Ch 24 - Japanese Expansion into Korea

Open for Business

Following the formal opening of the treaty ports of Pusan, Wonsan and Inchon, the Japanese constructed new settlements and began expanding their economic influence in Korea. Unable to compete, Korea's economy suffered. The vacillating government refused to face a new world reality and resisted change except under the threat of force.

The Japanese quickly took advantage of their new economic position in Korea. Japanese currency was permitted to enter Korea, and Korean currency was allowed to be taken to Japan. As Pusan, Wonsan and Inchon opened one by one for trade, Japanese merchants flocked to the port cities, bringing not only foreign-made goods such as woolen cloth, shirtings and Indian cotton cloth, but Japanese goods as well, including several kinds of silk and daily necessities. Each article on display had a price tag, an innovation that came as quite a surprise to local buyers.

Japan did everything it could to encourage trade in Korea. Any Japanese citizen could engage in trade with only a passport. Furthermore, the Japanese government gave special consideration to the Korean trade, exempting imports and exports from the same taxes imposed on Japan's trade with other nations. Japan treated imports and exports no differently than the transport of goods between different localities within Japan. To help move the increased volume of commercial goods and people to and from the peninsula, the Japanese government offered a young Tosa samurai named Iwasaki Yataro, the founder of the Mitsubishi Industries conglomerate, an annual subsidy of ¥5,000 to open a steamship line to Pusan. Iwasaki started his company with thirteen ships which the government let him have on favorable terms. Soon, scheduled monthly sailings began between Nagasaki and Pusan.

The rapid expansion of the Japanese population in Korea, due largely to the influx of merchants' families, became a matter of grave concern to local officials. Protests to Tokyo were fruitless however, and the Korean government resorted to stationing inspectors just outside the boundary of the treaty settlement in Pusan to observe all the traffic. The new Japanese settlement, which initially covered the area of the old Japan House, became almost entirely a business colony. A post office opened in November 1876. The following spring a small hospital opened its doors. Staffed by a navy doctor and Japanese medical personnel, the hospital treated both Japanese and Korean patients. The Japanese built a court house early in 1878 and began to manage the concerns of the settlement through a self-governing council comprised of a number of business representatives under the supervision of Trade Superintendent Kondo Masuki.

Japan enjoyed a near monopoly of trade for the first few years, supported in large measure by the Meiji government's encouragement and subsidies of Japanese traders who traveled to Pusan. To further develop the Korean trade, the Daiichi Kokuritsu Ginko Bank (First National Bank) opened a branch office in Pusan on March 8, 1877, with approval of the Japanese Finance Ministry. The bank principally aided the Japanese traders and was instrumental in circulating Japanese money in the port. In contrast, Korean traders could not count on their own government for support and the Japanese had a hard time finding suitable trading partners.

Because the Kanghwa Treaty prohibited the Japanese from traveling to Korea's interior, they had to rely entirely on local peddlers to bring goods to Pusan. However, local peddlers could not supply enough merchandise to satisfy the Japanese. To get around this problem, Japanese merchants took advantage of Pusan's proximity to the mouth of the Naktong River. This major river served both as a convenient transportation waterway and the gateway to the rich interior of Kyongsang Province. Numerous innkeepers along the river actively pursued their traditional roles as commission agents, brokers, money lenders, and storehouse keepers. They proved to be suitable partners for Japanese traders.

On Korea's northeast coast, the Japanese steamer Akitsushima Maru arrived in the Bay of Yonghung on May 20, 1880, heavily laden with all the lumber, tools and food necessary to start a new life. Shortly after the ship dropped anchor at the newly opened port of Wonsan, a small party of Japanese merchants from Kobe, Osaka and Pusan stepped onto Korean soil under the guidance of Consul General Maeda Kenkichi. The Japanese quickly began to establish their settlement on an eighty-five acre site of marshy ground some two miles northwest of Wonsan. The Japanese completed construction of more than one hundred houses built in a Japanese adaptation of European architecture by mid-September. Japanese settlers laid out the streets and the Korean government constructed the wharf and harbor jetties. To prevent incidents with the local population, the Wonsan magistrate prohibited unauthorized persons from entering the Japanese settlement.

