Industrialism, Working Conditions and the Zaibatsu in Prewar
Japan
ZAIBATSU
Most agree that the most unique feature of Japan's pre-WWII economic development was the vertically integrated economic combines or conglomerates called Zaibatsu. The most prominent zaibatsu of the 1910s and 1920s are names still familar today: Mitsui, Mitsubishi, Sumitomo and Yasuda (See Mcclkain, pp. 230-237). Peter Duus, in his textbook, Modern Japan, also mentions Daiichi. Here is a brief encyclopedia entry on the Zaibatsu:
[Literally=money or financial clique], the great family-controlled banking and industrial combines of modern Japan. The leading zaibatsu (called keiretsu after World War II) are Mitsui, Mitsubishi, Dai Ichi Kangyo, Sumitomo, Sanwa, and Fuyo. They gained a position in the Japanese economy with no exact parallel elsewhere. Although the Mitsui were powerful bankers under the shogunate, most of the other zaibatsu developed after the Meiji restoration (1868), when, by subsidies and a favorable tax policy, the new government granted them a privileged position in the economic development of Japan. Later they helped finance strategic semiofficial enterprises in Japan and abroad, particularly in Taiwan and Korea. In the early 1930s the military clique tried to break the economic power of the zaibatsu but failed. In 1937 the four leading zaibatsu controlled directly one third of all bank deposits, one third of all foreign trade, one half of Japan's shipbuilding and maritime shipping, and most of the heavy industries. They maintained close relations with the major political parties. After Japan's surrender (1945) in World War II, the breakup of the zaibatsu was announced as a major aim of the Allied occupation, but in the 1950s and 1960s groups based on the old zaibatsu reemerged as keiretsu. The decision on the part of these groups in the post? World War II era to pool their resources greatly influenced Japan's subsequent rise as a global business power.
The Columbia Encyclopedia, Sixth Edition. Copyright © 2002 Columbia University Press
The Mitsui logo: 
The Mitsubishi logo: 
Another take on the zaibatsu is:
Zaibatsu were seen as monopolistic organisations, which originated in the Meiji era. At this time Japan was dominated by three large zaibatsu: Mitsubishi, Mitsui and Yasuda, later to be joined by Sumitomo. These four were later to be known as the old zaibatsu.
Each zaibatsu was usually rigidly controlled by families, through a "holding company" (honsha) which held a controlling block of shares in the subordinate companies. A typical zaibatsu consisted of several key subsidiaries which were more often than not engaged in manufacturing, mining, trading and financial concerns.
The zaibatsu was a family like community because its entire organisation would be based on family principles of hierarchy, loyalty and dependency. Most zaibatsu were always very strong financially because of their shear size, allowing them to buy out and absorb/suffocate smaller competitors. This ultimately resulted in them developing into very powerful monopolistic organisations, which controlled the market in a number of commodities.
The industrial organisation of the Japanese economy in the pre-war days can be summarised as consisting of a family like hierarchy of business firms of varying size with huge zaibatsu corporations at the top and one family workshops at the bottom.
Although zaibatsu existed from the 19th century, the term was not in common use until after World War I. By definition, the "zaibatsu" were large family-controlled vertical monopolies consisting of a holding company on top, with a wholly-owned banking subsidiary providing finance, and several industrial subsidiaries dominating specific sectors of a market, either solely, or through a number of sub-subsidiary companies.
Significance
The zaibatsu were the heart of economic and industrial activity within the Empire of Japan, and held great influence over Japanese national and foreign policies. The Rikken Seiyukai political party was regarded as an extension of the Mitsui group, which also had very strong connections with the Imperial Japanese Army. Likewise, the Rikken Minseito was connected to the Mitsubishi group, as was the Imperial Japanese Navy. By the start of World War II, the Big Four zaibatsu alone had direct control over more than 30% of Japan's mining, chemical, metals industries and almost 50% control of the machinery and equipment market, a significant part of the foreign commercial merchant fleet and 60% of the commercial stock exchange.
The zaibatsu were viewed with suspicion by both the right and left of the political spectrum in the 1920s and 1930s. Although the world was in the throes of a worldwide economic depression, the zaibatsu were prospering through currency speculation, maintenance of low labour costs and on military procurement. Matters came to a head in the League of Blood Incident of March 1932, with the assassination of the managing director of Mitsui, after which the zaibatsu attempted to improve on their public image through increased charity work.
History and development
The Big Four
The Big Four zaibatsu ( 四大財閥, shidai zaibatsu) of Mitsubishi, Mitsui, Sumitomo and Yasuda are the most significant zaibatsu groups. Two of them, Mitsui and Sumitomo, have roots stemming from the Edo period while Mitsubishi and Yasuda trace their origins to the Meiji Restoration. Throughout Meiji to Showa, the government employed their financial powers and expertise for various endeavors, including tax collection, military procurement and foreign trade.
