No More Learning

The model here, as previously pointed out, was Catholic "integral syndicalism," and Salvemini is unques- tionably correct in comparing these directly with "company unions. " ^* (c) Authority throughout the entire pyramid stems from the top, with the head of the government (Mussolini) in theory the fountainhead of all delegated offices and competencies. The system, in short, is entirely and exclusively cooptative at the top; from that point downwards it is appointive with tenure, du-
there must be the number indicated unless such economic provinces (without more than one) are to be found in Italy, which is improbable. I have been unable to learn anything whatsoever about the number or the functions of the "Interprovincial Unions. "
53 Thus, there are 5,826 workers' "Local Syndical Associations" for 6,595 in the employer classification. In the next layer, there are 32 National Federations for the former to 96 for the latter. There are equal numbers of National Confederations (4 each), and the principle of "equal representation" holds for the National Council of Corporations, though the basis of classifications bears no necessary relationship to that obtaining below.
54 Salvemini, Under the Axe of Fascism, Chapter VII, "Company Unions, Nazi Unions, and Fascist Unions. "
? THE FASCIST SYSTEM 81
ties, and responsibilities subject to instantaneous alteration in any fashion whatsoever from on top--which means, of course, no re- course whatever, from below, grounded in substantive rights. ^^
Legal authority begins in theory with the National Federations (Juridical Associations of the "First Degree") and expands in power and influence upwards through the Confederations (Juridical As- sociations of the "Second Degree") and the National Council of Corporations; it comes to a head in the sovereign Chamber of Fasces and Corporations. All powers and authorities derive from this fountainhead. But the fountainhead is--as all such human institutions are--in turn, controlled by dominant pressure groups. Who are they?
Several analyses have been made of the social composition of the inner controlling groups. ^^ All of them reach the common con- clusion that the leading personalities are those associated with the great landowning, industrial, commercial, and financial houses and associations on the one hand, and the central leadership of the closely allied, socially compact, and self-perpetuating military, clerical, civil service, and party hierarchies on the other. Who, or what particular group, at any given time holds the upper hand can only be determined by independent analysis of the interplay of facts, forces, and personalities on each separate occasion. But it is beyond dispute that the net result, judged in the light of all the available facts, is coherent with the interests, the points of view,
the lines of growth inherent in monopoly-oriented, capitalistic enterprise, thus transmuted through acquisition of political power into a regime of exclusive privilege and patrimonial command.
Finally, it may be noted that there are not lacking Fascist theore- ticians able to find that these conditions are not only coherent with, but absolutely indispensable for the realization of, the economic
55 Except as guaranteed in the Labor Charter and in various decrees. These, how- ever, come entirely from on top, and are revocable at will--which is to say that they exist on tolerance and thus, in event of any point of dispute with the hierarchy of command, ultimately not at all. Most of the "labor leaders" are actually not laborers, being typically of "middle class" origins. In any event, they must be Fascist party members, they are appointed upon recommendation of Fascist party selected panels through the Fascist party hierarchy, and they owe no responsibility whatsoever to the syndicates which they do not represent but command.
56 See Salvemini, op. cit. , pp. 43-49, Ebenstein, Fascist Italy, Schmidt, The Plough and the Sword, and Louis R. Franck, Les Etapes de I'economie fasciste italienne (Paris,
1939), pp. 43-45.
? 82 THE FASCIST SYSTEM
equilibrium which constitutes the long sought good of free com- petition. As argued, for example, by Amoroso, one of the leading Fascist academicians, the conditions which, under the regime of free competition, fix the point of equilibrium in the determination of wages are identical with those laid down in the Charter of Labor.
Why, then, is the Charter of Labor and the intervention of the state, required, one may ask! As summarized by an Italian student of corporative economy in the graduate school at Columbia Uni- versity, Giorgio Pelligrini, the answer of Amoroso and his com- patriots would run about as follows:
Ideal conditions of free competition cannot be realized in the present (unregulated) economic organization. It is true that free competition brings about economic equilibrium; it is true that economic equilib- rium is the result of a sound economy; it is true that this sound economy improves the welfare of all classes; but there is to be found in present society no such thing as free competition. Liberalism, which pretends to be the champion of free competition, in reality brings about the division of society into two groups--the bourgeoisie and the proletariat --and strengthens the first against the second. Socialism, which pre- tends to cure the evil, in reality destroys free competition directly, and with it economic equilibrium and thereby sound economy. Corpora- tivism, instead, with the institution of organs whose sole aim is the elimination of all the influences contrary to a stable economic equi- librium, brings about the ideal conditions for the free play of economic forces, and, therefore, is the only sound economy.
If, as the Fascist Confederation of Industries comments, the con- fessedly antidemocratic principles of Fascist political regimenta- tion may be termed "authoritarian democracy," perhaps the view of Amoroso may properly be captioned "regimented free compe- tition"! It is doubtful if, under the new National Socialist guid- ance. Fascist logicians will be encouraged to resort further to many dubious circumlocutions. Verbundene Wirtschaft goes better with the institution of the lock-step in word as well as deed.
