Yoshino was infuriated by Ikeda's appointment. He realized why Ikeda might be politically preferable to an ex-bureaucrat, but he also believed that Ikeda would not carry out industrial policy faithfully, and that it was an insult to MCI to be put under a zaibatsu minister. Concerning his own future, Yoshino sought the advice of his sempai and long-time friend from MAC days, Ito * Bunkichi, the illegitimate son of the genro* Ito Hirobumi and the son-in-law of former Prime Minister Katsura Taro*. Ito had left MAC in the early 1920's and taken a position in Ayukawa's Nissan zaibatsu. He now urged Yoshino to join his colleague Kishi in Manchuria and invited him to become an executive of the Ayukawa group. The Konoe cabinet recommended Yoshino as president of the new North China Development Company (while still minister Yoshino had drafted the law establishing the company, although the army sponsored it in the Diet), but the army vetoed him as insufficiently nationalistic to head an organization governing territory won by army blood.
46
Yoshino was probably lucky he did not get this job, as it very likely would have led to his arrest after the war as a war criminalassuming, of course, that he would have survived the war. Forced to act on his own, Yoshino visited Hsinking, where Ayukawa instead appointed him as one of two vice-presidents (the other was a Manchurian) of Mangyo*. Yoshino was frustrated in Manchuria by excessive army control and Ayukawa's lack of capital for big projects. While working there, he received an Imperial appointment to the House of Peers, and on November 10, 1940, he returned to Tokyo to take it up. He remained an adviser to Mangyo but was replaced as vice-president by Takasaki Tatsunosuke, then president of the Mangyo-affiliated Manchurian Airplane Company. Takasaki was later MITI minister in the second Kishi cabinet (195859), and he was the Japanese sponsor of the famous Liao-Takasaki agreement for unofficial Sino-Japanese trade during the 1960's.
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During the Pacific War the Home Ministry appointed Yoshino governor of Aichi prefecture, and throughout 1944 he worked hard trying to cope with the bombing of Nagoya and with the death in his city of the chief Chinese puppet, Wang Ching-wei, who had been hospitalized there after an assassination attempt in China. Yoshino was purged but not tried during the occupation.
On April 24, 1953, Yoshino was elected to the House of Councillors from his native Miyagi prefecture. He had run on a platform of "economic independence" (from U.S. aid) and "rebuild Japan's economy." In the Diet he served as chairman of the upper house's Commerce and Industry Committee (where he was more of a problem for MITI than the ministry anticipated), and then as minister of transportation in the third Hatoyama cabinet (195556).
Yoshino never seemed to have any qualms about tapping the connections he had made during his bureaucratic service. Back in June 1934, while he was still vice-minister, he had helped Zen Keinosuke (18871951), Fujihara Ginjiro * (18691960), and other business leaders to establish the Japan Mutual Life Insurance Company (Nihon Dantai Seimei Hoken Kai), a company promoted by the prewar predecessor of the Japan Federation of Employers' Associations (Nikkeiren) to provide life insurance at reasonable rates for industrial workers. (Zen was a school classmate of Yoshino's and a fellow MAC official from 1914 to 1926. He resigned to become the secretary and a director of the Japan Industrial Club. After the war he became the first director-general of the Economic Stabilization Board. Fujihara was the founder of the Mitsui-connected Oji* Paper Company and became MCI minister during the first half of 1940.)
In January 1952, following the death of Zen Keinosuke the previous November, Yoshino succeeded him as chairman of the Japan Mutual Life Insurance Company, a post he retained for the next thirteen years. Yoshino retired as a member of the Diet in May 1959 and devoted himself to service as president of Musashi College, a position he held concurrently with his other commitments from 1956 to 1965. He died May 9, 1971, at the age of 84. Kishi Nobusuke delivered the eulogy at his funeral.
During 1938, in Tokyo, the new MCI minister Ikeda and vice-minister Murase got along fine. They liked each other, and both saw the world in essentially the same (commercial) terms; they shared the belief that economic control should mean self-imposed control by civilian industrial leaders themselves. Ikeda led the fight in the government to prevent the state-control view from prevailingShiroyama calls him the leader of the "status quo faction"and he established
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the precedent of businessmen serving in the cabinet in order to restrain the military, one that his successors Fujihara Ginjiro * and Kobayashi Ichizo* continued.
47
During late 1938 Ikeda clashed violently with Home Minister (Admiral) Suetsugu Nobumasa over the attempts to enforce articles 6 (labor control) and 11 (limitation on dividends and forced loans) of the mobilization law. Suetsugu took the view that if the government were going to control the people, it should also control the capitalists. Ikeda was not completely successful in preventing this, but as Tiedemann remarks, ''In the future, control over capital would become tighter, but Ikeda had set the pattern for making the controls on the business community the lightest of all in the war economy."
48
A result of his battle was that Ikeda was forced to leave the cabinet, and in January 1939 the Konoe government resigned in favor of the Hiranuma government, which was conservative but not necessarily pro-state control.
