10
RICE, MOUNTAINS
AND MACHINES
Hana yori dango—
Dumplings are better than flowers
Japanese proverb
The train of the Kyuko Kabushiki Kaisha in which Tadao Yamazaki rides to work each morning is almost a reproduction of the economic society in which he and his countrymen live. It is badly overcrowded, but more passengers get on at every stop. The equipment, although serviceable, needs repair; but since Yamazaki and his fellow-passengers have no other way of getting to their destination, there is no possibility of taking the train out of service for an overhaul. Like all electric trains, the cars get their power supplied from distant generators. If the current from this far-off source of power is cut, they cannot move.
Japan met the industrial world of the eighteen eighties head on, with no historical brakes or shock absorbers to cushion the impact. Japan in the nineteen fifties is nearer than any world power—possibly excepting Great Britain—to a head-on reckoning with the complexities of modern industrial society. There is no camouflage about this reckoning in Japan. Yamazaki, Kisei and Shimizu all know that whether there is enough wool and cotton on their backs and enough rice and vegetables on their tables depends intimately on whether there is coking coal in China, iron in Malaya, or cotton in Pakistan—and whether the people in those places are willing to sell these materials, in return for what Japan can offer them.
The population of Japan is increasing at the rate of over a million people a year. In 1920 the Japanese census showed a figure of 55,391,000. Ten years later it was 63,872,000. In 1946 there were 76,155,000 Japanese—the losses in war had been more than balanced by the repatriation of colonists from China and the Pacific. In 1952 the population was, roughly, 85 million. Before 1970, barring catastrophe, this number will grow to 100 million. The increase is geometrical and inexorable. In the short run, even the widest application of birth control methods can not do more than arrest this progression slightly.
The islands on which these people live cover 142,270 miles of land, a slightly larger area than the British Isles and a slightly smaller area than the state of California. They are mountainous. The evocative word "mountainous," translated into scientific language, here means that 65% of the land in Japan has a slope of 15% or more. Where mountains, or the nearness of mountains do not make farming impossible, bad soil, erosion or poor drainage often does. Only about 17% of Japan's soil is fit for any type of cultivation.
The Japanese are good farmers. A moist climate, but not excessively rainy, gives them the luxury of considerable double-cropping. Besides rice and other staple grains, they can grow a sweeping variety of foods. The broad wheat lands of Hokkaido are not unlike the fields of Minnesota and the southern soil of Kyushu favors tropical citruses. The Japanese are good fishermen. In normal times they account for one-fourth of the world's fish products—from offshore octopus and herring to whale meat from the Antarctic. But by any reckoning, the farmers and fishermen of modern Japan have not and will not be able to produce more than 80% of their food supply. This figure, in itself, is optimistic and based on a bare level of subsistence.
Japan is thickly forested. But until a better reforestation program can show its results, Japanese forests can meet little more than 60% of the nation's demand for wood—not only for the wood to build houses, but wood for paper, fuel and the thousand other uses for timber which the Japanese, chronically poor in metal resources, have improvised. Without stripping the forests bare—completing the damage caused by the war economy of World War II—wood must be imported. There are some fiber materials in Japan, but wool and cotton must also be imported, if the Japanese are to have anything like an adequate clothing supply.
In industrial raw materials, Japan's deficiencies are more profound. The short but turbulent rivers are a fortunate source of electric power—Japan has one of the largest hydroelectric power systems in the world. There are narrow veins of coal under the ground of Kyushu and Hokkaido, almost all that the Japanese need for low-grade uses. There is much sulphur, and copper in some quantity. Here the list of assets almost comes to an end. Although Japan has 22 of the 33 industrial minerals in one form or another, the supply of most is very scanty. At the lowest production levels, the Japanese must bring in over 2,000,000 tons of ore each year, 80% of the iron needed for their steel mills. Their coal is not suitable for coking. Lead, tin, copper and other lesser metals must be imported. They desperately need potash and phosphate for their chemical fertilizers. They have no land sources of salt. There is scarcely any oil.
These handicaps have far from crushed the Japanese. Like other island nations, they have worked hard and traded hard. They have fought for their own bread and taken the bread from the mouths of others. They have known days of great prosperity. During World War I Japan was a booming creditor nation, with most of the European Allies in its debt. Even today the Japanese, as a people, enjoy the highest living standard in Asia.
But poverty of resources is the unvoiced threat over the life of modern Japan. Shimizu, Sanada, Yamazaki, Kisei and Hirohito—they all in different ways live the economy of scarcity, in a country where there is never quite enough. Scarcity has made them suspicious of the outside and envious. It has helped drive them to war. It appears in the austerity of their art and the simplicity of their houses. It has its echo in their solidarity and their urge for cooperation, their fascination for the collective.
There is very little waste in Japan. Small children pick up carpenters' shavings and take them home to their parents. Unburned bits of coal are snatched from factory cinderpiles. Tree stumps are scarcely visible, because Japanese woodsmen painstakingly cut so close to the roots. Newspapers are seldom thrown away. Paper and string from packages are saved—not by especially frugal people, but by all the people—because all Japanese are frugal. Frugality is in fact a bond among them. It has shaped their tastes to an inclusive degree. The rich man may have beautiful wood in his house or ancient and expensive scrolls in his alcove, but there is very little difference between the kind of house he has and the houses of the middling well-off or of the very poor.
In 1936, in an issue of Fortune magazine devoted to Japan, Archibald MacLeish gave an awed American description of this scarcity:
"There are the roads always narrow and mostly at the wood's edge or the river's. There is the straw piled on brushwood bridges off the loam and the trees only growing at the god's house, never in the fields. There are the whole plains empty of roofs, squared into flats of water, no inch for walking but the dike backs, not so much as a green weed at the foot of the telegraph poles or a corner patch gone wild.
"There are the fields empty of crows after harvest: thin picking for black wings after cloth ones.
"There are the men under moonlight in the mountain villages breaking the winter snowdrifts on the paddies to save days of spring.
"There are the forest floors swept clean and the sweepings bundled in careful, valuable piles.
"There are the houses, without dogs, the farms without grass-eating cattle. There are the millet fields at the sea's edge following the sweet water to the brackish beginning of the salt, the salt sand not the thickness of a stake beyond.
"There are the rivers diked and ditched and straightened to recover a napkin's breadth of land and the hill valleys terraced till the steepest slope turns flatwise to the sun.
"There are the mountains eroded to the limestone where the axes and the mattocks have grubbed roots.
". . . Japan is the country where the stones show human fingerprints: where the pressure of has worn through to the iron rock. . . ."
