Chalmers Johnson - MITI and the Japanese miracle

Page 116

Four

Economic General Staff

During the period that Yoshino and his colleagues were discovering rationalization and inching their way toward industrial policy, a different group of Japanese officials was taking up parallel questions. They were military officers and civilian bureaucrats working in military or cabinet-level agencies. Their concerns centered on Japan's preparedness for war, particularly since Japan had not experienced the total mobilization during 191418 that had so deeply influenced the general staffs of the Europeans. They were also concerned about the severe economic constraints that had appeared during Japan's last major war (with Russia during 19045), the economic mobilization and growing industrial strength of the country's potential enemies (particularly Soviet Russia), and the emergence of problems in their planning for national security as it concerned primary resources (particularly petroleum, but including other materials necessary for modern armaments).

These men were coming to believe that Japan needed an industrial policy in order to ensure its military survival, not just to overcome the depression. At an absolute minimum they wanted an "economic general staff" (

keizai

sanbo

*

honbu

) that would provide guidance for the economy from the point of view of Japan's military needs and industrial and resource deficiencies. During the 1930's this stream of inspiration for industrial policy flowed into and merged with the civilian MCI stream, and both were transformed in the process.

The Japanese military's first thoughts about mobilizing the whole private economy for war came during World War I. On April 17, 1918, based on its understanding of Germany's mobilization effort and on the actions of the United States after entering the war, the govern-

Page 117

ment of Prime Minister (General) Terauchi enacted the Munitions Industries Mobilization Law (Gunju Kogyo * Doin* Ho*). It was Japan's first basic law relating to industrial control during wartime. It defined military supplies broadly and authorized the government after a declaration of war to supervise, use, or expropriate the industries producing them. Most of its provisions were never enforced during World War I, but it was still on the books in 1937, and it was implemented during the early stages of the "China Incident" (the Diet asked for a distinction between a "state of war" and a "state of incident") before the National General Mobilization Law of 1938 replaced it.

1

The 1918 law was virtually an afterthought of Japan's participation in World War I. But in order to prepare for the possible need to implement the law, the government on May 31, 1918, set up a Munitions Bureau (Gunju Kyoku) as a semidetached unit of the cabinet to prepare economic mobilization plans and to gather statistics on munitions industries. Its first chief, Hara Shoichiro* of the navy, worked hard at these tasks, but he found it almost impossible to get cooperation from the established ministries. On May 15, 1920, the government sought to lower the visibility of the bureau by merging it with the cabinet's Statistical Bureau to create a new agency called the Census Board (Kokusei-in). This idea did not work any better than the first onethe military officers and statisticians squabbled over turfand on November 30, 1922, with the military somewhat in disgrace because of the Siberian expedition and with the government trying to cut costs, the Census Board was abolished. The government transferred all the mobilization plans and accumulated statistics to MAC and from it to MCI, where they greatly enhanced the resources of the Secretariat's Statistical Section. Murase Naokai, the vice-minister of MCI from 1936 to 1939 and a very important figure in our later discussions in this chapter, was working in the cabinet at the time the Census Board was abolished. He says that he recognized that these mobilization materials would be useful to his ministry in administering industrial policy, and he implies that he had a hand in having them transferred there.

2

During the mid-1920'sthe period of "Taisho* democracy"the military was forced to drop its efforts to plan for economic mobilization, but by 1927 interest had revived. Many military officers had had a chance to study and absorb the lessons of World War I, and they were concerned about the growing economic might of Russia after the consolidation of the Bolshevik revolution. During 1927 General (then Major) Ishiwara Kanji, the chief economic architect of Manchukuo, wrote, "If national mobilization was taken to mean that the Japa-

Page 118

nese home islands should attempt to mobilize vast quantities of men and munitions on the scale expended from 1914 to 1918 by France, for example, then the effort would certainly bankrupt Japan, no matter what the outcome."

3

The financial panic of April 1927 and the coming to power of a Seiyukai* government headed by a military officer, General Tanaka Giichi, afforded an opportunity to try again to set up an economic planning unit with a military outlook.

On May 26, 1927, the government established a Resources Bureau (Shigen Kyoku) as a semidetached organ of the cabinet. Because a heavy military presence in the old Munitions Bureau had led to conflicts with other ministries, this time the government toned down the military element, recruited bureaucrats from other ministries, and set up a joint public-private deliberation council to discuss resource questions. The staff of the Resources Bureau was smallonly five peoplebut MCI sent to it one of its important young officials, Uemura Kogoro*, class of 1918, who was destined to become in May 1968 the president of Keidanren, the most influential post in the country for making policy for the business sector. Uemura spent the rest of his bureaucratic career working in the "economic general staff," where he rose to the position of vice-president of the Cabinet Planning Board in 1940. His position in the Resources Bureau was one of the earliest links between MCI and the military planners before the two were formally merged in 1943 in the Ministry of Munitions.

4

The Resources Bureau of 1927 undertook the first measures of genuine economic planning in Japan. It pioneered the "materials mobilization plans" (to be discussed later in this chapter) that dominated the economic landscape after the outbreak of war with China. Its main achievement in the late 1920's, however, was to sponsor the Resources Investigation Law (Shigen Chosa* Ho*, law number 53 of April 12, 1929), which required private enterprises to report to the government on their productive and financial capabilities. Since the Resources Bureau had no operating functions (lest it conflict with the territories of the established ministries), MCI was authorized to enforce the law by inspecting factories and mines to determine their resource potential. This was a significant development during peacetime. Interestingly enough, article 2 of this law refers to the need for "plans for the controlled operation" (

tosei

*

un'yo

*

keikaku

) of enterprises, and this use of tosei* in a military economic statute is thought to be the origin of the term in the title of the Important Industries Control Law of 1931, even though Yoshino has denied that his law had a military purpose.

5

If the financial panic of 1927 brought MCI to life as an organization,

Page 119

it was the invasion of Manchuria in September 1931 and the assassination of Prime Minister Inukai on May 15, 1932, that brought industrial policy to life as an element of military mobilization. The events of the succeeding few years in both Japan and Manchuria made even more insistent the need for an economic general staff, a coordinating organ that could unite military requirements with civilian capabilities and adjust both. After the militarist assault on Inukai the throne turned to a nonparty government of national unity under Admiral Saito * Makoto (18581936, assassinated in the military coup of February 26, 1936). Takahashi Korekiyo continued as minister of finance, and Nakajima Kumakichi (18731960) of the Furukawa zaibatsu (Furukawa Electric, Yokohama Rubber, Fuji Electric, and others), Yoshino's closest civilian associate in the TIRB, became minister of commerce and industry. Since this was a nonparty cabinet and Nakajima and Yoshino were good friends, the old practice of the vice-minister offering his resignation to a new minister was abandoned.