KEO Discussion Paper No. 175

Distinctive Pricing in the Metropole of the Integrated Empire’s Economy:
Japan’s Central and Local Rice Markets, 1900–1939

Kiyotaka Maeda

Distinctive Pricing in the Metropole of the Integrated
Empire’s Economy:
Japan’s Central and Local Rice Markets, 1900–1939*
Kiyotaka Maeda†
Keio University
April 2023
Abstract
This study explores the spot and futures pricing of rice in Japan’s central and local cities during theperiod 1900–1939 to detect how importing primary products from the colonies impacted the commodity
market in the metropole. The imperial country imported colonial primary products different in quality
than the domestic ones to accelerate industrialization and the export of industrial goods to the colonies.
During the process of commodity market to accommodate the trade expansion of colonial goods, thefutures prices in the central cities, which were hubs of colonial goods, reflected the price fluctuation ofimported goods. On the other hand, the minor exchange in the local cities, which tended not to tradecolonial goods, augmented its price formation function. Based on the geographical heterogeneity ofcolonial goods circulation, this mechanism promoted economic growth and widened economic disparity
within the empire.
Keywords: imperialism, primary product, colonial trade, Japanese Empire, futures trade, rice
JEL classification codes: F54, G13, N25, N75

We would like to thank Filippo Dornetti, Shigehiko Ioku, Mikio Ito, Myungsoo Kim, Takuto Shinone,
Yusuke Takeuchi, Hideyoshi Yagashiro, Yu Yamamoto, and the participants in the session entitled “Web ofties” at the 19th World Economic History Congress (Paris, France), the current issues in imperial history
workshop (Milan, Italy), the academic seminar hosted by the Institute of East Asian Studies, Keio University(Tokyo, Japan), and the academic conference on East Asian history (Daegu, South Korea). We also
acknowledge the Japan Society for the Promotion of Science for its financial assistance as provided throughthe Grants-in-Aid for Scientific Research (nos. 21K01617; 20KK0029; 20K01795) and financial support
received from the Takahashi Industrial and Economic Research Foundation.
†
Department of Japanese History, Faculty of Letters, Keio University, 2-15-45 Mita, Minato-ku, Tokyo
108-8345, Japan; E-mail: k-maeda@keio.jp*

1. Introduction
This study focuses on Japan’s rice market to investigate how the growth of commodity supply from thecolonies altered the market in the metropole of the imperial country; rice was a staple food and one of theprincipal commodities in East and Southeast Asia. Acemoglu et al. (2001) depict that imperialism shaped
the basis of the contemporary world and has caused some economic difficulties, such as the North-South
gap. Therefore, imperialism has been a principal contention in the academic community of modern history.
There is vast literature on the multi-faceted impact of imperialism on the colonies, which is the adverse
direction of the impact against the object of this study.
During the 19th century, peripheral countries did not protect their traditional industries and specialized
in the production of primary products to export to countries reaching the early stage of industrialization.
Williamson (2011) asserts that this specialization suppressed peripheral countries’ industrialization. The
industrialized countries often colonized the peripheral countries in Asia, South America, and Africa.
Mitchener and Weidenmier (2008) mention that the colonial trade of the industrialized countries surpassed
the trade with foreign countries at an increasing rate before the First World War.
Findlay and O’Rourke (2007) and Havinden and Meredith (2002) reveal that Western countries’
colonies enhanced the supply of primary products, which were indispensable to economic growth.
Therefore, imperial countries promoted the export of industrial products to their colonies and import ofprimary products from their colonies after the First World War. Consequently, as Acemoglu et al. (2001)
indicate, the colonizers altered economic institutions in their colonies and widened economic disparity
within their empires. For example, Tadei (2020) clarifies that French trading companies manipulatedcommodity prices and squeezed about one-third of the potential income for farmers in African Frenchcolonies in the 1930s. This case means that the imperial countries forced their colonies to contribute to theindustrial development of the metropole through the exploited colonial trade. Hence, the industrial export
and import of primary products with the colonies formed a cyclic structure. Even the Japanese Empire, afollower imperial country in the modern world, also had this characteristic structure of colonial trade.
Bolt and Van Zanden (2014) estimate that Japan comprised only 29% of the gross domestic product(GDP) per capita in England in 1800 since it opted to be excluded from international trade until the middle
19th century. In 1853, as a part of the Western powers’ enforcement of “free” trade, the United States
threatened Japan to open the ports. Finally, in 1859, Japan launched international trade. It introduced
Western technology and systems to promote rapid economic growth after the late 1880s (Gordon 2021).
However, Japan did not possess the sufficient economic capacity to colonize distant locations in contrast to
the Western powers. Accordingly, as the consequences of the First Sino-Japanese War of 1894–1895 andRusso-Japanese War of 1904–1905, Japan colonized its adjacent regions: Taiwan (Formosa) in 1895,
Southern Sakhalin in 1905, and Korea in 1910 (Beasley 1987). Specifically, Taiwan and Korea influenced
the commodity market in the metropole because Japan exploited its geographical proximity to its colonies
to enhance its colonial trade. Japan heavily relied on the supply of colonial commodities, and its market
experienced structural changes during the first half of the 20th century.
1

Okubo (2007) indicates that the degree of colonial trade linkage within the Japanese Empire was higher
than other imperial countries after the First World War. Ayuso‐Díaz and Tena‐Junguito (2020) and Li (2019)
contend that Japan actively exported industrial products to its colonies, while Taiwan and Korea could not
upgrade their industrial structure because they specialized in agricultural production during the inter-war
period. Tipton (2016) claims that these two colonies exported primary products to Japan, which was
experiencing industrialization and urbanization from the turn of the 20th century. Wilson and Cribb (2018)highlight that Japan and its colonies built a mutually dependent relationship as a result. Accordingly, thesecharacteristics of the colonial trade require historians to investigate the impact of imperialism on the colonies
and metropole.
Although previous research gives little thought to the economic impact of the colonies on the metropole,some economic historians shed light on the impact of African colonies on Europe. Frankema et al. (2018)
examine how the construction of railways and increase in the price of indigenous goods in Africa promoted
colonial imports in Europe. Kamenov (2019) describes that the cooperative movements in African andAsian colonies influenced those in other colonies and nations. Regarding the Japanese Empire, Nakajima
and Okazaki (2018) assert that the demographics altered geographically to reflect the integration of themarket in Japan and Korea after the annexation of 1910. However, scholars do not analyze the changes inJapan’s commodity market, a variation factor in population distribution, when Japan deepened economic
ties to its colonies.
The representative colonial commodity in Japan was rice, as Fabiosa (2012) and Latham (2022) state.
Fukao and Settsu (2021) and Kaneda (1970) argue that the per-capita consumption of rice rose along withindustrialization, promoting the improvement of the living level in Japan. Howe (1999) maintains that Japansuffered from a rice shortage and increased imports of rice from East and Southeast Asian countries sincethe 1890s. As Seth (2020) emphasizes, Japan procured colonial rice after possessing its colonies. During theinterwar period, according to Basu and Miroshnik (2020), Taiwan and Korea exported about 40% of theirrice crops to Japan. The colonial rice supply contributed to mitigating the rice shortage in Japan.
Nevertheless, colonial rice had a different texture and taste than domestic rice due to the difference in thebreed.
Domestic, Korean, and Taiwanese rice were classified into a japonica, a subspecific japonica, and an
indica breed, respectively. Consequently, only the central cities, which are far from the region that produces
domestic rice, consumed colonial rice, as Francks (2015) asserts. The expansion of colonial imports
diversified a variety of circulated goods and converted the market into a two-tiered structure. One was themarket in the central cities, which traded domestic and colonial goods, and the other dealt only with domestic
goods in the local cities, which were adjacent to the agricultural producing areas (Duus 1984). Although thisconversion of the market structure might alter the pricing in the two types of cities, previous literature does
not shed light on this alteration in the pricing.
Much Japanese literature on the commodity trade in Japan focuses on the rice transaction, and Mochida(1970) and Omameuda (1993) examine the distribution and policies of rice. Based on these studies, Ito et2

al. (2017; 2018) and Shizume (2011) analyze the pricing of the rice futures market in Japan’s two central
cities, Tokyo and Osaka, before 1939 and have two limitations. First, they focus only on the central markets
and do not clarify the difference in the pricing between the central and local cities. Studies analyzing thepricing of the futures markets tend to pay attention to the world’s large commodity exchanges in the major
cities, such as the Chicago Board of Trade, New York Mercantile Exchange, and Liverpool Cotton
Exchange, which Jacks (2007) focuses on. Consistent with this research trend, Japanese historians also deny
the minor exchanges in the local cities. Second, these studies investigate only the futures market. All ofJapan’s futures markets listed only domestic rice and did not trade colonial rice. Hence, they do not explore
the effect of an increase in the colonial rice trade on rice pricing. Accordingly, we extend our scope to the
futures market in the local cities and spot market to scrutinize the alteration process of the rice market
resulting from an increase in the colonial rice trade in Japan.
The rice market in Japan is a suitable case for the analysis on the effect of the colonial trade expansion
on the imperial country’s market during the interwar period when the world economy went into blocks.
During this period, the commodity market in the metropole experienced qualitative changes to fit an increasein the trade of colonial goods, which had some quality differences from the domestic ones. These changes
promoted more expansion of colonial trade, and the metropole relied on the imports of colonial primary
products to become industrialized after the First World War. Finally, the imperial country produced andexported industrial goods to its colonies by utilizing colonial food and raw materials. That is, the qualitativechanges in the metropole’s commodity market were keys to industry growth in the imperial country throughenhancing the cyclic structure of colonial trade. Accordingly, we pay attention to the qualitative changes in
the commodity market by focusing on rice pricing during the period 1900–1939 in three cities: Tokyo,
Osaka, and Kumamoto.
In the remainder of this section, we provide the basic knowledge of these three Japanese cities. Tokyo
and Osaka are two major central cities on Honshu Island (the Main Island of Japan). The former is the capitaland largest city in Japan, while the latter is the hub of the economic sphere in western Japan. These cities
are about 400 kilometers away from each other and had populations of 6.8 million and 3.3 million,
respectively, in 1940 (Cabinet Statistics Bureau 1941). Notably, Osaka had been the center of the rice tradesince the pre-modern period. During the Tokugawa period covering 1603–1867, many clan governments
imposed a heavy tax on paddy fields and collected it with physical rice. They transported the collected ricefrom their domains to Osaka to turn into money (Ohno 2018). As Blank et al. (1991) and Schaede (1989)
describe, Osaka became the rice distributing center, and the Shogunate certified the futures market named
Dojima Kome Kaisho (the Dojima Rice Exchange) in 1730.
In contrast to these cities, Kumamoto is a typical local city on Kyushu Island, which is located west of
Honshu Island. It is about 900 kilometers from Tokyo and about 500 kilometers from Osaka. Kumamoto is
the main producing area of high-quality domestic rice because it is warmer than the two central cities. It has
provided rice to Osaka since the Tokugawa period, and the Dojima Rice Exchange designated the rice from
Kumamoto as one of the standard goods (Schaede 1989). During the modern period, Kumamoto continued3to be one of the main suppliers of staple food and exported rice to the major cities (see Figure A.1).
These cities already satisfied the conditions of market integration at the end of the 19th century. Federico(2021) asserts that the reductions in transportation and information costs facilitated the integration of thedomestic market. The intensification of the competition among conveyances promoted the former, and theimprovement of information propagation achieved the latter. For example, the laying of railroads triggered
escalating the competition in transportation, and the installation of telegraph cable stimulated information
communication (Dobado-González et al. 2012; Donaldson 2018; Federico 2007; Kaukiainen 2001). The
three cities gained these infrastructures of transportation and communications until the 1890s.
The Tokugawa Shogunate improved the main roads and coastlines in the 17th century. Totman (2005)
stated that the massive coastal shipping between Tokyo (Edo) and Osaka was developed until the 1670s.
The coastlines also connected to Kumamoto and transported agricultural commodities. Transportation
conveyances were improved further from the middle 19th century. Japan opened the Port of Yokohama,
which is about 30 kilometers from Tokyo, and the Port of Kobe, which is about 20 kilometers from Osaka,
in 1859 and 1867, respectively (Ports and Harbours Association of Japan 2007). In 1889, the government
completed the laying of the Tokaido Line connecting Tokyo and Kobe via Yokohama and Osaka by rail.
Furthermore, it built the transport infrastructure even in the local cities and constructed the Port of Misumi
near Kumamoto in 1887 (Kumamoto Prefectural Government 1961). In 1899, the Kyushu Railway
Company laid the Misumi Line from Kumamoto to Misumi (Japan National Railways 1985). These
improvements in transport infrastructure intensified the competition between maritime traffic and therailroad in the late 19th century. During the same period, the Japanese government also began to constructcommunications infrastructure in the central and local cities.
The government laid telegram lines within the cities of Tokyo and Osaka in 1869 and 1870, respectively,
and connected these two lines in 1872 (Osaka Central Telegraph Office 1928; Tokyo Central Telegram
Office 1958). It extended the lines to Kumamoto and Misumi in 1875 and 1887, respectively (Kumamoto
Post and Telegram Office 1902).
Until the 1890s, Tokyo, Osaka, and Kumamoto were equipped with various infrastructures tostreamline the commodity trade. These upgraded basic facilities reduced the transaction cost and increased
the speed of transportation and communications. That is, the transaction environment was already improved
during the period 1900–1939, which this study focuses on.
The remainder of this study is organized as follows. Section 2 explains the structure of the rice market
and the system of rice trade in Japan during the first half of the 20th century. Section 3 shows our econometricmethodology to analyze the pricing of domestic and colonial rice. Sections 4 and 5 employ the time-series
analysis to investigate the pricing of rice futures and spot markets, respectively. Section 6 interprets the resultof the time-series analysis in Sections 4 and 5 by utilizing the statistics of rice circulation. Finally, Section 7
presents the conclusion.

