Reckoning

by David Halberstam

  Before the war Ayukawa had been a wunderkind of the new Japan, a brilliant entrepreneur and dealmaker who had an unerring talent for making the right connections. He was born to a good family of the samurai class. His mother was a niece of a man named Kaoru Inoue, a powerful politician and adviser to the Mitsui family. The young Ayukawa always had access to power, and to money. He had graduated from Tokyo University with a degree in engineering, worked in the Mitsui machine-tool shop, and in 1905, as a young man of twenty-five, had gone to America. There, for two years, he had worked in American companies in New York and Pennsylvania, studying new techniques in iron casting. He had returned and formed his first company, Tobata Casting, which prospered during World War I. Between the wars he embarked upon a truly remarkable program of growth, using different members of his family to push into related industries such as mining and electrical supplies, constantly expanding. Unlike the older zaibatsu, which were family-held companies and in which the lines between the banking and industry were almost impossible to draw, Nissan was listed on the stock exchange, and Ayukawa sought public funds to finance its growth. Because he was so well grounded technically, he understood the changing nature of the industrial economy as the older men, heading rival zaibatsu, did not, and his touch was almost perfect. Part Henry Ford, part Alfred P. Sloan, he was connected, talented, and alert to the possibilities of the moment. He was a better dealmaker than those who knew more about technology, and he knew more about technology than those who were better dealers. As his reputation grew, so did his legend, and so did the value of the stock, making his expansions easier and easier.

  He had long wanted to go into the area of auto and truck manufacture, and in the early thirties he put together what became Nissan Motors. He was encouraged by the fact that the older zaibatsu were too nervous and would not invest in the automotive business, so it was an area in which he could dominate. Almost all his advisers warned him against entering the world of auto; Ford and GM, which shipped knocked-down units to Japan, were too powerful, they argued. No Japanese firm could make it. That, as far as he was concerned, was all the more reason to try. He spent only $4 million to launch Nissan Motors, using money gathered from the sale of stock from his other companies. He intended to start small: five thousand cars a year at first and perhaps, if he was lucky, fifteen thousand in five years. But the war soon ended the production of civilian cars.

  As Japan readied for war, Ayukawa became more closely involved than ever with the Japanese military. He was a major manufacturer of the trucks used by the imperial army to invade Manchuria, and he soon became a principal partner of its new colonial government, Manchukuo, transferring his holding company there (for tax reasons, it was said). He had become a symbol of what many considered the new Japan. When that new Japan crashed in August 1945, he was sent to prison for twenty-one months. Finally released, he was purged, which meant that he could hold neither corporate nor public office, a ban that lasted until 1951. Until his death he was frustrated because he was not allowed to return to his old company. He was not alone. Others, who would have been his natural successors, were also tainted. Shoji Yamamoto, an able, aggressive man, ran the company from 1945 until 1947, when he too was purged, and Genshichi Asahara, the company’s most talented scientist, who was a favorite of Ayukawa’s, was purged for a time as well. Those who thought they should be running Nissan seemed to be finished, and those who were put in charge of running it felt ill prepared for their new roles and very much on the moral defensive about the company’s major role in the Manchurian affair. As the prewar alliance with the militarists and the war itself had strengthened the company, now it weakened it.

  The president after Yamamoto was removed in 1947 was Taichi Minoura. New to the company, uncomfortable with technology, uncomfortable grappling with a mutinous labor union, uncomfortable with finance, he was overwhelmed by his problems. During one set of difficult labor negotiations he collapsed—as much out of fear of the union leaders, it was said, as out of exhaustion. In the summer of 1947, four months after his arrival, he asked the Industrial Bank of Japan to send him a financial man.

  It was at this point that the banker came on stage. The banker was a forty-two-year-old man named Katsuji Kawamata, and he knew nothing about cars, not even, it was said, how to drive one. He knew even less about production and manufacturing. But he knew about money; he was a man of the bank.

  The IBJ—the Industrial Bank of Japan—was a powerful force in the reindustrialization of Japan. A very conservative institution, it was in charge of deciding (with, of course, the guidance of the Ministry of International Trade, MITI) how to divvy up Japan’s limited capital among the nation’s struggling companies. It was not unusual for the banks, because they held such immense power, to dispatch one of their people to help run a company. It was seen as a way of keeping a stern hand on the company’s business practices (which the bank inevitably regarded as poor) and at the same time of farming out some of the bank’s excess executives, the ones who were probably not going to make it there. Even so, the men from the IBJ were considered very good. If there was a shortage of good managers in most Japanese companies, there were more at the IBJ than elsewhere. Banking was a respected profession in Japan, there being little in the way of a stock market to drain off the financial talent. Yet in contrast to industry, banking had not been hit very hard by the purges. The Americans had decided that the act of banking was a passive one, while being a manager of a company engaged in wartime industrial production was an active one. Few institutions in the postwar years were as consequential as the IBJ; it held the power of life and death over major companies. A certain arrogance inevitably went with that power, for the IBJ and other banks. Twenty-five years later, when Japan’s economy was successful beyond everyone’s dreams and the balance had changed because the companies did not need the banks as badly—Toyota was so cash-rich that it was known as the Bank of Toyota—there were industrialists who had not forgotten and did not forgive. They deliberately used the banks as little as possible. It was not so much that the banks had set hard terms. It was more the manner in which they had treated their clients in those years when they had held total control.