* * * * *
By the standards of the American's description Sakaji Sanada has left his fingerprints on more stones than he would care to remember. Yamazaki or Kisei can easily feel deceived about their country's power and material stability, watching the new concrete office buildings spilling over Tokyo's business section, or wrapped in the smoke from the busy furnaces of Yahata, which now pour out nearly their capacity load of finished steel. But Sanada can never escape a reality as hard as those rocks in his fields: too many men on too little land.
In Japan Sanada is a prosperous farmer. Before the war he had twelve acres of field and paddy land; although land reform has cut his holdings to less than six, this is still far above the average size of a Japanese farm. He plants rice, wheat, barley, white potatoes and vegetables—beans, corn, pumpkin, squash and gourds. The rice he sells. Each October he averages a harvest of 120 bales which he currently sells at 3,720 yen per bale,* a better price than he has realized for a long time. The wheat, barley and vegetables he grows for the use of his own family and relatives. Some is used as feed for his one horse. Inside his house his looms are kept working from six to twelve hours a day—except during harvest and planting time. The two machines currently in use will make about 600 yards of silk material per month (which he sells in Tokyo at 600 yen a yard).
This division of Sanada's interests is the result of necessity, not of choice. The looms provide the margin between a bare subsistence level and a few small luxuries for the Sanada family, as they do for most of the population of Shimoyoshida. The crops they grow insure, generally, that there will be food** on the table and some clothing on their backs. But even this minimum of security is bought only with constant struggle. The upland fields are not rich. In other, more spacious countries, they would be used for pasturage. To bring forth any kind of a crop, Sanada must use large amounts of fertilizer—both chemicals and the night soil which gives Japanese fields their familiar odor. He is barely able to harvest one crop a year. The fields are used without rest. Sanada plants potatoes or vegetables between the rows of wheat.
Each day of his life Sanada can look up from his work to see the summit of Mt. Fuji serenely watching the hills around him. It is the symbol of Japan that is universally known and admired. Many Japanese climb Fuji almost in the manner of pilgrims going to a religious shrine. Foreigners are seldom content to leave Japan without at least looking at it from close by. But, although appreciative of the slight tourist business which Shimoyoshida, somewhat off the beaten track, gets from the Fuji visitors, the struggles of his daily life have given Sanada a practical grudge against the sacred mountain. "It is beautiful to watch," he concedes, "but we can't eat or live from it. Fuji stops the warm ocean breezes that would otherwise come in on us from the Pacific. We'd be a much happier, much wealthier farming community if we could enjoy the climate which they have on the southern side of Fuji. We'd be happier, in fact, if something blew Fuji away—perhaps an atom bomb."
Sanada's fields lie over a mile from his house. Instead of one broad patch of land they are a hodgepodge of diked squares, looking almost ornamental in the symmetry of their borders. They do not border one another; it is impossible for anyone who is not a resident of Shimoyoshida to tell which field belongs to Sanada and which to his neighbors. The fields of all the households in the buraku are tangled together in a way that would make neighborly cooperation a pressing need, if it were not already practiced. At the times of planting and harvesting, Sanada's entire family, down to his grandchildren, are out in the fields with the neighbor families working over the crops. It is the same at home, where daily work is broken down and distributed among members of the family with the regularity of a military operations plan. Except for the very young and the very old, everyone has his job, duly assigned and performed, which takes precedence over all else. The Japanese have found out that the only way to compensate for overpopulation is distributive work.
Sakaji Sanada inherited the economy of scarcity from his father and his grandfather, who in their time owned even smaller plots of land. His standard of living is better than theirs. If he were to go even further towards the roots of his family tree, he would not be envious of the bare scrabbling for existence of his peasant ancestors. Sanada, with his radio, his ballot box and the two daily newspapers he gets from Tokyo, could no more be called a "peasant" than a farmer in Iowa. Yet Sanada's generation lives face to face with a far harder set of realities than their ancestors of a century or two ago.
In the olden time Japan was a rich country. In 1697 the agriculturalist Miyazaki Yasusada could write with justice:
"Apart from China and Korea, it is said that nowhere can such a fortunate country be found. . . . All kinds of cereals, vegetables, plants and herbs, in fact all varieties of agricultural products for food, clothing, habitation and other human wants can be raised in our country, if proper knowledge and appropriate methods are applied and suitable seed is used. . . . With the exception of certain trees and plants, it may be said that everything could be supplied without relying on imports from abroad."
The population of Japan was then about 26 million. It remained about the same for over a century, until the resumption of foreign trade in the eighteen seventies. Poverty kept it from rising. If not by actual famine, the numbers of new Japanese were kept down by large-scale abortions and the killing of new-born children, in houses which could not support them. This poverty, however, was the result of unfair distribution of wealth, rather than a lack of it. In Tokugawa Japan, the farmers were exploited to fatten the stomachs and purses of a parasite class of samurai and officials. It was an adage that "the farmer should neither live nor die." But if land and the products of the land could have been distributed fairly, something approaching the good life could have been enjoyed by all Japanese.
Sanada cannot console himself with any similar plans. In his time the land, for practical purposes, has been distributed fairly. There is no real parasite class in Japan. Almost all Japanese work hard and work together. But the fact is inescapable that a rich country of 25 million population has become a poor country of 85 million population. The rise of science, trade and industry in the late nineteenth century encouraged the sensational rise of births. And birth begat its own problems.
* * * * *
Modern Japan is a creature of modern industry and trade. It stands or falls by them. Almost one-half of the working population is engaged in tilling the soil, but their labor is not decisive. The finished goods from Japanese factories and the maintenance of a profitable stream of commerce with the outside decide Japan's survival, as well as its prosperity. Even Sanada, in his upland farmhouse, is vitally affected by changes in the world textile market, or the appearance of new fibers discovered thousands of miles away from him.
The structure of business and finance which the Japanese have raised to meet this challenge is a peculiar one. Like the structure of prewar Japanese political government, it was built on quickly laid foundations, and, necessarily, from materials on hand. Additions and superstructure were of increasingly modern design, but always altered by the singular nature of the foundations. The result was the usual tantalizing mixture of old and new. The selling methods of a Japanese firm, or its scientific testing laboratory, might be as modern as the rakish, swept-back stacks of a Mogami class cruiser or a new NYK liner. But the ownership set-up, with all the postwar reforms, is generally as traditional as the high poop-deck of a Japanese fishing sampan.
The web society shows its traces clearly in any contrast of Japanese business practices with those of other nations. Competition exists in Japanese life, just as it does everywhere else. No one who has seen the variety of shops or individual peddlers who somehow sprouted out of the ruins of Tokyo in 1946, selling a weird and amazing variety of merchandise for a bombed-out capital, could doubt that in one sense the Japanese are a nation of free enterprisers. But free enterprise, pronounced in Japanese, has a sound and a meaning all its own. In a country where waste can be fatal, not just annoying, large-scale competition, to begin with, has very stern limits. Historically, it has also been hedged with rules, under-the-counter agreements and trade organizations on a low level, and with cartels and labyrinthine holding companies on a higher level.