42. Historical Settings
2.1. Imports of colonial rice and the central markets
Japan’s self-sufficiency ratio of rice sank below 100% in the 1890s and fell below 90% in the 1920s(see Figure A.2). During these decades, the Japanese colonies produced rice profusely, and Japan relied on
the colonial rice supply. For an advance in demand for colonial rice in Japan, the Japanese colonial
authorities improved the breed of colonial rice to suitable for Japanese consumers’ tastes and supervised the
production process to enhance the control of rice quality in Taiwan and Korea in the 1910s. These measurescontributed to expanding the consumption of colonial rice in Japan. As a result, foreign rice imports
disappeared at the beginning of the 1930s. Colonial rice consisted mostly of imported rice in the same
decade and was shipped from Korea and Taiwan to Tokyo and Osaka (see Figure A.2).
These two central cities have each port city and form two central markets. One is the eastern central
market comprised of Tokyo and Yokohama, and the other is the western central market constituted by Osakaand Kobe. These central markets functioned as the distributing centers of various commodities and supplied
rice to local cities in Japan. The eastern central market sent rice to the metropolitan area and northern Japan.
The western central market provided rice to broad regions extending from northern to southern Japan (seeFigure A.3). Hence, the latter was the largest rice market in Japan. Colonial rice was also circulated via these
distributing centers, and these two central markets traded more than half of colonial rice in Japan (see Figure
A.4).

2.2. Imported rice circulation in Tokyo and Osaka
There are no data on the trading volume of imported rice in the spot market. Alternatively, we can obtain
three types of monthly data on the imported rice circulation in the central cities. The first type is the volumeof stocked rice in the major warehouses. This type of data for Tokyo are available for October 1902–March
1939, while data for Osaka are available for January 1900–March 1939.1 The second type is the volume ofrice inflowing to the central cities, and we can utilize the data for January 1900–March 1939 for Tokyo
derived from the Tokyo-Fukagawa Rice Spot Market, the largest rice spot market in Tokyo, while that for
Osaka gleaned from the major warehouses within the city is in existence in January 1917–March 1939. The
third type is the volume of rice outflowing from Tokyo and Osaka to other cities. This type of data for Tokyo
provided by the Tokyo-Fukagawa Rice Spot Market is available for January 1900–March 1939, while thatfor Osaka supplied by the major warehouses within the city is available for January 1917–March 1939 (seeFigure A.5). As Federico (2021) asserts “domestic trade can be estimated with data on transportation,” weare left with no other option but to estimate the trend of the imported rice trade by using the above-mentioned
circulation data. Accordingly, we explore the circulation data to grasp the trend of the colonial rice trade.
Until the middle 1920s, these three types of imported rice ratios had similar trends in the two central

1

In detail, the data for Tokyo denotes the stocked volume in the Tokyo-Fukugawa Rice Spot Market during
the period October 1902–December 1908.
1cities and notably increased three times: 1913–1915, 1919–1921, and 1924–1926. These expansions of theimported rice trade resulted from diverse reasons.
There were two reasons for the increase in rice imports during the first period. First, rice cropping was
hit by a contiguous famine during the period 1912–1913. Second, the Ching Dynasty of China collapsed in
1912, and international affairs in East Asia deteriorated. These factors caused a rise in the annual average
prices of rice in Tokyo by 24% during the period 1911–1914, and rice imports expanded during the period
1913–1914. However, Japan had a bumper rice crop in 1914. The annual average rice prices in Tokyo
decreased by 25% from the previous year, and the rice imports shrunk in 1915 (Nakazawa 1933 and Figure
A.2).
During the second period, Japan sent its troops to Siberia in 1918 as a part of commitments to the FirstWorld War. The Japanese government bought a large amount of rice for military use. This caused a rice
shortage, and merchants hoarded their rice in the expectation of higher prices. The annual average prices ofrice in Tokyo skyrocketed by 64% from the previous year, and the nationwide rice riots, kome-sōdō,
occurred in July 1918 (Francks 2015). As a result, Japan’s rice imports expanded to mitigate the rice shortage(see Figure A.2).
During the third period, the Great Kanto Earthquake occurred on September 1, 1923. It turned Tokyo
into burned-out ruins and killed about 100,000 people in and around the city (Central MeteorologicalObservatory 1924). The enormous amount of rice stocked in Tokyo was also burned, and the survivors wereafflicted by food shortage. The government sent stored rice from western cities, such as Osaka, to Tokyoand imported rice to supply a deficiency (Ota 1938; Figure A.2).
After the middle 1920s, the ratio of imported rice to the stocked volume was lower than the ratios ofimported rice to the inflowing and outflowing volumes in Tokyo and Osaka. The difference in the trends ofthese ratios arose due to the government’s political responses under the Beikoku Hō (the Rice Law) enacted
in 1921.
This law reflecting the market disturbance under the nationwide rice riots of 1918 allowed thegovernment to trade in the rice market to adjust supply and demand, and the Ministry of Agriculture andForestry bought and stocked only domestic rice after 1925 (Ota 1938). Hence, the data on the stocked ricecontains the government’s stockpiled domestic rice and overestimates the proportion of domestic rice in the
spot market after 1925. Consequently, we consider the ratios of imported rice to the inflowing andoutflowing volume as proxy indexes for the imported rice trade during the period 1925–1939. However, thefluctuations of the two indexes were also different (see Figure A.5). These proxy indexes inevitably deviate
from the true ratio of imported rice to the trade volume in the spot market. On the one hand, the correlation
coefficients between these two indexes are 0.837 in Tokyo and 0.525 in Osaka. Thus, these proxy indexes
indicate roughly the same tendency. Accordingly, we pay attention to the analogous trends in the ratios ofimported rice to the inflowing and outflowing volumes to capture the propensity for imported rice trade withlittle regard for minute changes in the proxy indexes.
According to these proxy indexes, the traders in the central cities sold and bought colonial rice rather
2than domestic rice after the middle 1920s. Furthermore, Osaka was no longer the venue for the domestic
rice trade and became the market for Korean rice (see Figure A.5). These two central cities had each major
rice exchange: the Tokyo Rice and Merchandise Exchange (TRME) and Osaka-Dojima Rice Exchange(ODRE).

2.3. Rice futures trades in the central and local cities
The Japanese government enacted the Kome Shōkaisho Jōrei (the Rice Exchange Law) in 1876 andKabushiki Torihikijo Jōrei (the Stock Exchange Law) in 1878. According to the Rice Exchange Law, the
ODRE and TRME were established in 1876 and 1883, respectively (Osaka-Dojima Rice Exchange 1912;
Tokyo Grain Exchange 2003). Following the establishment of these major exchanges, many minor
exchanges in the local cities were also established. There were 137 commodity and stock exchanges in 1897.
However, many minor exchanges faced financial troubles and closed shortly after their establishment. The
number of exchanges decreased sharply to 64 in 1902 and reached 37 in 1923. This number stabilized after
the middle 1920s, and Japan had 33 exchanges in 1938 (Kotani 1953). Rice was one of the major trading
goods and traded in more than half of the exchanges. In 1938, 18 exchanges listed rice as a trading good,and rice exchanges were located all over Japan (see Figure A.6). In the rice exchanges, the brokers traded
only domestic rice.
Every rice exchange dealt with a single brand of domestic rice, and there were three different contract
months: a nearby contract (one month), second-nearest contract (two months), and deferred contract (threemonths). The buyers could choose settlement on balance or delivery of physical rice on the expiration dateof the nearby contract, and the exchanges accepted Korean rice as an alternative deliverable good after June
1912 (Ito et al. 2017). However, many brokers refrained from using this settlement system. They mainly
traded the deferred contract. The trading volume of the deferred contract accounted for approximately 70%of the futures rice trade (Ito et al. 2018).2 This volume fluctuated over time.
The volume of futures trade sustained less than 10 million kokus until the middle of 1914.3 The
government imposed a tax on the brokers’ trades in exchanges in 1882 and reduced the tax rate in September
1914 (Ministry of Finance 1938). This tax reduction eliminated the dealing cost. As a result, the tradevolume surged to over 30 million kokus (see Figure A.7). However, the nationwide rice riots toppled the
Cabinet in 1918, and the government suppressed the rice futures trade to control prices under the Rice Law
after the 1920s. It regarded some minor exchanges as gambling places.
In 1923, the government criticized that the minor exchanges only mirrored prices in the central cities(Nakanishi 1940). It considered that a surge in rice prices resulted from the disruption of the pricing in the
dubious exchanges and ordered eight rice exchanges to disband in 1924. Consequently, the volume of2

See Ito et al. 2017 for further information on the trade system in the Japanese rice exchanges.
The “koku” is a standard unit of measurement in Japanese agriculture. One koku is equal to 180.39 liters
and is roughly equivalent to 150 kilograms.
3
3

futures trade in the local cities decreased (see Figure A.7). In contrast, the TRME and ODRE sustained
leading positions in the rice futures trade.
Even in the early 1900s, these two major exchanges had already established their solid positions inJapan’s rice futures market. The ODRE reduced the fidelity guarantee deposit for its brokers in 1905 andbecame lower in the deposit amount than the TRME (Osaka City Government 1934; Tokyo Grain
Exchange 2003). As a result, it succeeded in increasing its trade volume and competed with the TRME in
the ratio to the total trade volume in all of Japan’s exchanges after the 1910s. In addition, the TRME could
not trade at all during the period September–October 1923 because the Great Kanto Earthquake destroyed
the TRME’s buildings, and the rice futures trade concentrated on the ODRE. Accordingly, the ODRE
surpassed the TRME in the ratio to the total trade volume after the earthquake and became the largest riceexchange. Although both exchanges altered their relative positions, their combined volume continued tohold about half of the total volume of rice futures trade (see Figure A.7). They achieved dominant shares of
the rice futures market in Japan.
Japan embarked on the Second Sino-Japanese War in July 1937 and began serious border incidents
with the Soviet Union in May 1939 (Holcombe 2017). The Tokyo Grain Exchange (2003) states that theJapanese economy was placed on a war footing and this social change significantly reduced the requirement
for the rice futures trade under these circumstances. The Japanese government ordered the shutdown of allrice exchanges to tighten the rice price control in September 1939 (Osaka-Dojima Rice Exchange 1939a).
In summary, Japan had two kinds of rice exchanges until 1939. One was the major exchange providing
the index prices of the rice market, and the other was the minor exchange mirroring the prices in the major
exchange. Nevertheless, as mentioned in the Introduction, previous literature addresses only the major
exchanges. Accordingly, we broadened our scope to the Kumamoto Rice Exchange (KRE) to focus on theminor exchange.
The KRE was located in Kumamoto, a typical local city on Kyushu Island. This exchange was thesouthernmost rice exchange in Japan (see Figure A.6). It launched its operation in January 1894, and thegovernment abolished the KRE with any other rice exchange in September 1939 (Kotani 1953). However,the KRE halted the deferred contract of the futures trade in March 1939. The government announced thepolicy to abolish all rice exchanges in February 1939 (Ministry of Agriculture and Forestry, Minister’s
Secretariat, 1959). In response to this announcement, the brokers exhibited a wait-and-see attitude andinterrupted the futures trade for the long-term (Kumamoto Rice Exchange, 1939).
The KRE was a typical minor rice exchange. Its monthly average volume of futures trade was only
136,284 kokus in the 1930s. This volume was ranked tenth on all 17 rice exchanges, which existed at theend of 1938. It was equal to 3.7% of the ODRE (3,657,485 kokus) and 5% of the TRME (2,704,285 kokus)(see Figure A.8). We analyze the KRE’s pricing and compare it against the TRME and ODRE by utilizing
a vector error correction (VEC) model.

