MITI and the Japanese miracle

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scale as the chosen leaders. Overproduction was inevitable, but this was not as serious a danger from the point of view of any one particular group (since MITI would have to organize a cartel to allocate market shares) as not being in on an important government-guaranteed industry at all.

Controlled though the Japanese economy surely was, Ichimada's modest efforts to expand the supply of capital during the dark days of 1950 thus led to much fiercer competition among big businesses than is common in other open economies dominated by oligopolies. Even the government's purely indicative "plans" of 1955 and after (discussed below) fed the competitive fires by revealing the industries that the government planned to commercialize over the coming termthat is, those in which the risks would be close to nil unless Japan itself went under. It is not at all surprising, therefore, or a reflection on the competence of government planners (as some scholars seem to think), that the targets for the designated priority sectors in all EPA plans have invariably been wildly overfulfilled.

¹⁸

The second tier of the industrial finance system, the government banks created by Ikeda, came into being to supplement the city banks at the point where the Bank of Japan had to place ultimate limits on how much it could lend. Shortly after the outbreak of the Korean War, Ichimada declared that the overloans had in fact reached their limits.

¹⁹

It would never have been possible, in any case, for the city banks alone to have supplied all the capital needed for the rehabilitation of Japan, particularly during the early period of capital shortage and particularly for the nonexporting but key infrastructure sectors of coal, steel, and electric power. These were the industries that the RFB had served, and Ikeda clearly recognized the need to create a replacement for it. His problem was that the Government Section of SCAP and Dodge both derided the RFB as the cause of hyperinflation, and some SCAP purists remained hostile to anything that smacked of the "national policy companies" of the prewar and wartime eras. The RFB's primary weakness was that a good portion of its funds had come straight out of the general account budget; Dodge had eliminated that source through his absolute requirement that Japan maintain balanced and even overbalanced budgets. What other sources of capital for a new bank were there?

There were two sources, primarily. The first was U.S. "counterpart funds" (

mikaeri shikin

)the yen proceeds from the sale in Japan of U.S. aid products; since Dodge's arrival, these proceeds had been carefully segregated into a special account rather than being combined with all foreign receipts, as was the case during the first half of