Another important part of the Meiji reforms was the modernising of the economy. Funds were raised by levying an agricultural tax. Japan’s first railway line, between Tokyo and the port of Yokohama, was built in 1870-72. Textile machinery was imported from Europe, and foreign technicians were employed to train workers, as well as to teach in universities and schools, and Japanese students were sent abroad. In 1872, modern banking institutions were launched. Companies like Mitsubishi and Sumitomo were helped through subsidies and tax benefits to become major shipbuilders so that Japanese trade was from now carried in Japanese ships. Zaibatsu (large business organisations controlled by individual families) dominated the economy till after the Second World War. The population, 35 million in 1872, increased to 55 million in 1920.
To reduce population pressure the government actively encouraged migration, first to the northern island of Hokkaido, which had been a largely autonomous area where the indigenous people called the Ainu lived, and then to Hawaii and Brazil, as well as to the growing colonial empire of Japan. Within Japan there was a shift to towns as industry developed. By 1925, 21 per cent of the population lived in cities; by 1935, this figure had gone up to 32 per cent (22.5 million).