43. Methodology
We employ a three-dimensional VEC model for the multiple time-series data of the futures prices inthe three exchanges and arrange these exchanges in the following sequence: the ODRE, TRME, and KRE.
There are three reasons to put the ODRE in the lead. First, the ODRE surpassed the TRME and KRE in
their trade volume (see Figure A.8). Second, Osaka was broader in the serving area of rice than Tokyo. The
Osaka-centered market provided rice to northern and southern Japan, whereas the serving area of the Tokyocentered market was only around Tokyo and in northern Japan (see Figure A.3). Third, Osaka was the central
trading hub of Korean rice in Japan (see Figures A.4 and A.5).
A VEC model is derived from a vector autoregressive (VAR) model. A VAR model is:𝒚𝒕where 𝒚𝒕𝒗

∑𝒑𝒊 𝟏 𝑨𝒊𝟏 𝒚𝒕 𝒊

𝑦 ,𝑦 ,𝑦𝜺𝒕(1)′ : 𝑦 , 𝑦 , and 𝑦

are the futures prices of a differed contract (threemonths) in the ODRE, TRME, and KRE, respectively; 𝒗 is a three-dimensional constant vector; 𝑨𝒊𝟏 is athree-by-three parameter vector; a three-dimensional white-noise vector 𝜺𝒕𝜀 ,𝜀 ,𝜀′. We convert

from Equation 1 to Equation 2 by subtracting 𝒚𝒕 𝟏 from both sides. Equation 2 is as follows:
Δ𝒚𝒕

𝒗

𝚷𝒚𝒕 𝟏

where a coefficient matrix 𝚷∑𝒑𝒊 𝟏 𝚪𝒊 Δ𝒚𝒕 𝒊∑𝒑𝒋 𝟏 𝑨𝒋

𝜺𝒕

(2)

𝑰𝒎 and 𝚪𝒊∑𝒑𝒋 𝒊 𝟏 𝑨𝒋 . The coefficient matrix is

decomposed into a loading matrix 𝜶 and a cointegration matrix 𝜷 , such that 𝚷

𝛂𝛃′ . If thecointegration order is 𝑟, both matrices have 𝑟 values less than three. Thus, a VEC model is as follows:Δ𝒚𝒕𝒗

𝜶𝜷′𝒚𝒕 𝟏

∑𝒑𝒊 𝟏 𝚪𝒊 Δ𝒚𝒕 𝒊

𝜺𝒕

(3)

A VEC model enables us to utilize an innovation accounting that derives an impulse response function(IRF) and a relative variance composition (RVC). These show the time path of the various shocks on thevariables in a VEC system and demonstrate the relative contribution degree of dispersion of an impulse on
a variable to other variables’ dispersions (Sims 1980). It is necessary to multiply parameters by impulsesthat are derived from supplying a standard deviation unit of impulse on the disturbance term at the zero
period in Equation 3 to employ an innovation accounting. An IRF indicates how an impulse influences eachvariable, while an RVC shows how much the fluctuation of a variable affects other variables.
This methodology is heavily used for the empirical study of economic history because it is not basedon strong theoretical assumptions (Enders 2015). However, it captures only an influence on the variables bysingle shocks and does not reveal the fluctuation of the variables reflected from a subsequent shock (Balcilar
et al. 2018). It assumes that the market structure was invariable, and an IRF and RVC only exhibit the
average structure of the market. In contrast to this assumption, the rice market experienced structural
5

changes subsequently according to the previous section. Hence, we utilize a historical decomposition (HD)to overcome these problems. This method enables us to demonstrate cumulative effects of subsequent
shocks and the variability of relative shocks (Kilian and Lütkepohl 2017).
Burbidge and Harrison (1985) propose an HD. Analyses on commodity pricing and themacroeconomic behavior in the discipline of economics and economic history employ this methodology(Breitenlechner et al. 2021; Erol and Saghaian 2022; Shibamoto and Shizume 2014). This method is derived
from a VEC model in Equation 3 and is specified as follows:
𝒚𝒕 𝒋∑𝒋𝒊 𝟎𝟏 𝝍𝒊 𝜺𝒕 𝒋 𝒊

𝑿𝒕 𝒋 𝜷∑𝒊 𝒋 𝝍𝒊 𝜺𝒕 𝒋 𝒊(4)where 𝒚𝒕 𝒋 is a multivariate stochastic process; 𝜺 is its multivariate noise process; 𝑿 is the deterministic
part of 𝒚𝒕 𝒋 ; 𝒊 is a counter for the number of periods. The first term on the right-hand side of Equation 4
demonstrates the part of 𝒚𝒕 𝒋 resulted from the shock, and the second term represents the prediction ofprice series stemmed from the information at time 𝒕 denoting the date of the event.

4. The Futures Pricing in the Local City
4.1. The price data of the futures trade
We explore the weighted monthly average data on the futures prices of the differed contract in the
ODRE, TRME, and KRE during the period January 1900–March 1939. The KRE halted the differedcontract trade in the last month of our observation period, as described in Section 2. The time-series data on
the futures prices in the minor exchanges are hard to find, and the KRE is a rare case that provides longterm continuous data on the futures trade during the period. We utilize 33 sources to obtain the data of thethree exchanges, and these sources are divided into two types (see Table A.1).
The first type is the statistical surveys issued by the central government. The Ministry of Financereleased the futures prices in the major exchanges in its statistical surveys to supervise the general pricetrends in 1908. In 1918, the Ministry of Agriculture and Commerce holding jurisdiction over theadministration of commodity exchange also began to report the futures prices in every exchange in its
statistical surveys. In 1925, the government split this ministry into two institutions: the Ministry ofAgriculture and Forestry and Ministry of Commerce and Industry. The latter took over the administrationof exchange and continued to report the futures prices. However, these records do not carry the futures prices
in the major exchanges before 1907 and the price data of the minor exchanges before 1917. Accordingly,
we use another type of source to obtain the lack of data.
The second type is the annual statistics issued by the city governments. Some cities published theirannual city statistics from the turn of the 20th century, and some of these statistics provide the rice futures
prices in each city. The city office of Kumamoto reported the KRE’s prices in its city statistics from January
1900. This data is the oldest series of futures prices in Japan’s minor rice exchange, and we refer to the6Table 1
Descriptive statistics and unit root test results of rice futures prices
Level
Osaka

First differenceTokyo

Kumamoto

Osaka

Tokyo

Kumamoto

Mean

3.080

3.097

3.043

0.002

0.002

0.002

Median

3.152

3.147

3.078

0.005

0.004

0.005

Maximum

3.918

3.928

3.935

0.191

0.208

0.216

Minimum

2.290

2.347

2.310

-0.307-0.319-0.336

Std. Dev.

0.422

0.416

0.420

0.057

0.056

0.063

ADF

-2.982-2.940-2.640-17.314***-17.050***-15.820***

Lags

1

1

2

0

0

1

***

***

***

PP

-16.891-16.570-17.132-2.556-2.552-2.559Bandwidth

8

7

11

16

16

20

N

471

471

471

470

470

470

Notes) The “ADF,” “Lags,” “PP,” “Bandwidth,” and “N” denote the Augmented Dickey-Fuller test statistics
with a time trend and a constant, lag order selected by the Schwartz Bayesian information criteria,
Phillips-Perron test statistics, Newey-West bandwidth by using Bartlett kernel, and number ofobservations, respectively. “***” means significant at the 1% level.

Kumamoto City Statistics until 1917. Furthermore, we secure the futures prices in the ODRE and TRME
until 1907 from the city statistics of Osaka and Tokyo, respectively. Nevertheless, the Annual Statistics of
the City of Tokyo do not put the futures prices in the TRME until December 1901.4 Hence, we utilize
Nakazawa (1932) showing the rice prices in Japan to obtain the futures prices in the TRME during theperiod 1900–1901.
There are two breaches in the price data series of the KRE and TRME. First, the KRE did not provide
the futures price in October 1913 because it suspended the trade temporarily to suppress a surge in prices.
Second, the price data of the TRME in September–October 1923 are missing because the rice trade in Tokyo
was brought to a standstill by the Great Kanto Earthquake. Accordingly, we apply the Catmull-Rom splineinterpolation technique to interpolate these missing data (see Figure A.9). We employ interpolated data toestimate a VEC model. Our estimation procedure is as follows.
First, we take the first difference in the natural log of each series. Second, we apply the Augmented
4

The National Diet Library of Japan discloses the statistical surveys, which were issued by the Ministry of
Finance, Ministry of Agriculture and Commerce, and Ministry of Commerce and Industry, and the city
statistics of Tokyo, Osaka, and Kumamoto on its website (https://ndlonline.ndl.go.jp/). However, it does nothold a part of the Kumamoto City Statistics, and we gained the cooperation of Hokkaido University in
Sapporo to obtain Kumamoto City Government (1918; 1919).
7

Table 2
Cointegration test results of rice futures prices
Trace test

Maximal eigenvalue test

Eigenvalue

Test statistics

Critical value

Test statistics

Critical valueNone0.0754

59.29

35.46

35.54

25.86

At most 1

0.0413

22.75

19.94

19.65

18.52

At most 2

0.0066

3.10

6.63

3.10

6.63

Notes) The “Trace test” and “Maximum eigenvalue test” denote the result of Johansen’s (1991) trace test
and Johansen’s (1988) maximal eigenvalue test, respectively. The “Critical value” is the critical value
at the 1% significance level for each test.

Dickey-Fuller (ADF) test and Phillips-Perron (PP) test as the unit root test to confirm whether the variables
satisfy the stationary condition. In this process, we utilize the Schwartz Bayesian information criteria (SBIC)
to choose the optimal lag length for the ADF test and Newey and West’s (1987) method by using the Bartlett
kernel to set the optimal bandwidth for the PP test. Table 1 displays the descriptive statistics and unit root
test results of the data.
Table 1 indicates that all variables in the first difference column satisfy the stationarity condition. Finally,
we apply Johansen’s (1991) trace test and Johansen’s (1988) maximal eigenvalue test to confirm
cointegration relations among the valuables. Table 2 demonstrates the results of the cointegration test.
These cointegration tests reject two null hypotheses at the 1% significance level: 𝑟
cointegration) and 𝑟

0 (no1 (at most one cointegration). Hence, we estimate a VEC model under theassumption that the valuables have two cointegration relationships.

