MITI and the Japanese miracle

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ment of six months or more. Most "plant exports" in the mid-1950's were actually ships, and a good many of them were only exported for a day. They were then resold back to Japanese shipping companies, the whole transaction having been subsidized by the Export-Import Bank. During the recession of 1954, as we shall see later in this chapter, MITI came up with an even more ambitious scheme for paying for ship "exports"it linked their manufacture and sale to the extremely lucrative sugar and banana importing business.

²⁰

The age was one of quite inventive ad hoc arrangements.

Of the six government banks established between 1949 and 1953 (plus two more that continued undisturbed from the prewar era), the most important for industrial policy was the Japan Development Bank (JDB), created by law number 108 of March 31, 1951.

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Despite Ikeda's pleas to Dodge that the JDB be allowed to borrow from the postal savings accounts, Dodge refused. During 1951 Dodge authorized disbursements from the savings trusts for specific government projects, but because of SCAP's hostility to the JDB, the funds could not be assigned to cover such an RFB-like operation. SCAP provided all of the JDB's initial capital of ¥10 billion from counterpart funds, and it allowed the bank to be established only on condition that it would not be permitted to issue debentures, borrow funds, or grant loans to cover an enterprise's operating costs. Old occupation hands were still very wary of reigniting inflation. According to SCAP historians, the JDB "was to provide long-term equipment loans to private enterprise when the commercial banks were not in a position to assume the risks involved."

²¹

Within a year of its creation the JDB became one of MITI's most important instruments of industrial policy. The bank itself had been put under the Ministry of Finance's administrative jurisdiction, but MITI exercised a predominant policy-making influence because it was given the duty of screening all loan applications and making annual estimatesto be transmitted to the bank's board of directorsof the shortfall between available and needed capital. For example, for fiscal 1952 the Enterprises Bureau calculated that investments in the steel industry would require ¥42 billion, of which the steel firms could generate or borrow from their banks ¥31.5 billion, and that coal

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The eight government banks existing at the end of 1953 were the Central Cooperative Bank for Agriculture and Forestry (1926), the Bank for Commerce and Industrial Cooperatives (1936), the People's Finance Corporation (1949), the Housing Loan Corporation (1950), the Export-Import Bank (1950), the Japan Development Bank (1951), the Agriculture, Forestry, and Fishery Finance Corporation (1953), and the Smaller Business Finance Corporation (1953). See Chalmers Johnson,

Japan's Public Policy Companies

(Washington, D.C.: American Enterprise Institute, 1978).