In order to eliminate the defects in the TMCB system and also to make MCI conform more closely in its overall operation to the mission it had been given by the economic general staff, Murase totally reorganized the Ministry of Commerce and Industry during early 1939. Despite his lack of sympathy with the controlled economy, Murase's reform was ironically the single most important structural change of MCI in the direction of greater control until the creation of MITI. Maeda Yasuyuki argues that Murase's vertical bureaus organized according to industry were the most valuable legacy of the war years; and former MITI Vice-Minister Kumagai Yoshifumi (196869) holds that industrial policy itself is synonymous with the industrial bureaus; without them a ministry would not be close enough to industry to exercise real guidance or control and could achieve no more than general economic policy.
49
MITI's
History of Commercial and Industrial Policy
says that after the reform MCI had already become a ministry of munitions, although it did not receive that name officially for four more years.
50
Murase abolished the Temporary Materials Coordination Bureau, the Commercial Affairs Bureau, the Control Bureau (successor after May 1, 1937, to the Temporary Industrial Rationality Bureau), and several other units. He combined their functions into one powerful coordinating and policy-making organization, the General Affairs Bureau (Somu* Kyoku), which is the origin of the contemporary MITI Secretariat. In addition, Murase took the specialized sections of the Industrial Affairs and Mining bureaus and made each of them into
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separate bureaus (see Appendix B). The result was not yet the internal structure of MITIstill needed were the Enterprises Bureau (created in 1942), the functions of the CPB, and absolute control over tradebut MCI after 1939 was much closer in form and orientation to the industrial policy apparatus of the high-speed growth era than was MCI from 1925 to 1939.
The thanks that Murase received for these efforts from his political superiors was to be fired. During the autumn of 1939 a series of issues came to a head that caused a major realignment of MCI personnel. First, it was becoming apparent that materials mobilization planning alone was not going to overcome Japan's industrial weaknesses, which were being exposed daily in the China war. On January 17, 1939, in recognition of this fact, the new cabinet adopted a "General Outline Plan for the Expansion of Productive Capacity" (Seisanryoku kakuju * keikaku yoko*), which had been prepared in the CPB on the basis of ideas first advanced by the Manchurian planners in 1936. The result was a detailed four-year proposal for the promotion of some fifteen industries in Japan, Manchuria, and China. They were steel, coal, light metals, nonferrou
s metals, petroleum and petroleum substitutes, soda and industrial salts, ammonium sulfate, pulp, gold mining (to earn foreign exchange), machine tools, rolling stock, ships, automobiles, wool, and electric power. The problem with the plan was how to implement it: was it to be through industrial self-control, public-private cooperation, or state control? These issues were debated throughout 1939 and ultimately led in 1940 to the Economic New Structurepart of the Japanese version of Hitler's New Order.
Second, the outbreak of war in Europe vastly complicated Japan's import arrangements. In order to force imports from the still unconquered territories in East Asia, Japan began to advance the idea of the Greater East Asian Coprosperity Sphere; to attain their goal they undertook direct negotiations with, for example, the Dutch in the Netherlands East Indies for petroleum shipments. The development of the so-called yen trading bloc also put pressure on the rest of the nation's trade relations, because Japanese exports to Manchuria and China no longer earned foreign exchange. The government demanded that exports to hard currency areas be expanded, and prices began to explode as shortages worsened. On October 18, 1939, the government issued its famous Price Control Ordinance, based on article 19 of the mobilization law, which fixed all prices, wages, rents, and similar economic indices at the level that had existed a month earlierhence the nickname "September 18 stop ordinance." However, all this did was
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eliminate the last traces of realism in the price structure and reinforce tendencies toward budgeting in terms of commodities and barter deals. It also led to the black markets and black prices that persisted throughout the Pacific War.
Third, Japan's poorly informed diplomacy had led to the unpleasant surprise of the Molotov-Ribbentrop agreement. Since the Japanese had thought that they were allied with Germany against Soviet Russia, this inexplicable turn of events led the government to resign. Two days before the outbreak of war in Europe a new cabinet was formed. Godo * Takuo (18771956)a doctor of engineering, a former ordnance vice admiral, a recent head of the Showa* steel works in Manchuria, a connection of the Asano zaibatsu through the marriage of his daughter, and a supporter of medium and smaller enterprises as an active director of the industrial unions associationbecame minister of both agriculture and commerce. Godo first told Murase that he wanted him to remain as vice-minister, but less than a month later he shamefacedly had to say that the army had asked for Murase's resignation in order to bring back Kishi from Manchuria. The problems of the bogged-down war in China, the need for industrial expansion, and the rapidly changing world scene had combined to generate a clamor inside and outside the ministry for the return of the Manchurians. Tojo* was already serving as vice-minister of the army, and Hoshino and Matsuoka did not come back until the following year. But Kishi paid quick heed to the call and became vice-minister of MCI on October 19, 1939.
Kishi had to proceed cautiously. He was one of the best-known reform bureaucrats, and the business community was still determined to keep MCI under its own control. Its method was to withhold support of the government unless a business figure were named MCI minister. In January 1940, following another change of cabinet, the business community replaced the technocratic Admiral Godo with a real businessman, Fujihara Ginjiro*; and seven months later, when the Manchurians really began to take over the second Konoe government (Tojo as army minister, Hoshino as CPB president, and Matsuoka as foreign minister), the business leaders asked for and got Kobayashi Ichizo* (18731957).
Kobayashi was the founder of the Hanshin Electric Railroad Company (the Osaka to Kobe express), the Takarazuka girls operatic troupe, the Takarazuka and Nichigeki theaters in Tokyo, the Toho* Motion Picture Company, and many other enterprises. After the war he served in the Shidehara cabinet as a planner of economic recon-
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struction. His clash with Vice-Minister Kishi was the greatest confrontation within the ministry before that of 1963, when the politicians appointed Imai Zen'ei as vice-minister in place of the MITI bureaucrats' choice of Sahashi Shigeru. Kobayashi was not a compromise business candidate like Ikeda Seihin or Admiral Godo * (that is, acceptable to both sides); he was a famous entrepreneur who made no bones about the fact that he did not like state control, reform bureaucrats, or Kishi. Ikeda had recommended his appointment in order to maintain peace with the business community, but it was clear from the outset that MCI was not big enough to hold both Kobayashi and Kishi. One of them had to go.
51
Before Kobayashi arrived on the scene, Kishi had been able to overturn many of Murase's personnel appointments, although he retained his new structure. In December 1939 Kishi made his most important personnel move: he installed his Manchurian colleague and "junior," Shiina Etsusaburo*, as director of the pivotal General Affairs Bureau.
Shiina then proceeded to bring into the bureau the brightest, most ambitious, control-oriented minds he could find within the ministry. They all subsequently became leaders of industrial policy during the era of high-speed growth, and most of them went on to become MITI vice-ministers. Among those working as section chiefs or officials in the General Affairs Bureau under Shiina were Yamamoto Takayuki (chief of the Production Expansion Section and later MITI's first vice-minister), Hirai Tomisaburo* (chief of the Materials Coordination Section and MITI vice-minister from 1953 to 1955), Ueno Koshichi* (a section chief in the General Affairs Bureau after Shiina became vice-minister in 1941 and MITI vice-minister from 1957 to 1960), Tamaki Keizo* (also a section chief in the General Affairs Bureau in 1941 and MITI vice-minister during 195253), Yoshida Teijiro* (a section chief while Shiina was bureau chief and postwar deputy director of the Coal Agency), Ishihara Takeo (a deputy section chief in 1940 and MITI vice-minister from 1955 to 1957), and Tokunaga Hisatsugu (an official in the General Affairs Bureau under Shiina and MITI vice-minister from 1960 to 1961).
This was the beginning of the Kishi-Shiina line. It was perpetuated after the war, while Kishi was in prison and Shiina was purged, by Toyoda Masataka (the first head of the Enterprises Bureau in 1942 and Shiina's successor as vice-minister in 1945) and Matsuda Taro* (a section chief during 1940 in the vertical bureaus and in 1949 the last MCI vice-minister). Matsuda Taro was the official in charge of the creation of MITI.
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In July 1940 Japan was a troubled place. The China war was dragging on with no end in sight, the allies had begun to boycott Japanese goods, and Germany and Italy were offering an alliance (the Axis pact was signed September 27,1940). To deal with this situation the throne turned once again to Prince Konoe, as it had earlier when others had been unable to restore stability in the wake of the army mutiny. Konoe's most important action in the realm of industrial policy was to sponsor the Economic New Structure. This was a sweeping proposal for the nationalization of industries, the operation of factories by bureaucrats, and the rapid expansion of production. Ryu * Shintaro* (190067), a member of Prince Konoe's brain trust, the Showa* Research Association, provided the first outline of this quintessentially reform bureaucratic scheme. His book.
The Reorganization of the Japanese Economy
(
Nihon keizai no saihensei
), was published in 1939 by
Chuo
*
koron
* and very widely read. Its anticapitalist and even Marxist orientation was hardly disguised at all, and Ryu only avoided intimidation by the police because of his elite connections.
52
Among Ryu's* friends and readers were some of the officials of the CPB, and they gave his ideas concrete form in a CPB report of September 13, 1940, entitled "General Plan for the Establishment of the Economic New Structure." Its immediate authors were the "star" reform bureaucrats of the Cabinet Planning Board, Colonel Akinaga Tsukizo*, Minobe Yoji* (who had recently returned from Manchuria to the CPB rather than to MCI), and Sakomizu Hisatsune. They called for the seminationalization (
kokyoka
*, literally "to make public") of private enterprises, t
he creation of industrial control organs that incorporated the then popular Nazi "leadership principle'' (
hyura
*
genri
, or
Führerprinzip
), the "reform of the Commercial Code in order to separate ownership of capital in enterprises from management functions and to establish the public character of industrial management," and strict limitations on profits.
53
The whole report was infused with a sense of outrage that the capitalists were still making a profit while one war was going on and a bigger one was clearly coming.
The business community did not take this lying down but responded with a business leaders' offensive. The businessmen charged, on the one hand, that Ryu Shintaro was a communistthe preferred term at the time was "red" (
aka
MITI and the Japanese miracle Page 24