MITI and the Japanese miracle

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seeming wholesale payoffs by the government to business interests with preferential access or advance knowledge: the "dollar-buying scandal" of 1931, the payments to munitions companies immediately following the defeat in 1945, and the Bank of Japan's dollar-buying policies at the time of the August 1971 "Nixon shock" (in the face of certain knowledge that the yen would be revalued). On August 27, 1971, alone the government paid out some $1.2 billionsix times the amount involved in 1931to purchase dollars that had already been devalued on the rest of the world's foreign exchange markets. Total Bank of Japan dollar purchases in 1971 came close to $6 billion at ¥360 = $1 instead of ¥308 = $1; this represented a gift to business concerns of almost $1 billion. Some writers have called this "institutionalized corruption"; others have argued that it was the government's attempt to soften the blow for industries that would henceforth be selling their products at less advantageous prices.

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The reemployment of retired government bureaucrats on the boards of industries currently designated as economically strategic also creates many opportunities for hand-in-glove relationships. A classic case was the so-called Hakone railroad war of the late 1950's between two big private railroad systems, Seibu and Tokyu*. The issues involved the development of tourist railroads and bus franchises in and around the Mount Fuji area, a rail route from Ito* to Shimoda, and tourist boats between Atami and Oshima* Island. In every instance the Ministry of Transportation gave approval or issued licenses to Tokyu. The explanation of informed observers was that the president of Tokyu, Goto* Keita (18821959)one of the pioneers of the railroad, hotel, and department store businesses in Japanwas also a former official of the government railways and a minister of transportation in the Tojo* cabinet. The vice-president of Tokyu and president of the Tokyu*-backed Toei* Film Company was Okawa* Hiroshi, also a veteran of the Japanese National Railways. The executive director of Tokyu and also president of Tokyu Rolling-Stock Company was Yoshitsugu Toshiji, who had served in the old Railroad Ministry for more than twenty years. In addition, Karasawa Tsutomu, the Tokyu managing director; Kawahara Michimasa, president of the Tokyu-affiliated Keihin Rapid Transit Company; Torii Kikuzo*, vice-president of the Tokyu-affiliated Sagami Railroad Company; Shibata Ginzo*, president of the Tokyu-affiliated Hakone-Tozan* Railroad Company; Kajiura Kojiro*, president of the Tokyu-affiliated Enoshima-Kamakura Electric Railway Company; and Kawai Kentaro*, president of the Tokyu-affiliated Shizuoka Railway Company, were all former officials of the Ministry of Railways or its postwar successor, the Ministry of Transporta-