4.2. The relationships in the pricing among rice exchanges
The estimation process of a VEC model requires us to select the optimal lag length, and we apply thelag exclusion Wald test. This test reports that the optimal joint lag length is eight at the 1% significance level(see Table A.2). Accordingly, we estimate a VEC model with the eight-lagged structure (see Table A.3).
In the next step, we calculate the HD to capture the time-varying structure of the rice futures market. In
this process, we determine the Cholesky ordering as follows: the ODRE, TRME, and KRE. This is arranged
in order of the monthly average volume of the futures trades in these exchanges (see Figure A.8). Figure 1
illustrates the HD of the futures prices in the three rice exchanges.5
The pricing of the ODRE was independent and constantly affected other exchanges. It basicallydetermined the prices even in the TRME, one of the major exchanges. The TRME had a little noticeable5

We also compute the IRF and the RVC by employing the same Cholesky ordering as the calculation for
the HD. Figure A.10 demonstrates the IRF and RVC.
8

TRME (Tokyo) ---> ODRE (Osaka)

KRE (Kumamoto) ---> ODRE (Osaka)

.3

.3

.2

.2

.2

.1

.1

.1

.0

.0

.0

-.1

-.1

-.1

-.2

-.2

-.2

-.3

-.3

-.3

-.4

-.4

-.4

ODRE (Osaka) ---> TRME (Tokyo)

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.3

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

TRME (Toky o) ---> TR ME (Tokyo )KRE (Kumamoto) ---> TRME (Tokyo )

.3

.3

.3

.2

.2

.2

.1

.1

.1

.0

.0

.0

-.1

-.1

-.1

-.2

-.2

-.2

-.3

-.3

-.3

-.4

-.4

-.4

ODRE (Osaka) ---> KRE (Kumamoto)

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

TRME (Tokyo) ---> KRE (Kumamoto )KRE (Kumamoto) ---> KRE (Kumamoto)
.4

.3

.3

.3

.2

.2

.2

.1

.1

.1

.0

.0

.0

-.1

-.1

-.1

-.2

-.2

-.2

-.3

-.3

-.3

-.4

-.4

-.4

Total stochastic

ODRE (Osaka)

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

.4

Total stochastic

TRME (Toky o)

1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

ODRE (Osaka) ---> ODRE (Osaka).4

Total stochastic

KRE (Kum amoto)Figure 1. HDs of futures rice prices

effect on its pricing. That is, the ODRE provided the standard index prices in Japan’s rice futures markets.
On the other hand, Figure 1 exhibits that the HD value to and from the KRE is higher than that to and fromthe TRME. It suggests that the KRE served more distinctive pricing than the TRME.6
In summary, the minor exchange also formed the prices while the largest exchange furnished the index
prices for other exchanges. However, all values of the HD fluctuate over time. Specifically, the HD values
from the ODRE to all exchanges vary wildly. It means that the rice market structure changed over time.
Accordingly, we focus on the diachronic changes in the KRE’s HD value to scrutinize the relationship in
the pricing between the major and minor exchanges.

6

The IRF and RVC denote the same results as the HD (see Figure A.10). We observe the 99% confidence
bands of the IRF deviating from zero and recognize that the pricing of the ODRE obviously affected itself
and other rice exchanges. Although the pricing of the TRME also affected itself, the ODRE is higher in thevalue of the IRF than the TRME. That is, the rice futures prices in Japan were basically determined by thepricing of the ODRE. In fact, the ratios of the ODRE in the TRME’s and the KRE’s RVCs are 89.5% and80.6%, respectively, in the first period while the KRE is higher in the ratio of its RVC than the TRME fromthe first to the tenth periods. The KRE has 19.0% percent of its RVC in the first period. It is about 1.8 times
higher than the ratio of the TRME in the TRME’s RVC in the same period. The KRE’s pricing was more
distinctive than the TRME’s pricing.
94.3. The distinctiveness of the minor exchange’s pricing
The HD value to and from the KRE increased after the middle 1910s when the colonial rice circulation
expanded in the central cities. However, the rice exchanges listed only domestic rice. As a result, two typesof rice markets emerged in the central cities: the futures market trading only domestic rice and spot market
trading domestic and imported rice. This change also widened the structural difference in the rice market
between the central and local cities. The central market traded domestic and imported rice, whereas the local
market traded only domestic rice. Accordingly, we focus on the geographical heterogeneity of the colonial
rice circulation.
Our estimated VEC model provides three HD values per exchange. An HD ratio is calculated by
dividing an HD value by the total stochastic, which is equal to the sum of relevant HD ratios. For example,
the total stochastic of the KRE is equivalent to the sum of three HD values: from the ODRE to the KRE,
from the TRME to the KRE, and to and from the KRE. The ratio of the HD to and from the KRE is
calculated by dividing the HD value to and from the KRE by the total stochastic of the KRE. This ratiomeans the relative contribution to the price fluctuations in the KRE, and its deviation from 0% indicates thepower to alter the prices. Accordingly, we convert the ratio to the absolute HD ratio (AHDR) to capture thecontribution to the price movements. However, the AHDR occasionally surpasses 100% because each HD
value is not always synchronized with the movement of the total stochastic. These AHDRs include someoutliers, and their maximums to and from the KRE and from the ODRE to the KRE reach 7,081% and5,280%, respectively. These outliers preclude our observations of the changes in the variables, and we
capture the AHDR below 100% to overcome this problem. Figure 2 illustrates the AHDR of the KRE.
Panels A and B of Figure 2 demonstrate the AHDR from the ODRE to the KRE and that to and fromthe KRE, respectively. These panels also illustrate the ratio of imported rice to the stocked volume before
1924 and the ratios of imported rice to the inflowing and outflowing volumes after 1925 as proxy indexes
for the trend of the imported rice trade in Osaka. The AHDRs in the early 1900s and the late 1930s are notstrictly accurate because the HD value has burn-in and burn-out effects, and we observe the remaining termfrom the middle 1900s to the middle 1930s.
Panel A denotes that the AHDR from the ODRE to the KRE reaches 100% for most of the observational
period. The price fluctuation in the ODRE heavily affected the price formation of the KRE. By contrast,
Panel B indicates that the AHDR to and from the KRE varies over time. This ratio increases when theimported rice ratios sustain a high level.
The imported rice ratio reaches over 80% and remained at that level for about two years over threetime periods: March 1919–March 1921, May 1924–May 1926, and May 1934–September 1936. As we
mentioned in Section 2, in the first and second periods, the imported rice trade expanded because of thedispatch of the Japanese army in 1918 and the Great Kanto Earthquake of 1923. In the third period, Japanwas hit by famine during the period 1934–1935. It increased the rice imports to supply a deficiency and its
self-sufficiency ratio of rice was sluggish during the period 1934–1936 (See Figure A.2). According to
Figure 2, the AHDR to and from the KRE does not drop to less than 50% for more than four consecutive
10

(A) From the ODRE to the KRE(B) To and from the KRE

Figure 2. AHDRs of the KRE
Notes) The “AHDR” indicates the absolute historical decomposition ratio. The ratio of imported rice inOsaka is composed of the ratio of imported rice to the stocked volume during the period 1900–1924
and that to the inflowing volume during the period 1925–1939.
Sources) Governor-General of Taiwan, Industrial Bureau, 1937; 41; Ministry of Agriculture and Forestry,

Agricultural Bureau, 1925; 28; Ministry of Railways, Transportation Bureau, 1925; Osaka Chamberof Commerce, 1918; Osaka City Government, 1905; 09; 15; Osaka-Dojima Rice Exchange, 1912b; 13–
20; 21a; 22a; 23a; 24a; 25a.
11

months during these three periods. Its averages for these three periods are 104%, 297%, and 360%.
Furthermore, this AHDR skyrockets simultaneously with surges in the imported rice ratios over a short term
at times other than the three periods. These observations suggest that the KRE’s pricing obtained
distinctiveness when the imported rice trade expanded in Osaka. Hence, we use a regression analysis toinvestigate the relationship between the KRE’s pricing and imported rice trade in Osaka.

4.4. The pricing of minor exchange and the imported rice trade in the central city
We apply the ordinary leased squared (OLS) regression equation to verify the relationship between the
AHDR to and from the KRE and the imported rice ratios in Osaka. In this step of our analysis, we add thetrade volume of the KRE as an explanatory variable in the equation since the study of futures pricing often
mentions that the relationship between the trade volume and price variability exists (Rutledge 1986).
Specifically, we employ the following equation:
𝑙𝑛 𝐴𝐻𝐷𝑅𝛽𝛽 𝑙𝑛 𝑇𝑉𝛽 𝑙𝑛 𝐼𝑅𝑅(5)

TV and IRR mean the volume of futures trade in the KRE and imported rice ratio in Osaka, respectively.7
As we mentioned in Section 2, our analysis focuses on the variable trends in the two ratios of imported riceto the inflowing and outflowing volumes to seize the propensity for imported rice trade without paying close
attention to minute changes in the variables. Accordingly, we utilize these two types of the imported rice
ratio as the IRR and convert the explained and explanatory variables in the regression formula to a six-monthmoving average (MA) and 12-month MA. We apply these values to Equation 5 and estimate the coefficients(𝛽 and 𝛽 ) and constant coefficient (𝛽 ). Table 3 illustrates the estimation result of four regression
equations.
All F-values of four regression equations are less than 0.01 according to the result of variance analysis.
Hence, these equations are significant at the 1% level. The four coefficients of IRR are also significant at
the 1% level and are positive values while all coefficients of TV are negative values. Consequently, these
regression analyses suggest that an expansion of the imported rice trade in Osaka promoted the7

We utilize the volume of futures trade in the KRE, which contains all futures trades of three contracts, asa proxy for the volume of deferred contract trade to employ our regression analysis. In ordinary
circumstances, we should use the volume of deferred contract trade because we apply the deferred contract
prices of the KRE to calculate HD values in Figures 1 and 2. However, our data sources shown in Table A.1
demonstrate only the total volume of all contracts in the KRE. We cannot find the time-series volume ofdeferred contract trade in the KRE during our sample period, but the volume of all futures trades is anappropriate proxy. Tokyo Stock Exchange, Investigation Department (1919–29; 30a), which is exclusively
owned by Keio University in Tokyo, indicates the fragmentary volume date of futures trade by each contract
in the KRE. Concretely, it carries that date during the periods November 1919–April 1920, June–October
1920, December 1920–January 1922, January 1923–September 1925, November 1925–May 1929, andJuly 1929–August 1930. According to the date for these 115 months, the deferred contract held 81% of all
futures trades in the KRE.
12

Table 3
OLS regression analysis of the KRE’s AHDRs
Inflowing volume
6-monthRegression

Constant

Coefficient

2.136

12-month6-month

***

2.723

12-month***

4.078***

3.585

SE

0.525

0.402

0.529

0.469

T-value

4.069

6.781

6.773

8.692

Trade

Coefficient-0.180***-0.208***-0.267***-0.287***

volume

SE

0.042

0.032

0.042

0.037

T-value-4.264-6.473-6.297-7.677

***

***

***

0.603***

analysis

Variance***

Outflowing volume

0.474

Coefficient

rice ratio

SE

0.066

0.056

0.070

0.066

T-value

5.868

8.621

7.121

9.195

Adjusted R-square

0.107

0.214

0.172

0.247

N

456

450

456

450

2

2

2

2

Sum of squares

42.34

48.90

73.54

79.86

Mean square

21.17

24.45

36.77

39.92

F-value

0.000

0.000

0.000

0.000

Residual

DF

453

447

453

447

error

Sum of squares

339.8

175.5

345.2

238.7

Mean square

0.750

0.393

0.762

0.534

DF

455

449

455

449

Sum of squares

382.1

224.4

418.8

318.6

Regression

analysis

Total

0.387

0.484

Imported

DF

Notes) This table shows the OLS regression analysis of monthly moving average data of the explained andexplanatory variables. The “SE,” “N,” and “DF” indicate the standard error, the number ofobservations, and the degree of freedom, respectively. “***” means significant at the 1% level.

distinctiveness of the KRE’s pricing.
The formation of the futures prices in the KRE had relevance to the imported rice trade in the spot
market in Osaka. However, even in the three periods, the averages of the AHDR from the ODRE to the
KRE are 165%, 179%, and 148%. This fact means that the pricing of the ODRE stably affected that of theKRE. Thus, we should reveal how the fluctuation of the imported rice trade in Osaka’s spot market affected
the pricing of the ODRE to capture the mechanism of the alteration in the pricing of the KRE. Concretely,in the next section, we employ a VEC model to analyze how the ODRE determined its future prices when
the imported rice trade expanded in Osaka.
13

5. The Pricing in the Central City
5.1. The price data of domestic and imported rice in Osaka
We investigate the data of rice prices in Osaka by employing the same technique as the analysis in theprevious section and assign the futures prices of a differed contract, spot prices of Korean rice, and spot
prices of domestic rice for 𝑦 , 𝑦 , and 𝑦 , which constitute the left-hand matrix 𝒚𝒕 in Equation 3. Ourinvestigation focuses on the period spanning from January 1919 to March 1939. During this period, Koreanrice mainly constituted the imported rice in Osaka, and authorities recorded the monthly average prices of
Korean rice in Osaka on their statistical surveys (see Figure A.5). We receive the price data from thesestatistical surveys issued by the Ministry of Agriculture and Commerce, Ministry of Agriculture and Forestry,
Ministry of Commerce and Industry, Ministry of Railways, and Governor-General of Taiwan (see Table
A.4).8
According to these data, there was a difference in the price trend between Korean and domestic rice,and the relative price ratio of Korean rice to domestic rice fluctuated over time (see Figure A.11). This
fluctuation has two characteristic points.
First, the relative price ratio tended to increase. This tendency was reflected by the rise in the quality of
Korean rice as mentioned in Section 2.9 Korean rice prices relatively increased in the 1920s and caught up
with domestic rice prices in the early 1930s.
Second, the fluctuation of the relative price ratio had seasonality. In detail, this ratio tended to decreasein a few months before the end of each year. Japanese and Korean farmers began to crop rice in September,and the monthly average real prices of domestic and Korean rice had the same tendency before the harvest
season. These prices began to increase in April and reached their zenith in August. After September, theseprices decreased. However, Korean rice prices reached a bottom in November while domestic rice prices
touched a foot in December. Korean farmers cropped rice from the beginning of September to the middleof November, and the Korean rice circulation in Japan reached full bloom in November, whereas thecirculation of domestic rice expanded in December (Hishimoto 1938). Hence, the gap between these prices
widened from September to November, and the price ratio of Korean rice to domestic rice decreased forthree months (see Figure A.11).

