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Government committees were established to explore the possibilities for new and existing industries to consolidate wartime gains for the long-term benefit of the nation. 40 As the war ended, Japan seemed to feel increasingly vulnerable. 42 28 Britain and the Japanese Economy during the First World War Awareness of Japan’s own concerns is likely to have confirmed a feeling in Britain that the Japanese economy was still relatively weak. Opinion in Britain was divided on how far Japan could sustain its wartime gains in the long run, and how far the 1914 situation of ‘business as normal’ could be resumed once hostilities had ceased, but there were many who took the more optimistic view that Britain would largely regain her lost markets and that the favourable balance of trade with Japan would be soon resumed.

Demand for woollen cloth for use by the Russian army soared, but Japan found it difficult to import the raw wool from which the cloth could be made. 21 Zinc was another potentially expanding industry that faced problems with imported raw material supplies. In the case of some of these infant industries, such as dyestuffs, the input problem could be addressed by import substitution, namely by Japan developing her own industries to produce these inputs. Alternatively, she could try and switch her main sources of supply.

The prices of many others soared. The Asahi Shinbun reported in September 1914 that: All imported goods are increasing rapidly in price, while exported goods are rapidly declining. The decline in hemp and straw braids amounts to 40 per cent, while manufacturers and merchants are selling shell buttons at a drop of 20 to 30 per cent. The goods shipped to Europe after the middle of June are still on their way, and it is uncertain whether those shipped to Germany will reach the consignees or be accepted.