Chalmers Johnson - MITI and the Japanese miracle

and more realistic "five-year plan for Japanese and Manchurian industry." The army's staff completed this plan in the summer of 1936 and presented it to the Japanese cabinet on May 29, 1937.

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There has been a good deal of controversy about Kishi's role in this plan. After the war the Prosecution Section of the International Military Tribunal for the Far East summoned Shiina some eight times to its offices at Ichigaya to ask him about Kishi's part in formulating the plan. His reply was that the plan was already completed when Kishi arrived and that Kishi had been invited to Hsinking primarily to supervise its implementation. Shiina was certainly the man to ask, since he had been conducting industrial surveys in Manchuria since 1933, and, according to Kishi,

he

was the central figure in drafting the 1936 plan. On another occasion, however, Kishi indicated that he had had a major input into the plan while serving in an advisory capacity in Tokyo.

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Whatever the case, when Kishi arrived, he insisted that Chief of Staff Itagaki Seishiro* of the Kwantung Army give him a free hand to implement the plan. Itagaki agreed, and army participation in Manchurian industrial affairs declined significantly.

The plan was extremely ambitious. It set targets of 5 million tons of pig iron, 3.5 million tons of steel ingots, 2 million tons of finished steel products, 38 million tons of coal, 2.6 million kilowatts of electric power, 400,000 tons of wood pulp, and so forth.

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In order to carry out this plan, Kishi invited the leader of the Nissan zaibatsu, Ayukawa Gisuke, to come to Manchuria to manage it. Ayukawa was acceptable to the army because he represented a "new zaibatsu"one of the concerns that had thrived as a result of the military expansion of the 1930's and that was made up of firms concentrated in comparatively high-technology industriesand because Ayukawa had many personal ties to Kishi and Yoshino (Yoshino, in fact, eventually joined Ayukawa's Manchurian firm after he was dropped as minister of commerce and industry in 1938). Also, Ayukawa's Nissan automobile firm was one of the two companies specially favored in the Automobile Manufacturing Industry Law of 1936 (discussed below). It was as a result of these plans and considerations that during the autumn of 1937 the Japan Industrial Corporation (Nissan) changed its name and incorporated in Manchukuo as the Manchurian Heavy Industries Corporation (Manshu* Jukogyo* K.K., abbreviated Mangyo*) with Ayukawa Gisuke as president.

Ayukawa planned to raise some $250 million from United States sources. He believed that this, plus his own capital, would be enough to get started. As it turned out, the war with China erupted just as he arrived on the scene, and international financing never became avail-

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able because of worldwide condemnation of Japan's conduct of the war. Nonetheless, Ayukawa worked at it for five years, setting up numerous satellite firms ("one company for one industry" was his and Kishi's model of industrial organization) and giving his staff of Japanese bureaucrats invaluable experience in industrial planning and operation.

Kishi subsequently wrote that in Manchuria he "imbibed the ideas of industrial guidance," and Shiina contends that the experience of economic planning in Manchuria was as important for the later "materials mobilization plans" and their postwar equivalents as the work of the Cabinet Resources Bureau. The biggest Manchurian undertakings were the dams for hydroelectric power generation on the Sungari and Yalu rivers and the extensive land reclamation projects. Mangyo * built electrical transmission lines larger than any that had been constructed in Japan up to that time, and the Japanese aluminum industry, which requires large quantities of electric power, was first established in Manchuria.

The nucleus of the Manchurian power structure was known in Hsinking by the acronym "the two

kis

and three

sukes"

(

ni-ki sansuke

), a phrase that referred on the political side to Hoshino Nao

ki

(chief of the General Affairs Agency), and Tojo* Hide

ki

(chief of the Kwantung Army's military police and after 1937 chief of staff of the Kwantung Army); and on the economic side to Kishi Nobu

suke

(deputy chief of the Industrial Department and subsequently deputy chief of the General Affairs Agency), Ayukawa Gi

suke

(president of Mangyo), and Matsuoka

Yosuke

* (president of the SMRR). They all missed the political turmoil in Japan during the first years of the China Incident, but in 1939 and 1940 four of them returned to top positions in the Japanese government. Two of them, Tojo and Kishi, went on to become prime ministers.

In Japan during this period the movement toward industrial control took the form primarily of industry-specific development laws. The second such law (after the Petroleum Industry Law of 1934) was the Automobile Manufacturing Industry Law (passed May 29, 1936, and in effect July 11). It required that manufacturers of cars and trucks in Japan be licensed (

kyoka

) by the governmenthence the term

kyoka kaisha

(a licensed company) for the few firms left in this sector. The government supplied half the capital of the licensees, and taxes and import duties were eliminated for five years. Only two companies were licensed, Toyota and Nissan, and by 1939 the law had put foreign car manufacturers in Japan (Ford and General Motors) out of business, as it was intended to do. One of Kishi's last acts during

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1936, while still serving as chief of the Industrial Affairs Bureau and before departing for Manchuria, was to draft this law. Kakuma notes laconically that although the law itself was rescinded during the occupation, its terms remained in effect until the late 1960's.

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The petroleum and automobile laws were the first of a series of laws designed to provide special governmental financing, taxes, and protective measures for individual industries, and the first that were defended in terms of national defense needs. Their importance cannot be overstated. They were resurrected during the 1950's and 1960's for different industries and for nonmilitary (but nonetheless national defense) objectives. They are a part of the prewar heritage most directly relevant to postwar industrial policy. Other laws passed during the late 1930's were the Artificial Petroleum Law (August 10, 1937), the Steel Industry Law (August 12, 1937), the Machine Tool Industry Law (March 30, 1938), the Aircraft Manufacturing Law (March 30, 1938), the Shipbuilding Industry Law (April 5, 1939), the Light Metals Manufacturing Industry Law (May 1, 1939), and the Important Machines Manufacturing Law (May 3, 1941).

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These laws did much to promote the particular industries concerned, but politically they represented compromises between the state-control and the self-control persuasions. The business sector was still strong enough to withstand state and public pressure and to insist on private ownership and a large measure of private management, which is closer to the postwar pattern than some of the other measures enacted by the state-control group during the 1930's.

One area in which the military first caused a major problem and then supported a solution well ahead of its time was in the control of foreign trade. The military's competitors here were not private businessmen but other bureaucrats. After the assassination of the minister of finance in February 1936, the officials of the Finance Ministry more or less gave up trying to resist military demands for budget increases. One scholar notes that from the Konoe cabinet of 1937 to the outbreak of the Pacific War, no Finance Ministry personnel participated in key decisions.