Chalmers Johnson - MITI and the Japanese miracle

Two Minseito politicians served their party as MCI minister between 1929 and 1931one a weak politician, Tawara Magoichi in the Hamaguchi cabinet (July 1929 to April 1931), and one a strong politician, Sakurauchi Yukio in the second Wakatsuki cabinet (April to December 1931). (On November 14, 1930, Prime Minister Hamaguchi Osachi was seriously wounded by a right-wing assassin. He remained in office and continued to serve as president of the Minseito until April, when he and his cabinet resigned. He died August 26, 1931, of his wounds. Wakatsuki Reijiro*, prime minister at the time of the financial panic in 1927, returned to power as president of the Minseito after Hamaguchi's resignation.) Dominating both MCI ministers was the powerful Minseito leader and minister of finance in both cabinets, Inoue Junnosuke. During 1930 Inoue became irritated by the growing influence of MCI in general, and of Yoshino Shinji in particular, because the activities of both impinged upon his own ministry's traditional bailiwick. He did not resist MCI directly. He served as a member of the Commerce and Industry Deliberation Council, and he supported industrial rationalization as the reverse side of his own policy of deflation through restoration of the international gold standard. But he wanted some changes made.

On July 2, 1930, a month after the creation of the TIRB, the vice-

Page 107

minister of MCI, Mitsui Yonematsu, resigned to take up positions as president of the Godo * Fishing Company and of the Karafuto (Sakhalin) Mining Company. He had worked for many years in fishing and mining administration during the MAC and early MCI eras, but he had not intended to resign in 1930. Inoue and Tawara eased him out when he inquired about a shift to director of the Patent Bureau, since he was not fully in tune with Yoshino's TIRB and its policies. As Mitsui's replacement Inoue directed Minister Tawara to appoint Tajima Katsutaro*, class of 1906, and Tawara did sothough with a considerable loss of face to himself personally.

Tajima was an unusual appointment. He had had no experience in any of the ministry's home office bureaus, having spent the later part of his career as head of the Fisheries Bureau during the MAC era, then as a transferee to the Tokyo metropolitan government, and most recently as chief of the Fukuoka Mine Inspectors Bureau. The last was the key to his appointment. Fukuoka was an important post since it exercised supervision over Japan's main coal fields, which supplied fuel to the Yawata steel works. The bureau chief there had to work closely with the powerful zaibatsu coal mine operators. Tajima had apparently developed something of a constituency in Fukuoka and was known to be ambitious to enter politics as a member of the Minseito* party. After his retirement as vice-minister in December 1931, he did join the Minseito and was elected to the Diet as a member from Fukuoka for some three terms. Tajima's appointment in 1930 appeared to the bureaucracy and to the political world as an attempt by the Minseito to take over the MCI. It was partly to overcome the rumors that Vice-Minister Tajima lacked the appropriate political independence for an Imperial bureaucrat that the succeeding Seiyukai* government ousted him and appointed Yoshino in his place. It was rumored that Takahashi Korekiyo himself had a hand in recommending Yoshino, even though Yoshino was only 43 years old and so had to be passed over nine of his seniors and three of his classmates.

During 1930, when Tajima was still vice-minister, Yoshino requested permission to go abroad to investigate the industrial rationalization movement in other countries. He was turned down on the grounds that Finance Minister Inoue thought it inopportune for the actual chief of the TIRB to be out of the country and therefore refused to pay for the trip. Yoshino countered with a proposal that his protégé, Kishi, go in his placeand this was readily approved for other bureaucratic reasons. On October 15, 1929, as part of the Minseito's* deflationary program, the Hamaguchi cabinet had ordered a 10 percent pay cut for all civil and military officials. The idea was very popular

Page 108

with the public, but it led to organized protests by the bureaucrats. Within MCI Kishi, then an assistant section chief in the Documents Section, led the opposition.

Kishi obtained about 50 signed letters of resignation from a few higher officials and from several noncareer officials. He threatened to present these to the minister if the pay cuts were not rescinded. Kishi's motives do not appear to have been primarily monetary; he was also concerned about the welfare of the noncareer employees and about the government's austerity measures as they applied to the military. During 1930 Yoshino and the minister worked out a compromise to paper over the dispute, and Yoshino used his first opportunity to get Kishi out of the country in order to let tempers cool. Kishi spent seven months (MayNovember 1930) in Berlin reporting on the industrial rationalization movement, and his reports directly influenced the path it took in Japan. One of Kishi's reports, that of July 13, 1930, was addressed to Kido Koichi * as one of the two department chiefs in the TIRB; it is of such interest in relation to the history of industrial policy that it was reprinted in

Chuo

*

koron

* in September 1979, almost fifty years after it was written.

42

Kishi said that German industrial rationalization, like the movement elsewhere, was devoted to technological innovation in industries, to the installation of the most up-to-date machines and equipment, and to generally increasing efficiency. What distinguished the German movement was its emphasis on government-sponsored trusts and cartels as the main means of implementing reforms. The Japanese translated this to mean that rationalization implied a lessening of economic competition, an approach that seemed plausible to them given the cutthroat competition and dumping of exports that existed in the medium and small enterprises sector.

In Japan rationalization came increasingly to emphasize that competition among enterprises should be replaced by "cooperation" (

kyocho

*), and that the purpose of business activities should be the attempt to lower costs, not make profits. Yoshino himself has written,

Modern industries attained their present development primarily through free competition. However, various evils [of the capitalist order] are gradually becoming apparent. Holding to absolute freedom will not rescue the industrial world from its present disturbances. Industry needs a plan of comprehensive development and a measure of control. Concerning the idea of control, there are many complex explanations of it in terms of logical principles, but all one really needs to understand it is common sense.

43

This view of economic competition has been characteristic of Japan's

Page 109

trade and industry bureaucrats from 1930 to at least the 1960's, and perhaps beyond. Sahashi Shigeru often made stronger statements when he was vice-minister about the evils of "excessive competition." One scholar of industrial policy concludes that around 1931 the term industrial rationalization in Japan became synonymous with the spirit of control as a substitute for the spirit of competition, which many people believed had caused the disasters of the 1920's and 1930's.

44

At the time of the TIRB's founding, the main question for policy-makers thus became Control by whom?

The first modern Japanese answer to this question was the Important Industries Control Law (Juyo* Sangyo* Tosei* Ho*, law no. 40, introduced in the Diet on February 25, 1931, passed April 1, 1931, and in effect from August 16, 1931). It was the most important product of the TIRB and the single most important piece of industrial legislation until the National General Mobilization Law of 1938 and the Important Industries Association Ordinance of 1941, which was based on the mobilization law. According to the 1931 law, control was to be exercised within an industry by the enterprises themselvesthat is, the law legalized so-called self-control (