The instinct for the collective that brings Sakaji Sanada to help his neighbor at harvest time or creates a reluctance in Hideya Kisei to impede production by a strike is more, however, than economic determinism, the result of Japan's pinched natural geography. The Chinese, after all, have lived in a similarly crowded economy, hedged by famine and bitter economic injustice; but their form of competition is free to the point of being destructive. The differences in Chinese and Japanese definitions of competition have been dramatized in their contacts throughout Asia. Put five Chinese businessmen and five Japanese businessmen on a strange island. For a while, man for man, the Chinese will outsell the Japanese. After six months, however, the Chinese will have begun a destructive competition against each other, as well as the Japanese. But the five Japanese businessmen will have organized a workable cartel, which will then use its combined assets to crowd the Chinese, singly, out of the running. (If the cartel somehow failed to do the job, the Japanese, in the old days, would call in a cruiser to complete the ruin of the competition.)
Besides this island instinct for group action—and related to it—is the determined effort to share work. Japan's poorness of resources has given the Japanese an idea of manpower totally the opposite of the American. In America, where resources and machines abound, they do the work of men. In Japan, where resources are scarce, men do the work of machines. Laboi is cheap in Japan. This is not so much a passing survival of a feudal outlook on life or a reflection of a backward technology, as it is recognition of some cruel but basic economic facts. American reporters in Tokyo were amused to see Yamazaki and his fellow-reporters on Asahi covering their stories "by platoons." But this did not necessarily imply a Japanese belief that one or two men could not have done the job well. It was an implicit recognition that there are too many men in Japan for any job, but that they must be used and allowed a chance for gainful work of their choice.
With these preliminary observations in mind, it would be well to look briefly at the origins of Japan's modern economy. Like the political system and the Westernized society of Meiji, it had a frantic growth. It evolved, in fact, far more quickly than Japanese political institutions of the Meiji era and there was far less argument about it. Liberals like Itagaki Taisuke and Conservatives like Saigo Takamori could argue or fight a civil war over the objectives of foreign policy, or the advisability of an early constitution. But a steel mill was a steel mill—and all but the most die-hard of the provincial samurai agreed that Japan needed steel mills in a hurry.
The Japanese economy began, frankly, as a war industry. As has been suggested earlier, it was not an aggressive war industry, but purely defensive. More realistic than the Chinese of the time, the Japanese in the eighteen sixties knew that the only thing which could ultimately prevent European colonization or semi-colonization in Japan was a strong Japanese army and navy, armed with modern weapons. (Judging by the fate of Africa and other parts of Asia during the same period, they were right.) Modern weapons are the products of modern factories. Therefore, modern factories had to be built.
There were, of course, natural peaceful incentives for building industrial plants—the Meiji reformers were not blind to the benefits of consumer goods and cheap mass production. But heavy industry was the basic consideration. The first arsenal was built 20 years before the first textile plant. The Japanese skipped the long evolution of industry which had taken place in Europe and the United States. Without inching their way through the quieter currents of first small factories and then of larger consumer goods production, they plunged headfirst into the depths of heavy industry. It was not surprising, under the circumstances, that even the most experienced divers would have a case of the economic bends.
In 1868 the young samurai of Meiji had already drawn the blueprints of Japan's modern industry: mines, steel mills, arsenals and railroads to connect them. When they looked up from their plans, however, the outlook for tools and construction was discouraging. Japan was not, to be sure, a colonial country with only the most primitive type of economy. But the business and industry of the Tokugawa era was almost as feudal as its politics. The country was above all an agricultural producer. Rice fields were at once the industrial base and the gold reserve. There was considerable home manufacture, but it was all done through the agency of cumbersome craftsmen's associations, like the medieval guilds of Europe.
The one group of people with the organization and the imagination for creating a modern industrial state were the rich merchants of Osaka and, to a lesser extent, the other cities of Japan. Through the two centuries before Meiji these traders had elevated themselves to a key position in the country. As the only men in Japan who dealt in cash, they had become indispensable to the feudal lords and their samurai, who were often forced into large cash expenditures by the exactions of the shogun's government. There was hardly a clan leader who had not at one time or another pledged the rice yield of his estates in return for a quick loan. On a smaller scale, the farmers often came into the merchants' debt in the same manner. The concentration of the merchants' wealth in the large cities produced a big consumers' market—and more traders to take care of it. Osaka, the merchants' headquarters, was popularly known as the "Kitchen of Japan." It was plain and workaday, but the country could not get on without it.
It was quite natural that the samurai reformers of Meiji call on the proprietors of the Kitchen to cook up some modern financing and industry. The old class barriers be tween the samurai and the merchants had ultimately broken down, as their financial interdependence grew. By the eighteen sixties the large families of Osaka were already going through that refining transition period in which merchants become businessmen and usurers become bankers. There was considerable intermarriage and adoption between the samurai and the new "businessmen." Many of the lower samurai themselves went into trade.
In Europe the Industrial Revolution was a battleground between feudalism and capitalism, a warfare which continued on a guerrilla scale until the rise of Communism made it academic. Nothing like this ever happened in Japan. The merchants wanted to sweep away the trade barriers of the Tokugawa as badly as the feudalists wanted to make Japan a strong modern polity. They made common cause from the beginning—and historically it has ever since been difficult to decide where one class began and the other left off. The alliance joined in 1868 was never broken. The young samurai who took over the government, and their friends the merchants who built Japan's new capitalism, always cooperated. Government and business—big business, that is—interlocked. Out of their merger came an economic web society, firmly fixed in the path of the old tradition.
* * * * *
At the very beginning the Osaka businessmen were able to lend the reformers money to overthrow the shogunate. Once this was done, however, they were reluctant to put their money into new and untried economic ventures. They were bankers, rather than promoters or industrial capitalists—and the conservative bankers' mentality continued to dominate Japanese business for decades afterward. The government, therefore, stepped in at the beginning with a large program of industrial development and subsidizing. In other capitalist economies similar activities have been justified as a form of pump-priming. In the Japanese system, with government and business so closely linked together, it resulted inevitably in the government owning a large part of the pump as well.
The new government bureaucrats reserved control of a few basic industries—railroads, the telephone system, the telegraph—on grounds of their strategic value. The other industries, or the beginning of industries, the government initiated and then handed over to the leading groups of big businessmen. The government, for example, took over all the metal and coal mines of Japan immediately after the Meiji Restoration, imported foreign engineers to work and develop them, then turned them over to industry. By 1888 all of them were in private hands. A model government factory for silk spinning was founded in 1872; cotton and woolen factories were set up a few years later. They were duly turned over to private companies at attractive rates. To build up a merchant marine, the government built or purchased ocean-going vessels, then turned them over to the Osaka businessmen at the usual good rates. In some cases they were given away.
