MITI and the Japanese miracle

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tions of the Finance, Foreign Affairs, and Commerce ministries into a new trade ministry.

The Foreign Office opposed this plan, but MCI supported it. Terao Susumu, one of the leaders of MCI's Trade Bureau since its creation in May 1930, recalls that in 1937 they were searching for something like MITIthe first agency in Japan to combine industrial administration with the supervision of foreign trade.

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The Foreign Ministry would not hear of it, however, and the idea had to be dropped. Instead, on July 14, 1937 (and wholly unrelated to the outbreak of war with China on July 7), MCI's Trade Bureau was elevated and transformed into a semidetached bureau with its own director-general and secretariat, and with military officers serving in it in policy-making roles. MCI's external Trade Bureau was the direct ancestor of the powerful Board of Trade (Boeki-cho*) of the occupation period, and MITI itself came into being in 1949 essentially as a merger of MCI and the Board of Trade.

In 1939 the army and MCI tried again for a trade ministry. This time every official of the Foreign Ministry's Trade Bureau handed in his resignation, and the foreign minister, Nomura Kichisaburo*, threatened to bring down the cabinet with his own resignation if the idea was not dropped. The Abe cabinet ultimately fell over the issue anyway. The chief MCI official who worked to establish a trade ministry in 1939 was Ueno Koshichi*, MITI vice-minister from 1957 to 1960, and he remembers the entire episode with great frustration.

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The Foreign Ministry and the trade and industry bureaucracy have fought unremittingly to the present day over the issue of who is to control foreign trade.

Although a trade ministry was not set up before the war, MCI became deeply involved in trade matters after the outbreak of the China Incident. When the China war expanded into the Pacific War, however, trade matters became concentrated almost exclusively in the new Greater East Asia Ministry, which absorbed the external Trade Bureau. The Greater East Asia Ministry was also violently opposed by the Foreign Ministry, and it was actually more of a colonial office for newly occupied areas than a foreign commerce bureaucracy. From 1942 until the creation of MITI, then, MCI had little to do with trade (although it retained its own small trade staff during 1942 and 1943 until the Ministry of Munitions wiped it out). In comparative terms, there is no question that MITI is a more effective industrial policy agency than MCI precisely because it combines control of trade and industry in one unit and plans for each in coordination with the other.

The cabinets that followed the army mutiny of 1936 were unpopu-