8

The National Diet Library of Japan posts the statistical surveys published by the Ministry of Agriculture
and Commerce, Ministry of Agriculture and Forestry, Ministry of Commerce and Industry, and GovernorGeneral of Taiwan on the Internet (https://ndlonline.ndl.go.jp/). Nevertheless, it has only a part of thestatistics issued by the Governor-General of Taiwan, and we received collaboration from Oita University in
Oita to inspect the Governor-General of Taiwan, Industrial Bureau (1941).
9
The price gap between domestic and Korean rice did not move in conjunction with changes in freightcosts from Korea to Japan. Hishimoto (1938) reports the freight cost of Korean rice during the period
January 1924–April 1935, which decreased when newcomers appeared. Tatsuuma Steamship Corporation
and Iino Steamship Corporation started their services between Japan and Korea in December 1927 andOctober 1932, respectively, and the freight cost decreased in February 1928 and May 1933. However, thetrend of the price gap between domestic and Korean rice did not change after these months, and the freight
cost increased in July 1929 and November 1933.
14

Table 4
Descriptive statistics and unit root test results of rice prices in Osaka
Level
Futures

First difference

KoreanDomestic(spot)(spot)

Futures

KoreanDomestic(spot)(spot)

Mean

3.426

3.386

3.458

-0.000-0.001-0.001

Median

3.444

3.413

3.474

0.004

0.003

0.001

Maximum

3.918

3.934

4.016

0.175

0.338

0.288

Minimum

2.749

2.773

2.850

-0.307-0.324-0.373

Std. Dev.

0.212

0.245

0.252

0.061

0.067

0.057

***

***

-13.976***-2.951-2.962-2.418

Lags

1

1

0

0

0

0

***

***

***

PP

-11.944-13.108

ADF-11.640-13.071-13.975-2.158-2.521-1.770

Bandwidth

0

1

0

8

4

4

N

243

243

243

242

242

242

Notes) The “ADF,” “Lags,” “PP,” “Bandwidth,” and “N” denote the Augmented Dickey-Fuller test statistics
with a time trend and a constant, lag order selected by the Schwartz Bayesian information criteria,
Phillips-Perron test statistics, Newey-West bandwidth by using Bartlett kernel, and number ofobservations, respectively. “***” means significant at the 1% level.

The price trend of Korean rice differed from that of domestic rice, and this difference varied over time
for these two reasons. We apply the HD to examine the diachronic change in the relationship between theprice formations of Korean and domestic rice. Our estimation procedure is as previously stated in Section
3. Table 4 shows the descriptive statistics of the variables and the results of the ADF test and PP test.
According to Table 4, all variables in the first difference column satisfy the stationarity condition. The
next procedure is applying the trace test and maximal eigenvalue test as the cointegration test. Table 5
displays the results of these tests.
Both tests reject two null hypotheses at the 1% significance level: 𝑟

0 (no cointegration) and 𝑟

1 (at most one cointegration). Hence, we assume that there are two cointegration relationships.

15

Table 5
Cointegration test results of rice prices in Osaka
Trace test

Maximal eigenvalue test

Eigenvalue

Test statistics

Critical value

Test statistics

Critical valueNone

0.1621

64.89

35.46

42.28

25.86

At most 1

0.0777

22.61

19.94

19.33

18.52

At most 2

0.0136

3.28

6.63

3.28

6.63

Notes) The “Trace test” and “Maximum eigenvalue test” denote the result of Johansen’s (1991) trace test
and Johansen’s (1988) maximal eigenvalue test, respectively. The “Critical value” is the critical value at the
1% significance level for each test.

5.2. The pricing of futures and spot markets in Osaka
We apply the lag exclusion Wald test, and the result of this test indicates that the optimal joint lag length
is three (see Table A.5). Accordingly, we estimate a VEC model with the three-lagged structure to calculate
the HD (see Table A.6).
In the calculation process of the HD, we determine the Cholesky ordering as follows: the futures pricesof domestic rice, spot prices of Korean rice, and spot prices of domestic rice. This order of spot prices isranked by the circulation volume of each rice in Osaka after the 1920s (see Figure A.5). Figure 3 shows the
HD of the futures and spot rice prices in Osaka.10
Figure 3 indicates that the futures market independently formed its prices and constantly affected thespot prices of Korean and domestic rice. This fact suggests that the futures market provided the index pricesof the spot market. However, the pricing of domestic rice in the futures market and Korean rice in the spot
market did not have a unilateral relationship. The pricing of Korean rice also affected the futures pricing.
Figure 3 illustrates that the HD value from Korean rice to the futures is more variable than that fromdomestic rice in the spot market to the futures.11 Accordingly, we delve into the interrelation of the pricing
between domestic rice in the futures market and Korean rice in the spot market. Figure 4 demonstrates two
AHDRs between these two prices and the imported rice ratios in Osaka. This figure shows the AHDRs
below 100% in the same manner as Figure 2.

10

We also calculate the IRF and the RVC of the rice market in Osaka by employing our estimated VEC
model following the same Cholesky ordering as the calculation for the HD. Figure A.12 demonstrates the
IRF and RVC.
11The IRF and RVC of the rice market in Osaka are almost identical to the HD. According to Figure A.12,
the futures prices were independently formed and influenced the spot prices of Korean and domestic rice.
Furthermore, the RVC demonstrates that the pricing of Korean rice marginally affected the futures pricing.
Although the 99% confidence band of the IRF from Korean rice prices in the spot market to the domestic
rice prices in the futures market does not deviate from zero, the ratio of Korean rice in the RVC of the futures
after the fifth period is more than 2%.
16Total stochastic

Korean (spot)

1938
1939

1937

1936

1934

1933

1932

1931

1930

1929

1928

1927

1926

1925

1924

1935
1935

1936

1937

1938
1939

1935

1936

1937

1938
1939

1934

1933

1932

1931

1930

1929

1928

1927

1926

1925

1924

1923

Total stochastic

1934

1933

1932

1931

1930

1929

1928

1927

1926

1925

1924

1923

1922

1921

1938
1939

1937

1936

1934
1935

1933

1932

1931

1930

1929

1928

1927

1926

1925

1924

1923

1922

1921

1920

1919

1938
1939

1937

1936

-.4

1935

-.4
1934

-.3

-.4
1933

-.2

-.3
1931
1932

-.2

-.3
1930

-.2

1929

-.1

1928

-.1

1927

.0

-.1

1926

.0

1925

.1

.0

1924

.1

1923

.2

.1

1922

.3

.2

1921

.3

.2

1920

.3

1919

.4

1920

Domestic (spot) ---> Domestic (spot).4

Futures

1922

1919

1938
1939

1937

1936

1934
1935

1933

1932

1931

1930

1929

1928

1927

1926

1925

Korean (spot) ---> Domestic (spot)

.4

1919

Futures ---> Domestic (spot)

1924

1923

1922

1921

1920

1919

1938
1939

1937

1936

-.4

1935

-.4
1934

-.3

-.4
1933

-.2

-.3
1931
1932

-.2

-.3
1930

-.2

1929

-.1

1928

-.1

1927

.0

-.1

1926

.0

1925

.1

.0

1924

.1

1923

.2

.1

1922

.3

.2

1921

.3

.2

1920

.3

1919

.4

1921

Domestic (spot) ---> Korean (spot).4

Total stochastic

1923

1919

1938
1939

1937

1936

1934
1935

1933

1932

1931

1930

1929

1928

1927

1926

1925

Korean (spot) ---> Korean (spot)

.4

1920

Futures ---> Korean (spot)

1924

1923

1922

1921

1920

1919

1938
1939

1937

1936

1935

-.4

1934

-.4
1933

-.3

-.4
1931
1932

-.2

-.3
1930

-.2

-.3
1929

-.2

1928

-.1

1927

-.1

1926

.0

-.1

1925

.0

1924

.1

.0

1923

.1

1922

.2

.1

1921

.3

.2

1920

.3

.2

1919

.3

1922

Domestic (spot) ---> Futures
.4

1921

Korean (spot) ---> Futures
.4

1920

Futures ---> Futures.4

Domestic (spot)

Figure 3. HDs of rice prices in Osaka

Figure 4 denotes that the AHDR from the futures to Korean rice is higher than that of the opposite
direction and frequently rises to 100%. The pricing of the futures market constantly determined the Koreanrice prices in the spot market. By contrast, Panel B of Figure 4 exhibits that the AHDR from Korean rice tothe futures varies wildly over time and surges following increases in the imported rice ratios. This trend issimilar to the AHDR to and from the KRE shown in Figure 2. As we mentioned in the previous section, theimported rice ratios sustained at a high level during three periods: March 1919–March 1921, May 1924–
May 1926, and May 1934–September 1936. The averages of the AHDR from Korean rice to the futures forthese three periods are 351%, 260%, and 435%, whereas this ratio frequently falls to less than 20%.12 This
fact indicates that the fluctuation of Korean rice prices in the spot market partially determined domestic rice
prices in the futures market during these periods. Hence, we employ a regression analysis to investigate theinterrelation between the pricing of the ODRE and Korean rice pricing in the spot market in Osaka.

12

We estimate the HD only from June 1919 because our estimated VEC model utilizing the price data fromJanuary 1919 has a three-lagged structure and two cointegration relationships. Accordingly, we calculate theaverage of the AHDR from Korean rice to the futures for the first period by using the data from June 1919
to March 1921.
17

(A) From futures to Korean (spot)(B) From Korean (spot) to futures

Figure 4. AHDRs of futures and Korean (spot) in Osaka
Notes) The “AHDR” indicates the absolute historical decomposition ratio. The ratio of imported rice inOsaka means the ratio of imported rice to the stocked volume in 1900–1924 and that ratio to the
inflow volume in 1925–1939.
Sources) Governor-General of Taiwan, Industrial Bureau, 1937; 41; Ministry of Agriculture and Forestry,

Agricultural Bureau, 1925; 28; Ministry of Railways, Transportation Bureau, 1925; Osaka-Dojima
Rice Exchange, 1920; 21a; 22a; 23a; 24a; 25a.
18

5.3. The influence of Korean rice pricing on the futures market
We apply Equation 5 to employ a regression analysis. AHDR is the AHDR from Korean rice prices inthe spot market to the futures prices in the ODRE, TV is the volume of deferred contract trade in the ODRE,
and IRR is the ratio of imported rice to the inflowing or outflowing volumes in Osaka.13 In analogy withthe regression analysis in the previous section, we utilize two types of the imported rice ratio to IRR in
Equation 5 and convert the explained and two explanatory variables to six-month MA and 12-month MA.
Finally, we estimate the coefficients (𝛽 and 𝛽 ) and constant coefficient (𝛽 ). Table 6 demonstrates theestimation result of four regression equations.
According to the result of variance analysis, all F-values of four regression equations are less than 0.01.
These equations are significant at the 1% level. The result of the regression analysis inhibits that the four
coefficients of IRR are also significant at the 1% level and are positive values. These observations indicatethat an expansion of the imported rice trade accelerated the influence of Korean rice pricing in the spot
market on the pricing of the ODRE.

6. The Heterogeneity of Japan’s Market Structure and Korean Rice
6.1. The results of econometric analysis
Section 4 suggests that the distinctiveness of the KRE’s pricing increased when the imported rice trade
expanded in the spot market in Osaka. Nevertheless, the price fluctuation in the ODRE surely determined
the prices in the KRE. These facts require an analysis of the change in the relationship of the pricing between
the futures and spot markets in Osaka along with the variation in the trade of imported rice. Accordingly,
the next section investigates how the fluctuation of the imported rice trade in the spot market affected thepricing of the ODRE.
Section 5 indicates that the price fluctuations of Korean rice in the spot market in Osaka temporarily
influenced the futures prices in the ODRE when the imported rice trade thrived there. When these episodicchanges in the price formation in Osaka arose, the role of the KRE in the pricing increased. Hence, we focus
on the heterogeneity of the rice market in Osaka and Kumamoto concerning the circulation of Korean rice
to explore the cause of temporary changes in the relationship of the futures rice pricing between the twocities.