This policy of government initiative was wise—probably nothing else would have sufficed if Japan were to have modern industry quickly. But in the shuffle of transfers between the government and the big commercial house, the small free enterprises—so important to the development of Western capitalism—never had a chance to appear. Although small factories and medium-sized businesses later struggled to the surface, they were almost fatally handicapped by the prior existence of well-established big business which could count on firm and almost automatic government support.
The mood of Japanese business for almost a century—and, quite possibly, for many centuries more—was settled by 1880. Government subsidies were expected things, not, as they have been in the United States, a dirty economic word. Big business regarded itself as intimately connected and concerned with national politics—and vice versa. It may have been a shock to some businessmen when the Japanese Army, in the thirties, formally and crudely dedicated Japanese business to the furtherance of political goals. But everything in the evolution of Japanese business to that date had worked to make such a shock easy to take.
This intimate cooperation between government and industry sped the rise of the great commercial houses of Japan. In the hothouse atmosphere provided by the anxious government bureaucrats, the largest and most efficient of the Osaka merchants and bankers increased and multiplied their assets. With their head start they were able to build up structures strong enough to weather depressions which ruined smaller businesses. Feudally organized, they followed the tendency of capitalism to form monopolies. In Japan there was no Sherman Anti-Trust Act or even a like tradition to stop them. Before World War II, there were fifteen combines which controlled 70% of Japan's commerce and industry. The four biggest, the houses of Mitsui, Mitsubishi, Sumitomo and Yasuda, came to be called the zaibatsu (literally, "financial clique"), the Japanese equivalent of "the big money."
The House of Mitsui, which before the war controlled 15% of Japanese business, was the greatest of all. It grew great in the classic manner. Sakubei Mitsui, its founder, was a samurai, the son of the lord of Echigo. At the beginning of the seventeenth century he started a manufacturing and trading business in sake and soy, at Matsuzaka, on the Ise Peninsula. His youngest son Hachirobei was most successful in carrying on the business. He opened branches in Kyoto, Osaka and Tokyo and was the greatest money-lender of his time. He became the merchant for the government, doing the shogun's business between Osaka and Tokyo. In 1707 the Mitsui were appointed court bankers.
At the time of the Meiji Restoration the House of Mitsui financed the new Emperor's armies and issued notes in the name of the Meiji government. The family got a liberal helping of the mines and industries which the government parcelled out to private enterprise. With this as a start, the Mitsui built up an empire of their own which by 1930 was certainly the largest of its kind in the world. It was still under family ownership—basically the same structure, providing for a cooperative partnership and several branch houses, which Sakubei Mitsui had stipulated in his will in 1694. A holding company, the Mitsui Gomei Kaisha, controlled directly or through its direct subsidiaries, or through its subsidiaries' subsidiaries, an incredible variety of industries. They included the Mitsui Bank, the Mitsui Mining Company, the Mitsui Products Company—and through it such enterprises as the Toyo Rayon Co., the Taisho Marine and Fire Insurance Co., the Toyoda Loom Manufacturing Company. There were also the Mitsukoshi Department Stores, the Shibaura Electric Company, the Oji Paper Company, and, through the Oji Paper Company, the Osaka Mainichi, japan's second largest newspaper.
The family ownership system of the large Japanese trusts deeply influenced the Japanese idea of labor relations. Industry was relentlessly paternal. Once Kisei was hired at Yahata, he entered a web of responsibilities and mutual duties almost as strong as the social system of his neighborhood association. On the employer's side of the relationship, there was the obligation to retain his workers in some kind of a job (this did not necessarily include giving them a living wage), to supply them with housing and a certain amount of minimal conveniences. An employee, like a subordinate member of a family, had to be taken care of. Witness the hundreds of surplus workers whom Yamazaki found dutifully being re-engaged at Asahi after World War II.
On the other side of the bargain, the employee was tied to his workbench. He was not a free agent; if one firm fired him, or if he quit in protest against bad conditions, it was almost impossible to get on another's payroll. Except for the brief heyday of labor freedom in the early twentieth century, it was generally impossible for employees to strike, demand better wages, or enjoy any of the rights that workers of other countries, by the nineteen thirties, accepted as natural.
There was a crushing sense of helplessness among Japanese workers. A man working in a Mitsui or Mitsubishi factory was as dwarfed as Franz Kafka's hero in The Castle by the hierarchy of mysterious personages which governed his life. The small businessman, who wanted to make his way in industry, felt the same way. The only hope was to join one of the colossi, work hard, obey the rules, and ultimately, perhaps, earn a competence as one of the thousands of managerial bureaucrats who ran the faceless operations of Sumitono Goshi Kaisha or the Mitsui Bussan Kaisha.
The only area in Japan where the free enterpriser had a chance was among the welter of small traders, craftsmen and manufacturers who worked for the domestic economy. It was they who turned out the wooden clogs, the straw mats, the parasols, the combs and paper sliding doors, the cheap glassware and pottery that went into the homes of Japan. The individual craftsman has remained in industrial Japan doing the same job that generations of family artisans did before him. But even he had to get his letters of credit at the Mitsui Bank or have his produce transported in Toyoda trucks.
Seen from the surface, japan of the decade before World War II looked like a well industrialized modern state. The steel ingots from Hideya Kisei's furnace were as strong as most others; Sakaji Sanada's steel looms were of excellent quality, as were the silk products that he wove on them; Fumio Shimizu's 18-inch guns, although gunnery experts of other nations did not know about them at the time, were the finest examples of his craft in the world. The facade of the Mitsui Bank looked as solid and enduring as bank facades anywhere. But the world it represented was in its essence different from the others. Below the surface of the Japanese economy, there was an unparalleled centralized control. There was no distinction between industry and banking—they were done by the same people. There was no large body of private investors, although often prosperous citizens like farmer Sanada bought bonds when they were officially pressured into it. The Tokyo Stock Market, far from being a bona fide investors' market, was not much more than an exclusive, government-sponsored financial lottery. Most important of all, outside the circle of the zaibatsu and those like them, the great majority of the Japanese people, farmers on small plots or craftsmen or mechanics, were completely innocent of any of the economic rights and duties commonly understood by citizens of industrial civilizations.
In the decade of the thirties the centrally run economy of Japan rolled up some imposing statistics. Industry's yearly production rose from six billion yen in 1930 to 30 billions by 1941. In 1930 the Japanese automobile industry turned out 500 cars, trucks and busses. In 1941 it had an output of 48,000. At the beginning of the thirties, coal production was 27,000,000 metric tons per day. By 1940 it was 56,000,000. In the same period ingot steel production was increased from 1.8 million tons to 6.8 million tons.
