recession' that followed the beginning of negotiations in Korea were just being felt, so SCAP extended the law for yet another year. But SCAP and Yoshida were both determined to let it lapse on April 1, 1952.
MITI has often contended that its acquiescence in the expiration of the Temporary Materials Supply and Demand Control Law demonstrated that it is a more liberal and less control-oriented ministry than either Finance or Agriculture, whose control laws (over the banks and rice production) have never ended.
54
Professor Maeda, on the other hand, believes that the expiration of the Supply and Demand Law merely ushered in a 'second control era' based on MITI's use of the foreign exchange budgets to carry out its policies, a phase that lasted until 1964.
55
Whatever one thinks about this issue, the fact that the law was coming to an end in the spring of 1952 had a major unsettling effect on several industries, particularly those in which there were many firms, strong competition, and damage due to the decline in American procurements. Under these circumstances MITI took its first totally independent action as a new ministry. On February 25, 1952, it informally advised ten big cotton spinners to reduce production by 40 percent, and the ministry assigned quotas to each individual firm. To enterprises that rejected this 'administrative guidance,' MITI mentioned (again verbally and informally) that foreign currency al-
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locations for their next month's supply of raw cotton might not be available. This was the first postwar instance of a famous Japanese institution, the MITI
* (advice to limit production), and of the inevitable government-organized cartel that followed in its wake. Similar kankoku sotan* were issued in March and May for rubber and steel. The FTC said that MITI's actions were illegal, but the ministry replied that the Antimonopoly Law did not cover informal advice from the government, and it persisted in its policies.
Thus was the issue joined. As soon as the occupation ended in April, MITI introduced in the Diet two lawsthe Special Measures Law for the Stabilization of Designated Medium and Smaller Enterprises (number 294 of August 1, 1952) and the Exports Transactions Law (number 299 of August 5, 1952)both of which authorized MITI to create cartels among small businesses as exceptions to the Antimonopoly Law. They were the precedent for many such laws to comeand for the revision of the AML itself in 1953, the first such revision by an independent Japanese government.
Throughout 1953 both the Steel Federation and the Federation of Economic Organizations petitioned the Diet (some say they also bribed Diet members) to permit cartels for businesses in recession or businesses trying to implement rationalization plans. MITI's position, according to its annual reports, was that it respected the intent of the original AML but had found that in practice it led to the excessive fragmentation of industries and stood in the way of capital accumulation in order to enhance international competitiveness. In its proposed amendment to the AML, MITI asked for the power to approve 'cooperative behavior' (
*
*, the new euphemism for cartel) to limit production and sales for depressed industries and to lower costs and promote exports for industries undergoing rationalization. Such 'cooperative behavior' was to include the sharing of technologies, the limiting of product lines, the joint use of warehouses for raw materials and finished products, and joint consultations on investment plans. On September 1, 1953, the Diet amended the AML (law number 259) to permit so-called depression and rationalization cartels, and it also abolished SCAP's Trade Associations Law. The Tokyo correspondent for the
wrote that ''hardly a vestige now remains of the anti-trust measures forced upon the Japanese during the occupation of General of the Army Douglas MacArthur.'
56
In the years that followed MITI kept up the pressure on the FTC and the AML, although neither ever did disappear completely. In 1955 MITI amended the Exports Transactions Law (now called the Export-Import Transactions Law, number 121 of August 2) to make the
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cartels compulsory for all small exporters and to strengthen the general trading companies. During that same year it also abolished the occupation-era Law Prohibiting Excess Concentrations of Economic Power. During 1956 the ministry began its sponsorship of a long series of 'industry laws' that provided for exceptions to the AMLincluding, for example, the Textile Industry Equipment Special Measures Law (number 130 of June 5, 1956), the Machinery Industry Promotion Special Measures Law (number 154 of June 15, 1956), and the Electronics Industry Promotion Special Measures Law (number 171 of June 11, 1957). And in June 1958 MITI caused the FTC to approve its plan for a 'public sales system' (
*
) for the steel industryan ingenious system of price rigging invented by the old MCI cadre Inayama Yoshihiro, then a director of Yawata Steel, and Sahashi Shigeru, then the deputy director of the Heavy Industries Bureau.
57
It seemed to some that the FTC would approve anything short of piracy if MITI said it was necessary for Japan's rapid economic growth.
In fact, MITI judged the time was ripe to get rid of the AML altogether. From October 1957 to February 1958 the Enterprises Bureau sponsored a cabinet-level deliberation council on the future status of the AML. Professor Nakayama Ichiro* chaired it. The council stated in its final report that 'the stipulations of the AML do not necessarily conform to the proper operation of our country's economy,' and that 'the public interest is not best served by the legal maintenance of a free competitive order.' The council recommended a new law that would allow for the 'coordination of investment' and that would encourage mergers to overcome ''excessive competition' among the banking keiretsu.
The new law was introduced in the Diet in October 1958, but it 'got lost' in the turmoil surrounding the Kishi government's attempts
