the internal structure of MITIstill needed were the Enterprises Bureau (created in 1942), the functions of the CPB, and absolute control over tradebut MCI after 1939 was much closer in form and orientation to the industrial policy apparatus of the high-speed growth era than was MCI from 1925 to 1939.
The thanks that Murase received for these efforts from his political superiors was to be fired. During the autumn of 1939 a series of issues came to a head that caused a major realignment of MCI personnel. First, it was becoming apparent that materials mobilization planning alone was not going to overcome Japan's industrial weaknesses, which were being exposed daily in the China war. On January 17, 1939, in recognition of this fact, the new cabinet adopted a 'General Outline Plan for the Expansion of Productive Capacity' (Seisanryoku kakuju * keikaku yoko*), which had been prepared in the CPB on the basis of ideas first advanced by the Manchurian planners in 1936. The result was a detailed four-year proposal for the promotion of some fifteen industries in Japan, Manchuria, and China. They were steel, coal, light metals, nonferrous metals, petroleum and petroleum substitutes, soda and industrial salts, ammonium sulfate, pulp, gold mining (to earn foreign exchange), machine tools, rolling stock, ships, automobiles, wool, and electric power. The problem with the plan was how to implement it: was it to be through industrial self-control, public-private cooperation, or state control? These issues were debated throughout 1939 and ultimately led in 1940 to the Economic New Structurepart of the Japanese version of Hitler's New Order.
Second, the outbreak of war in Europe vastly complicated Japan's import arrangements. In order to force imports from the still unconquered territories in East Asia, Japan began to advance the idea of the Greater East Asian Coprosperity Sphere; to attain their goal they undertook direct negotiations with, for example, the Dutch in the Netherlands East Indies for petroleum shipments. The development of the so-called yen trading bloc also put pressure on the rest of the nation's trade relations, because Japanese exports to Manchuria and China no longer earned foreign exchange. The government demanded that exports to hard currency areas be expanded, and prices began to explode as shortages worsened. On October 18, 1939, the government issued its famous Price Control Ordinance, based on article 19 of the mobilization law, which fixed all prices, wages, rents, and similar economic indices at the level that had existed a month earlierhence the nickname 'September 18 stop ordinance.' However, all this did was
Page 148
eliminate the last traces of realism in the price structure and reinforce tendencies toward budgeting in terms of commodities and barter deals. It also led to the black markets and black prices that persisted throughout the Pacific War.
Third, Japan's poorly informed diplomacy had led to the unpleasant surprise of the Molotov-Ribbentrop agreement. Since the Japanese had thought that they were allied with Germany against Soviet Russia, this inexplicable turn of events led the government to resign. Two days before the outbreak of war in Europe a new cabinet was formed. Godo * Takuo (18771956)a doctor of engineering, a former ordnance vice admiral, a recent head of the Showa* steel works in Manchuria, a connection of the Asano zaibatsu through the marriage of his daughter, and a supporter of medium and smaller enterprises as an active director of the industrial unions associationbecame minister of both agriculture and commerce. Godo first told Murase that he wanted him to remain as vice-minister, but less than a month later he shamefacedly had to say that the army had asked for Murase's resignation in order to bring back Kishi from Manchuria. The problems of the bogged-down war in China, the need for industrial expansion, and the rapidly changing world scene had combined to generate a clamor inside and outside the ministry for the return of the Manchurians. Tojo* was already serving as vice-minister of the army, and Hoshino and Matsuoka did not come back until the following year. But Kishi paid quick heed to the call and became vice-minister of MCI on October 19, 1939.
Kishi had to proceed cautiously. He was one of the best-known reform bureaucrats, and the business community was still determined to keep MCI under its own control. Its method was to withhold support of the government unless a business figure were named MCI minister. In January 1940, following another change of cabinet, the business community replaced the technocratic Admiral Godo with a real businessman, Fujihara Ginjiro*; and seven months later, when the Manchurians really began to take over the second Konoe government (Tojo as army minister, Hoshino as CPB president, and Matsuoka as foreign minister), the business leaders asked for and got Kobayashi Ichizo* (18731957).
Kobayashi was the founder of the Hanshin Electric Railroad Company (the Osaka to Kobe express), the Takarazuka girls operatic troupe, the Takarazuka and Nichigeki theaters in Tokyo, the Toho* Motion Picture Company, and many other enterprises. After the war he served in the Shidehara cabinet as a planner of economic recon-
Page 149
struction. His clash with Vice-Minister Kishi was the greatest confrontation within the ministry before that of 1963, when the politicians appointed Imai Zen'ei as vice-minister in place of the MITI bureaucrats' choice of Sahashi Shigeru. Kobayashi was not a compromise business candidate like Ikeda Seihin or Admiral Godo * (that is, acceptable to both sides); he was a famous entrepreneur who made no bones about the fact that he did not like state control, reform bureaucrats, or Kishi. Ikeda had recommended his appointment in order to maintain peace with the business community, but it was clear from the outset that MCI was not big enough to hold both Kobayashi and Kishi. One of them had to go.
51
Before Kobayashi arrived on the scene, Kishi had been able to overturn many of Murase's personnel appointments, although he retained his new structure. In December 1939 Kishi made his most important personnel move: he installed his Manchurian colleague and 'junior,' Shiina Etsusaburo*, as director of the pivotal General Affairs Bureau.
Shiina then proceeded to bring into the bureau the brightest, most ambitious, control-oriented minds he could find within the ministry. They all subsequently became leaders of industrial policy during the era of high-speed growth, and most of them went on to become MITI vice-ministers. Among those working as section chiefs or officials in the General Affairs Bureau under Shiina were Yamamoto Takayuki (chief of the Production Expansion Section and later MITI's first vice- minister), Hirai Tomisaburo* (chief of the Materials Coordination Section and MITI vice-minister from 1953 to 1955), Ueno Koshichi* (a section chief in the General Affairs Bureau after Shiina became vice-minister in 1941 and MITI vice-minister from 1957 to 1960), Tamaki Keizo* (also a section chief in the General Affairs Bureau in 1941 and MITI vice-minister during 195253), Yoshida Teijiro* (a section chief while Shiina was bureau chief and postwar deputy director of the Coal Agency), Ishihara Takeo (a deputy section chief in 1940 and MITI vice-minister from 1955 to 1957), and Tokunaga Hisatsugu (an official in the General Affairs Bureau under Shiina and MITI vice- minister from 1960 to 1961).
This was the beginning of the Kishi-Shiina line. It was perpetuated after the war, while Kishi was in prison and Shiina was purged, by Toyoda Masataka (the first head of the Enterprises Bureau in 1942 and Shiina's successor as vice-minister in 1945) and Matsuda Taro* (a section chief during 1940 in the vertical bureaus and in 1949 the last MCI vice-minister). Matsuda Taro was the official in charge of the creation of MITI.
Page 150
In July 1940 Japan was a troubled place. The China war was dragging on with no end in sight, the allies had begun to boycott Japanese goods, and Germany and Italy were offering an alliance (the Axis pact was signed September 27,1940). To deal with this situation the throne turned once again to Prince Konoe, as it had earlier when others had been unable to restore stability in the wake of the army mutiny. Konoe's most important action in the realm of industrial policy was to sponsor the Economic New Structure. This was a sweeping proposal for the nationalization of industries, the operation of factories by bureaucrats, and the rapid expansion of production. Ryu * Shintaro* (190067), a member of Prince Konoe's brain trust, the Showa* Research Association, provided the first outline of this quintessentially reform bureaucratic scheme. His book.
