Monopolization is a system that a government places under its complete control the production, distribution, and sales of specific goods and monopolizes the profits gained from them in order to increase the national income. It is also for the guarantee of the quality and for security.
One of the systems for collecting tax from consumption goods is consumption tax, but monopolization is a system that develops this further and monopolizes profits by completely controlling the processes of production, distribution, and sales and excluding competition. While it is possible to gain a huge income by setting monopoly prices higher for daily necessities of low cost, there can also be some risk in the process of monopoly.
In order to introduce monopolization, it is necessary that the production and distribution of consumption goods is focused. For instance, it is important that the goods in question can only be produced in specific regions so that the production areas and productors are limited (it is desirable that the production areas are limited rather than scattered all over the nation in terms of control of production and distribution). Also, it is important that the demand for the consumption goods in question is always ubiquitously high, and it is more desirable that they are is "daily necessities." Salt, alcohol, and tobacco, which are likely to be the object of monopoly, often meet these requirements, while there is hardly any monopoly of grains, which are mass-produced in cultivated land all over the nation, though there are still some such cases.
Also, it is important whether the object of monopoly is within or without the region. There can be a monopolization for the people within the region instead of tax and a monopolization for exclusive sales on the market outside the region. Both of them take different attitudes towards production, and the former can control the production but the latter can mildly encourage production at the same time.
The Monopolization of Japan
The Edo Period
The Edo bakufu (Japanese feudal government headed by a shogun) and domains practiced monopolization in order to intervene with the purchase and sales of specific goods within the territory and to gain profits. It differs from the monopolization in the modern times in that the bakufu and domains did not directly manage it but made merchants and wealthy peasants do it by contracts and robbed the profits of them.
In the middle of the Edo period, the bakufu practiced the monopolization of rice, foil (gold foil, silver foil, etc.), lime, Korean ginseng, copper, and others.
In order to solve their financial problems, the domains protected and encouraged the production of goods, set up domestic meeting places (meeting places for productions) run by them, made merchants monopolize the purchase and sales by contracts, and gained the profits to fill the income of the domains.
It was praciced from the early Edo period. It included salt of the Sendai Domain and the Kaga Domain, Shikon (lithospermum root used for purple color) of the Morioka Domain, Wax of the Aizu Domain and the Yonezawa Domain (wax made from fruits of japanese lacquer).
After the middle of the Edo period, it was adopted as part of the reformation of domain duties. The price of rice became alarmingly low on such central markets as Osaka and Edo, and the increase in the income due to the increase of agricultural land made by the development of new fields and the increase of land tax also reached the limit. Therefore, the development and improvement of the income resource other than annual rice tax became urgently wanted. The most common monopolization was that of paper. It was practiced in the Choshu Domain, the Iwakuni Domain, the Tokuyama Domain, the Tsuwano Domain, the Matsue Domain, the Hiroshima Domain, the Uwajima Domain, the Tosa Domain, the Mito Domain, and other domains. There were also monopolizations of Japanese lacquer and wax of the domains in the Tohoku region, Japanese wax trees (dye, timber, and sumac wax) of the southwest domains, cotton of the Himeji Domain, indigo plants of the Tokushima Domain, and sugar of the Satsuma Domain. In addition, the objects of monopolization also included such metals as iron, copper, brass, coal, clothing materials such as deseeded cotton (cotton wool with its seeds removed), cotton, and raw silk, Seien (blue mat, mate made from cyperus), goods of taste such as tea and tobacco.
However, in many cases, it led to compulsory allocation of crops production to the people of the domain and compulsory purchase by low price, so many uprisings against monopolization happened in various places.
After the Meiji Period
After the Meiji period, the government practiced monopolization of tobacco, salt, camphor, alcohol, and opium. After the World War II, Japan Monopoly Corporation was founded to deal with tobacco, salt, and camphor.
Taxation on tobacco started in January, 1876, when the Tobacco Ad Duty Stamp Tax Law went into effect, by which tax was imposed on tobacco in the form of affixing stamp. In order to increase the income after the Sino-Japanese War, the rule for tobacco tax was reformed, the Leaf Tobacco Monopoly Law went into effect in January, 1898, and the monopoly of leaf tobacco was started. After that, in 1904, the targets of monopolization were widened from storage and manufacture and sales to import and transport of leaf tobacco and products, in order to collect funding for the Russo-Japanese War. After the monopolization of tobacco was started, the Ministry of Finance (Monopoly Bureau) managed it directly, but from June, 1949, on, the Japan Monopoly Corporation took over the business.
After that, in August, 1984, 'Monopoly-Reform-Related Law' passed, and while 'the Tobacco Industries Act' was newly regulated, 'the Tobacco Monopoly Law' and 'the Manufactured Tobacco Price Fixing Law' were abolished.