13

We can easily acquire the monthly volume of deferred contract trade in the ODRE after November 1919
from Osaka-Dojima Rice Exchange (1921b; 22b–25b; 26–28; 29b; 30–32; 33a; 33b; 34–38; 39b; 39c).
However, there are no published data on the monthly trade volume by contract before October 1919. To
overcome this problem, we utilize Osaka-Dojima Rice Exchange (1919b) held by Kansai University in
Suita, Osaka Prefecture. This material carries the daily volume of deferred contract trade, and we calculate
the monthly volume during the period January–October 1919.
19

Table 6
OLS regression analysis of the AHDRs and the imported rice ratio in Osaka
Inflowing volume
6-monthRegression

Constant

12-month
***

6.833

6-month

***

6.917

12-month***6.694 ***

6.597

SE

1.842

1.823

1.858

1.839

T-value

3.710

3.795

3.551

3.640

Trade

Coefficient-0.431***-0.440***-0.416***-0.426 ***volume

SE

0.124

0.123

0.125

0.124

T-value-3.470-3.575-3.318-3.428

***

***

***

1.160***

analysis

Variance

Coefficient

Outflowing volume

1.213

Coefficient

rice ratio

SE

0.195

0.195

0.197

0.197

T-value

6.460

6.198

6.162

5.890

Adjusted R-square

0.198

0.195

0.187

0.184

N

233

227

233

227

2

2

2

2

Sum of squares

73.78

69.10

69.77

65.18

Mean square

36.89

34.55

34.88

32.59

F-value

0.000

0.000

0.000

0.000

Residual

DF

230

224

230

224

error

Sum of squares

285.8

272.4

289.8

276.3

Mean square

1.242

1.216

1.260

1.234

DF

232

226

232

226

Sum of squares

359.5

341.5

359.5

341.5

Regression

analysis

Total

1.263

1.212

Imported

DF

Notes) This table shows the OLS regression analysis of the monthly moving average data of the absolutehistorical decomposition ratios (AHDRs) from Korean (spot) to futures and the imported rice ratio
in Osaka. The “SE,” “N,” and “DF” indicate the standard error, number of observations, and degreeof freedom, respectively. “***” means significant at the 1% level.

6.2. Korean rice circulation in the spot market
Korean rice was rarely circulated in the local cities, such as Kumamoto. The annual average volume
of Korean rice imports in Kumamoto during the period 1923–1938 was paltry 3,199 kokus. This was equal
to only a thousandth of Osaka whose volume was 3,196,277 kokus (see Figure A.13).14 These data include
14

The annual average volume of Korean rice imports per 100 populations in Kumamoto Prefecture during
20

only Korean rice directly shipped from Korea to each city. However, a small volume of rice was transported
from Korea through the distribution centers in Japan.
The Ministry of Agriculture and Forestry inspected the Korean rice circulation within Japan during theperiod 1936–1937. According to this inspection, Kumamoto imported Korean rice from Korea and Fukuoka
City on Kyushu Island. Fukuoka and Kumamoto are located on the same island, and both cities are about
100 kilometers from each other (see Figure A.14). Fukuoka had the largest population on the island and was
one of the regional distributing centers of rice. It imported rice from Korea, and its annual average volume
of rice directly imported from Korea during the period 1923–1938 was 132,762 kokus (Governor-Generalof Taiwan, Industrial Bureau, 1937; 41; Ministry of Agriculture and Commerce, 1921–25; Ministry ofAgriculture and Commerce, Commercial Bureau, 1922; 25–26; Ministry of Commerce and Industry, 1930–
32; Ministry of Commerce and Industry, Commercial Bureau, 1927–29; 33–40). This volume represented
about 41-fold of Kumamoto’s volume and about 4% of Osaka’s volume. Fukuoka sent a part of its imported
Korean rice to some cities.
During the period 1936–1937, Fukuoka re-exported 44,821 kokus of Korean rice, which was 20% of
its imported rice from Korea. This re-exported volume was equivalent to 4% of that volume from Osaka(Hishimoto 1938). Accordingly, Fukuoka certainly acted as a distributing center of Korean rice, but the scaleof its re-exported rice was small rather to the major distributing centers. We cannot observe the transportation
volume of Korean rice from Fukuoka by the destinations due to the lack of the date on the rice re-exports.
However, Hishimoto (1938) describes that there were four types of Korean rice destinations from Fukuoka(see Figure A.14).
The first type was the major cities in Western Japan. Fukuoka is Japan’s proximate city to Korea. It is
about 200 kilometers away from Busan, which is one of the largest ports located at the south end of the
Korean Peninsula, and served as a transit point for Korean rice. Fukuoka imported Korean rice and reexported it to major cities, such as Osaka and Kobe.
The second type was the cities within Kyushu Island. Fukuoka was the economic hub of the island andsent Korean rice to adjacent cities, such as the cities of Saga, Nagasaki, Oita, and Kumamoto. These
destination cities are located within a radius of about 100 kilometers from Fukuoka. Fukuoka functioned as
the regional distributing center of Korean rice on Kyushu Island.
The third type was the Japanese colony. Micronesia comprises numerous small islands in the South
Pacific Ocean and was colonized by Germany in 1885. Germany lost Micronesia after the defeat in the FirstWorld War, and the Treaty of Versailles granted Japan the mandate over Micronesia. Micronesia is situatedfar away from Japan. Saipan Island, the center of the Micronesian economy during the era of Japanesecolonial rule, is about 2,600 kilometers from Fukuoka. Fukuoka sent Korean rice to Micronesia and played
a role as the original port for the Japanese colony.

the period 1923–1938 was also critically small. This volume was 0.23 koku while that in Osaka Prefecture
was 66.69 kokus (Cabinet Statistics Bureau 1941).
21

The transportation volume of Korean rice from Fukuoka was not too much, and several cities and areas
shared the transported rice thinly and broadly. Accordingly, we can suppose that the transportation volume
of Korean rice from Fukuoka to Kumamoto was extremely small. This supposition is confirmed by the
Korean Rice Association’s report. This association promoted the selling of Korean rice in Japan and reported
that Kumamoto had tiny demand for Korean rice because it was the production area of domestic rice
(Korean Rice Association 1934). Hence, Kumamoto imported only a tiny volume of Korean rice, and there
was a sharp difference in the circulation volume of Korean rice from Osaka. Furthermore, there was also a
difference in the quality of imported Korean rice between the two cities.

6.3. Korean rice quality in the spot market
Korea exported two types of rice: unpolished and polished rice. Unpolished rice is not pleasant to thepalate because it is covered by bran, and most consumers have a penchant for polished rice. On the other
hand, polished rice is perishable. In general, retailers polished rice after purchasing unpolished rice fromwholesalers in the major distributing centers who tended to deal with unpolished rice. As a result, the annual
average ratios of polished rice to the total Korean rice imports in Tokyo and Osaka during the period 1926–
1938 were 26% and 40%, respectively. However, these ratios in Kumamoto and Fukuoka were 67% and68%, respectively. Furthermore, the ratio in Kumamoto frequently reached more than 90% (see FigureA.13). The cities on Kyushu Island near Korea mainly imported polished Korean rice.
In 1937, Busan in Korea had more than 400 rice milling plants and exported much of the polished rice
to Kyushu Island in Japan (Hishimoto 1938). Kumamoto was a consumption city, and the consumers in thiscity could eat Korean rice immediately after purchasing it. Fukuoka acted as a regional distributing centerof Korean rice in its neighboring area of about a 100-kilometer radius, and the transportation distance andthe shipping time of re-exported rice were short compared to the distance from the major distributing centers,such as Osaka. Accordingly, Fukuoka could re-export polished rice, and Kumamoto traded polished Koreanrice that was pleasant to the palate.
There were two differences in the circulation volume and quality of Korean rice between Kumamoto
and Osaka. These gaps determined the structural difference in the rice spot market between the central andlocal cities, and the quality gap caused the difference in Korean rice usage in the futures market between the
two types of cities.

6.4. Korean rice usage in the futures market
We can observe the delivery volume of Korean rice in each exchange from the 1920s, and the TRME
and ODRE actively delivered Korean rice. The ratio of Korean rice to the total delivery volume in these two
exchanges often reached more than 90% from the 1920s. In contrast to both exchanges, the KRE did notdeliver Korean rice at all, although its ratio exceptionally deviated from 0% during the period October 1937–
October 1938 (see Figure A.15).
Kumamoto rarely imported rice from Korea, and the sellers in the KRE could not procure Korean rice22

as a deliverable good. Additionally, most Korean rice in Kumamoto was polished. It was not suitable fordelivery while the suitable good for delivery in the exchanges was unpolished rice that could be stored forquite a while (Enatsu 1930). Consequently, the major exchanges actively delivered Korean rice since thecentral cities imported much of the unpolished rice from Korea. By contrast, the delivery of Korean rice inthe KRE was floundering. That is, the central and local cities had structural differences in the spot market
and futures market.

7. Conclusion
Colonial rice had a different texture and taste from the domestic one when Japan possessed its colonies
at the turn of the 20th century. The colonial governments improved the production process of rice in theirterritories, and colonial rice became on par with the quality of domestic rice. As a result, Japan increased theimports of colonial rice after the 1910s, and colonial rice overtook domestic rice in price after the 1930s.
However, there was a geographical heterogeneity of colonial rice circulation in Japan. Specifically, colonial
rice was mainly distributed as unpolished rice only in the central cities. It can be stored for a long time andhad the requisite characteristic for a deliverable good of the futures trade. By contrast, the volume of colonial
rice distribution was small in the local cities, which was the producing area of domestic rice. Furthermore,
Kyushu Island, which is adjacent to the Japanese colonies, imported perishable polished rice, and the riceexchange on the island did not use colonial rice for delivery.
The expansion of colonial rice circulation widened the difference in the structure of the rice spot markets
between the central and local cities. In contrast to the spot market, every futures market continued to trade
only domestic rice as a standard good. Under these circumstances, although the futures trade in the central
cities provided index prices to the minor exchanges in the local cities from the 1900s, the expansion ofcolonial rice circulation caused the change in the pricing of the major and minor exchanges after the FirstWorld War. In the central cities, the pricing of colonial rice in the spot market temporarily affected the pricing
of domestic rice in the futures market when the colonial rice trade expanded. That is, the futures prices in
the central cities reflected the price fluctuation of colonial rice. They were not suitable for the index pricesof the futures market in the local cities because colonial rice held only a small portion of the physical ricetrade there. Consequently, when the trade of colonial rice expanded in the central cities, the distinctivenessof the rice pricing of the exchange in the local cities increased to complement the major exchanges’ role ina generating the index prices. The geographical heterogeneity of colonial goods circulation, along with theeconomic convergence within the empire, occasionally augmented the price formation function of themarket in the local cities.
Many historians have investigated the impact of imperialism on the colonies of the imperial country. In
contrast, this study, focusing on the cyclic structure of the colonial trade, scrutinizes the adverse direction of
the impact against the object of previous literature. Until the first half of the 20th century, the imperial country
imported primary products from its colonies and used them as food and raw materials to industrialize its
23metropole. Finally, this industrialization accelerated the economic growth and promoted the exports ofindustrial goods to the colonies. We shed light on the other aspect of this cycle, which the previous studies
tend not to focus on, and draw the process that the imperial country satisfied a requirement forindustrialization and the economic growth. The commodity market in the metropole was forced to alter its
structure to accept the colonial primary products that had a quality difference from the domestic ones. The
central market obviously altered its structure, but the local market also experienced the structural changes toperform a complementary role of the pricing. In short, the commodity market was altered across themetropole of the imperial country to accommodate the expansion of colonial goods trade, which circulated
in specific districts. Previous research does not mention these findings because its main preoccupation is theimpact of imperialism on the colonies or the major markets in large cities. Our findings suggest that thesubstantial changes of the market acted as the solid foundation to expand the colonial goods trade in themetropole. Through this process, the metropole of the imperial country formed an industrialized economy
and achieved economic growth, while the economic disparity from the colonies widened.
There are two limitations to this study. First, further research will be necessary to detect other factors toaugment the price formation function of the futures market in the local cities. Although this study regards
the expansion of colonial goods trade in the central cities as one of the factors, our results of the regression
analysis also indicate that other factors may exist because the adjusted coefficients of determination shownin Tables 3 and 6 are rather low. Second, further research will require investigating the pricing of the minor
exchanges in the local cities in the areas that grew rice vigorously and non-producing areas of rice. However,the central cities that had the major exchanges, which we scrutinized in this study, were also the nonproducing areas of rice. Hence, based on the results of this study, the minor exchanges in the non-producing
areas might not form the distinctive price because both types of exchanges had a similar structure.