Japan's export trade boomed. A flood of textiles, machinery and cheap consumer goods poured out of Japanese ports into the world's trading centers. Japan was the world's third largest textile producer, and throughout the thirties, steadily gained ground on all the others. The British and the Dutch clamped desperate restrictions on the import of Japanese cloth goods into their colonies in Asia. In an odd twist of economic justice, Japan's cheap Asiatic products were forcing the European colonizers out of their own neatly hedged markets.
The Japanese people, like many of the world's military intelligence services, were duped by the false sense of economic strength which these statistics gave. They followed their economic leaders into war along with their generals, confident that their growing island industry would be enough to keep the West at bay. It proved inadequate. In the first two years of World War II all the hidden defects of the Japanese economy came explosively to the surface. The industrial war effort was grossly mismanaged, showing not only that generals make poor captains of industry, but that the old interlocking relationship of government and big business in Japan, with all its untraceable subtleties, was not easily adaptable to the needs of a centralized war effort. The Japanese never really understood the concept of industrial mobilization—or understood it too late.*
Japan's supply of skilled workers was not enough to sustain the rush of a desperate war effort. Through a confused war labor policy, skilled workers, like Hideya Kisei, were taken off their jobs and sent to the front. It took Kisei's replacement at Yahata months to learn his old job thoroughly, just as it took the margin of a refresher training course before Kisei became an efficient army signalman in 1941.
The most crushing defect of the economy was the lack of raw materials. The generals had hoped that the conquest of Southeast Asia would remedy this. It did, to a degree. But before the Japanese could bring sizable reserves of oil and metal out of the ground, U.S. navy submarines had begun to shut off Japan's sea lanes. Japan began the war with almost six million tons of ocean-going shipping (i.e., suitable for ocean-going). There was barely 700,000 tons left at the end—despite the fact that shipyards had turned out 4,100,000 tons to replace wartime losses.
Deprived of its only major hope of supply, the island economy of Japan slowly strangled. Although the Japanese doubled their steel production capacity during the war (raising it to 13.6 million metric tons in 1944), for want of raw materials only half of this could be used. By 1945 Japan's industry was nothing but an ironic comment on the importance of communications. There were steel mills without coking coal and ore (most of them producing at about 20% of capacity); there were oil refineries without oil; there were tire factories without rubber. The assembly lines ground to a stop, and most of the factory workers began to drift into the country, in search of food.
* * * * *
When the U.S. occupation army arrived in Japan, the national economy was as low as the national morale. It was not the original intention of the American government to raise it. It was hoped, in Washington, that the Japanese government would prove itself equal to the job of reviving and regulating postwar industry, with only the guidance and certain material helps of the occupation. This expectation was unfounded. The postwar Japanese cabinets were unable and, in most cases, unwilling by themselves to do any real housecleaning among the debris of Japan's smashed and twisted war economy. (It was not until 1949 that Japan had even a capable finance minister.) As a result, General MacArthur's staff, assisted by rotating detachments of economic experts from the United States, was forced to assume this job in addition to its mission of democratizing.
Through the years from 1945 to 1952 the economy of Japan was directed by Americans. The good qualities and the defects of the policies pursued, like those in the political field, were those of the U.S. occupation as a whole: there was the same high purpose and honest idealism; there was the same lack of trained personnel; there was the same disregard of peculiar local problems in the attempt to translate tried and true American theories into Japanese practice. Finally, there was the same irony of international politics. A critical economic experiment was being performed, as well as a social and political one, when the laboratory was suddenly exposed to attack. In the face of Communist aggression, the occupation had to retrench from many of its original economic goals, as well as political, in order to make the Japanese laboratory immediately defensible.
The land reform which the occupation effected was its most successful achievement, and the one least likely to be interfered with by succeeding Japanese governments. The problem of tenant farmers, if not so aggravated in Japan as elsewhere in Asia, was very real. At the end of World War II half of Japan's cultivated land was owned by slightly more than 7% of the farmers. Almost 70% of the farming population were either tenants or part tenants, forced to pay exorbitant rents for the land they hired and virtually unable to purchase land outright—the price of an acre of land in Sakaji Sanada's village (before land reform) was many times the price of an acre of good farmland in many places in the United States.
In December, 1945, General MacArthur directed the Japanese Government to see that "those who till the soil of Japan shall have a more equal opportunity to enjoy the fruits of their labor." Under the terms of a law drawn up by the occupation, all absentee landlords were forced to sell their lands to the government. Resident landlords, besides being limited in the amount of land they could own, were forced to sell all but two and one half acres of tenant-cultivated land. The government arranged to compensate the landlords for the confiscated land, although at prices lower than it was worth.
The law worked. By 1951 there were only 1,670,000 acres of land operated by tenants, as compared with 6,300,000 before the war. Hundreds of thousands of Japanese farm families got a new lease on life. The old tenantry contracts had been loaded in favor of the landlords, who could terminate most renting agreements at will and who had exacted a rent in kind amounting to half the crop. The land reform was a great step towards creating a sound and satisfied farm population. To its credit the occupation remembered that it was discontented farmers' sons from hungry, struggling households who had led the Japanese armies into the Greater East Asia Co-Prosperity Sphere before and during World War II.
In achieving the greater good for the greatest number, the land reform dealt harshly with some honest free enterprisers. Sakaji Sanada was one of them. Before the war he had been one of the largest landowners in Shimoyoshida. Most of his original twelve acres he had bought with his own hard-earned money. He had to give up almost half of it outright (and part of what he has left is held in the name of his dead son Mitsu). The compensation paid was small. It is the one action of the "America san" which Sanada recalls with bitterness. Shimoyoshida, in his opinion, has gained nothing by it at all. And the loss of the land has killed his and his wife's hopes of retiring in comfort.
* * * * *
Hideya Kisei thinks differently. He has never regretted leaving his family farm in Kyushu. Like many of the younger generation, he feels there is no future in farming—an attitude which Sanada never ceases to deplore. But since the reform was enacted, he has "shared the joy of the farmers in being able to own their own land." His own family at Kurino were relieved and happy at being released from the bonds of tenantry. "It has changed things radically in the rural areas," he remarked. "It has greatly eased the farmers' problem."
Kisei has, however, one reservation about the land reform law. It is, understandably, the classically American fillip that went along with it—the reordering of the Japanese inheritance laws. All the gentlemen of Japan grew up under a system where land, property and the family name always accrued to the eldest son of a family, with the other children picking up only a few legal crumbs from a father's estate. If it were not for that system, Kisei, who is the third son in his family, might not have left the farm in the first place. The American mind finds something almost morally evil in the law of primogeniture; and it was natural that the Americans should sponsor inheritance laws which distributed property equally among members of a family.