And in April, 1985, when the Japan Monopoly Corporation was abolished and Japan Tobacco was created, finally the monopolization of tobacco was abolished.
It was started in 1905. It was abolished in 1997 (the Salt Monopoly Law was abolished, and the Salt Business Act went into effect).
In order to collect funding for the Russo-Japanese War, tax on salt was considered. Those who argued against the tax argued for the monopolization of salt, which became legislated. The steep price rise of salt caused by the enactment of the Salt Monopoly Law evoked public opinions, inviting many criticisms, and after 1906, the possibility of abolition of the law was debated at each meeting of the Diet, but the government never accepted it but worked hard to improve the law and virtually abolished private profitalism in 1918, and, by adopting public profitalism, tried to adjust the balance of demand and supply and to protect the salt industry, and then the criticisms subsided. In 1949, the monopoly of salt was moved from the Monopoly Bureau of the Ministry of Finance to Japan Monopoly Corporation. In 1997, the monopolization was abolished (at the same time, the work of Japan Tobacco Inc. was transferred to the Salt Industry Center of Japan). In 2002, the sales was completely liberalized.
It was started in 1937. It was abolished in 2001 (The Alcohol Monopoly Law was abolished and the Alcohol Busines Act went into effect).
It was started in 1954. It is still in effect (the Opium Act).
Camphor, Camphor Oil
It was started in 1902, and abolished in 1962. The monopolization of camphor inland went into effect in October, 1903, and before this, in Taiwan, the Taiwan Camphor and Camphor Oil Monopoly Regulations was regulated in June, 1899, and went into effect in August. The inland camphor industry which had been sluggish until then became very active thanks to the steep rise of price of camphor due to the Taiwanese camphor monopolization, and came to compete on the market with the Taiwanese monopolized camphor, so it became necessary to regulate the Monopoly Law both for inland and for Taiwan. Therefore, in June 1903, the Monopoly Law was announced, and went into effect in October. Due to the development of celluloid factories inland, the demand for camphor oil, which is the basic material for celluloid, increased.
The Monopolization in China
In China, Emperor Wu of the Former Han (Han) monopolized iron and salt in order to rebuilt the financial status of the Empire, which had been strained due to the war against Xiongnu. Confucian scholars protested agasint this policy, saying that the nation was pursuing profits and depriving the property of the common people, so the next Emperor Zhao (Han) held a debate to discuss the pros and cons of this policy (it is said that this debate was summarized into "Discourses on Salt and Iron").
In Shu, which is well-known from "the Chronicle of the Three Kingdoms," Liang ZHUGE is known to have strengthened the finance of the kingdom by monopolization of salt.
Also, since Yu GUAN, General of Shu, was from Hai County, Hedong (China), which has 'Hai Lake,' the biggest saltwater lake in China, a legend was transmitted that he was a trafficker of salt, and later this led to the idea that Yu GUAN was 'a god of trade.'
In the middle of the Tang Dynasty, when the financial status of the Empire was strained because of An Shi Rebellion, monopolization of salt was done folloiwng the suggestion of Qi DIWU. Later this became a policy of the central government and once it even occupied a half of the income. However, the price of salt, which had been 10 sen per 1 to (about 18 liter) before the monopolization, was raised to 110 sen after the monopolization, and since it was raised everytime the government income was strained, people became more and more poverished, which led to the War of Chao HUANG. The leader of the war, Chao HUANG, was originally a trafficker of salt.
In the Northern Song Dynasty, tea, now a daily necessity, was added to the list of monopoly goods, and it became as important as salt for the income. However, when the income of the government was strained, it easily led to price rise and lowered quality, which caused troubles for common people. Under such circumstances, traffickers of salt and other goods appeared in many places. The government tried to regulate it by death penalty, but they could not exterminate the trafficking because the monopoly products were so expensive and so bad that high-quality trafficked products became less expensive, inviting bigger profits.
China has a long coastline, but its land is spread far inland and it has a huge population, so many people lacked the opportunity to gain salt directly. The same thing could be said of tea, whose production areas were limited. The policy of monopolization that made use of it was maintained in different forms even after the Xinhai Revolution.
After the esablishment of the People's Republic of China in 1949, the objects of monopolizations included alcoholic liquor, processed tobacco products, affiliated tobacco leaves, filter tows, tobacco paper, and tobacco manufacturing machines. The national monopolization of alcohol was abolished in 1980, but after that there happened incidents that people were killed and injured because of fake alcohol, so the restoration of the policy is being considered by some people.
Also, in modern Chinese, the word "monopoly" means sales and shops specialized in specific goods as well as monopolization, so one must be careful to use the word.