When first set up, the CPB was divided into six departments: general affairs, domestic plans, financial plans, industrial plans (Uemura Kogoro* was the first head of this department), communications plans, and research. In 1939, after the dismal failure of its first efforts at economic planning, the CPB was reorganized into a secretariat, first department (general policy for the expansion of national strength), second department (overall mobilization), third department (labor and civilian mobilization), fourth department ("materials mobilization plans" and "expansion of production plans"), fifth department (trade and finance), sixth department (transportation and communications), and seventh department (science and technology). It underwent several more minor changes in later years (the fourth department, for example, was merged with the second department). Prince Konoe named his old professor of law at Kyoto University, Taki Masao, to be the first president of the CPB, but subsequent presidents and vice-presidents were reform bureaucrats or military officers (see Table 9). The CPB's initial staff consisted of 116 career officials, technicians, and temporarily attached specialists.
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TABLE
9
Leaders of the Cabinet Planning Board, October 23, 1937October 31, 1943
Cabinet
President and vice-president of board
Remarks
First Konoe 10/371/39
Taki Masao
Postwar member of the House of Representatives of the Diet.
Aoki Kazuo
Finance bureaucrat. Minister of finance, Abe cabinet. Ambassador to Nanking, 1940. Minister of greater East Asia, Tojo * cabinet. Postwar member of House of Councillors, Diet.
Hiranuma
1/398/39
Aoki Kazuo
Takebe Rokuzo*
See above.
Home ministry bureaucrat. Director, General Affairs Agency, Manchukuo, 194045. Prisoner in USSR, 194556.
Abe
8/391/40
Aoki Kazuo
Takebe Rokuzo
Concurrently finance minister.
See above.
Yonai
1/407/40
Takeuchi Kakichi
Uemura Kogoro*
MCI bureaucrat.
Postwar chairman, Fuji Television, Japan Airlines. President of Keidanren, 1968.
Second Konoe 7/404/41
Hoshino Naoki
Finance bureaucrat. Chief cabinet secretary, Tojo cabinet.
Obata Tadayoshi
Sumitomo zaibatsu.
Second Konoe 4/417/41
Suzuki Teiichi
Lt. General. Convicted class A war criminal. Released 1956.
Miyamoto Takenosuke
Home ministry bureaucrat. Engineer.
Third Konoe 7/4110/41
Suzuki Teiichi
Abe Genki
See above.
Home ministry bureaucrat.
Former chief, Special Higher Police. Lost election as LDP candidate for House of Councillors, 1956.
Tojo
10/4110/43
Suzuki Teiichi
Abe Genki
See above.
See above.
NOTE
: On December 6, 1940, in the second Konoe cabinet, the president of the CPB was given cabinet-level rank as a minister of state (
kokumu daijin
).
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The most famous product of the CPB was the National General Mobilization Law (Kokka Sodoin * Ho*, law number 55, introduced in the Diet on February 24, 1938, passed April 1, 1938, and put into effect May 5, 1938). It was more than an economic law. It was intended as a replacement for the munitions law of 1918, but it actually authorized the complete reorganization of the society along totalitarian lines. According to Murase, its drafter was Uemura Kogoro*.
37
Despite the law's scope, its 50 articles contain very few concrete rules or stipulations. All details of implementation were left to Imperial ordinances, which the bureaucracy could issue on its own initiative without reference to the Diet. The law, in fact, became a carte blanche for the executive branch to do anything that it and its various clients could agree on; its policies extended not just to industry and the economy but also to education, labor, finance, publishing, and virtually all social activities even remotely related to the war effort.
38
The Diet vigorously debated the mobilization law. Leaders of the new zaibatsu approved it, even though they did not like controls, because it signaled more business for them. The old zaibatsu and independent business leaders raised numerous objections and demanded a say in the ordinances that would implement the law (this they received), but they were quieted during 1938 with assurances that the China Incident would end soon, or they were shouted down by military spokesmen in the Diet chambers. Some economic leaders seemed to imply that a façade of civilian control should be maintained in order to prolong friendly trading relations with the United States and Great Britain, to which the military agreed, and dividends on equity shares continued to be paid until virtually the end of the Pacific War, when the zaibatsu no longer objected to the nationalization of their destroyed factories. These zaibatsu ownership rights turned out to be virtually the only civilian rights that were respected throughout the wartime period.
More important than the mobilization law to an understanding of postwar industrial policy was the work of department four of the CPB, which was responsible for formulating the materials mobilization plans (
busshi
doin
*
keikaku
, abbreviated
butsudo
*).