? Chapter III
JAPAN: KOKUTAI AND THE "CO-PROSPERITY SPHERE"
icrj^HE ECONOMIC WORLD nccds a guiding hand to direct its diverse JL energies," explained Mr. Ogura, head of the immense Sumi- tomo interests upon his appointment by ex-premier Konoye as "economic dictator of Japan. " Expected, as reported in American newspapers, "to become a sort of Japanese Knudsen," flanked at will by a " 'brain trust' . . . not of bureaucrats, but of business men" ^ of his own choosing, Ogura was vested with the powers of a supreme economic coordinator, in what has been described as "a complete corporative State built into the existing constitutional structure of Japan. " While one organ of state policy, the Supreme
Cultural Council, is to see that "all people will think only reformed thoughts," Mr. Ogura is to draw on all his business experience in order that the principle, "the public service first," may be sup- ported naturally through continuation by the Supreme Economic Council of control over Japanese industry under the system of
^
japan's peculiar institutional machinery
However strange this may sound to Western ears--and it is not so strange now as it would have seemed a short time ago--it repre- sents in principle nothing essentially new for the Japanese. Con- trol over business policies has always been highly centralized in the Island Kingdom, and that centralization is traceable, genetically, to environmental forces almost the complete inverse of those fos- tering similar movements in the United States and England. Tap-
1 New York Times, April i, 1941.
2 Hugh Byas, "Japan's Fascist March," New York Times, Dec. 15, 1940.
"private enterprise. "
? 84
KOKUTAI AND CO-PROSPERITY
roots for centralization in these latter were struck in periods for- mally committed to unmitigated free competition and laissez faire. But in Japan, feudalistic carry-overs, mercantilistic practices, and monopoly-oriented capitalism have from the beginning stood side by side.
Throughout the period of the Meiji Restoration, the setting for the rise of Capitalism has been predominantly patriarchal, anti- democratic, antiliberal, anti-laissez faire, and those superficial con- cessions to Western petit-bourgois economic and political institu- tions, which on occasion faintly leavened the modern era, have, particularly in the light of more recent events, served only the more heavily to underscore the fact. ^ The principle of Kokutai--"the state body corporate"--carried over from ancient times has, under an economics dominated by large-scale governmentally fostered, industrial capitalism, served to knit seemingly disparate elements of old and new into an efficient and generically totalitarian state. Current lines of development are converging swiftly and unmis- takably to create a national system similar at bottom to that advo- cated by lawgivers of the Axis Powers, although the system does not approach full articulation in the best approved authoritarian manner.
Thus business enterprise in Japan has, from the earliest days, unfolded its activities in an atmosphere largely, and at times wholly, dominated by principles, controls, and social philosophies which are internally coherent with what we in the Western world have come more recently to identify as Fascism. The oriental symbolism, in keeping with a deep and tenacious past, is more heavily blooded with the naive chivalric pietism of a society still organized on lines
3 How superficial were the changes wrought in the social, political, and economic life of Japan by the "Enlightenment" (period of the Meiji Restoration) is nowhere better illustrated than in a series of articles, remarkable for their complete candor, contributed by various Japanese professors to a special Japanese edition of Welt- wirtschaftliches Archiv, Vol. XLVI, July, 1937. All the social legislation--even Parlia- mentary forms of election and representation--are treated very much as was Bis- marck's famous social legislation of the '80s, as authoritative reforms, concessions, and tactics, and not as evidence of either conversion of the Japanese people to democratic- liberal principles, or as moves occasioned by fear of popular antagonism from the submerged ranks at the bottom of the social pyramid. It is worth recalling, in this connection, that what the Japanese did copy along these lines was not taken in the main from England or the United States, but from Imperial Germany. See also Thorstein Veblen, "The Opportunity of Japan," in Essays in Our Changing Order
(New York, 1934).
? KOKUTAI AND CO-PROSPERITY
of status, and with the simpler patriarchal or familial charisma of its characteristic emperor and ancestor worship. Tenno (the em- peror), for example, is at once father, ruler, and high priest in a patently theocratic state still governed by rules of honorific eti- quette and graduated subservience. But if this renders the task of domination in a caste-minded society far easier for the oriental Fuhrer than for his Western counterparts, it is largely because in Japan industrial, commercial, and financial capitalism has been absorbed into the old social system without seriously and for long challenging or greatly modifying the preceding structure of con- trols.
It is especially necessary to emphasize this point now, for there exists a common disposition to look upon more recent develop- ments in Japan as either a complete reversal of policies dominant since the latter half of the nineteenth century,* or as the product of a somewhat vaguely conceived military coup d'etat. Neither, of course, is correct. The answer to the former is that Japan borrowed freely, adopted and adapted at need, but that she did not, with the decline of the Shogunate and formal repudiation of feudal controls, fundamentally alter at any significant point the nature or func- tioning of her hierarchical social order, and that as a result of this lack of change the new order represents somewhat less than a straight-line, but still a consistent, development from the pre- Meiji, pre-Perry times. And the answer to the latter is that mili- tarism, far from being antagonistic to either the new or the old, was actually part and parcel of both. In the hands of the Choshu and
4 See H. G. Moulton and J. Ko, Japan, an Economic and Financial Appraisal (Washington, D. C. , 1931), where the Restoration is regarded as a sharp and complete break with the past. Professor Saburo Shiomi refers to the occasion, "When Japan broke away from feudalism in 1848" and a few pages later on tells how "the old patriarchal conception of the family as a complete social and economic unit has been incorporated in the guild system. " "Aufbau der Industriewirtschaft and Technischer Fortschritt in Japan," Weltwirtschajtliches Archiv, XLVI Quly, 1937), 118-56. The "outward forms of feudalism," Professor Allen points out, were "gone for ever" with the crushing of the Satsuma rebellion in 1877. But he quotes a Japanese writer who appraises the significance of what was "set up in its stead" as "a bureaucracy that retained the spirit of the Shogunate. It is not too much to say that the political and social institutions of the new Japan were only another expression of the Tokugawa system. " To which Professor Allen adds, "The main result of the Restoration was, in fact, the substitution of what came to be called the Sat-Cho group for Tokugawa. It was a change of governors rather than a change in the system of government. " G. C. Allen, Modern Japan and Its Problems (London, 1928), pp. 62, 64.
