continuing in office. It also effectively blocked Sato's intended successor from becoming prime minister: Fukuda Takeo had suffered the misfortune of being appointed Foreign Minister only a fortnight before the dramatic shift in Washington-Peking relations. (The Chinese communists indirectly helped Tanaka by launching a strident cam-
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paign against Sato *, claiming that he was attempting to revive Japanese militarism, and stating that they would not deal with him or anyone associated with him as Japanese prime minister.)
On October 15, 1971, Tanaka adroitly ended the textile dispute by giving the Nixon administration what it wanted while also coming up with a ?200 billion 'relief program' for the Japanese textile industry (including governmental purchase of surplus machines, compensation for losses in exports, and long-term low-interest loans for 'production adjustment' and occupational change).
32
Tanaka also offered the country new leadership on the overcrowding problem. Following the second Amaya thesis of 1969, the ministry had set some of its bright young officials to investigate the seriousness of that problem. They discovered that fully 73 percent of the nation's total industrial production was concentrated in a narrow belt along the east coast, and that some 33 million people lived within 30 miles of the three largest cities (Tokyo, Osaka, and Nagoya). This meant that 32 percent of the nation's population was living on 1 percent of the land area.
They also came up with such startling statistics as the fact that during rush hours Tokyo's traffic moved at only 5.6 miles per hour (2.5 m.p.h. along some routes), that the city had only 12 percent of its land area given over to roads (compared to 43 percent in Washington, D.C. or 23 percent in London), and that during the 1960's some 22 rural prefectures had suffered drastic declines in population (several communities in Tanaka's native Niigata prefecture were discovered to have all-female fire departments). To deal with these problems, MITI proposed a vast and very expensive program of industrial relocation, including building bullet-train networks all over the country, connecting Shikoku and Hokkaido to the main island through a system of monumental bridges and tunnels, and providing strong tax incentives to get industries to move out of the Tokyo-Kobe corridor.
The official in charge of these plans was Konaga Keiichi, who from October 1969 to July 1971 was chief of the Industrial Location Guidance Section in the Enterprises Bureau. When Tanaka became MITI minister in July 1971, he appointed Konaga his personal secretary, and Konaga was the ghost writer for Tanaka's best-selling book
*
*
(A plan to remodel the Japanese archipelago).
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The book was published in June 1972, just a month before the LDP convention at which Tanaka planned to contest the party presidency (and, thus, the prime ministership) with Fukuda Takeo. A rewritten and spruced up version of MITI's original plan, it sold more than a million copies and helped ensure Tanaka's victory. On July 7, 1972, Tanaka moved from MITI to the prime minister's office, and he named
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as MITI minister Nakasone Yasuhiro, another party politician, LDP faction leader, and last-minute ally of Tanaka's in the LDP election contest (the press suggested that a large sum of money had passed between them).
The installation of the Tanaka cabinet seemed to mark a real turning point in Japanese politics. In contrast to the consistent domination of the government by former bureaucrats, Tanaka offered a cabinet made up of younger party politicians, including men who had experience in telling the bureaucracy what they wanted done, had no compunctions about blaming the bureaucracy for policy mistakes, and were 'activist' in a way that ministers had not been since Ikeda's time. They were, however, so activist on one frontspending public moneythat they contributed to a revival of bureaucratic government following the oil shock.
Tanaka accomplished many thingsabove all, the normalization of relations between Japan and China. But almost from the outset his administration led to serious inflationa period of what the public came to call 'crazy prices.' Tanaka's industrial relocation policy was not the primary cause, and many of his big construction projects were desperately needed in any case (even though some people charged that Tanaka's background as a construction industry tycoon gave him more than a political interest in them). The root cause of 'crazy prices' was Japan's public finance system and the divided responsibility among politicians and bureaucrats for managing it. In this sense, crazy prices were as much a side effect of the high-speed growth era as overcrowding and pollution. By the end of Tanaka's rule the country was reviving terms not heard since the occupationeconomic control (keizai tosei *) and economic police (keizai keisatsu).
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The problem was excess liquidity. The Ministry of Finance had never believed that Japan could actually be forced to relinquish its trade advantage in an undervalued currency, and the value it set in late 1971 for the yen against the dollar still left the yen considerably undervalued (the yen was not allowed to float until after 1973). Many firms, however, were doing business on the basis of an internal, more highly valued exchange rate and pocketing the difference. As the
noted, 'From about the middle of 1972, Japanese industries had been conducting trade at the rate of ?270?280 to the dollar, and by selling the earned dollars to the Bank of Japan at a rate of ?301 to the dollar, they earned an extra ?20 per dollar.'
35
In addition, the government-sponsored investment boom of the late 1960's had once again left industry with considerable overcapacity. As a result, investment slumped throughout the first half of the 1970's, and because of
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the danger of foreign protectionism the old relief valve of an export drive was also not as readily available as it had been ten years earlier. On March 31, 1970, the government