39
Despite their being top secret (only during the 1960's were full details about them published), their influence on postwar economic management cannot be overstated. All analysts agree that the experience and methods of the wartime materials mobilization plans reappeared in the Temporary Materials Supply and Demand Control Law (Rinji Busshi Jukyu* Chosei* Ho) of October 1946, which was MCI's basic control law dur-
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ing the occupation, and in the "foreign currency budgets" of 1950 to 1964, which were MITI's main instruments of control during the high-speed growth era. The plans also reflected the strong influence during the 1930's in Japan of Stalinist economicsparticularly economic analysis in terms of the direct supply of commodities to industry rather than the attempt to reconcile supply and demand through prices and other market forcesand of the Soviet five-year plans as a means of rapid industrialization, regardless of their effects on consumption and welfare.
40
The initial materials mobilization plan, not yet so named, took the form of a report dated November 9, 1937, from the president of the CPB to the prime minister estimating that there was a total of ¥470 million in currency reserves to pay for emergency military imports during the last quarter of 1937. The report also offered a budget for spending this amount. With the China Incident continuing to expand, Uemura's Industrial Plans Department set up a General Affairs Unit for Materials Mobilization Plans (Butsudo* Somuhan*) and charged it with designing a similar budget for the calendar year 1938. This was the first true materials mobilization plan. Prepared in two months, the plan took as its basic assumption that there would be an import capability of ¥3 billion for the year. It then calculated the military and civilian needs that this amount had to cover and specified the exact quantities of some 96 commodities that it authorized for import. The plan also calculated the supplies of each commodity that would be available from domestic production, from Manchuria and China, and from stockpiles. After approval by the cabinet on January 16, 1938, the plan was transmitted to MCI for implementation, using as a legal basis Yoshino's foreign trade law of September 1937. The CPB itself had no operational authority or capability.
By midyear the planners discovered that they had overestimated foreign exchange by about ¥600 million, and on June 23, 1938, they therefore issued a revised plan. Both
the first and second plans of 1938 necessitated structural changes within MCI and also incorporated the first steps in the program to convert some industries, forcibly if necessary, to munitions production. This program affected primarily textile industries and medium and small enterprises (discussed in Chapter 5). The plan also led to the so-called link system (a system revived again for the same purposes during the mid-1950's) in which raw materials imports were authorized only for those civilian industries that manufactured goods for export and that earned more foreign exchange than they spent. The link system also caused a reor-
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ganization of the Trade Bureau into vertical departments for each market and commodity.
The 1939 plan was considerably more elaborate than the one for 1938. Calculated on the basis of quarters of the fiscal year rather than the whole calendar year, it covered about four hundred commodities grouped into ten master categories (steel, nonferrous metals, chemicals, and so forth), and it established an eightfold priority list for the distribution of raw materials:
41
A
army munitions
B
navy munitions
C
1
military reserves (C
1A
army and C
1B
navy)
C
2
materials for the expansion of productive capacity
C
3
nonmilitary governmental requirements
C
4i
materials for use in Manchuria and China
C
4ro
materials for export goods
C
5
materials for the general population
Even though this plan was more carefully thought out than the first, several factors combined to make it go as haywire as its predecessor. Perhaps the most persistent problem was fighting between the control officers of A and B materials. They regularly interrupted conferences with accusations of plots, and this ultimately led to the military police's arresting some CPB military officers on charges of corruption. Other disputes often had to go to the cabinet for settlement. In addition, after the outbreak of war in Europe on September 1,1939, the British embargoed exports from India, Canada, and Australia, which ruined all import forecasts; and the 1939 drought in western Japan and floods in Taiwan and China forced the government to allocate some 10 percent of its total import capability for food. Until then the planners had assumed that Japan was self-sufficient in food at least. The drought also cut hydroelectric power output and thus caused a decline in domestic production of munitions and export goods.
42
Officials involved with the planssuch as Kaya Okinori (minister of finance during early 1938), Inaba Hidezo* (arrested by the military police in the Cabinet Planning Board incident of 1941, discussed below, and a leading planner of Japan's postwar reconstruction), and Tanaka Shin'ichi (Inaba's successor as the highest-ranking civilian official in the General Affairs Unit)have all written, in regard to the early years of materials mobilization planning, that their concepts and methods were primitive, that their statistical base was supplied by the industries they sought to control, and that competition between
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the military services for allocations made their lives almost intolerable.
43
Tanaka Shin'ichi divides the planning into two periods: 193840, during which the determining element in the plans was the amount of foreign currency reserves; and 194144, during which the determining element was marine transport capability. The leader of the General Affairs Unit during the first period was an army officer, and during the second period a naval officer.