85
? 86 KOKUTAI AND CO-PROSPERITY
Satsuma clans, the military order was so clearly shaped as a phase of the peculiar expansionist dynamism of totalitarian ideology, in- terests, and process, that the one is unthinkable in the absence of the other. In Japan, because of this continuity with the past, the identification of the old social order and the new economic and political forms of business ramification and military expansion is made more easily and more painlessly than was the case even in the Nazified streamlining of Prussianized Germany.
Not, of course, that there is or has been absence of conflict of interests and ideologies in contemporary Japan. Far from it. How bitter the internecine warfare has been between military and naval branches of the armed services, between civil administration and military juntas, between small business, labor and peasantry on the one hand and the huge and omnivorous combines on the other, or even amongst these latter themselves, it is extremely difficult, at least on the evidence available to foreigners, to say. It appears not only that such cleavages do exist, but also that they have been at times far-reaching and sanguinary. But they have never been suf- ficiently deep or fundamental to alter seriously the structure of Japanese society nor the sanctions upon which its castelike hier- archical controls rest.
The social framework of this system represents a fusion of feu- dalism and the concept of the patriarchally governed, absolute state. Stigmata of feudalism are to be found in connection with a peculiar social-occupational gradation on the one hand and a sys- tem of guild and guild-like associational groupings on the other. Some of the latter--such as various trade unions and cooperative societies--were for a period of time during the twenties more or less "free" of constraints exercised from above. During the thirties, however, and especially with the outbreak of war on the Asiatic mainland, such partial freedoms have been gradually worn away until, to all intents and purposes, freedom of association in the liberal-democratic sense no longer exists. With minor exceptions, all occupational categories in industry, trade, and agriculture are organized into more or less all-inclusive unions, associations, fed- erations, and guilds. But behind all such associational forms is a backdrop which represents a blend of the feudal spirit of "servile
? KOKUTAI AND CO-PROSPERITY
solidarity" and the patriarchal norms of an "autonomous co- optative bureaucracy. " ^
At the gravitational center of this somewhat confusing mesh- work of partially modernized clans, guilds, military cliques, family dominated bureaucracies and businesses, on the one hand, and hierarchically graduated occupational strata, classifications, "cor- porations" and federations, on the other, stands the omnicompetent tutelary and administrative authority of the state--a state in both theory and practice more absolute than those of the European "age of the benevolent despots. " In the Japanese symbolism, this power comes to focus in the person of the Emperor who, in addition to being supreme head of the lay state and commander-in-chief of the armed forces, is also the ceremonial director of the official religion of Shinto. Via Shinto--in itself a sort of combined system of social etiquette and personal ethic pieced together from Buddhism, Con- fucianism, Taoism, and other elements of adapted belief and rules of status--the Imperial House becomes the recognized symbol of the dominance of the family and patriarchal system of Japan. ^
Thus the Imperial House stands for the principle of Bushido, or the ethic and practice of the spirit of complaisant subordination to the universal rules of status which becomes complete only with un- questioning acceptance by the mass of the population of the atti- tudes, the duties, and the compulsions expressed in "the state of being willing and ready to die at any moment at the bidding of a recognized superior. " Bushido, writes an ardent proponent, "is the result of the feudal ages--entirely governed and thoroughly
5 Veblen, Essays in Our Changing Order.
6 "History records that all manner of foreign ideas have, from time to time, flooded the nation, but standing like a sun, about which these new ideas found their proper and subordinate place, has, through long ages, stood the Imperial House. Indeed no foreign idea--Buddhism, Christianity, Democracy, Socialism,--may survive in this country and find root in the consciousness of the Japanese unless it subordinates it- self to that undefinable yet all-pervasive soul element of the Yamato race, which stands crystallized and symbolized in the person and tradition of His Imperial Maj- esty. For deep in our race is rooted a reverence for the Emperor as the descendant of the very gods to whom we owe our being. Indeed, even to speak the words 'Tenno Heika' or 'Shison' conveys to us a very solemn and deep impression and stirs to depths our profoundest emotions. To explain or rationalize this attitude is un- necessary; it is fact and true because it exists. " Quoted from the Japan Times in Professor Taid O'Conroy, The Menace of Japan (New York, 1934), p. 71. See also Uichi Iwasaki, The Working Forces in Japanese Politics (New York, 1921).
87
? 88 KOKUTAI AND CO-PROSPERITY
permeated by sovereign authority and humble obedience. " ^ While Bushido, as the principle underlying the etiquette of a past age of feudal knighthood, has been greatly undermined during the modern era,^ it has apparently been quite easy to translate its ancient sanctions into modern terms. Throughout the Japanese literature dedicated to preservation and strengthening of the status quo runs the language borrowed from Bushido: "loyalty," "honor," "obedience," "sacrifice," "duty," "humility," "unity," "harmony," "patriotism," "authority," and similar terms. These are the terms, and the blending underneath them is in line with the ideas and points of view, of course, which are typical of Fascist ideology in Europe. They express the habitual turn of mind of a caste-ordered society, well-schooled in the techniques required to divert, canalize, and control popular strivings from below. Their utility to the
central authorities in the promotion of imperial expansion abroad and the structures of autocratically governed self-sufficiency at home are entirely obvious.
The ease of transition from the old to the new has been further facilitated by the fact that the interlude between the Meiji restora- tion and the consolidation of the current system did not see the rise of sufficiently powerful antagonistic popular movements to shake the transmuted structure of traditional class control. There was, to repeat, no real "liberal period" but rather a time of blend- ing of inherited social biases with altered interest groupings. But the incubus of the past was too heavy and the period of time before the new lines of autocratic control became clear was too short for labor unions, farmer groups, consumers' cooperatives,^ or even the more general and confused liberal middle-class parties, to strike deep roots.
7 Professor Yasuma Takata, "Kulturelle und geistige Voraussetzungen fiir Japans Aufstieg. " Weltwirtschaftliches Archiv, XLVI (July, 1937), 1-13.
