MITI and the Japanese miracle

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would need ¥40 billion, of which ¥27 billion could be raised from civilian sources. The rest was to be provided by the JDB.

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In addition to these inputs to the bank, MITI also placed some of its important retired "seniors" on the JDB's board, beginning with Matsuda Taro*, the last MCI vice-minister and a member of the JDB board from August 1952 to June 1957 (Matsuda was succeeded by Yoshioka Chiyozo*, MITI 1934 to 1957, and Yoshioka was succeeded by Imai Hiroshi, MITI 1937 to 1962).

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Almost as soon as the occupation ended, the government amended the JDB's charter (law number 224 of July 1, 1952) giving it authority to issue its own bonds and lifting the loan ceilings that SCAP had imposed. At the same time the Ministry of Finance modified all of the statutes covering the postal savings accounts, combining them into one large investment pool named the Fiscal Investment and Loan Plan (FILP; Zaisei Toyushi* Keikaku). This "second" or "investment" budget was constructed annually by officials of the Ministry of Finance and of the Industrial Capital Section of MITI's Enterprises Bureau. From 1953 on it became the single most important financial instrument for Japan's economic development.

In order to keep FILP healthy and to ensure that people kept depositing their savings in the post office, the Ministry of Finance made the interest on the first ¥3 million (circa $15,000) that an individual deposited tax exempt and authorized highly competitive interest rates. The system became a rousing success, so much so that during 1980 the total amount of postal savings was estimated at nearly ¥55 trillion (four times the assets of the Bank of America, the world's largest commercial bank); this compares to ¥31 trillion in personal deposits with all city banks and ¥30 trillion in personal deposits with regional banks. (During the 1970's the postal savings system was to become the major means of tax evasion in Japan, since an individual saver could open as many ¥3 million savings accounts as there were post offices in the country, and the Postal Ministry claimed that it was simply unable to monitor the numbers of the accounts involved. To compound the problem, postmasters routinely recommended to savers whose accounts threatened to exceed ¥3 million that they open an account at another post office.)

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When FILP was created, the Development Bank was authorized to borrow from its funds, and then to make loans to industrial customers who had been approved by MITI.

From 1953 to 1961 the direct supply of capital by the government to industry (as distinct from its indirect supply via overloans) ranged from 38 percent to 19 percent (see Table 15). The JDB itself contributed 22 percent in 1953 and only 5 percent in 1961, but even as the size of