Bending Adversity: Japan and the Art of Survival (13 page)

None of this was foreseeable in 1945, at least not to outsiders. Japan’s economy, built up since Meiji, was a smoking wreck. Its industrial misery was compounded by the failure of the harvest in the year of its defeat. Bad weather combined with lack of fertilizer and labour to produce a food shortfall of some 40 per cent.
Grave of the Fireflies
, an animated feature film produced four decades later, started gruesomely with the child protagonist dying of starvation in Ueno station, a fate that befell countless people in those early desperate months.
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Hungry Tokyoites clambered aboard trains leaving Ueno for the countryside, loaded with kimonos and other family heirlooms to swap for food. So crowded were the trains that people hung onto the outside of the carriages and railway staff put wooden slats across the windows to stop them cracking. Kazue Matsumaru, a farmer’s wife in a village near Tokyo, described the ravenous crowds that descended from the trains. ‘They’d buy anything. Even the leaves off the potato plants.’
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There was a good deal of stealing too. Much food made its way onto the swelling black market. In the cities, some young women earned money or received scarce items such as nylon stockings or canned food by sleeping with American GIs. ‘In the dark corners of certain downtown areas, prostitutes, called “
panpan
girls” in those
days, emerged every evening to wait for American soldiers,’ Ogata recalls.

Such hardship notwithstanding, America’s first concern was not to boost Japan’s economy but to dismantle its wartime industrial complex.
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Japan had been one of the fastest-growing economies in the world since the 1880s when the Meiji leaders set out to modernize their country. From the 1930s, its industries had been marshalled for a war economy. The Americans were determined this would never happen again. Shipyards that had turned out warships were banned from building anything other than wooden fishing boats. The US originally planned to dismantle most of the factories left standing and pack the machinery off to Japan’s former enemies as war reparations. Those plans were gradually scaled back. The softening was initially out of sympathy for Japan’s desperate economic plight and concerns about social unrest. But, as the Cold War set in, Washington’s ideas shifted. It decided that its strategic needs were not best served by a Japan on its knees. Rather, it wanted a bulwark against communism. Yet, even when America started to think about how to build up Japan economically, the ‘image always remained of a fundamentally second-rate economy at best’. Only days before the outbreak of the Korean War, John Foster Dulles, special envoy of President Harry Truman, said Japan should concentrate on exporting items such as cocktail napkins.
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If the US saw Japan as a maker of trinkets, the nation’s bureaucrats had other ideas. Even before the war had ended, government officials had secretly planned for life after defeat. Saburo Okita, a post-war economic planner, sent out a notice at the start of August 1945 to arrange a meeting. ‘The idea was to discuss the future of the Japanese economy after the war,’ Okita said of his surreptitious plans. ‘But if we’d advertised a meeting with a title like that we would have been arrested by the military police.’ The gathering of experts took place in a burnt-out building on 16 August, the day after Japan surrendered. Okita remembered how desperate the situation seemed. ‘If you looked out of the windows, it looked like a scorched plain. Everybody was starving. But the committee discussing the future worked really hard. They thought, It’s bad now. But with a big effort, Japan will get back on her feet again, not by military means, but with new technology and economic power.’
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These early planners discussed various models for rebuilding Japan, with some arguing that it should concentrate on agriculture. The consensus that eventually emerged, however, was to employ the same methods that had been marshalled for all-out war to create powerful peacetime industries. From the early 1930s, Japan had shifted from light to heavy industrialization, emphasizing warships, bombs and chemicals over textiles and handicrafts.
Fukoku kyohei
 – ‘rich country, strong army’ – had been the centrepiece of the Meiji project, an objective that slipped into militarism. Now that Japan was forbidden from fighting, it could concentrate solely on building a strong economy.