8 See Bushido, the Soul of Japan (Philadelphia, 1900), written by Inazo Nitobe of the Imperial University, who translates the term to mean "Military Knights' Ways" or "Precepts of Knighthood. " Bushido is not, however, to be compared with the humane chivalry of the Arthurian legend; it represents, on the contrary, "the essen- tial readiness of the warrior to lay down his life in battle since he regarded life as a transitory gift the enjoyment of which, like the blossom of the cherry tree, was necessarily of short duration. " London Times, March 18, 1942.
9 Cooperatives were very extensive in the countryside and actively fostered by nu- merous government agencies (federal and local). But all were carefully controlled and have functioned in the manner of mutual-aid societies to relieve the monotony and poverty of the agrarian way of life.
? KOKUTAI AND CO-PROSPERITY
Thus the new Japanese totalitarianism has been easier to achieve than in any other major industrial-capitalistic country. More than that, it has provided an environment which not only enormously facilitates the centralization of policy-forming power in business, but also identifies immediately the feudal and patriarchal-minded hierarchies of business with the political and military bureaucra- cies. Japanese capitalism, in short, has been in large part and from its very beginning an upstart phase--but part and parcel, neverthe- less--of the Japanese political and social system of status--a system on the economic side, in a word, of status-minded monopoly capi- talism. Its closest historical parallel is probably the system forecast in the Kameralism of Frederick the Great; in contemporary times its approximates the patterns of Nazi Germany.
At the center of the system on the economic side stand the great state-encouraged, monopolistically-oriented, and patriarchally- governed family enterprises known as the Zaibatsu. Around, and in large part directly subservient to, these are the lesser enterprises, business and agricultural federations, handicraft guilds, colonial development corporations, "mixed enterprises" and other forms of economic organization and control.
THE ZAIBATSU: AT THE CENTER OF THE WEB OF CONTROL
The numbers of the Zaibatsu are limited, but they differ with the sources quoted. G. C. Allen ^^ and Neil Skene Smith ^^ refer to the "Big 4. " The Japan-Manchoukuo Year Book ^^ (semiofficial) re- fers to the "Big 3," the "Big 8," and the "Big 14. " The first seems to be the more commonly accepted number, since generically the term Zaibatsu means "money cliques," and "of these, four are out- standing--namely, Mitsui, Mitsubishi, Sumitomo, and Yasuda. " More loosely the term is applied to large-scale business combina- tions in general. ^^
10 G. C. Allen, "The Concentration of Economic Control in Japan," Economic Journal, XLVII (June, 1937), 271-86.
11 Neil Skene Smith, "Japan's Business Families," The Economist, June 18, 1938, pp. 651-56.
12 See in particular the 1938 issue dealing with Konzerns of Japan.
13 Such as Okura, "concerned chiefly with trading, mining, textiles and motor- transport; Asano with cement, mining, iron and steel and heavy engineering; Kuhara with heavy engineering, chemicals, mining and aquatic products; Ogawa-Tanaka
89
? KOKUTAI AND CO-PROSPERITY
The dominating role of the **Big 4" is without adequate parallel in any other major capitalist country. Smith cites estimates which "have suggested that sums equal to 60 per cent of the 2 1,000 million yen (? 2,100 millions, at par) invested in all Japanese joint-stock companies are controlled by these concerns; and that Mitsui alone accounts for 5,000 millions yen (? 500 millions), or nearly 25 pei cent of the total. " ^* Adding to the "Big 4" the banking interests oi the Shibusawa and Kawasaki concerns, the six groups held in 1938 57 percent of all funds deposited in banks, trust companies, life, marine, fire, and accident insurance companies ^^--a figure, by the way, which contrasts with an estimated 45 percent equivalent for 1929-
Their range of interests extends to all the modern industries of Japan and to some of the traditional trades also. Shipping, shipbuilding, foreign trade, warehousing, colonial enterprise, engineering, metal manufacture, mining, textiles, and sugar- and flour-milling all fall within their sphere. . . . A glance at a few of the leading trades will show the extent to which the concentration of control over industry and trade has been achieved. For this purpose we may confine ourselves to Mitsui, Mitsubishi and Sumitomo. These three control about half the copper production and nearly the same proportion of the coal out- put, and Mitsui Bussan (the trading company of Mitsui) alone deals in about one-third of the coal marketed in Japan. More than half of the tonnage of merchant ships is owned by them. Of the steamers building in 1936 55 per cent of the gross tonnage was being constructed in yards belonging to Mitsui and Mitsubishi. The Oji Company controlled by Mitsui has about 75 per cent of the capacity of the paper industry and Mitsubishi owns the greater part of the remainder. These two firms possess 70 per cent of the flour-milling capacity and practically all the
with chemicals; Kawasaki with banking, insurance, rayon and shipbuilding; Shiba- sawa with banking, shipbuilding and engineering; Furukawa with copper-mining and refining and electrical plant; Mori with chemicals and electric-power genera- tion. " Allen, "The Concentration of Economic Control in Japan," p. 272.
14 Smith, "Japan's Business Families. "
15 The shares of the Big Six and the Big Four respectively in the following were, in 1938: Bank Deposits, 59% and 40%; Property in Trust by Trust Companies, 68% and 66%; reserves of life insurance companies, 28% and 20%; and reserves of marine, fire, and accident insurance companies, 82% and 73%. Again, recent war years have seen a huge expansion of the Zaibatsu. This can be seen by comparing the data of the 1940 (p. 1140) and 1941 (p. 1134) issues of the Japan-Manchoukuo Year Book. From June, 1939, to June, 1940, the estimated worth of companies controlled by the Zaibatsu jumped from 1,857 niillion yen to 2,368 million yen for Mitsui, 1,745 million yen to 2,050 million yen for Mitsubishi, 1,712 million yen to 2,390 for Mangyo, 624 million yen to 1,330 for Sumitomo, and 484 million yen to 540 for Yasuda.
