MITI and the Japanese miracle

Page 268

encouragement. During fiscal 1963 the Japan Development Bank set aside some ¥3 billion (enlarged to ¥6 billion during 1964) for "structural credit" loans to large firms that merged. The government had long used easy financing to encourage mergers among medium and smaller enterprises; now it extended such funds to the automobile, petrochemical, and alloy steel industries. In the merger of the Nissan and Prince automobile companies, which was finally consummated on August 1, 1966, Nissan is alleged to have received a reward in the form of an $11.1 million loan from the JDB.

⁴²

The government justified this kind of largesse as part of its export promotion policies, since economies of scale lowered the prices of export products. As Holler-man notes, "It is ironic that whereas zaibatsu dissolution was undertaken by the occupation authorities in the name of economic democracy, their reconstruction is now being pursued in Japan in the name of import liberalization."

⁴³

Sahashi credits Minister Sakurauchi with bringing off the Nissan-Prince merger, but most observers believe that Sahashi himself did most of the work.

⁴⁴

These months of "structural recession," mergers, and administrative guidance led up to and conditioned Vice-Minister Sahashi's last hurrahthe fight he had with the Sumitomo Metals Company of Osaka because it refused to abide by his administrative guidance. Steel, in Inayama Yoshihiro's words, is the "rice of industry," and the steel industry has long been regarded by knowledgeable observers as the "honor student" of the Japanese government-business relationship.

⁴⁵

During the mid-1960's, however, MITI was having some problems with its prize pupil. Because the Yawata works had been founded as a state enterprise (which in 1934 became the major participant in Japan Steel, a public corporation), four of the "big six" steel companies (Yawata, Fuji, Nippon Kokan*, Kawasaki, Sumitomo, and Kobe) distrusted MITI's impartiality on the grounds that it had a soft spot in its heart for its ''true children," Yawata and Fuji, the successors to Japan Steel after SCAP broke it up. Moreover, relations with the steel industry were delicate. All of the big six firms had high-ranking former MITI officials on their boards of directorsexcept for Sumitomo, which refused on principle to hire bureaucrats. But even so it was hard to give direct orders to the industry because so many of its executives were top leaders in business organizations such as Keidanren and Keizai Doyukai*.

There were two main problems in the administration of the steel industry: coordination of investment for new blast furnaces and converters, and coordination of production in order to maintain prices at