Washington was soon to regret writing the pacifist clause into Japan’s constitution. But in what became known as the Yoshida Doctrine – after Shigeru Yoshida, prime minister for much of the decade after the war – Japan used its lack of international obligations to its own advantage. Released from the burden of defence and protected by the US military, it was able to throw all its energies into economic development. Wealth creation was seen as an alternative way of generating national prestige. The link between pre- and post-war ambitions, and the means of achieving them, was sometimes explicit. Kiyoshi Tomizuka, a professor of engineering at Tokyo Imperial University, wrote in his diary in April 1945, ‘An army in uniform is not the only sort of army. Scientific technology and fighting spirit under a business suit will be our underground army.’
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For all these aspirations, by 1948, the economy had reached crisis point. Prices had risen a cumulative 1,200 per cent in the three years since the war. Labour conflict was rife. The Americans called for Joseph Dodge, a Detroit banker, who as ‘economic tsar’ oversaw a drastic plan to rein in government spending and fire public workers. Inflation was gradually contained, and the exchange rate massaged lower to stimulate exports. The Red Purge started and policies intended to break up conglomerates were quietly abandoned. Unemployment rose, consumption dropped and many companies went bankrupt. Depression beckoned. Then, in 1950, the Korean War came to the rescue. What remained of Japan’s industrial base cranked into action to supply the Americans with military equipment. Yoshida called it ‘a gift from the gods’. Long-idle factories hummed as the US, setting
aside its scruples about Japan’s military complex, put in orders for barbed wire and munitions. Some factories went the other way, from pre-war military production to the manufacture of civilian goods. An aircraft factory in Osaka started making nails for houses. Makers of radio parts turned their thoughts to light bulbs. In due course, companies such as Nikon, which had ground lenses for gunsights, started producing cameras and binoculars.

The Americans lifted the ban on shipbuilding. The naval yards at Kure, which had built the
Yamato
, the largest battleship ever made, converted production to tankers and other merchant vessels. At that time, Britain was producing half the world’s ships. But even during the shipbuilding ban, Japanese engineers harboured what looked like fantastical dreams of surpassing it. Universities continued to churn out shipbuilding engineers even though there were no jobs for them. As soon as the ban was lifted, they were put to work. In Kure, managers adopted the so-called block construction method of shipbuilding in which prefabricated sections of a ship are welded together. They were soon turning out ships in seven months, less than half the time in other countries. A secret mission was sent to study shipbuilding on the Clyde in Scotland. Its members discovered that Japanese methods were already more advanced. Less than a decade after work at the shipyards resumed, Japan had overtaken Britain as the biggest shipbuilder in the world.

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It was shortly after Dodge arrived that the Ministry of Trade and Industry, the legendary MITI, was formed. The ministry that was subsequently credited by many with overseeing Japan’s economic renaissance was a direct descendant of the Ministry of Munitions. In that incarnation it had beseeched Japanese companies to work together for the purpose of increasing weapons production. Now the bureaucrats of MITI rallied Japan’s industrial potential in the interests of peacetime revival. One of its priorities was steel, what one official called ‘the food of industry’. If steel was sustenance, it was thin on the ground. In the aftermath of the war, Japan was turning out just 5 million tonnes against the 90 million tonnes being produced in America. Every tonne produced took seven times more man hours. In a strategy reminiscent of the post-Meiji Iwakura mission, in which
Japanese had scoured the world for tips on modernization, steel study groups were sent to the US. MITI concluded that new mills would be needed in strategic port locations. Using the tools of what was then a semi-command economy, it ordered the reclamation of large tracts of land on which ultramodern steel plants could be built. As was to happen with other favoured industries, the government gave mills preferential access to cheap finance and foreign currency. Meanwhile, Japanese engineers were quick to see the potential of a new steel production technique using blown oxygen. They proved rapid learners. By 1960, Japan had quadrupled steel production to 20 million tonnes and had vastly improved efficiency. Five years later, it had more than doubled it again.