Although there were many interesting technical problems of conceptualization and procedure in these plans, by far the most lasting influence they were to exercise on later Japanese industrial policy came from the experience gained by MCI in trying to implement them. On May 7, 1938, in order to deal with its new rationing function, MCI created a powerful external unit called the Temporary Materials Coordination Bureau (TMCB; Rinji Busshi Chosei* Kyoku, based on Imperial ordinance 324). The minister of commerce and industry was concurrently its director-generalto signify its importancebut its deputy director was actually in charge. Yoshino was still minister and therefore the first director, although he was dropped from the cabinet less than three weeks after the bureau was created. Its first deputy director and actual leader was Murase Naokai, who served at the same time as vice-minister of MCI.
The Fuel Bureau was the first unit in MCI to be devoted exclusively to a commodity, but the TMCB was the first unit to adopt the principle of vertical organizations classified by materials for its internal organization. The TMCB was divided into six departments and fourteen sections, ranging from department one, section one (in charge of steel and manganese), through department four, section nine (in charge of chemical textiles, paper, and pulp), to department six, section fourteen (in charge of import plans and funds to pay for imports). All commodities covered in the materials mobilization plan were assigned to one or another section, which then had to decide how to meet the targets and had to negotiate with other bureaus and with industries about terms, delivery dates, and so forth. The TMCB was heavily staffed with military officers, and all the civilian MCI officials who worked there became intimately familiar with the plan and with its authors in the Cabinet Planning Board.
44
The TMCB did not work well. Among its many problems were conflicts of jurisdiction within MCI itselfparticularly among the TMCB, the Trade Bureau, and the Fuel Bureauand externally with the Ministry of Finance over the licensing of imports and the use of foreign exchange. The conflict with the Finance Ministry led in December
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1941 to MCI's surrendering its long-standing control over the insurance business and over the stock and commodity exchanges in return for control over import and export licensesa change that made MCI even more exclusively an industrial policy agency, and that established the link, seen again later in MITI, between industrial policy and trade. Conflicts also occurred between MCI officials and the military and between MCI officials and the Cabinet Planning Board. As a line organization, the ministry tried repeatedly to convince the staff of the CPB that drafting and executing a plan were two different things: zaibatsu firms were in competition with each other, skilled manpower was in short supply, capital availability was a problem, black markets were appearing, and the military regularly made direct deals on its own.
During the second half of 1938, the quality of life in Japan went rapidly downhill, and this, too, contributed to the TMCB's troubles. The revised materials mobilization plan halved imports for the civilian sector and drove innumerable medium and smaller enterprises out of business. By one estimate some 390,000 bankruptcies occurred during August 1938 alone.
45
During the same month the Home Ministry deployed what the public called the "economic police." This involved the stationing in all police offices of twelve or thirteen procurators and investigators who specialized in "economic crimes" and tried to control the black markets and maintain official prices. The TMCB thus became distinctly unpopular with the citizenry.
Perhaps the main reason the bureau did not work well was the persistent difference in political outlook that existed between MCI under Murase and the reform bureaucrats. Shiina says bluntly that both Murase and Takeuchi Kakichi, the TMCB's only deputy directors during its short existence, did not get along well with the military and sought to create their own factions as counters to those of the reform bureaucrats. Equally important, the zaibatsu and the party politicians in the Diet did not like the way they had been treated during the debate over the mobilization law, or the trend of events generally. They fixed their irritation particularly on the presence in the cabinet of two former bureaucrats in key economic positions, minister of finance and minister of commerce and indu
stry. Their way of dealing with this problem was to ignore both Kaya and Yoshino and subtly to sabotage the controlled economy. Much of the control structure existed only on paper; the reality was that the bureaucracy had to negotiate every contract in order to get industry's cooperation.
In May 1938 Prime Minister Konoe sought to placate business inter-
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ests by dropping Kaya and Yoshino from the cabinet and replacing them both with one manIkeda Seihin, a former Mitsui executive and an "elder" of the business world. Ikeda had retired from business following the military coup d'etat, and in 1938 he was serving as governor of the Bank of Japan. He was acceptable to the business community because of his background, and he was acceptable to the military because he was tolerant of economic controls as long as the business community dominated them. Konoe and his military advisers also hoped that a single leader serving concurrently as minister of both finance and MCI might mitigate the increasingly serious bureaucratic jurisdictional disputes between the two ministries.
MITI and the Japanese miracle Page 23