  Kawamata, the banker from the IBJ, was an immensely ambitious man, but few of his contemporaries at the IBJ had perceived the full measure of that ambition. On the surface he had not seemed that driven. By the standards of Tokyo’s bankers, some of whom were exceedingly sophisticated and polished, men who either were from the upper class or were imitating it, he was a bit primitive—almost, it sometimes seemed, deliberately so. He had appeared a little too rough, too blunt, for a successful career at the bank, and in 1947 he had been shunted off to Nissan, so urgently in need of financial help. The news of his transfer had not pleased Kawamata either. He was somewhat angered by the rebuff implicit in his being moved around. Indeed there were old colleagues of Kawamata’s who thought that he had been somewhat lazy at the IBJ, and that it was only when the bank scorned him and placed him outside that he became ambitious, as if to prove that the IBJ had been wrong.

  Immediately after the war, fresh out of the army, Kawamata had returned to the bank as assistant manager in the loans department in Tokyo. He was resentful and irascible, his attention rarely focused. Like many Japanese at that time, he was overwhelmed by a psychic exhaustion. The defeat of the nation was absorbed as a personal defeat as well. The Japan he had been a part of had failed completely; lost in that collapse were all his own hopes. He was not sure how much point there was to postwar life. (“Not just the cities but the hearts of the people have been burned out,” Edwin Reischauer wrote of that period.) At the office he tried all day to edge nearer a small electric stove, with an old army overcoat over his head as a kind of cape to keep him warm. Some superiors urged him to work harder, but he did as little as he could. All he wanted to do was to stay warm, and read newspapers and magazines, and keep his mind as far from the bank as possible. His superiors, less than pleased by his performance, trans
ferred him to Hiroshima as the manager there.

  The order to Hiroshima appalled him. Hiroshima was a regional office, and a relatively unimportant one at that, hardly the sort of post that would go to a rising star. He wanted no part of that tragic, devastated city, and for a time he thought of tearing up his assignment order. Years later he could remember every detail of his arrival in Hiroshima. It was at five o’clock in the morning. The only people there to greet him were the city’s numerous black marketeers, gathered around little fires that they had lit to keep warm. Kawamata was wearing his army overcoat and long boots and carrying his army mess tin. Had ever, he wondered, a banker made a less imposing arrival in a less imposing city? He walked from the station along burned-out streets until he reached the street where the bank was. The gods had not been any gentler with the bank building than they had with anything else in the center of Hiroshima. It was a cavern of burned bricks; it looked as if it had been crushed by some enormous hand. He looked around and found a few sticks of wood and started a fire to cook his rice. There were still a few rooms left, all of them in shambles. He wanted to sit in the manager’s office, but the janitor would not let him in; that, was where the main fire was kept to heat the soup served to the employees each day. The place, he soon decided, was more a soup kitchen than a bank.

  There was no place to live. For a time he stayed in a bare dormitory and commuted to work. He badly wanted his family with him, but there was no housing. Finally, after six months, he rented half of a farmer’s house and brought his family down. He was, he realized, luckier than almost anyone else in Hiroshima. It was a painful time in a ravaged place. The city was filled with ghosts, its memories unfailingly sad. The sense of defeat was pervasive. In 1947, when he received the news from the home office to go to Nissan, the one thing about it that he liked was that he could now return to Tokyo. Other than that he was not really very happy about the move. That night he told his wife what happened. Nissan, after all, was not a very important firm. “What kind of company is Nissan?” she asked.

  His first day at Nissan, Kawamata was stunned by the chaos of the operation. That morning he expected to attend a board meeting. Where are the other executives? he asked. Oh, he was told, they are all holding wage negotiations with the union. Later that day he was told that the workers were excited by his arrival. The fact that a powerful new man had come from the IBJ was good news. To them it meant the company would be able to borrow money more readily and they would therefore be able to get even bigger raises. That was not exactly the way Kawamata saw it. His instructions were quite different—to take a company that was out of control and bring some order to it and, above all, to end the labor troubles.