The New Zaibatsu
Beyond the Big Four, consensus is lacking as to which companies can be called zaibatsu, and which cannot. After the Russo-Japanese War, a number of so-called "second-tier" zaibatsu also emerged, mostly as the result of business conglomerations and/or the award of lucrative military contracts. Some more famous second-tier zaibatsu included the Okura, Furukawa, and Nakajima groups, among several others.
The early zaibatsu permitted some public shareholding of some subsidiary companies, but never of the top holding company or key subsidiaries.
The monopolistic business practices by the zaibatsu resulted in a closed circle of companies until Japanese industrial expansion on the Asian mainland (Manchukuo) began in the 1930s, which allowed for the rise of a number of new groups (shinko zaibatsu), including Nissan. These new zaibatsu differed from the traditional zaibatsu only in that they were not controlled by specific families, and not in terms of business practices.
This fairly unpleasant account of Mitsui activities in Manchuria comes from John Robert's book on Mitsui.
Japan's Mitsui zaibatsu financed and profited from Japan's Opium Monopoly Bureau in Manchukuo (Japan's Manchurian colony), in the 1930s. Roberts writes:
Opium was an important source of revenue for the Manchukuo government, through the Opium Monopoly Bureau set up by Hoshino [1]. Following the example of the British in another part of China about a hundred years before, the Kwantung Army used opiates to weaken public resistance, and deliberately fostered drug addiction in Manchukuo and occupied areas of China. One means of hooking new users was the distribution of medicines containing morphine and of special cigarettes bearing the popular trademark "Golden Bat" but with mouthpieces containing small amounts of heroin. These various narcotics supplied quite legally to the Opium Monopoly Bureau by Mitsui and other trading companies, induced euphoria not only in the unfortunate victims but also in the members of the "ni-ki-san-suke" [2] clique, because the traffic was racking up profits of twenty to thirty million yen per year for financing the industrial development of Manchukuo (according to testimony presented at the Tokyo War Crimes trials in 1948). A witness testified further that Hoshino [1] negotiated one large loan from Japanese banks against collateral in the form of a lien on the profits from Manchukuo's Opium Monopoly Bureau. Another authority stated that the annual revenue from the narcotization policy in China, including
Manchukuo, was estimated by the Japanese military at 300 million dollars a year.
Source: Mitsui: Three Centuries of Japanese Business, by John G. Roberts, Weatherhill, New York, 1991, pages 312-313.
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Female Workers in the Textile Mills
As McClain (pp. 225-230) points out, the foundations of the modern textile industry were laid
in 1882 when Shibusawa Eiichi founded the Osaka Spinning Company. He powered
a 10,000 spindle mill with steam power. To make the steam, he had to burn something
so these kind of modern factories stimulated the demand for coal. Moreover,
cotton and silk needed to be shipped and the coal had to be transported to the
factories, so there was growth in the transportation sector as well. In turn,
with all the wage labor in both the mines and the factories, there was generated
effective demand for a wide variety of ordinary consumer products.
Who worked in the mills? Mostly young women who were known as joko
or female laborers. See the following account by Patricia Tsurumi:
Begun initially as largely government enterprises that received government
support and encouragement after they were in private hands, the machine
silk-reeling and cotton-spinning industries of Meiji were the first in Japan
to develop extensive factory production. Their work forces, heavily female,
formed a large proportion of the labor force during the first period of
Japan's industrialization. This pattern would remain long after the
Meiji era had ended.
Although throughout the Meiji period some cotton-mill hands came from urban
homes, the vast majority of the silk-reeling and cotton-spinning operatives
were women and girls from a rural background. During the first decade of
the new era, daughters of debt-free and even well-to-do farming families
went to work in the new silk mills, but thereafter the female workers in
both silk and cotton plants tended to be from poor peasant families. By
the turn of the century these kojo [factory girls] came from some of the
poorest tenant-farmer villages in the entire country. The women and girls
who became textile factory workers, including those from independent cultivator
or prosperous farming homes, were no strangers to hard work. They knew that
many generations of country women had contributed to the well-being of their
families by laboring both at home and away from home. Like their mothers
and grandmothers before them in pre-Meiji times, they had routinely seen
female as well as male offspring of peasant families "going out to
work" (dekasegi) in a place beyond commuting distance....
During the Edo era (1600-1867), female offspring of peasant families were
sent away to labor as dekasegi workers, usually in a local village or town.
This immediately reduced the number of mouths that had to be fed, and the
girls might gain valuable skills and experience, eventually bringing in
some remuneration. The ones who remained at home were essential workers
within the peasant family economy, producing and processing food and other
items for the family subsistence, caring for the young and the incapacitated,
and playing key roles in the production of marketable commodities, including
silk and cotton thread.