90
? KOKUTAI AND CO-PROSPERITY
sugar-refining mills. Much of the chemical industry is in their hands, including the bulk of the ammonium-sulphate and artificial fertiliser production. Mitsubishi dominates the aircraft industry, and through its control over the Asahi Glass Company monopolises the sheet-glass output. About half of the goods in warehouses are in those owned by the three great Zaibatsu, who also conduct about one-third of the for- eign trade. Mitsui Bussan alone is responsible for nearly one-fifth of this trade; it imports a quarter of the raw wool used in Japan, and about the same proportion of the raw-silk exports passes through its hands. Toyo Menkwa, another Mitsui concern, until recently handled one- third of the raw cotton imports and one-fifth of the exports of cotton textiles. Most of the enterprises which have been founded to develop the raw material resources of the colonies, Manchukuo, China, and the South Sea countries have been established by the Zaibatsu; for instance, much of the Manchurian soyabean trade is conducted by them or their subsidiaries. The great cotton-spinning industry is less dependent upon the Zaibatsu than are the other large-scale trades. Yet even here Mitsui has interests in Kanegafuchi Boseki, and Mitsubishi in Fuji Gasu Bo- seki, which are among the six largest companies in the country; while Mitsui, through its subsidiary, Toyo Menkwa, has control over several smaller concerns. Mitsubishi controls much of the canned-fish trade, one of the three large brewery companies in Japan and one of the two large foreign-style confectionery manufacturing companies. The Zai- batsu are predominant in the heavy engineering industry. Their in- terests extend to woollen textiles, rayon, cement and petrol-refining and dealing. In all the new industries as they have appeared the Zaibatsu have usually taken the initiative. At present Sumitomo is developing the aluminum industry, and Mitsui the hydrogenation process. ^^
Such data take on added significance when it is realized that the Zaibatsu "are pre-eminent at once in finance and also in industry and commerce. " In this respect, Japanese industrial development is similar to that of Germany, where the interdependence between banking and industry has been extremely close from the very be- ginning.
Yet the degree of control over both fields is not only more closely held in Japan than in Germany, but the fact that in Japan, as in no other country of the world, the general public puts its money into savings accounts as fixed deposits rather than into in- dustrial securities tends still further to enhance the importance of this interlinkage. "The small producers," Allen points out, "who in the aggregate are responsible for the larger proportion of the output of consumable goods, are financed by merchants, who, in
16 Allen, "The Concentration of Economic Control in Japan," pp. 276, 277, 278.
91
? KOKUTAI AND CO-PROSPERITY
turn, obtain the bulk of their resources from the great banks. Those who control the financial institutions can, therefore, play a dominant part in the development of industry. " ^^ In this manner not only have many small firms come under the influence of the "Big 4," but also several of the other large concerns such as Okura, Asano, and the chemical properties of Nobuteru Mori.
"One can scarcely go into any corner of the Japanese Empire," writes Chamberlain, "without finding one of the big capitalist com- bines firmly entrenched and skimming the cream of whatever prof- its are to be made. " ^^ How wide-spread this "skimming" process has become can readily be visualized by the curious able to examine carefully the chart of the holdings and affiliations of the house of Mitsui reproduced in the Japan-Manchoukuo Year Book for 1938.
The importance of the Zaibatsu is further enhanced by the fact that the expansion of their interests and controls has been accom- panied by a general trend towards concentration throughout all phases of Japanese economic life, as shown by the following data: ^^
98
Total number of companies Number of big companies (with capital of over 5
million yen)
Proportion of big companies
to total (in percent) Paid-up capital of all com-
panies (million yen) Paid-up capital of big com- panies (capital over 5 mil-
lion yen)
Proportion of capital of big
companies to total capital (in percent)
1909 1 1^549
38 0. 3 1,367
495
36. 2
1913 1918 1923 1927 1933 15406 23,028 32,089 38,516 71,196
59 293 589 687 7>>3 0. 4 1-3 1. 8 1. 8 1. 0
17 Ibid. , p. 275.
18 W. H. Chamberlin, Japan over Asia (Boston, 1937), p. 228.
19 Data from Resume statistique de I'empire du Japon (Tokyo, 1912). P- 108; ibid.
(1924), p. 72; ibid. (1930), p. 46; ibid. (1934), p. 44; ibid. (1936), pp. 46-47. According to an investigation by the Industrial Bank of Japan, quoted in the Osaka Mainichi and Tokyo Nichi Nichi (English), July 26, 1941:
1st half of 1940 2nd" " "
No. of Am't of capital mergers involved (in yen)
69 1,802,353,000 143 2,093,143,000
1st " " 1941 172 The Bank gives the following reasons for the increase:
3,024,770,000
1,983 4. 707 10,194 12,634
14-547
755 2,523 6,227 8,113 9,264
38. 1 53. 6 61. 1 64. 2 63. 7
? KOKUTAI AND CO-PROSPERITY
Built up around and led by the Zaihatsu, the large aggregations of capital represent a degree of actual concentration far greater than the superficial data of corporate holdings of the giant concerns would seem to indicate. No important policy of state, it is safe to say, is likely to be realized unless it has the active or tacit approval of the great houses that stand at the gravitational center of this swiftly growing concentration movement.
The Zaibatsu, in turn, are closely held family systems, controlled through the device of family owned holding companies. Again the case of Mitsui, largest and oldest of the Zaibatsu, may be taken as typical. The House of Mitsui consists of eleven affiliated Mitsui families,^^ all offshoots of the founder, Sokubei Mitsui. The head of each family is a member of the Family Council, and only family heads may vote at Council meetings. The head of the main Mitsui family is ipso facto head of the Council. The other ten families have a strict and traditional family rank and status. The Council is governed through a Family Constitution, first drawn up in 1722 by the third Mitsui, and revised and brought up to date in 1900. The full text of the 1900 Constitution has never been published, for many passages are held as strict family secrets. It is known that there are 10 chapters and over 100 articles. Of the Constitution, Russell 2^ remarks, "In no other large business institution in the
"1. The Government has advised companies in financial difficulties to carry out merger.