Kisei himself has no quarrel with a system of equal inheritance, but, in the case of Japanese farm households, he thinks it is woefully impractical. Most Japanese farmland is too small to cut up piecemeal—the average farm is less than three acres. If farmers take the new laws literally, Kisei has no doubt of the dire result. Happily, as he concedes himself, in practice the younger children of a family still waive their rights to the land, letting the eldest carry on as before. "I guess," Kisei commented, "it is pretty hard to break down old traditions in any case—but in the case of small farms and a growing population this old tradition is the only way out."
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The land reform operated on a limited area of the Japanese economy. It was a gratifyingly concrete operation. There was a specific error, if not an evil, in the system of land tenure. There was a specific solution, which justice and good sense indicated. There was a population in great majority receptive to this solution, which neatly fitted the democratic pattern which the occupation tried to cut out.
The other problems of the Japanese economy were more murky. The entire financial system of Japan needed overhauling, after its ten years in harness with the Japanese war effort. The trade pattern, which had emphasized heavy industry for strategic purposes and relied heavily on colonial markets, had to be shifted. A new labor movement had to be developed. Finally, the control of Japanese industry had to be taken from the zaibatsu and their ilk, so that Japanese capitalism would no longer be a synonym for financial feudalism. There was no handy solution for any of these problems, or any way of limiting their scope. They were closely related; the economic health of a trading nation depended utterly on their solution.
Few of the young economists at General MacArthur's headquarters had ever had a chance to run the destinies of a nation. They got off to a galloping start. The new labor unions were organized and assisted. The heads and administrators of the great business houses were "purged" and forbidden any voice in running their concerns. The industrial complexes of the holding companies were broken up into manageable units; plans were made to distribute the ownership of their components as far and as widely as possible. American technical experts began to survey Japanese industry; and SCAP bureaus began casting about for new outlets for Japanese products.
In everything except land reform and, possibly, the rise of labor unions, the gallop soon slowed to a stumbling trot. Although the SCAP economists immediately began breaking up the old Japanese trusts, they did little to stimulate an alternative system of business ownership. The public bought stock in the new companies slowly—there was little incentive to buy it at all. The nation's industry was repeatedly "surveyed," but there was no program for weeding out the uneconomic, subsidized industries that had sprung up as a result of the Japanese war effort. The approach to Japan's trade problem was pedestrian—simply a cautious succession of small bilateral agreements with other countries, a sad contrast to the enlightened schemes for international payments and many-sided trading that were already being worked out by E.C.A. administrators in Europe. Even the growing labor movement was hampered, as Hideya Kisei found out, by American insistence that it could (and must) organize itself on a completely non-political basis (a system of unionization which has succeeded only in the United States). As a result, instead of a frankly political Socialist or semi-Socialist labor party, there was a non-partisan labor movement dangerously infiltrated or dominated by Communists.
There were many able men among the occupation economists. There were able officials in the Japanese finance ministry. There was a great fund of U.S. economic aid. And both Japanese business and labor were malleable clay for almost any economic experiment. The failure of the Japanese economy in the years between 1946 and 1949 was principally a failure of design and of leadership. Economics was never General MacArthur's strong point. The faculty of swift and sure decision which he constantly displayed in other fields was noticeably wanting in this one. There was no strong central direction of SCAP's economic effort, comparable, even, to the leadership of an E.C.A. mission head in Europe. Instead, this economic effort, loosely presided over by one of MacArthur's major generals, was an Occidental bazaar of overlapping authorities and opposed personalities, each hawking his peculiar set of economic panaceas.
In following through the plans which they did turn out, the military economists leaned far too heavily on the Japanese Government. There was a reluctance to interfere with the internal operations of the economy, especially in matters of finance, suggesting the picture of a well-dressed gentleman hesitating to involve himself in the workings of a glue factory. This reluctance was fatal to the plans' success. Until 1949, the Japanese postwar governments displayed a shocking lack of capacity for understanding economic fact. Successive finance ministers operated on the shadiest levels of deficit financing. Somehow an occupation which was forthright enough in giving political orders to the Japanese was shy about dictating some laws of economics. The Japanese economy needed a great deal more occupying than it got.
Washington, presumably preoccupied with European concerns, did little to supply economic direction for the economy of Japan. The question of reparations was left dangling for three critical years. In 1946 the Pauley Commission recommended that Japan should earn its future keep as a mass producer of textiles, with most of its heavy industry shipped as reparations to other Asian countries. Later investigating groups wisely revised this simple suggestion, but no one indicated to the Japanese what factories, or what kind of factories, would be crated and sent away, and what would remain. The future levels of Japanese production were left as matters of debate.
Japanese businessmen understandably did nothing to revive production or improve their plants on a large scale when it was not certain that they would be permitted to keep them. They continued to produce unprofitably, and received government subsidies for doing so. The entire Japanese people lived in a fool's paradise, insulated from the economic facts of life, like their businessmen, by American material and financial help. By 1949 Yamazaki and Shimizu were riding to work in Tokyo in freshly painted railway coaches and busses, past department stores bulging with consumer goods. Sanada was doing well on the farm. In Yahata the Kiseis were able to buy new clothes for their children. Hirohito, through his household officials, had placed the order for his new Cadillac. Three years after the British, facing a similar and less intense problem, had begun a drab regimen of austerity, defeated Japan was enjoying a spurious prosperity which had its origins in the American pocket.
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In 1948 the reckoning drew near. William Draper, then Under Secretary of the Army, after in his turn leading a mission to Japan, recommended that the trust-busting in Japanese industry be braked, if not brought to a stop. His reasons were that it critically impaired the efficiency of Japanese business,—unfortunately the trust-busters had not as yet worked up any good substitute for the mechanism they destroyed. And by 1948, in economics as in politics, the pressure of the Cold War with the Communists was forcing the United States to compromise with idealized long-term programs in favor of measures which would show immediate returns in stability, and, by that very fact, in defensibility.
At the same time, the U.S. Government at last officially recognized that it had assumed responsibility for directing the Japanese economy. The idea of reparations in the form of plant and equipment transfers was abandoned (in favor of reparations in money or from current production). In February, 1949, after a preliminary statement of principles from Washington, Joseph M. Dodge, the president of the Detroit Bank, arrived in Japan to make the long deferred overhauling of the Japanese economy.
Dodge expressed his objective bluntly. "The economy," he said, "has traveled the early part of this road in a damaged and unrepaired vehicle, but the vehicle and the passengers have been protected from road shocks by the cushion of U.S. aid. It is time the Japanese began to face up to the unalterable facts of their own life. . . . Wealth must be created before it can be divided."