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30Appendix A. Additional tables and figures
Table A.1
Data sources of rice futures prices in the ODRE, TRME, and KRE
DurationJan. 1900–Dec. 1901

ODRE (Osaka)

TRME (Tokyo)

KRE (Kumamoto)

Osaka City

Nakazawa (1932)

Kumamoto City

Government (1905)
Jan. 1902–Dec. 1902
Jan. 1903–Dec. 1903
Jan. 1904–Dec. 1907
Jan. 1908–Dec. 1908

Government (1904)

Osaka City

Tokyo City

Kumamoto City

Government (1905)

Government (1904)

Government (1904)

Osaka City

Tokyo City

Kumamoto City

Government (1909)

Government (1909)

Government (1904)

Osaka City

Tokyo City

Kumamoto City

Government (1909)

Government (1909)

Government (1909)

Ministry of Finance, Financial Bureau (1918)

Kumamoto City
Government (1909)

Jan. 1909–Dec. 1913

Ministry of Finance, Financial Bureau (1918)

Kumamoto City
Government (1914)

Jan. 1914–Dec. 1916

Ministry of Finance, Financial Bureau (1918)

Kumamoto City
Government (1918)

Jan. 1917–Dec. 1917

Ministry of Finance, Financial Bureau (1918)

Kumamoto City
Government (1919)

Jan. 1918–Mar. 1921

Ministry of Agriculture and Commerce (1920–23)

Apr. 1921–Dec. 1921

Ministry of Agriculture and Commerce, Commercial Bureau (1922)

Jan. 1922–Dec. 1923

Ministry of Agriculture and Commerce (1924–25)

Jan. 1924–Dec. 1925

Ministry of Agriculture and Commerce, Commercial Bureau (1925–26)

Jan. 1926–Dec. 1928

Ministry of Commerce and Industry, Commercial Bureau (1927–29)

Jan. 1929–Dec. 1931

Ministry of Commerce and Industry (1930–32)

Jan. 1932–Mar. 1939

Ministry of Commerce and Industry, Commercial Bureau (1933–40)

31

Table A.2
Chi-squared test statistics of the lag exclusion Wald test for the VEC of rice futures prices
𝒚𝟏

𝒚𝟐

𝒚𝟑

Joint

D (lag 1)

134.277 (0.000)

158.183 (0.000)

170.595 (0.000)

250.955 (0.000)

D (lag 2)

102.593 (0.000)

121.103 (0.000)

157.007 (0.000)

220.756 (0.000)

D (lag 3)

80.211 (0.000)

97.096 (0.000)

135.591 (0.000)

195.097 (0.000)

D (lag 4)50.033 (0.000)

54.352 (0.000)

87.382 (0.000)

124.929 (0.000)

D (lag 5)48.846 (0.000)

51.303 (0.000)

80.801 (0.000)

108.666 (0.000)

D (lag 6)25.435 (0.000)

28.413 (0.000)

49.962 (0.000)

82.322 (0.000)

D (lag 7)

15.031 (0.002)

15.903 (0.001)

31.752 (0.000)

56.221 (0.000)

D (lag 8)19.422 (0.000)

18.468 (0.000)

27.428 (0.000)

37.832 (0.000)

D (lag 9)7.731 (0.052)

8.079 (0.044)

8.724 (0.033)

15.038 (0.090)

Note) The numbers in parentheses are p-values.

32

Table A.3
VEC estimations of rice futures prices
Cointegration equation
Equation 1

Equation 2

𝒚𝟏,𝒕 𝟏1.00000.0000𝒚𝟐,𝒕 𝟏0.00001.0000𝒚𝟑,𝒕 𝟏-0.8934 [0.0226]-0.9220 [0.0247]-0.0005-0.0004

Constant

Error correction
∆𝒚𝟏,𝒕

∆𝒚 ,𝒕

∆𝒚 ,𝒕

Cointegration equation 1-3.1340 [0.9453]-0.6392 [0.9316]-0.3820 [1.0143]

Cointegration equation 2

1.9821 [0.8174]-0.6942 [0.8055]

1.9745 [0.8770]∆𝒚𝟏,𝒕 𝟏

1.9410 [0.8826]

0.6848 [0.8698]

0.6639 [0.9470]∆𝒚𝟏,𝒕 𝟐1.8600 [0.8068]

1.0564 [0.7951]

1.0343 [0.8657]∆𝒚𝟏,𝒕 𝟑

1.7763 [0.7084]

1.2464 [0.6981]

1.2644 [0.7601]∆𝒚𝟏,𝒕 𝟒1.4352 [0.6039]

1.1270 [0.5952]

1.2136 [0.6480]∆𝒚𝟏,𝒕 𝟓1.2267 [0.4945]

1.0834 [0.4873]

1.1961 [0.5305]∆𝒚𝟏,𝒕 𝟔

0.7280 [0.3811]

0.6980 [0.3756]

0.8262 [0.4089]∆𝒚𝟏,𝒕 𝟕0.1187 [0.2637]

0.0556 [0.2599]

0.1386 [0.2829]∆𝒚𝟏,𝒕 𝟖0.2005 [0.1611]

0.1640 [0.1588]

0.2661 [0.1728]∆𝒚𝟐,𝒕 𝟏-1.6157 [0.7629]-0.1287 [0.7519]-1.5645 [0.8186]∆𝒚𝟐,𝒕 𝟐-1.4051 [0.7009]-0.3874 [0.6908]-1.5168 [0.7521]∆𝒚𝟐,𝒕 𝟑

-1.2595 [0.6155]-0.5306 [0.6066]-1.4374 [0.6604]∆𝒚𝟐,𝒕 𝟒-1.0983 [0.5221]-0.6226 [0.5145]-1.3427 [0.5602]∆𝒚𝟐,𝒕 𝟓-0.9539 [0.4218]-0.6416 [0.4156]-1.2170 [0.4525]∆𝒚𝟐,𝒕 𝟔-0.5305 [0.3233]-0.3745 [0.3186]-0.9096 [0.3469]∆𝒚𝟐,𝒕 𝟕-0.1862 [0.2241]-0.0538 [0.2208]-0.4005 [0.2404]∆𝒚𝟐,𝒕 𝟖-0.2374 [0.1468]-0.1687 [0.1447]-0.3741 [0.1576]∆𝒚𝟑,𝒕 𝟏-0.7552 [0.4825]-1.0474 [0.4755]

0.2476 [0.5177]∆𝒚𝟑,𝒕 𝟐-0.8763 [0.4394]-1.1447 [0.4330]-0.1945 [0.4715]∆𝒚𝟑,𝒕 𝟑-0.9124 [0.3932]-1.1697 [0.3875]-0.4951 [0.4219]∆𝒚𝟑,𝒕 𝟒-0.6623 [0.3932]-0.8532 [0.3368]-0.4251 [0.3667]∆𝒚𝟑,𝒕 𝟓-0.6077 [0.2859]-0.7811 [0.2818]-0.5033 [0.3068]∆𝒚𝟑,𝒕 𝟔

-0.3922 [0.2267]-0.5259 [0.2235]-0.2967 [0.2433]∆𝒚𝟑,𝒕 𝟕-0.0997 [0.1655]-0.1661 [0.1631]-0.0434 [0.1776]∆𝒚𝟑,𝒕 𝟖-0.1216 [0.0982]-0.1437 [0.0968]-0.1051 [0.1053]

33

Constant𝑹

𝟐

0.0001 [0.0026]

0.0000 [0.0026]

0.0003 [0.0028]

0.36210.35180.4038Note) 𝑹𝟐 denotes adjusted R-squared, and the standard errors are in brackets.

34

Table A.4
Data sources of rice prices in Osaka
Duration

Domestic rice

Korean rice

Domestic ricein the futures market

in the spot market

in the spot market

Jan. 1919

Ministry of Agriculture andMinistry of Railways, Transportation Bureau–Dec. 1919

Commerce (1920)(1925)

Jan. 1920

Ministry of Agriculture andMinistry of Agriculture and Forestry,–Mar. 1921

Commerce (1921–23)

Agricultural Bureau (1925)

Apr. 1921

Ministry of Agriculture andMinistry of Agriculture and Forestry,–Dec. 1921

Commerce, Commercial Bureau

Agricultural Bureau (1925)(1922)
Jan. 1922

Ministry of Agriculture andMinistry of Agriculture and Forestry,–Dec. 1923

Commerce (1924–25)

Agricultural Bureau (1925)

Jan. 1924

Ministry of Agriculture andMinistry of Agriculture and Forestry,–Dec. 1924

Commerce, Commercial Bureau

Agricultural Bureau (1925)(1925)
Jan. 1925

Ministry of Agriculture andMinistry of Agriculture and Forestry,–Dec. 1925

Commerce, Commercial Bureau

Agricultural Bureau (1928)(1926)
Jan. 1926

Ministry of Commerce and Industry,

Ministry of Agriculture and Forestry,–Oct. 1926

Commercial Bureau (1927)

Agricultural Bureau (1928)

Nov. 1926

Ministry of Commerce and Industry,

Governor-General of Taiwan, Industrial–Dec. 1928

Commercial Bureau (1928–29)

Bureau (1937)

Jan. 1929

Ministry of Commerce and Industry

Governor-General of Taiwan, Industrial–Dec. 1931

(1930–32)

Bureau (1937)

Jan. 1932

Ministry of Commerce and Industry,

Governor-General of Taiwan, Industrial–Dec. 1936

Commercial Bureau (1933–37)

Bureau (1937)

Jan. 1937

Ministry of Commerce and Industry,

Governor-General of Taiwan, Industrial–Mar. 1939

Commercial Bureau (1938–40)

Bureau (1941)

35

Table A.5
Chi-squared test statistics of the lag exclusion Wald test for the VEC of rice prices in Osaka
𝒚𝟏

𝒚𝟐

𝒚𝟑

Joint

D (lag 1)

66.275 (0.000)

76.039 (0.000)

82.562 (0.000)

118.695 (0.000)

D (lag 2)33.405 (0.000)

38.124 (0.000)

34.697 (0.000)

61.564 (0.000)

D (lag 3)

10.084 (0.018)

17.570 (0.001)

11.010 (0.012)

27.327 (0.001)

D (lag 4)

7.142 (0.068)

8.884 (0.031)

10.731 (0.013)

14.628 (0.102)

Note) The numbers in parentheses are p-values.

36Table A.6
VEC estimations of rice prices in Osaka
Cointegration equation
Equation 1

Equation 2

𝒚𝟏,𝒕 𝟏1.00000.0000𝒚𝟐,𝒕 𝟏0.00001.0000𝒚𝟑,𝒕 𝟏-1.0442 [0.0948]-1.2111 [0.0341]-0.0012-0.0007

Constant

Error correction
∆𝒚𝟏,𝒕

∆𝒚 ,𝒕

∆𝒚 ,𝒕

Cointegration equation 1-0.2480 [0.1782]

1.0004 [0.1774]

0.7226 [0.1540]

Cointegration equation 20.4283 [0.3187]-1.5726 [0.3173]

0.7898 [0.2756]∆𝒚𝟏,𝒕 𝟏-0.1629 [0.1612]-0.4159 [0.1605]-0.3091 [0.1394]∆𝒚𝟏,𝒕 𝟐0.0240 [0.1314]-0.1525 [0.1308]-0.1353 [0.1136]∆𝒚𝟏,𝒕 𝟑0.0577 [0.0981]-0.0768 [0.0976]

0.0462 [0.0848]∆𝒚𝟐,𝒕 𝟏-0.4207 [0.2654]

0.4027 [0.2642]-0.4497 [0.2295]∆𝒚𝟐,𝒕 𝟐-0.3206 [0.1916]

0.2565 [0.1908]-0.1774 [0.1657]∆𝒚𝟐,𝒕 𝟑-0.1907 [0.1085]

0.0449 [0.1080]-0.1045 [0.0938]∆𝒚𝟑,𝒕 𝟏

0.0488 [0.3028]-0.7173 [0.3015]

0.2719 [0.2618]∆𝒚𝟑,𝒕 𝟐-0.0698 [0.2130]-0.5495 [0.2121]

0.0064 [0.1842]∆𝒚𝟑,𝒕 𝟑0.0318 [0.1203]-0.1995 [0.1198]-0.0399 [0.1041]

Constant-0.0001 [0.0041]

0.0012 [0.0041]

0.0001 [0.0036]

0.22980.43340.4904𝑹𝟐𝟐Note) 𝑹 denotes adjusted R-squared, and the standard errors are in brackets.