2. With the kaleidoscopic change in the world situation many companies were obliged to effect amalgamation due to the difficulty in obtaining raw materials. 3. From the viewpoint of enterprise rationalization financial organs have advised
industrial companies to effect mergers. "
20 Oland D. Russell, The House of Mitsui (Boston, 1939), p- 4, quotes a Japanese
authority, Shumpei Kanda, who in 1937 estimated the fortunes of the eleven family heads as follows:
Baron Takakimi Takahisa
Geneyemon Baron Takakiyo Baron Toshitaro
Takanaga Takamoto Morinosuke Takaakira Benzo Takateru
Total wealth *i Ibid. , p. 23.
450,000,000 Yen 170,000,000 200,000,000 230,000,000 150,000,000 140,000,000
60,000,000 80,000,000 60,000,000 60,000,000 35,000,000
1,635,000,000
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? KOKUTAI AND CO-PROSPERITY
world is the power and unity of family so firmly entrenched and safe-guarded as in the House of Mitsui through this rare docu- ment. "
So fundamental is the pattern of Mitsui in the family systems of the gigantic Japanese combines that it is worth quoting Russell's summary of this remarkable document somewhat at length: ^2
Chapter One specifies the six main families and five branch families by name, and prescribes that branch families may not be elevated to the status of main families, nor may any future branch families be ad- mitted to the Council.
It is characteristic of the spirit of the document that Chapter Two expressly defines the duties of the family members before there is any mention of the rights and prerogatives of these members. In this chap- ter are laid down these principal points:
94
1.
2.
3.
4.
5. 6.
Members of the family shall respect the rules prescribed by the founder, associate with each other as brothers, cooperate in all things, work together to enhance the prosperity of the House and to consolidate the foundations of each family.
Dispense with excessive luxury and practice simplicity and econ- omy in living.
When of proper age, sons and daughters of the eleven families shall study in good institutions of learning.
No debts shall be incurred by members of the Family nor shall any one member guarantee the loans of others.
All special actions require the consent of the Family Council. The Family Heads shall observe the various contracts and inden- tures in transacting their various businesses, shall take turns in inspectihg the business conditions of each of the firms and estab- lishments of the House of Mitsui, shall submit reports to the Coun- cil, shall call the Council whenever it is found that any officer of any firm of the House of Mitsui is undertaking or attempting to undertake dangerous plans, or if he is found committing some wrong so as promptly to adopt means of dealing with the offender and set about rectification or prevention of similar acts.
Chapter Three outlines the prerogatives and duties of the Family Council, voting rights, and general agenda of Council meetings. The second article of the chapter gives to the Council the right of "distribu- tion of profits, earmarking of reserves, budgeting of expenses and pay- ments of the various firms of the House, and distribution of property in case any of the companies of the House should be dissolved. " Ac- tually these details are handled in general by the Mitsui Gomei Kaisha, but the Family Council acts as sanctioning body.
22 ihid. , pp. 20-23.
? KOKUTAI AND CO-PROSPERITY
95
The Fourth Article of the chapter specifies that the Council shall determine the household budgets of each of the eleven members of the family; and this is religiously followed, even to the extent of "entertain- ment allowance. "
Chapter Four concerns marriage, adoption, and regulations about collateral branches. It has never been published in detail.
Strict rules are provided in Chapter Five for clamping a heavy hand on "those members of the House who misconduct themselves or who squander money or property. " It is a matter of record that these regu- lations rarely have been invoked.
Chapter Six is the original Sixth Precept of the Founder's Constitu- tion, and is characteristic not only of the spirit of the entire document but a three-hundred-year-old Mitsui Principle. It specifies that "Retire- ment shall never be permitted unless it is unavoidable," and includes a maxim of Hachirobei: "The lifework of a man lasts as long as he lives; therefore do not, without reason, seek the luxury and ease of retire- ment. " The rest of the chapter deals with inheritances in the event of compulsory retirement.
Chapter Seven details the duties of the directors of the Mitsui firms and lays down a code, mostly secret, "to assure perfect contact among them so as to obviate friction. "
Chapter Eight is held in extreme secrecy. Only family members and the higher directors of the business organization know its provisions. In general, it sets strict limits to various capitalizations, specifies com- mon property and the property of each family. It details the handling of reserve funds, classified as "common reserves, preparatory reserves, extra reserves, outlay reserves and descendant reserves. " The descendant reserves are set aside whenever a son or daughter is bom into any of the families.
Contractual safeguards among family members are dealt with in Chapter Nine, which asserts that "Violation of rules or contracts by any member of the main and branch families is punished by reprimand, disciplining, and more severe methods under the Civil Code, if neces- sary. It is evidence enough of the strength of the Constitution as a force of law on the family members to observe that the Mitsuis have never gone into civil court against each other.
The final chapter provides for necessary supplementary rules and amendments with the provision that "Should there be changes in the law of the land which makes the foregoing Constitution of the House of Mitsui infringe them, changes shall be made in the Constitution, but in such a way as not to lose the spirit of the original Constitution. "
No better illustration could be given of the completely patri- archal character of the system of the Zaibatsu than this. Only the mechanism of control, the holding company, is modern. All the
? KOKUTAI AND CO-PROSPERITY
Zaihatsu "have a pyramidal structure, with a holding company at the top controlling the main operating companies and the 'side- line' concerns. Each of these two classes of company has numerous subsidiaries, which frequently, in turn, have small companies largely dependent upon them. " However, actual day-by-day ad- ministration is, G. C. Allen tells us, "largely in the hands of one or more distinguished 'Banto' (literally 'head watchman') such as Nanjo of Mitsui, Ishikawa of Sumitomo, Kozo Mori of Yasuda and, until recently, Toyotaro Yuki of Sumitomo. " ^^ The Banto may be, in fact typically are, "adopted" into the familial structure and come to be completely identified--not infrequently through mar- riage alliances--with the family hierarchy of the House.
