MITI and the Japanese miracle

Page 133

1936, while still serving as chief of the Industrial Affairs Bureau and before departing for Manchuria, was to draft this law. Kakuma notes laconically that although the law itself was rescinded during the occupation, its terms remained in effect until the late 1960's.

²⁷

The petroleum and automobile laws were the first of a series of laws designed to provide special governmental financing, taxes, and protective measures for individual industries, and the first that were defended in terms of national defense needs. Their importance cannot be overstated. They were resurrected during the 1950's and 1960's for different industries and for nonmilitary (but nonetheless national defense) objectives. They are a part of the prewar heritage most directly relevant to postwar industrial policy. Other laws passed during the late 1930's were the Artificial Petroleum Law (August 10, 1937), the Steel Industry Law (August 12, 1937), the Machine Tool Industry Law (March 30, 1938), the Aircraft Manufacturing Law (March 30, 1938), the Shipbuilding Industry Law (April 5, 1939), the Light Metals Manufacturing Industry Law (May 1, 1939), and the Important Machines Manufacturing Law (May 3, 1941).

²⁸

These laws did much to promote the particular industries concerned, but politically they represented compromises between the state-control and the self-control persuasions. The business sector was still strong enough to withstand state and public pressure and to insist on private ownership and a large measure of private management, which is closer to the postwar pattern than some of the other measures enacted by the state-control group during the 1930's.

One area in which the military first caused a major problem and then supported a solution well ahead of its time was in the control of foreign trade. The military's competitors here were not private businessmen but other bureaucrats. After the assassination of the minister of finance in February 1936, the officials of the Finance Ministry more or less gave up trying to resist military demands for budget increases. One scholar notes that from the Konoe cabinet of 1937 to the outbreak of the Pacific War, no Finance Ministry personnel participated in key decisions.

²⁹

As a result of this shoving aside of financial administrators, the budget jumped from ¥2.3 billion in 1936 to ¥3 billion in 1937, with all of the increase going for munitions. Companies supplying the military engaged in tremendous speculative importing of materials. In order to overcome the serious balance of payments deficits that resulted, the military demanded that foreign trade be put on a war footing. They wanted to promote industries that earned foreign exchange and to restrict all imports they deemed unnecessary. To do these things, the military advocated combining the trade func-