Chalmers Johnson - MITI and the Japanese miracle

Kishi and Shiina next concluded that they needed a new control apparatus within MCI to administer the Enterprise Readjustment Ordinance and to supervise the work of the Industrial Facilities Corporation. On June 17, 1942, they created the new Enterprises Bureau, placed it immediately after the General Affairs Bureau in the ministry's internal chain of command, and designated it as the policy center for all industrial reorganization and production-increase activities. The Enterprises Bureau absorbed the existing Promotion Department and the Financial Section of the General Affairs Bureau. It was made responsible for the supply of capital, the internal organization, the management practices, and the efficiency of all Japanese enterprises. Its duties included supervising the Industrial Facilities Corporation, dealing with all questions concerning medium and smaller enterprises, and inspecting and controlling company financial and accounting affairs. The bureau was divided into four sectionsFacilities (Setsubi-ka), Commercial Policy (Shosei-ka*), Industrial Policy (Kosei-ka*), and Finance (Shikin-ka)and it was given authority over all other bureaus in the ministry in order to insure that its programs were executed. The first director was Toyoda Masataka, Shiina's successor as vice-minister after the war and a member of the Diet from 1953 to 1968.

During the second half of 1942 and into 1943 the Enterprises Bureau used its various policy instrumentsthe two ordinances, the

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corporation, and virtually unlimited financial powersto convert one industrial sector after another to war production. Toyoda later recalled that he traveled around the country to explain the new policies and was surprised to find he was none too popular.

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The industry hardest hit was textiles. Following Enterprises Bureau directives, the Textiles and Machinery bureaus forced the reduction of installed spindles from 12,165,000 in 1937 to only 2,150,000 in February 1946, a decline of 82 percent.

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Some of this reduction was caused by war damage, but by far the largest proportion came from the conversion of textile mills to airplane and airplane parts production. In 1937 Japan had some 271 textile mills, but only 44 still existed in February 1946. Prior to the war there had been 23 cotton-spinning companies in operation, but forced amalgamations had reduced this number to 10 by the end of the war.

The full force of the movement hit in 1943. On June 1 the cabinet adopted its "Basic Policy for Enterprise Readjustment to Enlarge Fighting Strength" (Senryoku Zokyo* Kigyo* Seibi Kihon Yoko*).

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This directive divided all enterprises into three categories: the so-called peace industries (textiles, metals, chemicals), munitions industries (aircraft, steel, coal, light metals, and shipbuilding), and daily necessity industries. It ordered that the first category be converted into the second category, and that the third category be abolished. The policy also sought to strengthen the munitions industries by designating all war-related medium and smaller enterprises as belonging to two groupings: "cooperating factories," most of which became subsidiaries (

kogaisha

, literally, "child companies"), that is, permanent subcontractors of large enterprises; and "group-use factories.'' The effect was greatly to increase the industrial concentration in zaibatsu hands (the aspect of the program that is most often noticed), but it also produced a significant shift of the industrial structure toward heavy and chemical industries.

The Japanese public paid a heavy price for this shift in industrial structure. Jerome B. Cohen argues that "the Japanese consumer was hit harder by war than civilians in any other major belligerent country for which data is available."

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Tanaka Shin'ichi, who was in charge of drafting the materials mobilization plans in the CPB, acknowledges that during 1943 consumer goods virtually disappeared from the economy; and Maeda Yasuyuki notes ruefully that Japan's "peace industries" were destroyed by their own government before a single American bomb had fallen.

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Still, the effort was not enough. Japan had taken eighteen months after the outbreak of war to try to forge the economic institutions necessary to wage the war. By the time the

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war production apparatus was in place, the tide of war was beginning to run strongly against Japan. It was against this background that, in late 1943, Kishi and Tojo * took their final step to achieve full state control of the economy. They converted MCI into the Ministry of Munitions.

Writing as an Allied analyst of the Japanese economy during World War II, T. A. Bisson perceived the existence of "a chronic behind-the-scenes political crisis throughout 1943," and he was quite right to do so.

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The crisis had at least three aspects. First, Tojo and Kishi were seeking to centralize authority over war production, but the business community was resisting this movement, and MCI was being pulled in both directions. Second, the Cabinet Planning Board and MCI were engaged in almost daily shouting matches over priorities and deliveries, in part because the CPB was writing plans for the empire as a whole, including the occupied areas (which were under military control), but MCI had jurisdiction only over Japan proper. And third, interservice rivalries were tending to nullify all efforts at expanded production, particularly production of fighter aircraft, which had become the highest priority for the battles to be fought in Japanese home waters.

In March 1943, in response to the Tojo cabinet's assertion of greater control powers and to the enterprise readjustment movement, the business community and its supporters in the Diet had demanded and won a much larger voice at the top of the government concerning war production policies. This led on March 17, 1943, to the creation of a Cabinet Advisers Council, the businessmen on which wanted above all to supervise the comparatively young MCI minister, Kishi. These businessmen were not unpatriotic or opposed to the war effort, but they remained suspicious of the dictatorial tendencies of Tojo and Kishi and of their known antizaibatsu sentiments. From Kishi's point of view the creation of the council was a personal insult; it recalled forcefully to him the clashes of the 1930's between the reform bureaucrats and such MCI ministers as Ikeda Seihin, Fujihara Ginjiro* (who became a member of the 1943 council and ultimately Kishi's successor), and Kobayashi Ichizo*. The council of 1943 also signified that neither the state-control nor the self-control group had ever seen its views totally prevail as a result of those earlier battles.

Members of the council included Admiral Toyoda, president of the Iron and Steel Control Association; Okochi* Masatoshi, one of Yoshino's civilian colleagues in the old Rationality Bureau and president of the Industrial Machinery Control Association; Fujihara, head of the Industrial Facilities Corporation and personally affiliated with Mitsui;

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Yuki * Toyotaro*, president of the Bank of Japan and affiliated with the Yasuda zaibatsu; Goko* Kiyoshi, former president of Mitsubishi Heavy Industries; Yamashita Kamesaburo*, former president of the Yamashita Steamship Company; and Suzuki Chuji*, president of the Showa* Denko* Company and president of the Light Metals Industry Control Association.

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Although these men were attached to the cabinet primarily to look after zaibatsu interests, they were quickly educated by Kishi about the problems of the control associations. One sample of Kishi's position is available from a Tokyo radio broadcast of June 23, 1943: