MITI and the Japanese miracle

by Chalmers Johnson

  12

  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*).

  13

  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."

  14

  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.

  15

  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

  Page 166

  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.

  16

  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;

  Page 167

  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.

  17

  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:

  At a time when the readjustment of industries is being carried out on a large scale, there are still entrepreneurs living on their unearned incomes. Concerning this, the minister of commerce and industry, Kishi, . . . emphasized the necessity of maintaining a strict control over various industries, causing a profound sensation among the leaders of industrial circles. . . . The minister of commerce and industry has been kept busy preparing a concrete plan in order to make the control companies function as national policy companies. . . . The directors of the companies, although they are regarded as the responsible authorities, are still remaining as they were before.

  18

  Of all the members of the council, the one Kishi feared and resented mostbecause of his long association with MCI and his insider's knowledgewas Fujihara. In fact, on November 17, 1943, after the founding of the Munitions Ministry on November 1, Fujihara was secretly appointed a state minister without portfoliothe same rank as Kishiand placed within the ministry to oversee his activities. Nonetheless, the evidence indicates that Fujihara was every bit as alarmed as Kishi by the ineffectiveness of the control associations at a time when the war was entering its most dangerous phase for Japan. After several inspection trips Fujihara reported to the council that there was no real shortage of coal, only inefficiency and negligence by the mine operators, and that aircraft production was stymied not by a shortage of aluminumonly 55 percent of the aluminum available was being used for airplanesbut by the intense competition for and hoarding of materials by the army and navy.

  19

  Kishi devised two answers to these various problems: the enactment of a new law to enhance governmental supervision over the control associations, and a total reorganization of the government's economic bureaucracies. On October 31, 1943, an extraordinary session of the Diet passed the Munitions Companies Law (Gunju Kaisha Ho*, number 108), which sought to establish once and for all the principle contained in the old Konoe New Structure Movement of 1940namely, the separation of management from ownership. It authorized the sta-

  Page 168

  tioning of governmental officials called "munitions supervisors" in each factory and made these officials, rather than the industrywide control associations, responsible for seeing that targets were fulfilled and rules followed.

  As it turned out, this law came too late to make much difference to the war effort. It merely added another layer of officialdom on top of the control associations, which still allocated materials and distributed products on an industrywide basis. The Munitions Companies Law was the last serious
effort of the state-control group before the Allied occupation, and it remained a compromise; with the cabinet council looking on and the Diet increasingly dubious about Tojo's * leadership, Kishi could not go beyond the basic parameters of the capitalist system. The government continued to pay dividends to owners and guarantee their costs of production until June 1945, when the zaibatsu were only too happy to see the government buy out and nationalize their ruined munitions plants.

  20

  The Munitions Companies Law was not an important precedent for postwar industrial policy (although the law of 1948 authorizing state control of the coal industry has strong similarities to it). The reorganization of the economic ministries, however, had lasting consequences. In essence the government abolished the Cabinet Planning Board and four old ministriesCommerce and Industry, Agriculture and Forestry, Communications, and Railroadsand replaced them with three new ministriesMunitions (Gunju-sho*), Agriculture and Commerce (Nosho-sho*), and Transport and Communications (Un'yu Tsushin-sho*). Concrete plans for this reorganization were drafted on the MCI side by Yamamoto Takayuki, the first MITI vice-minister in 1949; on the CPB side they were drafted by Tanaka Shin'ichi, deputy director of MITI's Enterprises Bureau after 1949, and Morisaki Hisatoshi, director of MITI's Heavy Industries Bureau in 1964.

  The new Munitions Ministry (MM) was the brightest star in the firmament. The CPB and MCI's General Affairs Bureau were united into a single new agency for both planning and execution; it was called the General Mobilization Bureau (Sodoin* Kyoku), with Shiina Etsusaburo* as director. MCI's old bureaus for Steel, Machinery, Light Metals, Nonferrous Metals, Chemicals, and Fuel, plus the now defunct Communications Ministry's Electric Power Bureau, went to Munitions. MCI's old bureaus for Textiles, Daily Life Commodities, and Prices went to the new version of the old Ministry of Agriculture and Commerce. MCI's Enterprises Bureau continued on in MM as the Enterprises Readjustment Headquarters (Kigyo* Seibi Honbu), although it did not have many enterprises left to convert to war production. The few remaining

  Page 169

  functions of MCI in the area of international trade were transferred to the Greater East Asia Ministry. MM also established nine regional Munitions Supervision Departments (Gunju Kanri Bu), which are the concrete origins of the contemporary MITI regional bureaus. Finally, the factory inspectors of the Army-Navy Aviation Headquarters were integrated into a new Aircraft Ordnance General Bureau within MM under Lieutenant General Endo * Saburo*.

  From the perspective of 1945 Allied intelligence, Bisson thought that this structure plus the Munitions Companies Law had "largely rectified" the chaotic situation that had prevailed in Japan's war economy during 1942 and 1943. He was, however, astonished that MCI"this old-line standby of the business interests"and not the military, as had been supposed in Washington, had been responsible for creating the new ministry.

  21

  The MCI officials who went to MM, a contingent that included all of MITI's later industrial faction, were much less sanguine about their prospects for success. Even Shiina, despite his own Manchurian background, later complained bitterly about having to work with arrogant military officers; and many able officials, such as Ueno Koshichi* (MITI vice-minister from 1957 to 1960), found their effectiveness reduced because of clashes with military officers.

  22

  One of the first things the former MCI men did when the war was over was to kick out the military officers while retaining the ministry's expanded jurisdiction.

  The chief significance of MM for later industrial policy is that MITI managed to retain all of the functionsincluding electric power, airplane manufacture, and industrial planningthat had first been brought together in MM. The experience of working as factory supervisors was also important for later MITI cadres. And for some the Munitions Ministry would have a great personal meaning: two MITI vice-ministers, Sahashi (196466) and Morozumi (197173), met and married women who served in MM's Women's Volunteer Corps. Perhaps also worth mentioning, Prime Minister Tojo* evicted the prestigious Board of Audit (Kaikei Kensa-in) from its offices in Kasumigaseki and moved his new MM there from the old MCI headquarters near the Kabuki theater. As a result of the war, the industrial policy bureaucrats finally made it to the Tokyo equivalent of Whitehall, never again to leave.

  At the level of top leadership some arrangements were made for MM that would soon have serious political consequences. After November 1, 1943, Tojo served concurrently as prime minister, minister of the army, chief of the General Staff, and minister of munitions. He took on MM not simply as a gesture to give it more prestige, even

  Page 170

  though he never exercised any personal administrative control over the ministry. It was instead, as Okochi * Shigeo stresses, a final attempt to overcome the structural disunity of the Japanese government that had been imposed on it by the Meiji Constitution. Tojo* was attempting to achieve elementary coordination of his government by assuming a one-man dictatorship, despite the fact that he could never achieve control over the navy.

  23

  But in order to make Kishi effective, although Tojo was the formal minister, Tojo had to adopt an expedient that ultimately made his own political problems worse. He appointed Kishi both vice-minister of munitions and state minister with cabinet rank (

  gunju jikan kokumu daijin

  ), thus making him the de facto head of MM.

  Kishi himself has commented on this strange arrangement, as have numerous outside observers. Kishi says that he told Tojo that as vice-minister he would have to obey Tojo as his minister and superior, but that as minister of state he did not have to obey him because they would both have equivalent ranks. Tojo certainly understood this point, but he appointed Kishi state minister anyway in order to give him sufficient authority to command the generals and admirals who would be working in Kishi's ministry. Tojo remarked to Kishi that military men are trained to take orders according to the number of stars a person wears; a vice-minister has only two stars, but a minister has three.

  24

  Kishi's becoming minister and vice-minister simultaneously set up and conditioned his clash with Tojo less than a year later. This clash was of much greater significance historically than Kishi's earlier ones (over the pay cuts and with ministers Ogawa and Kobayashi), and it contributed one of Kishi's nicknames, the "quarreler" (

  kenka

  ), and added to his reputation as a man of principle.

  25

  Trouble between Tojo and Kishi began almost at once. The secret appointment of Fujihara as Kishi's watchdog barely three weeks after the new ministry had been launched caused Kishi to tender his resignation. He argued that it was hard enough to run MM with two ministers; three was impossible. Tojo refused to accept his resignation, accused Kishi of being irresponsible, and said that Fujihara was necessary to keep the zaibatsu quiet. However, six months later, in July 1944, Tojo asked for Kishi's resignation, and this time Kishi refused to give it, citing his independent responsibility as a minister to the throne. This impasse could not be resolved, and the Tojo government fell.

  The ostensible cause of the resignation of the Tojo cabinet was the American capture of Saipan. Kishi forthrightly expressed his opinion that Japan had no chance of winning after Saipan and should there-

  Page 171

  fore sue for peace. Tojo * was enraged. The word "defeat" was all but taboo in the Japan of 1944, and Tojo accused Kishi of meddling with the military's prerogative of supreme command. This was an extremely dangerous charge for Kishi. Tojo exercised effective control over the military police (

  kempeitai

  )he was a former Kempei commander in the Kwantung Armyand he had caused several political figures to meet their deaths at the hands of the military police for disagreeing with him (for example, Nakano Seigo*, 18861943, a member of the Diet since 1920).

  Kishi nonetheless stood his ground. The inner reality was that powerful figures in the Diet and the Imperial Household agreed with Kishi and wanted to be rid of
Tojo. Some of these men were Kido Koichi* (in the palace); Funada Naka (in the Diet); Ino Hiroya (an old MAC associate of Kishi's and one whom Kishi wished had gone to MCI instead of Agriculture in 1925; he served from 1941 to 1943 in the Tojo cabinet as agriculture minister); and Fujiyama Aiichiro* (a prominent businessman and adviser to the navy who plotted with the admirals against Tojo after the Saipan disaster). It appears that Tojo did not dare move against Kishi because he feared Kishi's numerous but unseen supporters. Incidentally, after Kishi became prime minister in 1957, he named Fujiyama minister of foreign affairs in his first cabinet and Ino minister of justice in his second.

  The cabinet of General Koiso, who succeeded Tojo, was transitional. The "watchdog" Fujihara moved up to become minister of munitions, and he appointed Kishi's old bureaucratic competitor, Takeuchi Kakichi (one of Murase Naokai's associates), as vice-minister. Fujihara only lasted six months. He resigned at the end of 1944 because of "ill health" (he was 75 years old but lived on until 1960); the real reason, however, was that a Mitsubishi-Sumitomo coalition forced him out because they were worried that a Mitsui-affiliated minister might threaten their own interests. As a replacement the prime minister chose a neutral figurethe old Home Ministry bureaucrat and first director of the Cabinet Research Bureau back in 1935, Yoshida Shigeru.

  *