I HOME I CHRONICLE I INTERACTIVE I SEARCH I---Themes: I Societies Main I South Africa I Russia I Japan I

By 1870 a Ministry of Industry had been established in Tokyo. The new bureaucrats began the task of building up a modern economy – steamships, textiles, steel mills, public utilities – from scratch. Inevitably the government and the newly founded banking system had to help. And when Japan’s old-line merchants seemed too risk-conscious to take the plunge into modern manufacturing, the government built the plants, then turned them over to like-minded former samurai to manage. With this "privatization" policy, far ahead of its time, the Meiji reformers saved themselves from the temptation of forming huge, unwieldy state-run industries, which were to cause trouble for developing nations in the next century.

Thus it fell out, for instance, that a young samurai named Iwasaki Yataro, the founder of the Mitsubishi conglomerate, started his company with thirteen ships which the government let him have, on favorable terms, for ferrying troops to Taiwan, in one of the first overseas actions of the new army.

Another Meiji businessman, Shibusawa Eiichi, after a short turn in the new Meiji Finance Ministry, left to found the Dai-Ichi Bank – now the Dai-Ichi Kangyo. He went on to start the country’s modern textile industry, in the process introducing the joint-stock company to Japan. He ultimately founded about five hundred of them, many still active today.

One of Shibusawa’s early borrowers, a merchant named Furukawa Ichibei, bought the Ashio copper mines from the government, on highly favorable terms, in 1877. He parlayed his success there into a network of related companies – mining, cable manufacture, tractors, rubber – which ultimately became one of Japan’s huge zaibatsu conglomerates and, among other things, the ancestor of the modern Fujitsu computer group.

Such success stories were by no means atypical. The Meiji government’s privatization policy on the whole worked spectacularly well. This pattern of close collaboration among government, business and finance continues to this day. It was the beginning of what Americans would later, in competitive frustration, came to call "Japan, Inc."