E. Patricia Tsurumi, Factory Girls: Women in the Thread Mills of Meiji
Japan, Princeton: New Jersey: Princeton UP,
1990, pp. 9-10.
Takai Toshio went to work at the Ogaki Woolen Mill when she was barely
12 years old. The following is taken from her memoir, Watashi no joko
aishi as translated in excerpts by Ronald Loftus in Telling Lives. She begins by noting the discrepancy between what the recruiter
had told her family about working conditions in the mill, and the reality:
. . .[B]ut what we heard and what the conditions actually were, were
two quite different things. What we had heard was paradise, turned out
to be hell. The 13-sen we were supposed to earn per day was before deductions
were made for food (9-sen), and for the soap and toilet paper, and straw
sandals we had to buy each month (3-sen), so we were left with less than
one-sen. So, in effect, all we were left with was our fatigue. At that
time, Kao soap was 9-sen for a bar and toilet paper was 3-sen for a bundle.
In the dormitories, they put 20 people in a 12-mat room. When we rolled
out our futon to sleep at night, we had to sleep in two rows separated
by not more than 3 centimeters. So if anyone talked in their sleep or
snored, everyone would wake up. For someone as high-strung as myself,
I could barely sleep at all. The dining hall was filthy, dark and gloomy,
there were virtually no side dishes with meals. All we got everyday was
miso soup and pickles but even the picked radishes were old and smelled
bad, and there was nothing of real substance in the soup though occasionally
a fly or a cockroach might float to the surface. We called it "Teppo
(rifle) miso." Moreover, the rice was imported; it was long grain
and not the sticky variety, so it scattered all over the place. You needed
a stick as well as your chopsticks to eat it. . .
Toshio was small of stature, so initially, they kept her away from machines
and had her collect scraps from the floor:
"Until she gets bigger, let’s have her collect the waste thread."
So all I got to do was clean up waste pieces of thread. For twelve hours
a day, from 6:00 a.m. to 6:00 p.m.—with 30 minutes for lunch and
15 minute breaks at 9:00 a.m. and 3:00 p.m.—I was standing or walking
and collecting left-over pieces of thread. No matter how much I collected,
there was always more that would fall from the machines. My legs became
stiff and my feet were swollen so that I was stumbling around. Nevertheless,
sitting or resting during work hours was not permitted, so I was constantly
in tears, just trying to hang on. And for the whole year, I was ridiculed
as nothing but a kid. So that whole year with filled with painful and
embarrassing moments…(17-21)
The machine which reeled the mill-spun thread was long and narrow—about
20 meters long—and right in the middle was the gear mechanism with
lots of small and large teeth which twisted and coiled the threads. One
time, a piece of scrap got coiled up in the large gear teeth and before
I even realized it, my right hand was pulled into the teeth of the gears.
I pulled my hand out with all my might but a lost a chunk of flesh off
of my wrist the size of a small coin and you could see right down to the
bone.
The machine boss and the supervisor came running over saying "You
stupid idiot! All the threads are cut. If your hand hurts, it serves you
right. You weren’t paying any attention. You’ve really created
a substantial loss for the company. There’s no excuse for that."
They scolded me severely and no one offered me any treatment at all. So
I went to the gatekeeper by myself and when I said, "I’m going
to see a doctor," he replied "What? You have an injury? I’ll
put a little medicine on it. If you go to see the doctor without any money,
he won’t see you anyway." He slapped a little phenol on my wound
and bandaged it, so I returned to the mill only to be accosted with "Where
the hell did you go during work hours? You really are a lazy one!"
I thought to myself, "You sons of bitches—are you even human?
I’ll get even with you, you better believe it!" (25-27)
Peter Duus, in his Modern Japan, mentions that tired workers often injured themselves and this seems
to have been Toshio's experience. He also notes the prevalence of tuberculosis,
something one historian refers to it as the AIDS of its time. Since the
women were forced to live and work in damp (from the steam), poorly ventillated
spaces, the chances for contagion were high. In fact, Toshio was married
to a young man, Hosoi Wakizo, who was ill with a disease that often accompanies
TB and he died at the age of 25. Before he died, though, he published one
of the most famous expose's of working conditions in the mill, Joko Aishi
or The Pitiable History of the Female Textile Workers, a title Takai
played upon for the title of her own memoirs. Before Hosoi's painstakingly
detailed work appeared, Yokoyama Gennosuke had published his demographic
survey of working conditions in the early 1900s, Nihon no kaso shakai
(Japan's Lower Classes). See McClain's mention of Yokoyama on pp. 254-55. His overall section on "Factory Workers" is found on pp. 248-256.
Also, in Loftus, The Turn Against the Modern, Yokoyama is discussed on pp. 110-112.