4
materials for export goods
C
5
materials for the general population
Even though this plan was more carefully thought out than the first, several factors combined to make it go as haywire as its predecessor. Perhaps the most persistent problem was fighting between the control officers of A and B materials. They regularly interrupted conferences with accusations of plots, and this ultimately led to the military police's arresting some CPB military officers on charges of corruption. Other disputes often had to go to the cabinet for settlement. In addition, after the outbreak of war in Europe on September 1,1939, the British embargoed exports from India, Canada, and Australia, which ruined all import forecasts; and the 1939 drought in western Japan and floods in Taiwan and China forced the government to allocate some 10 percent of its total import capability for food. Until then the planners had assumed that Japan was self-sufficient in food at least. The drought also cut hydroelectric power output and thus caused a decline in domestic production of munitions and export goods.
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Officials involved with the planssuch as Kaya Okinori (minister of finance during early 1938), Inaba Hidezo* (arrested by the military police in the Cabinet Planning Board incident of 1941, discussed below, and a leading planner of Japan's postwar reconstruction), and Tanaka Shin'ichi (Inaba's successor as the highest-ranking civilian official in the General Affairs Unit)have all written, in regard to the early years of materials mobilization planning, that their concepts and methods were primitive, that their statistical base was supplied by the industries they sought to control, and that competition between
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the military services for allocations made their lives almost intolerable.
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Tanaka Shin'ichi divides the planning into two periods: 193840, during which the determining element in the plans was the amount of foreign currency reserves; and 194144, during which the determining element was marine transport capability. The leader of the General Affairs Unit during the first period was an army officer, and during the second period a naval officer.
Although there were many interesting technical problems of conceptualization and procedure in these plans, by far the most lasting influence they were to exercise on later Japanese industrial policy came from the experience gained by MCI in trying to implement them. On May 7, 1938, in order to deal with its new rationing function, MCI created a powerful external unit called the Temporary Materials Coordination Bureau (TMCB; Rinji Busshi Chosei* Kyoku, based on Imperial ordinance 324). The minister of commerce and industry was concurrently its director-generalto signify its importancebut its deputy director was actually in charge. Yoshino was still minister and therefore the first director, although he was dropped from the cabinet less than three weeks after the bureau was created. Its first deputy director and actual leader was Murase Naokai, who served at the same time as vice-minister of MCI.
The Fuel Bureau was the first unit in MCI to be devoted exclusively to a commodity, but the TMCB was the first unit to adopt the principle of vertical organizations classified by materials for its internal organization. The TMCB was divided into six departments and fourteen sections, ranging from department one, section one (in charge of steel and manganese), through department four, section nine (in charge of chemical textiles, paper, and pulp), to department six, section fourteen (in charge of import plans and funds to pay for imports). All commodities covered in the materials mobilization plan were assigned to one or another section, which then had to decide how to meet the targets and had to negotiate with other bureaus and with industries about terms, delivery dates, and so forth. The TMCB was heavily staffed with military officers, and all the civilian MCI officials who worked there became intimately familiar with the plan and with its authors in the Cabinet Planning Board.
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The TMCB did not work well. Among its many problems were conflicts of jurisdiction within MCI itselfparticularly among the TMCB, the Trade Bureau, and the Fuel Bureauand externally with the Ministry of Finance over the licensing of imports and the use of foreign exchange. The conflict with the Finance Ministry led in December
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1941 to MCI's surrendering its long-standing control over the insurance business and over the stock and commodity exchanges in return for control over import and export licensesa change that made MCI even more exclusively an industrial policy agency, and that established the link, seen again later in MITI, between industrial policy and trade. Conflicts also occurred between MCI officials and the military and between MCI officials and the Cabinet Planning Board. As a line organization, the ministry tried repeatedly to convince the staff of the CPB that drafting and executing a plan were two different things: zaibatsu firms were in competition with each other, skilled manpower was in short supply, capital availability was a problem, black markets were appearing, and the military regularly made direct deals on its own.
During the second half of 1938, the quality of life in Japan went rapidly downhill, and this, too, contributed to the TMCB's troubles. The revised materials mobilization plan halved imports for the civilian sector and drove innumerable medium and smaller enterprises out of business. By one estimate some 390,000 bankruptcies occurred during August 1938 alone.
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During the same month the Home Ministry deployed what the public called the 'economic police.' This involved the stationing in all police offices of twelve or thirteen procurators and investigators who specialized in 'economic crimes' and tried to control the black markets and maintain official prices. The TMCB thus became distinctly unpopular with the citizenry.
Perhaps the main reason the bureau did not work well was the persistent difference in political outlook that existed between MCI under Murase and the reform bureaucrats. Shiina says bluntly that both Murase and Takeuchi Kakichi, the TMCB's only deputy directors during its short existence, did not get along well with the military and sought to create their own factions as counters to those of the reform bureaucrats. Equally important, the zaibatsu and the party politicians in the Diet did not like the way they had been treated during the debate over the mobilization law, or the trend of events generally. They fixed their irritation particularly on the presence in the cabinet of two former bureaucrats in key economic positions, minister of finance and minister of commerce and industry. Their way of dealing with this problem was to ignore both Kaya and Yoshino and subtly to sabotage the controlled economy. Much of the control structure existed only on paper; the reality was that the bureaucracy had to negotiate every contract in order to get industry's cooperation.
In May 1938 Prime Minister Konoe sought to placate business inter-
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ests by dropping Kaya and Yoshino from the cabinet and replacing them both with one manIkeda Seihin, a former Mitsui executive and an 'elder' of the business world. Ikeda had retired from business following the military coup d'etat, and in 1938 he was serving as governor of the Bank of Japan. He was acceptable to the business community because of his background, and he was acceptable to the military because he was tolerant of economic controls as long as the business community dominated them. Konoe and his military advisers also hoped that a single leader serving concurrently as minister of both finance and MCI might mitigate the increasingly serious bureaucratic jurisdictional disputes between the two