Dodge's first step was to insist that the Japanese balance their budget.* In 1949 this was done for the first time since 1931. He virtually abolished the system of export subsidies, which he called "an economy on stilts." For the first time in Japanese history, business firms were forced to produce economically, or get out of business. There was no more dipping into the public till to make up for faulty production lines. A drive went on to force manufacturers to export, instead of diverting their products into the home consumer market (often with little pretense at legality), because the returns there were quicker. The taxation system, grossly inefficient, was revised. Another U.S. mission, headed by Dr. Carl Shoup, arrived late in 1949 to increase the scale and efficiency of Japanese taxation. (Historically Japanese governments had depended on debentures instead of taxation for most of their financing.)
Austerity at last came to Japan. The new and highly competent Finance Minister, Hayato Ikeda, in a speech to the Diet in April, 1949, said, "We cannot be too serious in consideration of this fact—real political freedom and independence cannot be hoped for where there is no economic independence. If we Japanese prefer to be idly dependent on the help of foreign countries, we would be disgracing both our forefathers and our children."
A balanced budget was the basic lever which slowly swung the Japanese economy into a stable position. It did so by indirection. The Dodge Plan did not attempt to regulate Japanese industry by a complex of economic planning. It resorted to the old-fashioned kind of free-enterprise remedy which Americans, or at least Americans of Joseph Dodge's generation, had learned in their economics textbooks. "Eliminate obvious business and financial malpractices," the theory ran, "set up a few strong credit controls, then let the economy right itself."
The resulting "rationalization of industry" operated on the Japanese economy like a cruel but, in this case, wholesome purgative. With subsidies withdrawn, credit also became tight. A counterpart fund similar to that used in the Marshall Plan was instituted, whereby the Japanese set up a yen fund equal to the dollar amount of U.S. aid. The proceeds of this counterpart fund were used to retire public debt and to give rigidly circumscribed capital loans, under rigidly circumscribed conditions, to firms which had proved their stability. Within a few months inflation was stopped. In the scramble to put their houses in order, businesses which operated uneconomically were squeezed out. The survivors were forced to overhaul operational methods, fire surplus employees and develop as best they could new selling and production techniques to keep in business.
Initially the Dodge Plan produced what seemed like a sudden depression in Japanese industry, but a depression scarcely as bad as had been expected. Hundreds of small businesses failed, not necessarily because they were uneconomic, but because they had not the capital reserves to keep going. The economists in the labor section of the occupation headquarters tremblingly awaited a vast rise in unemployment, as the surplus workers—against all the old unwritten laws of Japanese industry—were being released from their jobs. But here the old web society of Japan, however weakened, once more turned out to be a friend in disguise to the agencies which had set out to destroy it. No mobs of unemployed rioted in the cities. Few workers, in fact, applied even for unemployment insurance. Just as they had fled to the country during the last of World War II, the discharged workers again went to board with their country cousins. By the old codes of the family system (stronger in the country than in the city), they were unfailingly welcomed. There was no way of showing the change by statistics, but by the thousands the surplus workers of industry straggled off to become, for the time being, surplus workers on their relatives' farms.
By the beginning of 1950 the crisis that many economists had felt must follow the Dodge Plan had not materialized. The surplus workers were filtering back into the cities, finding jobs again, as the "rationalized" businesses began to step up production. There were willing markets for Japanese manufactures in Asia, South America and, to a lesser degree, Europe and the United States. After their bitter medicine, Japanese businesses were able to sell more at lower prices. Trade restrictions against Japanese products loosened. The trade pattern was shifting—away from the planned dependence on textiles and towards additional exports of industrial goods and light machine products. The old mixed bag of exports began to fill up again: cotton goods for Southeast Asia, cameras for the United States, looms for India, bicycles for South America.
In June, 1950, the Japanese economy got an unexpected boost. With the coming of war to Korea, Japan became the base for the United Nations forces. Fumio Shimizu was by then working as a technical advisor for the reorganized Japan Steel Company, whose executives he had known and done business with before 1945. From their headquarters in Tokyo, Shimizu and his colleagues found themselves running part of a giant ordnance repair program for servicing U. S. military equipment and manufacturing spare parts. In the Tokyo-Yokohama area alone, where Shimizu's company has the bulk of its operations, over 50,000 Japanese mechanics were engaged in this work. Once again he was on the job supervising ordnance research, hiring technicians and debating the types of special steel suitable for armament production.
The furnaces of Yahata poured out their ingots for use in equipment manufacture. Other factories throughout Japan swung into production for the military effort in Korea, as well as for civilian rehabilitation there. During the first year and a half of the Korean war, Japan sold over $567,000,000 worth of supplies to the United Nations' war effort, from telephone poles and railroad ties to parachutes, sleeping bags, locomotives and fire extinguishers.
As war production for Korea expanded, so did peaceful trade with the rest of the world. By mid-1952 Japan was again selling to 76 countries or colonies. The great textile mills of the Kansai district were exporting at 60% of their prewar level. From two million spindles left at the end of World War II, japan's textile manufacturers had increased their plant to six million, over half of what it was in its heyday of the early thirties. The assembly lines were back in operation at the Toyoda Automobile plant in Nagoya and other rising production centers throughout the country. The Japanese produced 28,000 trucks in 1951. Coal output had gone from 500,000 tons in late 1945, to 3.3 million tons in 1950. Electric power was 60% greater than it ever had been. Japan's industrial index was half again as great as it had been in 1936. This resurrection of Japanese industry surpassed the most optimistic expectations of the SCAP planners in 1945—and certainly proved brighter than the Japanese themselves then thought possible.
The new prosperity was precarious, subject to the twists of the world market and political shifts in the Far East (See Chapter 12). Certainly, the businessmen who counted the Korean war prosperity as a continuing one were deluding themselves as badly as they had in the old days of subsidies. But Japanese business was in relatively good shape for resisting a recession and eager to expand its markets elsewhere, once the Korean windfall was over.
The thick growth of businesses has been severely pruned. What survived had to be hardy. The split-up components of the old zaibatsu combines emerged in the best shape—largely because they had inherited not only the prestige of the parent concerns, but some of the best younger managerial talent in Japan. These men, not high enough in their companies to be purged by the postwar economic directives, were forced by exigency into positions of responsibility they would never have held under the old house hierarchies. They grew into an aggressive business leadership, surprisingly young and surprisingly competent. Their firms grew with them—the hard way. Of the 200-odd companies formed out of the wreckage of the Mitsui Products Company (Mitsui Bussan Kaisha) in 1947, after the Mitsui empire was broken up, roughly twenty have survived as stable concerns. The most successful of them, Dai Ichi Bussan, started in 1947 with a capital of $500; by 1952 it had run this up to a half million.