37

(A) Net export volume

North

400 kilometers(B) Export volume from Kumamoto PrefectureNorth

400 kilometers

Figure A.1. Export volume of rice by prefecture (annual average during the period 1926–1930)
Note) There are no data on the net export volumes of Tokyo, Yamanashi, Nagano, Shizuoka, Wakayama,
Nagasaki, and Okinawa Prefectures.
Source) Ministry of Agriculture and Forestry, Rice Bureau, 1932, pp. 2–5.
38

Figure A.2. Supply volume of rice in Japan (1881–1939)
Sources) Ministry of Agriculture and Commerce, Food Control Bureau, 1944, pp. 50–51; Ministry ofAgriculture and Forestry, Economy of Agriculture and Forestry Bureau, Statistical Investigation
Unit, 1955, pp. 160–161; Toyo Keizai Shimpo Sha, 1935, pp. 484–485; 592–593.

39

(A) From Tokyo City and Yokohama City

North

Tokyo City

Yokohama City

400 kilometers(B) From Osaka City and Kobe City

North

Osaka City
Kobe City

400 kilometers
Figure A.3. Volume of domestic and imported rice transferred from the central cities (1920)
Source) Ministry of Railways, Transportation Bureau, 1925, pp. 392–393.
40

(A) Korean rice(B) Taiwanese rice

Figure A.4. Volume of colonial rice imports (1923–38)
Note) Kanagawa and Hyogo Prefectures are centered on Yokohama and Kobe Cities, respectively.
Sources) Governor-General of Korea, Agriculture and Forestry Bureau, 1935, pp. 60–71; Governor-Generalof Korea, Agriculture and Forestry Bureau, 1940, pp. 64–69; Governor-General of Korea,
Industrial Bureau, 1928, pp. 40–43; Governor-General of Taiwan, Food Bureau, 1942, pp. 89–91.
41

(A) Tokyo(B) Osaka

Figure A.5 Ratio of imported rice in Tokyo and Osaka (1900–1939)
42

Notes) Panel A denotes the stocked and inflowing ratios of imported rice in the major warehouses in Tokyoand in the Tokyo-Fukagawa Rice Spot Market, respectively. The inflowing ratio until September
1902, in May 1922, and during the period June 1923–January 1924 is missing because the sourceswere destroyed by fire in the Great Kanto Earthquake of September 1, 1923. Panel B demonstrates
the stocked, inflowing, and outflowing ratios of imported rice in the major warehouses in Osaka. The
data of the inflowing and outflowing ratios are available after 1917.
Sources) Governor-General of Taiwan, Industrial Bureau, 1937; 41; Ministry of Agriculture and Forestry,
Agricultural Bureau, 1925; 28; Ministry of Railways, Transportation Bureau, 1925; Osaka
Chamber of Commerce, 1918; 20a; 20b; 22; 23a; 23b; 24–28; 39a; 39b; Osaka City Government,
1905; 09; 15; Osaka-Dojima Rice Exchange, 1912b; 13–18; 19a; 20; 21a; 22a; 23a; 24a; 25a; 28;
29b; 32; 33a; 33b; 34–38; 39b; 39c; Tokyo Chamber of Commerce, 1901–03; 16–17; Tokyo
Chamber of Commerce and Industry, 1918–19; 21–22; 24; 26–27; 28a–29a; 28b-37b; 31a–37a;
38–40; Tokyo City Government, 1904–05; 07–09; 11a; 11b; 12–30.

43

North400 kilometers

Figure A.6 Location of rice exchanges in Japan (1938)
Source) Tokyo Stock Exchange, Investigation Department, 1938–39

44

Figure A.7 Volume of futures trade in rice exchanges (January 1900–August 1939)
Sources) Kumamoto Prefectural Government, 1922; 24; 27; 31; Ministry of Agriculture and Commerce,
1902–21; Ministry of Agriculture and Forestry, Rice Bureau, 1935; Ministry of Finance, Financial
Bureau, 1913; 15; 18; Osaka City Government, 1905; 09; Osaka-Dojima Rice Exchange, 1920;
22a; 23a; 25a; 29a; Tokyo Chamber of Commerce, 1921; 24; 27; Tokyo Chamber of Commerceand Industry, 1930a, p. 59; Tokyo City Government, 1924, pp. 500–501; Tokyo Stock Exchange,
Investigation Department, 1919–29; 30a; 30b; 31–39

45

Figure A.8 Monthly average volume of futures trade in rice exchanges (January 1930–August 1939)
Sources) Tokyo Stock Exchange, Investigation Department, 1930a; 30b; 31–39

46

60

price per one koku (yen)50

TRME (Tokyo)
ODRE (Osaka)
KRE (Kumamoto)

40
30
20

0

1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

10

Figure A.9. Rice futures prices in the TRME, the ODRE, and the KRE (January 1900–March 1939)
Notes) This figure demonstrates the rice futures prices of the deferred contract month. The futures trade ofthe deferred contract month in the KRE was suspended in October 1913 due to the market disruption
by soaring prices. All futures trades in the TRME were stopped during the period September–October
1923 because of the Great Kanto Earthquake. Accordingly, we interpolated these breaches by using
the Catmull-Rom spline technique.
Sources) Kumamoto City Government, 1904; 09; 14; 18–19; Ministry of Commerce and Industry, 1930–
32; Ministry of Agriculture and Commerce, 1920–25; Ministry of Agriculture and Commerce,
Commercial Bureau, 1922; 25–26; Ministry of Commerce and Industry, Commercial Bureau,
1927–29; 31–40; Ministry of Finance, Financial Bureau, 1918; Nakazawa, 1933, pp. 382–386;
Osaka City Government 1905; 09; Tokyo City Government 1904; 09

47

(A) Impulse response functions
ODRE (Osaka) ---> ODRE (Osaka)

TRM E (Tokyo) ---> ODRE (Osaka)

KRE (Kumamoto) ---> ODRE (Osaka)

.08

.08

.08

.06

.06

.06

.04

.04

.04

.02

.02

.02

.00

.00

.00

-.02

1

2

3

4

5

6

7

8

9

10

-.02

1

ODRE (Osaka) ---> TRM E (Tokyo)

2

3

4

5

6

7

8

9

10

-.02

TRM E (Tokyo) ---> TRM E (Tokyo)
.08

.08

.06

.06

.06

.04

.04

.04

.02

.02

.02

.00

.00

.00

1

2

3

4

5

6

7

8

9

10

-.02

1

ODRE (Osaka) ---> KRE (Kumamoto)

2

3

4

5

6

7

8

9

10

-.02

.08

.06

.06

.06

.04

.04

.04

.02

.02

.02

.00

.00

.00

2

3

4

5

6

7

8

9

10

-.02

1

2

3

4

5

6

7

8

9

3

4

5

6

7

8

9

10

2

3

4

5

6

7

8

9

10

KRE (Kumamoto) ---> KRE (Kumamoto)

.08

1

1

TRM E (Tokyo) ---> KRE (Kumamoto)

.08

-.02

2

KRE (Kumamoto) ---> TRM E (Tokyo)

.08

-.02

1

10

-.02

1

2

3

4

5

6

7

8

9

10

8

9

10

(B) Relative variance composition
ODRE (Osaka)

TRM E (Tokyo)

KRE (Kumamoto)

100

100

100

80

80

80

60

60

60

40

40

40

20

20

20

0

0
1

2

3

4

5

6

7

8

9

10

0
1

2

3

ODRE (Osaka)

4

5

6

TRME (Tokyo)

7

8

9

10

1

2

3

4

5

6

KRE (Kumamoto )Figure A.10. Results of the innovation accounting approach of rice futures pricesNote) The dashed lines in Panel A represent the 99% confidence band.

48

7

(A) Nominal prices (January 1919–March 1939)
110%
Relative price ratio

100%

60

80%

50

70%

40

60%

30

1938

1937

1936

1935

1934

1933

1932

1931

1930

1929

1928

1927

1926

1925

1924

1923

1922

1921

10

1920

20
1919

Price per one koku (yen)90%

Relative price ratio of Korean rice to domestic rice in the spot market
Futures price
Korean rice price in the spot market
Domestic rice price in the spot market(B) Monthly average real prices of Korean and domestic rice in the spot market (1919–38)

Figure A.11. Rice prices in Osaka
Note) The “Futures price” in Panel A displays the prices of the deferred contract month.
Sources) Bank of Japan, Statistics Department, 1966; Governor-General of Taiwan, Industrial Bureau,
1937; 41; Ministry of Agriculture and Commerce, 1921–25; Ministry of Agriculture andCommerce, Commercial Bureau, 1922; 25–26; Ministry of Commerce and Industry, 1930–32;
Ministry of Commerce and Industry, Commercial Bureau, 1927–29; 33–40
49

(A) Impulse response functions
Futures ---> Futures

Korean (spot) ---> Futures

Domestic (spot) ---> Futures

.08

.08

.08

.06

.06

.06

.04

.04

.04

.02

.02

.02

.00

.00

.00

-.02

-.02

-.02

-.04

1

2

3

4

5

6

7

8

9

10

-.04

1

2

Futures ---> Korean (spot)

3

4

5

6

7

8

9

10

-.04

Korean (spot) ---> Korean (spot)
.08

.08

.06

.06

.06

.04

.04

.04

.02

.02

.02

.00

.00

.00

-.02

-.02

-.02

1

2

3

4

5

6

7

8

9

10

-.04

1

Futures ---> Domestic (spot)

2

3

4

5

6

7

8

9

10

-.04

.08

.06

.06

.06

.04

.04

.04

.02

.02

.02

.00

.00

.00

-.02

-.02

-.02

2

3

4

5

6

7

8

9

10

-.04

1

2

3

4

5

6

7

8

3

4

5

6

7

8

9

10

9

2

3

4

5

6

7

8

9

10

Domestic (spot) ---> Domestic (spot)

.08

1

1

Korean (spot) ---> Domestic (spot)

.08

-.04

2

Domestic (spot) ---> Korean (spot)

.08

-.04

1

10

-.04

1

2

3

4

5

6

7

8

9

10

8

9

10

(B) Relative variance composition
Futures

Korean (spot)

Domestic (spot)

100

100

100

80

80

80

60

60

60

40

40

40

20

20

20

0

0
1

2

3

4

5

6

7

8

9

10

0
1

2

3

Futures

45

6Korean (spot)

7

8

9

10

1

2

3

4

5

6

Domestic (spot)

Figure A.12. Results of the innovation accounting approach of rice prices in Osaka
Note) The dashed lines in Panel A represent the 99% confidence band.

50

7Figure A.13. Volume of Korean rice imports and the polished rice ratio by prefecture (1923–38)
Note) The polished rice ratios are interpolated between 1923 and 1926 because the data on the volume ofpolished and unpolished rice during the period 1924–1925 are missing.
Sources) Governor-General of Korea, Agriculture and Forestry Bureau, 1935, pp. 60–71; Governor-Generalof Korea, Agriculture and Forestry Bureau, 1940, pp. 64–69; Governor-General of Korea,
Industrial Bureau, 1928, pp. 40–43

51

North400 kilometers

Figure A.14. Destination cities of Korean rice from Fukuoka (1936–37)
Source) Hishimoto, 1938, p. 576

52

Figure A.15. Six-month average ratio of Korean rice to the delivery volume (January 1921–July 1939)
Note) The breakdowns of delivery volume by origins in the TRME until December 1925 and the KRE until
December 1927 are unknown.
Sources) Ministry of Agriculture and Forestry, Agricultural Bureau, 1929; Ministry of Commerce andIndustry, Commercial Bureau, 1929–40; Osaka-Dojima Rice Exchange, 1921b; 22b–25b; 26–28

53