The Meiji government heavily subsidized the Wonsan settlement, just as it had done in Pusan. The new Japanese community grew rapidly. By the summer of 1880, the population had risen to between 200 and 250 people, including the soldiers and policemen stationed in the settlement for the protection of their countrymen. Among the principal merchants who moved into Wonsan were representatives of Mitsubishi, Sumitomo, Ikeda, and Daiichi Ginko. To Consul General Maeda's satisfaction, there was little local opposition to the Japanese presence. Historically a busy market, Wonsan's marketplace was filled with booths that displayed a variety of goods from near and far, items such as hemp cloth, pipes, tobacco bags, brushes, ink, needles and food. One could even find some fancy articles from China. Local merchants all along the wide market road displayed cereals, fish, vegetables, pottery, metalwares, and cattle and encouraged the Japanese to buy their wares.

Wonsan developed generally along the lines established at Pusan, although the southern port city's much larger Japanese foothold overshadowed its importance. Nevertheless, the opening of Wonsan marked a significant event in Japan's diplomatic advance in Korea. The consolidation of Japanese settlements at Pusan and Wonsan firmly set Korea's future course toward the presence of foreigners on the peninsula and the expansion of foreign trade. Korea resisted both developments however, and took a decidedly negative view of Japanese activities in the treaty ports. Burdened by its own financial difficulties, the Seoul government continued to see trade with Japan as a threat to its people's livelihood and made several unsuccessful attempts to halt the export of rice.

The many foreign traders who took up residence in Korea's newly opened treaty ports prompted a rapid increase in business from foreign trade. Korea's wholesale commodity brokers, an aggressive and enterprising lot, tried to profit from this increased trade by collaborating with foreign traders in new commercial enterprises. The wholesale merchants for example, organized trading companies and merchant groups in the trade ports that gradually developed the form and function of modern mercantile associations. Such organizations were established at Wonsan in 1883, at Inchon in 1885, and later at Pusan. These enterprises quickly exposed the activities of Japanese merchants who violated the conditions governing trade in treaty ports. They commonly filed complaints against the Japanese and sought other ways to combat the economic penetration by foreign traders. Simultaneous with resisting the intrusions of foreign trade, they gradually adapted themselves to new Western business practices.

By removing trade restrictions in connection with opening the treaty ports, foreign traders moved into and began operating in Korea's interior. This dealt a serious blow to the wholesale merchants and threatened the monopolistic position of the pack and back peddlers. To protect the peddler's interests, the Korean government established an agency in 1883 called the Office for the Benefit of Trade. Not even government protection however, could free the Peddlers Guild from a psychology of dependence on its traditional privileges, a problem that prevented the guild from ever developing into a modern merchant's organization.

A defining characteristic of modern industry in Korea in the first years following the opening of the treaty ports was that the government owned and operated factories rather than private entrepreneurs. The government took the lead in the area of industrial development in 1883 by establishing a variety of manufacturing enterprises, including an arsenal to produce modern weapons, a government mint and a publishing organ. A textile factory was founded in 1885, and a paper manufacturing plant and a bureau to develop mines employing new methods of ore extraction were created two years later.

Since natural goods dominated the export market, expanding trade with Japan did nothing to stimulate the native production of manufactured goods. Korea's problem was that it did not have a single manufactured product that could have been easily developed for export. As Japanese goods gradually overwhelmed the little domestic industry that existed, government officials watched helplessly as Korean merchants suffered serious losses. This process slowly drained Korea of its wealth and impoverished many in the country before it ended. The opening of treaty ports imposed a great historical ordeal on the people of Korea;  how to achieve modernization while simultaneously preserving their own national independence.