It is, perhaps, superfluous to add that the governing relation- ships in these hierarchies of command and subordination bear throughout the patriarchal-feudal stamp. Frequent dissatisfaction has been expressed with such paternalism by executive staffs ^^ and, of course, by labor whenever and wherever it has had any oppor- tunity to organize. But in those places which have been kept anti- septic to all forms of disaffection, staffs may still properly
be designated as vassals of the entrepreneur, and are ready even to make sacrifices for his honor. Another aspect of this feudal attitude is the tendency to lay great stress on the esteem and standing of the enterprise. The Japanese is not content merely to draw his salary; he wants to be active in the correct way, in the correct place, and wherever possible in an outstanding, universally respected undertaking. ^^
This is in keeping with Bushido, and may, naturally, have at times its better side. ^(R) Yet, challenged at any point by the growth of
23 "The Concentration of Economic Control in Japan. " Allen's point is well taken here, except that Mori is connected with Sumitomo and Yuki, with Yasuda.
24 Particularly with the deepening of the depression. Criticism by the younger army officers, becoming keen during the early 1930s, seems to have accelerated such dissatisfaction amongst the younger staff members of the "Big 4," who felt especially resentful over their low chances of promotion. The resultant change in policy, called "slewing-around"--donation of funds to national social organization, some "slowing up of the tendency of big business to monopolize all branches of trade," etc. --does not seem seriously nor at any point to have altered the picture.
25Emil Lederer and Emy Lederer-Seidler, Japan in Transition (New Haven, Conn. , 1938), p. 187.
26 "The great entrepreneurs take it for granted that through bad times as well as good they will carry at least their clerks, and if at all possible their workers; in case of dismissal there is a moral claim to a six months' bonus. Everywhere, in both public and private service, the bonus plays a great role--further evidencing the per- sistence of feudal, patriarchal habits of thought. Service is to be rewarded not only
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? KOKUTAI AND CO-PROSPERITY
97 antagonistic liberal-left mass movements, it has led to coordinated and comprehensive measures not only for suppressing independent political parties, labor unions,^^ and other such popular organiza- tions, but also to systematic methods for the totalitarian extirpation of "dangerous thoughts"; this is accomplished by "thought con- trol" 2^ in restraint of "ideational offenders," and is effectuated through such programs as the "National Spirit Mobilization" of the "National Harmonizing Society. " ^^ The Supreme Cultural Coun-
cil represents the final step in this direction. ^^
SUPPLEMENTARY AND PERIPHERAL WEBS OF CONTROL
The influence of the Zaihatsu reaches far beyond the fingertips of corporate control. Mention has already been made of the power they are enabled to wield over other large concerns through their control over credit, and their ability to manipulate markets, prices, and the framework of law so as to bring small concerns into a posi- tion of economic dependence upon them. Most small industrial establishments, Allen remarks in another connection,^^ are domi- nated by merchant employers, who finance the producers, co-
with the expected payment but also with a voluntary gift (of course as determined by customary law, but still with overtones of the gift) and wherever possible gen- erously. The employer has a number of other obligations, as, for example, gifts to the clerks in case of a wedding or the birth of a child, and long excursions, paid for and participated in by the employer. " Ibid, p. 188.
27 Not including, of course, many types of superpatriotic and vigilante or semi- vigilante Fascist-type organizations. For a description of these, see O. Tanin and E. Yohan, Militarism and Fascism in Japan (London, 1934).
28 An interesting summary of these efforts is given in an article by Hugh Byas in the Magazine section of the New York Times, April 18, 1937, called "Japan's Cen-
"
sors Aspire to 'Thought Control. '
29 Bibliography Section, Public Opinion Quarterly, July, 1938, p. 528 (based on an
article in Contemporary Japan, Sept. , 1937, written by Moriyama Takeichiro and en- titled, "Rescuing Radicals by Law"): "By a high administrator of the 'Law for the Protection and Observation of Ideational Offenders effective since November 20, 1936, which is intended to rehabilitate both the mental and the material life of such offenders in order that they may be converted from radical doctrine and restored as loyal and useful members of society. ' 'The zeal, paternal feeling, and devotion with which those who apply the law are thus serving the nation, have an important bear- ing upon the reform of the existing order which is a watchword of the nation today. ' Twenty-two such Homes for Protection and Observation are said to exist in Japan, to afford 'ideational offenders' an opportunity to 'resume their studies. ' " See also the discussion, "Organ for Spiritual Drive Favored," in the Japan Times and Mail Aug. 3, 1938.
30 Byas, "Japan's Censors. "
31 G. C. Allen, Japan; the Hungry Guest (London, 1938), p. 103.
? gS KOKUTAI AND CO-PROSPERITY
ordinate their activities, and market the finished goods. " "Gen- erally speaking," writes a Japanese authority,^^
small industries have no economic independence in regard to the sale of their manufactures. They do not constitute perfect independent units in the market of competitive transactions as contrasted with large- scale capitalistic enterprise. . . . Most small industries are so circum- stanced as to be obliged to enter into business relations with large busi- ness interests in order to secure the sale of their manufactures. Partly because of the financial necessity of entering into such business relations and partly because of the fact that the purchasers of their manufactures are limited in number, small industries have little free choice in the marketing of their goods. That is to say, most small industries exist in subordination to influential capitalists, who perform the role of cus- tomers in the sale of their manufactures. It is no exaggeration to s^y that in the present-day market organizations, they are entirely depend- ent on powerful capitalistic concerns for their existence.
