Chalmers Johnson - MITI and the Japanese miracle

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man to study abroad and to widen his horizons. Yoshino stayed in San Francisco for a year and a half, auditing courses in labor economics at Berkeley (he specifically recalls Professor Ira Cross), traveling around the country, and receiving an overseas salary of ¥245 per month compared with the ¥45 he would have been paid in Tokyo.

The efforts and the politics of people like Yamamoto were not particularly appreciated among the dominant agriculturalists within the ministry. Their orientation was physiocratic (

nohonshugi

*), and they felt a philosophical sympathy for the rural way of life, so they were not pleased by the rise of industrialism or by the growing influence of the zaibatsu. Soejima Sempachi, a commercial-track official who was nonetheless serving as chief of the Agricultural Policy Section at the time of the 1918 "rice riots," later charged that the whole Agricultural Affairs Bureau was sympathetic to the interests of landlords.

12

This was probably true, but it must be understood that agricultural bureaucrats also represented one wing of then current liberal opinion. To them the most serious social problem of the nation was rural poverty and tenancy, a problem to which they believed the government was insufficiently attentive, particularly in comparison to the privileges it extended to the zaibatsu.

This social consciousness of the agricultural bureaucrats is sometimes called "Ishiguroism," after the great elder statesman of agricultural administration, Ishiguro Tadaatsu (18841960). From 1919 to 1925 Ishiguro was chief of the Agricultural Policy Section, Agricultural Affairs Bureau, in MAC. He became vice-minister of agriculture in 1934 and minister of agriculture in the second Konoe (194041) and Suzuki (1945) cabinets. He was famous for recruiting social activists to his ministry (for example, the post-World War II socialist politician Wada Hiroo), and for donating a part of his salary during the 1930's to aid tenant farmers. During the period of World War I he and his followers imbued the ministry with a sense of mission to protect the small tenant farmer, and the Ministry of Agriculture and Forestry that resulted from the break-up of MAC was regarded as the most "progressive" in the interwar government.

13

The dominance of the agricultural career path in MAC is also revealed by its personnel deployments. The ministry grew from 2,422 total employees in 1890 to 7,918 in 1920 and 8,362 at the time of the split, but of this final figure 5,879 went to the Ministry of Agriculture in 1925, and only 2,483 to MCI.

14

World War I affected Japan's economy and economic bureaucracy in many significant ways. The war boom itself was extraordinary. In 1914 Japan's total exports and imports combined amounted to about ¥1.2

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billion, but by 1919 this figure had grown to about ¥4.5 billion, excluding income from marine transportation and insurance premiums. During the period 191518 exports exceeded imports by about ¥1.3 billion, and the Bank of Japan used the profits from these years to pay off all of Japan's foreign debts, to purchase foreign bonds, and to increase the country's gold reserves. At the end of 1918 specie holdings reached ¥1.6 billion, about four times the figure for 1913. Some of Japan's established businessmen became rich overnight; Mitsui Trading Company, for example, reported paid-in capital of ¥20 million in February 1918, and of ¥100 million a year later.

15

Many new firms were established, known at the time as

senso

*

narikin

(wartime nouveaux riches). The most famous of these was the new zaibatsu complex of Kaneko Naokichi, whose firms included Suzuki Trading, Kobe Steel, Harima Shipbuilding, Imperial Rayon (Teijin), Japan Flour Milling, Great Japan Celluloid, and Honen* Refining.

16

The Japanese chemical industry started up during the war almost from scratch after exports from Germany, particularly textile dyes, were cut off.

The effect of the war boom on agriculture was equally profound but much less satisfactory. A significant rise in all price levels accompanied the growth of industry (see Table 7), but most important was the rise in demand for rice by the rapidly urbanizing industrial labor force. The government's policy at the outset of the boom was to allow prices to go up, hoping to increase production in that way. This was also what the politically influential landlords wanted. The landlords were organized into the Imperial Agricultural Association (Teikoku Nokai*), founded in 1910 as the successor to the Great Japan Agricultural Association (Dai Nihon Nokai) of 1881, which began as a quasi-official organization for landlords and was oriented toward rural improvements.

17

During the war, however, the Teikoku Nokai became more of a pressure group than an agrarian improvement society. Its interests were in rising prices for domestic rice and high tariffs on imports, which profited both landlords and their tenants.

The new industrialists, on the other hand, wanted prices to fall, both to relieve the pressure on them for wage hikes and to maintain industrial peace. Their organization was the Japan Industrial Club (Nihon Kogyo* Kurabu), which held a preliminary meeting in December 1915 and was formally established on March 10, 1917. Its first officers reflected the club's zaibatsu sponsorship: the chairman of the board was Dan Takuma of Mitsui; the chairman of the council was Toyokawa Ryohei* of Mitsubishi; and the managing directors were Nakajima Kumakichi of Furukawa and Go* Seinosuke, formerly of MAC and then chairman of the Tokyo Stock Exchange.

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TABLE

7

Price Fluctuations, July 1914March 1920

(July 1914 = 100)

Month

Index

July 1914

100

March 1919

267

June 1919

295

December 1919

381

March 1920

425

SOURCE

: Fujiwara Akira et al., eds.,

Kindai Nihonshi no kiso chishiki

(Basic knowledge of modern Japanese history), Tokyo, 1972, p. 278.

Both the agricultural and industrial groups attempted to influence the government directly and to shape policies in the Diet through their support of political parties. The landlordsled by their president, Matsudaira Koso *, a descendant of the daimyo of Fukui prefecture, and their vice-president, Kuwata Kumazo*, a member of the House of Peersput their faith in the Seiyukai* party and in the upper house, where landlords with large holdings were entitled to seats because of the high taxes they paid. The industrialists were less vocal on the subject of rice prices, but they exercised their influence through their members who were appointed to the various cabinets as minister of agriculture and commerce. The most important of these men was Yamamoto Tatsuo of Mitsubishi, who served as minister in both the Yamamoto Gonnohyoe* cabinet of 191314 and the Hara cabinet of 191821.

The issue of rice prices for city dwellers versus rice prices for farmers came to a head in 1918 when the combination of a bad harvest and the need to supply increased provisions to the armed forces for the Siberian Expedition led to a panic of rice speculation and profiteering. On September 1, 1917, the Terauchi government issued its famous Profiteering Control Ordinance (Bori* Torishimari Rei), which made crimes of both attempting to corner a market (