The old ownership of these companies has not returned. Once used to power, the new managers have by and large determined to keep direction and ownership in their hands. (There is, of course, in many of the former zaibatsu holdings, a considerable amount of behind-the-scenes direction.) But, facing a crisis time in its history, Japanese businesses have tended to consolidate or even to bank together in new groupings. This is in their tradition. And tradition is a difficult thing to kill when it is reinforced by economic necessity. In 1953, as in 1933, a Japanese cartel can muscle its way into the world market with more resources and more authority than several individually competing Japanese firms.
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The spectacular rise in Japanese production did not bring sudden soaring prosperity to the people of Japan. At times it has been more than offset by the shortages of consumer goods—and their consequent high price—in a nation which is producing so strenuously for export. It has given the Japanese a basis for hope. Since 1950 the new direction in the economy has communicated some confidence through the nation. Hirohito, of course, does not have to worry about personal economic matters. The other gentlemen of Japan, however, have all been able to save something each month from what they make. They are immeasurably better off than they were at the close of the war, slightly better off than they were a year or two ago, and almost on a level with their prewar standard of living.
At Yahata, Hideya Kisei has watched his country's economy grow in the most concrete way. The mill is now on a 24-hour day, organized on a three-shift basis. Kisei puts in a great deal of overtime, since on whatever shift it is his responsibility to keep the Number 2 furnace at the Kukioka plant going. New men have come out of the fields around Yahata to work in the furnaces. Those who are there, have had more work than they could handle.
Until 1952 all capital expenditures at Yahata were in the nature of repair and rehabilitation of existing facilities. From early 1952, however, as ore-laden ships crowded in the nearby harbor, the plant started going ahead boldly with new installations. A 1,000-ton furnace, whose construction was stopped in the steel-short days of the war, has recently been finished. Other blast furnaces are planned. There are expansion programs for the rolling mills, the strip mills and the foundry. The Yahata Steel Products Company, in 1951, had already increased its capitalization from 800,000,000 to 1,600,000,000 yen. Another capital increase has lately followed.
Kisei and his friends are astonishingly well-informed on matters like company capitalization and improvement projects, because, for the first time in the history of Japanese industry, they have an incentive for learning. The new stock ownership of Yahata is scattered. Although banks and insurance companies have acquired a great deal of it, about 30% is owned by individuals, including many of the workers. Kisei has no shares himself, but he hopes to get some. His ambition for Yahata is to see all the shares owned by the workers.* Kisei's take-home pay of 21,000 yen a month, plus his wife's small salary, has pushed their standard of living to its highest point since the war—although Kisei does not do so well as he did in the late thirties, when he was a bachelor working longer hours at a similar production rate. There is enough to eat. "We eat as well," Kisei says, "as any worker in the plant"; but the Kisei diet is hardly luxurious. The breakfast staple is misoshiru, a thick salty bean-paste soup which is the oatmeal of japan; there is also rice, some pickles and, occasionally, an egg. At noon, when Kisei eats at the plant, and for the evening meal, the staples are roughly the same: rice, noodles, fish, vegetables, pickles—cooked in varying ways.
Rice is still rationed. But, although Kisei gets a laborer's special heavy ration of rice, he has to buy blackmarket rice each month to supplement his diet. The Kiseis, for the sake of their children, keep a lot of fruit in the house, which is especially plentiful in southern Japan. Once or twice a month, they can afford meat. "At least we are not hungry," Kisei will say, "and that is the main thing."
Probably more than any other people, the Japanese realize that the margin of their present prosperity is very, very thin. The marks of the economy of scarcity are seldom absent. Fumio Shimizu, who has been preaching austerity for the last seven years, is pleased now that his fellow-citizens are approaching their problems realistically, though he is far from satisfied. Yamazaki is most worried about the population problem. He is actively supporting the birth-control movement in Japan. He feels that some Japanese should be allowed to emigrate, pending the ultimate stabilization of the population.
Kisei, who once thought that Yahata's production should be used to alleviate the shortages on the home market, now implicitly believes in the truism "export or die." As he expressed this, "In the broad sense, I am convinced that hard times are ahead. Japan as an independent nation cannot depend on the United States to keep paying her bills. The only way for Japan to stand on her feet again is through export of her products. We must be prepared for a period of great austerity."
Sanada, on the farm, is working diligently. New competition from other looms and small factories has made it more difficult than ever before to sell his silk manufactures at a good profit. Taxes, now enforced as they never were in Japan's past history, have also been hitting him hard. The two newspapers he gets from Tokyo each day, Yomiuri and Nihon Keizai (the latter, "Japanese Economics," a popularized kind of Wall Street Journal'), keep him well-informed about new industries, shares and bonds. He is impressed by this industrial growth, but he is cautious and reserves judgment about its success. In his closet, along with the bamboo spear with which the Japanese Army, in 1945, suggested that he fight off the Americans, he still keeps a box of interesting old securities. Their names are lettered in firm, impressive characters: Japan-Manchuria Fertilizer Company, Manchurian Heavy Industry, China Development Company, the Bank of Korea, North Korean Pulp. They constitute an unusually graphic reminder to this citizen of a rising industrial power that stocks and shares are not necessarily worth more than the paper they are printed on.
* One bale equals 60 kilograms.
** Only once have the crops failed. Shortly after World War I, a cold north wind swept down on Shimoyoshida in late August. The rice would not ripen. Sanada remembers that the rice kernels looked like tiny silver bells, just empty. The farmers raised funds to purchase rice from the outside, the only time in Sanada's memory that Shimoyoshida had to import its staple food.
* Japan's effort at economic warfare degenerated into a three-way tug of war between the Army, the Navy and civilian business interests, none of which understood the problems of the other parties involved. The nadir of misdirection was reached when the Army insisted on building its own submarines—for carrying supplies to isolated garrisons in the Pacific.
* Balancing the budget means much more to the Japanese economy, than it does to that of the United States, where there is less of a connection between government and business. Only one-sixth of the American national income is accounted for in the budget; two-thirds of the Japanese national income is.
* The renovated Japanese stock market opened its doors in Tokyo in the spring of 1949, followed shortly after by the markets in other cities. Under a new set of security regulations there is every incentive for the public to buy stock shares, in the knowledge that they will not be the pawns of the high-class gambling practices that once characterized Japanese stock trading. A strong campaign to enlarge the investing public, after many false starts, showed some results by 1950. There were some initial difficulties in operating the American-style exchanges. Not the least of them was the communications problem—the occupation economists had worked out a system of rules for split-second transactions unthinkingly based on the American, not the Japanese, telephone system.