Something similar was repeated in the auto industry. In the 1920s, there were only a few thousand cars in Japan, all of them foreign made. General Motors and Ford dominated. As Japan militarized, this was considered a threat. American companies were expelled and Toyota and Nissan were asked to build military trucks. Toyota, which had hitherto made textile looms, began building vehicles only from the mid-1930s. Quality was poor. Yet days after Japan’s defeat, Kiichiro Toyoda, Toyota’s president, told his engineers they must catch up with American technology within three years. Even for Toyota that proved a fanciful goal. When the company started exporting cars to the US in 1957 under the Crown brand, they flopped. The car could not accelerate fast enough to get onto American freeways. Still, at home Toyota was doing better, helped by high protective tariffs on foreign imports and by cheap finance. The men at MITI had fought with the more economically ‘rational’ officials in other parts of the government, who had argued Japan should leave car production to the far more advanced Americans. As in other industries, car manufacturers received a huge boost from the Korean War, Toyota’s ‘salvation’, according to Toyoda. ‘I felt a mingling of joy for my company and a sense of guilt that I was rejoicing at another country’s war.’
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Although Toyota went it alone, other car companies signed tie-ups with foreign manufactures. MITI made sure that the country was not swamped by superior foreign technology. Instead, Japanese companies were given strict timetables to indigenize the manufacture of components and finally to build entire cars in Japan.

Certainly, MITI officials were not averse to practising a mercantilism that came to be known as ‘industrial policy’. Of their protection of start-up industries behind high tariff walls until they could fend off foreign competition, Yoshihiko Morozumi, a senior MITI official, said, ‘Until we were strong enough, we kept the doors tight shut. If we opened them too early, the winds might blow everything flat.’
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It would be wrong, however, to suggest that MITI and other ministries orchestrated Japan’s industrial and economic revival singlehandedly. Some recent studies have even suggested that those industries left alone by government were the ones that did best.
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That view is exaggerated. But there was a great deal of bottom-up entrepreneurial activity as well as state planning. One example is Honda, which became a car manufacturer in direct contravention of MITI’s orders. Soichiro Honda, a self-taught engineer who began his career tuning racing cars, turned his attention to motorbikes after the war. He built his first by attaching a small engine to a standard pushbike. After he launched the Honda Cub, he was determined to graduate to cars and trucks. He recalled a meeting with the officials at MITI, who tried to block his entry into an already crowded arena. ‘The bureaucrats still had their heads full of the old notions of central control,’ he remembered more than three decades later. ‘They were absolutely no help. You wouldn’t believe what a hard time I had with MITI. When I wanted to make cars, they said, “Keep out. Toyota and Nissan are doing it already.” I said, “I’m free to do what I want. The war’s over you know.”’
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Honda was by no means the only entrepreneur to invent a business from scratch. More than any company, Sony exemplifies Japan’s rise from the rubble and its transformation from a producer of shoddy trinkets to a manufacturer of world-beating technology. It began its life, quite literally, in a bombed-out building, the shell of the Shirokiya department store in Nihombashi, where Masaru Ibuka opened a radio repair shop in late 1945. The following year, he and Akio Morita, who had been expected to take over his family’s 300-year-old sake business in Nagoya, founded a company with the unpromising name of Tsushin Kogyo, or Tokyo Telecommunications Engineering Corporation. The initial investment was $500.

Morita and Ibuka had met the year before the war ended when they
were both put on a project to develop a heat-seeking missile. Ibuka, an electrical engineer with thick spectacles, ‘shovel hands’
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and a working-man’s accent, was an inveterate tinkerer. After the war, whenever he travelled to America, he would return with toys, but never presented them to his children without first pulling them apart and putting them back together again. Sometimes he bought two sets so that he and Morita could dismantle them together. Early on Ibuka experimented with electric rice cookers (a flop) and reel-to-reel magnetic tape recorders, the first to be sold in Japan. The big breakthrough came in the 1950s when he paid $25,000 to Bell Laboratories to license its transistor technology. His aim was to adapt transistors for use in radios. Bell told him it was impossible. Ibuka persisted and in 1955 Sony became the first company to make transistor radios a commercial success. The transistor was actually a little large for most pockets. So Morita, a marketing genius, had salesmen wear shirts with slightly bigger pockets to foster the illusion of portability.
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