MITI and the Japanese miracle

Page 190

Shirasu was the son-in-law of Kabayama Aisuke, the titled (count), American-educated Satsuma clansman of Yoshida's father-in-law, Makino Nobuaki. Makino in turn was the second son of the Meiji oligarch Okubo * Toshimichi and, like Kabayama, also a graduate of an American university. Yoshida and Shirasu had become friends during the 1930's in London, where Yoshida was serving as Japanese ambassador and Shirasu was the manager of the English branch of the Imperial Fisheries Corporation. Linked by family background, education, and overseas experience, Yoshida and Shirasu continued their affiliation after the war. Yoshida appointed Shirasu first as deputy director of the bureau for liaison with SCAP and then as deputy director of the ESB in his first cabinet. Shirasu also participated in many important negotiations, including those with General Whitney over the new constitution and, as a consultant, in those conducted by the Japanese delegation at the San Francisco Peace Conference. On December 1, 1948, Yoshida appointed Shirasu director-general of the Board of Trade.

On December 19, three weeks after Shirasu took over at the BOT, General MacArthur transmitted to the Japanese government his nine-point Economic Stabilization Plan. This called for a balanced budget, strengthened tax collection, limitations on RFB loans, improved controls over foreign trade and U.S. aid, increased production, and several other reforms that were intended to bring Japan back into international commerce but that would also impose very harsh conditions on the Japanese people until the exports started to flow. The immediate objective of the plan was to establish a fixed exchange rate. MacArthur made it clear that concrete policies to implement the nine principles were the responsibility of the Japanese government, but he added that the United States was sending an adviser to assist the government in its efforts and to monitor its progress. This adviser was the Detroit banker and former financial consultant to General Lucius D. Clay in Germany, Joseph Morrell Dodge (18901964).

Dodge arrived in February 1949 and, working with Yoshida's new minister of finance, Ikeda Hayato, he compelled the government to write an overbalanced budget. On April 25 he also established the official exchange rate of US$1 = ¥360 that was to last until 1971. He authorized the creation of the Japanese Export-Import Bank and the Japan Development Bank, and he supervised a host of other critical decisions that affected the Japanese economy for years to come. Dodge's most important achievement was the sudden, drastic curtailment of inflation through a draconian reduction of demandwhat Maeda has called "rationalization through unemployment" (

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