9
The result of the negotiations in 1934 was that the foreign suppliers more or less met the terms of the law in order to keep the Japanese business.
The Petroleum Law affected the ministry most directly by authorizing the creation of a Fuel Section in the Mining Bureau. Three years later, on June 9, 1937, this section became the Fuel Bureau (Nenryo* Kyoku), an external agency of MCI charged with making fuel policy, developing new sources of petroleum, promoting the synthetic petroleum industry, and administering the Petroleum Industry Law. It
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was MCI's first industry-specific bureaua pattern that the whole ministry would adopt in 1939and it was the first bureau of MCI to which military officers on active duty were seconded.
10
Meanwhile, during 1934 the first of two political events that were to lead to the creation of the economic general staff in its most fully developed form erupted on the political scene. This was the Teijin scandal that brought down the Saito* cabinet. The second incident was the military mutiny of February 1936 that dramatically increased military influence over the whole society. In January 1934, in a series of articles in his
* newspaper, the businessman and political polemicist Muto* Sanji charged that a group of ministers and higher officials were corruptly manipulating the stock of the Imperial Rayon Company (Teijin) for their own profit, and that Teijin shares held by the minister of finance since the bail out of the Taiwan Bank in 1927 had been secretly sold to them. It is unclear to this day whether Muto sincerely believed what he wrote or whether his charges were part of a militarist plot to discredit the political parties and their capitalist supporters. The effect of his charges is not, however, in dispute; they contributed strongly to the belief that civilian politicians were hopelessly corrupt.
11
Muto himself was shot to death at North Kamakura station on March 9, 1934, by an unemployed worker. Two ministersNakajima of MCI and Hatoyama of educationalong with a former vice-minister of finance and top business leaders were arrested and subjected to a sensational public trial that lasted from June 1935 to October 1937. All were ultimately acquitted. Three prominent businessmen who were arrested went on to hold positions as ministers in postwar cabinets (Kawai Yoshinari in the first Yoshida cabinet, Nagano Mamoru in the second Kishi cabinet, and Mitsuchi Chuzo* in the Shidehara cabinet).
The role of Yoshino Shinji in the Teijin case deserves mention here. The interesting point is that he never said a word about the case even though many of the defendants were his close personal and professional associatesNakajima as his minister and former TIRB colleague; Mitsuchi as a former counselor of the old MAC; Kawai as a former MAC bureaucrat (he resigned at the time of the rice riots); and Nagano as a director of the Tokyo Rice Exchange. Moreover, although the disposition of shares of stock put up as collateral by the Bank of Taiwan was the responsibility of the Finance Ministry's bank inspectors, the supervision of the stock exchanges was still under the jurisdiction of MCI. Yoshino did not have to know directly about the disposition of Teijin shares, but the manipulation of prices on the Tokyo and Osaka stock exchanges had to be of interest to MCI.
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When Nakajima resigned as minister on February 9, 1934, he was succeeded for the remainder of the Saito * cabinet by Matsumoto Joji*, the famous legal scholar who later figured as an adviser on the constitution in 1946, and whose draft SCAP rejected in favor of its own. In 1934 Matsumoto favored vigorous prosecution of the Teijin defendants and made life difficult for Yoshino over the matter. Yoshino, however, never said a word on the subject of the Teijin case. He may have felt, along with many others at the time, that the case was a frame-up by the militarists and rightists to destroy ''liberal' elements in politics. If so, his silence can be explained by the fact that it was extremely dangerous in the mid-1930's to contradict the nationalists on any subject. The Teijin case appears in retrospect to have been the equivalent in party politics of the Minobe casethe ouster of Minobe Tatsukichi from Tokyo University on charges of lese majestein academic life.
After the Teijin incident the cabinet of Admiral Okada Keisuke (July 1934 to March 1936) sought to dispel the public's (and the military's) doubts about economic administration by establishing a Cabinet Deliberation Council (Naikaku Shingikai)what the press called its 'supplementary cabinet'to advise it on economic policies. However, when the prime minister declared that his council was intended 'to remove technical economic matters from political interference,' the Seiyukai* vigorously opposed the council as a bureaucratic and militaristic device. Partly because of this Seiyukai boycott, the president of the Minseito* and one of Japan's most accomplished political manipulators, Machida Chuji* (18631946), entered the cabinet as MCI minister even though most party politicians shunned Okada's 'nonparty' government. Machida retained Yoshino as vice-minister for political reasons of his own, but in retrospect Yoshino believed that he should have resigned at the time. Okada's council was composed of fifteen members from among the 'senior statesmen' (
*, the successors to the Meiji-era
*), peers, political party leaders, and representatives of big business.
In order to service this brain trust, the Okada government also set up a Cabinet Research Bureau (Naikaku Chosa* Kyoku, established by Imperial ordinance 119 of May 11, 1935). This was not the older military-oriented Resources Bureau of 1927, also attached to the cabinet, but a new organ made up of bureaucrats detached on temporary duty from the main ministries to serve in this elite body. Two years later the Cabinet Planning Boardknown at the time as the 'economic general staff'came into being by combining the Cabinet Research Bureau and the Resources Bureau.
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In 1935 the Cabinet Research Bureau was the stronghold of the variously termed 'new bureaucrats' (
*), 'reform bureaucrats' (