  There were strikes almost all the time. The union was stronger than the management, and management feared it. It was all the company could do to make a small number of trucks; it was constantly in the red, and yet its workers were always demanding raises. Kawamata had had almost no experience with unions. Once when he had been with the IBJ in Hiroshima his employees, who had formed what they thought of as a union, had handed him a seven-point petition complaining about his personal behavior, including the fact that he on occasion put his feet on his desk and smoked. This was deemed arrogant, and he was asked to stop. He pondered this request for a time and decided that it was the sign of employees who had no earthly idea what a union was supposed to do. Clearly, someone had told the workers that he, Kawamata, worked for the ruling class, and they, the workers, were supposed to rein in his power. Kawamata with his feet brazenly placed on the desk was a symbol of the excesses of the ruling class. He had taken his feet off the desk, and his union problems had disappeared. His experiences at Hiroshima had in no way prepared him for the force and the fury of the Nissan union. He expected to run a poor company in difficult times and compete with other companies for funds. The last thing he had expected was to play the villain to his own workers. He was also alarmed by how weak the existing management was and how readily it yielded to the workers’ demands. As far as he was concerned, that was going to end, and end soon. But it did not. Years of constant confrontation awaited him.

  During most of that period the most important man in management was Genshichi Asahara, a protégé of Ayukawa, the founder of the company. Asahara, who had returned from being purged to serve as president, was a mild, almost sweet man. He was a chemist by profession and had neither the taste nor the talent for dealing with the crisis now in front of him. He much preferred trying to invent—eventually with some success—artificial sake. When labor crises exploded, Asahara’s first reaction was to hide, which he often did. Failing that, he acquiesced. He was both overwhelmed and charmed by Tetsuo Masuda, the formidable union leader. Asahara’s own son, Hideo, then still in college, often argued with his father about what was happening. The son was appalled to find that Asahara was writing plaintive letters to the union that said things like “We must work together. I am not your enemy. I am not a capitalist. These things don’t exist in Japan:”

  That, said the son to his father, would not go over well with the Nikkeiren (an antiunion organization of businessmen).

  “Don’t you think so?” said the senior Asahara. “Well, you probably know more about labor relations than I do. But you must remember that Masuda-san is a very capable man, one of the ablest I have seen. We should pay a great deal of attention to him.”

  Kawamata, roused from his own lethargy, was aghast at the management approach. Everyone at Nissan, he told friends back at the bank, was afraid of the union. The union was always demanding more rights, while the workers never worked. What had happened to Japanese respect for work? It was one thing to lose a war, he believed, but another to lose a sense of all things Japanese. The problem, he decided, was not the Americans, it was the Japanese people themselves. Something precious in the Japanese spirit had been lost. Slowly, it seemed, jarred by this experience, Kawamata began coming up out of his own postwar death.

  In the late 1940s small strikes kept breaking out like brushfires. They were over pay increases, and they were over the question of whether management or the union would control promotions. The first strike that Kawamata had to deal with came in 1949, after the Dodge Line. That summer Kawamata had been forced once again to borrow from the IBJ. He had gone to the Hiroshima branch because he had better contacts there, and he had successfully negotiated a discounted bill. But he had been wearied by the process and by the knowledge that when the bank people gave him a cool and skeptical eye, barely disguising their contempt, they were right—his house was not in order. Nissan was a poorly run company. The production was low, the payroll was high. It was time to get tougher. He knew he was going to have to let people go in order to save the company. Otherwise he would hit the limit of the bank’s tolerance. He could detect from his talks with the IBJ in Hiroshima and Tokyo its growing impatience. He knew some of the people there thought Nissan was going to fail, and he sensed that some of them would not be unhappy to see that happen. But Nissan was now his company, and he did not want to fail. He welcomed the Dodge Line, because it gave him the direction he needed. He left Hiroshima and went back to Tokyo and told his colleagues at Nissan of his decision to cut back the work force, the first austerity measure for a company so loosely controlled. Everyone in the room was silent. No one, he realized, wanted to challenge the union.

  There were about eighty-five hundred employees at Nissan at the time of the Dodge Line, and Kawamata decided to let go of about two thousand. He knew nothing of the procedures on how to do this. There had to be some termination pay and the company was broke, but he went secretly to the IBJ and to two local banks and got 80 million yen (or about $220,000) extra for this. He got it by promising that this was the beginning of a new and harder line on the part of management. In September, Kawamata announced that the company was going to fire some 1760 employees. To the degree that it could distinguish between radical workers and regular, less politicized workers, the company fired the radicals. The union immediat
ely called a strike. The strike went on for forty days, and in the end management won. The dismissals stood. But the lines were drawn and the union had become more radical than ever.