Recent war manoeuvers seem to have further heightened this condition of dependence. An article in the Mitsubishi Monthly Cir- cular (November, 1938), appraising the significance of the Sino- Japanese war for small enterprises, found that two tendencies stood out: (1) an even greater dependence of these small establishments upon their functions as subcontractors to large enterprises; (2) en- forced and compulsory enrollment of small establishments into Industrial Associations, of which 1,200 new associations, or more than 54 percent of the total number now in existence were organ- ized in the first year of hostilities, 1937-38. These associations have served as a sort of "national grid" for the distribution and alloca- tion of raw materials, and have been instrumental in establishing the type of rules and regulations for self-organization and group discipline which accord with the Kokutai principle. While many of these associations appear to have been initially motivated by hostility to the Zaibatsu/^ there can be no question but that in the main they are subservient to the larger course of events subject to the manipulation of, and the definitive controls mapped out by, the giants.
32 1. Otsuka, "Characteristic Features of Japanese Small Industries and Policies for Their Development," Kyoto University Economic Revieiu, Oct. , 1939, pp. 22-23.
33 This seems to be the case with many of the more recently established handicraft and merchant guilds, and the Zaibatsu appear to have been for a time pretty much disturbed by criticisms emanating from such sources. But the emergencies and
? KOKUTAI AND CO-PROSPERITY
Centered around the Zaibatsu is a far-flung system of closely interlocking cartel and syndicate controls. The coal cartel, estab- lished in 1921, attempts to regulate prices, set production quotas, and the like, for the entire Japanese industry. A sales syndicate for the raw-iron industry, established in the same year, includes all is- land and Japanese-controlled Korean and Manchurian producers. The cement industry is organized into three overlapping cartel groupings, the Japanese Portland Cement Producers, founded in 1900, the Japanese Portland Association, founded in 1910, and the Japanese Cement Consortium, organized in 1924. Amongst the three, controls cover technical innovations, advertising, conditions and terms of delivery, establishment of production quotas, and so on. A community of interest binds together the leading paper pro- ducers (85 percent of the paper, and 90 percent of the pulp in 1929). A series of cartel-like associations governs the cotton, silk, and other textile industries of Japan. ^*
The strength of the Zaibatsu in the cartel system is indicated by their percentages of production volume, or of total capacity, in various of the more powerful cartel groupings (1936): ^^
Industry and Leading Zaibatsu
Steel materials--^Japan Steel (owned by the government plus important Zaibatsu)
Pig iron--^Japan Steel Coal--Mitsubishi Copper--Mitsubishi Shipbuilding--Mitsubishi Alloys--Mitsubishi, Japan Steel Cement--Mitsubishi, Mitsui Paper--Mitsui
Flour--Mitsui, Mitsubishi
Sugar--Mitsui, Mitsubishi
Shipping Tonnage--Mitsubishi, Sumitomo
Percentage of Output or Capacity
65
74 31 31 16 41 44 84 99 43 55
exigencies of wartime seem, for the time being at least, to have stilled such opposi- tion.
34 Most of the above was taken from Karl Hahn, Die Industrielisierung Japans (Giessen, 1932), pp. 126-27.
35 Fortune, Special Japan Issue, Sept. , 1936, p. 136. See also Japanese Trade and Industry, published by the Mitsubishi Economic Research Bureau, Tokyo (New York, 1936), pp. 114-29.
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? 100 KOKUTAI AND CO-PROSPERITY
In addition to the cartel structure, there exists a series of central *'peak associations," so clearly dominated by the Zaibatsu and the large concerns grouped around and dependent upon them as to resemble more closely clubs or fraternities than actual trade asso- ciations. While there is, for foreign observers, no way whatsoever of now gauging their relative importance, they show tendencies quite similar to those underlying the growth and expansion of com- parable organizations abroad:
Almost all economic organizations in Japan have developed after the World War. Excepting chambers of commerce and industry, they have no legal basis, but as Governmental control of the national economy becomes stricter, the part played by these organizations is necessarily of greater importance. The most representative organizations, the mem- bers of which include all branches of the national economy are the Japan Chamber of Commerce and Industry, Nippon Kogyo Club, Nip- pon Keizai Renmeikwai, and Zensanren. ^^
The first of these, the Chamber of Commerce and Industry of Japan,^^ originated in 1928 under legislative sanction as the legally competent and officially recognized central federation of all the chambers of commerce and industry in Japan Proper, "organized according to the Law and the judicial persons and organizations in Chosen (Korea), Taiwan (Formosa), Karafuto (Japanese Sagha- lien), Kwantung Province and abroad, authorized by the Minister of Commerce and Industry. " ^^ It was successor to the Associated
Chamber of Commerce of Japan, organized in October, 1892, un- der authority of a "Chamber of Commerce Ordinance" promul- gated in 1890 when "chambers of commerce became official organ- izations of merchants and industrialists. " ^^
The nature of this quasi-governmental body has been described by an official representative as follows: *^
^^ Monthly Circular, issued by Mitsubishi Economic Research Bureau, Dec, 1937, written in response to query by the author.
37 These appear to have been modeled after the pattern of the German Chamber of Ck)mmerce and Industry, rather than after the type dominant in the United States and England, and thus to carry much greater weight with their constituencies than is the case in these latter countries.
38 From a typed summary prepared by the Assistant Secretary of the Japan Cham- ber of Commerce and Industry, Tokyo, Japan, in reply to direct questions by the author.
39 Mitsubishi Economic Research Bureau, Monthly Circular, Dec, 1937. 40 Summary, cited in footnote 38 above.