The rapid changes underway in Korea inevitably aroused strong opposition from the country's xenophobic literati, who deluged the government with memorials. The first manifestation of organized opposition appeared in March 1881, when the literati of Yongnam in Kyongsang Province collectively submitted a memorial to King Kojong popularly called the "Memorial of Ten Thousand Men of Yongnam." Its principal author, Yi Man-son, a Confucianist from Kyongsang, vehemently attacked Huang Tsun-hsien's widely read treatise, "A Strategy for Korea." He charged that Huang was actually an "apologist for Japan and a faithful agent for Christianity," interested solely in the propagation of this "evil" religion. He also rebuffed Huang's recommendation of an association with Japan and an alliance with the United States against Russia. Yi Man-son claimed that all of these powers were one and the same kind of barbarian. He resolutely urged the king to "burn Huang's treatise" and punish Kim Hong-jip for bringing the insulting document home. When neither appeasement nor intimidation succeeded in silencing the signers of the memorial, the government exiled two of its leaders.

The action of the Yongnam literati touched off similar waves of protest throughout Korea. During the following spring and summer, prominent scholars, mostly Confucian disciples and followers of Yi Hang-no and Choe Ik-hyon, denounced the government and its moves to establish relations with Western countries. Condemning Kojong's "betrayal" of the exclusionist principle followed by the Taewongun, one memorialist, Hong Chae-hak, decried the bad foreign influences that had spread all over the country, even to the highest levels of government. Japan and the West were really one and the same, he wrote, yet the government not only received the Japanese, it even rewarded them. The teachings of the great Confucian masters Confucius and Mencius were steadily declining, and the right relations between the people were falling into disorder. Hong demanded the ministers responsible for the changes be put to death. Instead, Hong was himself arrested along with his mentor and instigator, Kim Pyong-muk. After a dramatic trial, Hong was dragged outside the city walls of Seoul on September 13 and beheaded. Kim was exiled.

Naturally, the Confucianist's stiffly worded memorials disturbed the government and placed it in a very delicate spot. With its credibility as the protector of Confucian values at stake, neither soothing words nor behind the scenes maneuvering could put a halt to the protests. The changes underway in Korea so enraged the country's self-proclaimed guardians of tradition and opponents of modernization they sought any way possible to reverse its course. The Kyonggi Confucianist Sin Sop energetically singled out former State Councillor Yi Yu-won and attacked him for his correspondence with Chinese Viceroy Li Hongzhang. King Kojong was reportedly particularly angered by the fact that Yi leaked the text of his secret correspondence with Li Hongzhang to the public. Sin Sop also went after Kim Hong-jip for bringing Huang Tsun-hsien's text into Korea. The aged and frightened Yi Yu-won submitted a counter-memorial to the throne offering excuses for his action. Angered by Yi's cowardly behavior and blaming him for starting the uproar, Kojong mercilessly sent the old man into exile along with his critic, Sin Sop.

In the continued absence of effective royal leadership during the 1870s, the State Council took the lead in exercising decision-making authority in the government. Nominally presided over by the Taewongun's older brother Yi Choe-ung, a man of mediocre endowment, the State Council gradually came under the increasing influence of Queen Min and her relatives. Yi's position as the king's uncle proved useful to the queen and her relatives in their power struggle against the Taewongun, a battle that grew in intensity and bitterness. Korea saw a reemergence of the "rule of the consort clans." When the Taewongun ruled, he virtually ignored Yi Choe-ung. Exploiting Yi Choe-ung's resentment against his younger brother, the Min clan gave him all the trappings of high position and power, but little substance. They used him largely as a figurehead. Meanwhile, the Mins themselves had no firm views or clear goals in either domestic or foreign policy other than to perpetuate their own power. Thus, with neither conviction nor direction, the Korean government vacillated and drifted in its relations with Japan, refusing to come to grips with a changing world reality and accepting change grudgingly and only under the threat of force.