[ Speech for the Saitama Employers' Association delivered on June 14, 2010 ]
The assignment given to me today by the host organization is to talk about the life and work of two distinguished individuals—Iwasaki Yatarō and Shibusawa Eiichi—who made great contributions toward Japan’s modernization and economic growth during the Meiji period. With an overwhelming presence and outstanding entrepreneurship, these two men left an indelible mark on the history of Japan.
But they accomplished this through different approaches to business management. Shibusawa was eager to promote and encourage the consultative system of management, involving all the stakeholders concerned. In the name of “Gappon-shyugi,” or a joint stock company arrangement, he adhered to this principle in founding and managing numerous enterprises throughout his long life.
Iwasaki, by contrast, believed in the top-down form of decision-making, with all the power residing in the hand of a chief executive. Possessing a fierce and dynamic disposition, Iwasaki was also quite astute in assessing the business environment, seldom missing an opportunity to expand his work or maximize his profit. Starting with very little, he ended up founding of one of Japan’s largest and most powerful industrial groups. Having consolidated his power and placed himself at the center of his work, Iwasaki paid little attention to his reputation or the reaction of society in general. This unique style was at odds with the norms of Japanese society; one might say that his life and work had more in common with those of contemporary business leaders in America.
Born in the 2nd month of Tenpō 11 (March 1840) near present day Fukaya city, Shibusawa Eiichi was recruited to work for the new government in Meiji 2 (1869). This meant that he was involved in the process of Japan’s modernization earlier than Yatarō, who was born six years before Eiichi in Tenpō 5 (1834) in Kōchi Prefecture.
In Keio 3 (1867), Eiichi had an opportunity to travel to Europe on the personal recommendation of the fifteenth and last Shogun, Tokugawa Yoshinobu. On his return to Japan after the collapse in 1868 of the Tokugawa government, Eiichi was recruited by the newly organized Meiji government in Tokyo and given a high-ranking position as the Chief of the Tax Office (租税正) of the Ministry of Popular Affairs (民部省). Subsequently, he was made responsible for “Kaisei-gakari” (Reform Office), whose mission was to prepare a blueprint and transform Japan into a modern nation.
In retrospect, the way the new government dared to entrust such important responsibility to Eiichi, a young 29-year-old upstart from a farming family who, aside from a year or so’s experience in Europe, had little connection with the new regime, was an indication of the intense and urgent commitment of the Meiji leaders to Japan’s modernization.
Another young man, Maejima Hisoka, from a farming village in Niigata Prefecture, was drafted to work in the Reform Office at about the same time as Eiichi, mainly on account of his brilliant achievements in Western studies. Eventually, Maejima ended up being revered as the “founder” of Japan’s modern postal services. This was another example of the Meiji government’s eagerness to hire capable talents, regardless of their former class or rank.
According to the data base of Shibusawa Eiichi Memorial Foundation, the broad agenda of the Reform Office cut across different departments. Eiichi, who was appointed as the head of the Office, by special assignment, had to involve himself in over thirty different projects, ranging from nationwide land surveys, to railway construction, to setting of the tariffs, and many others which were considered essential in building a modern nation.
One of the most urgent issues was to abolish the former domains of the daimyō and replace them with modern prefectural governments. This involved complex procedures to exchange the money which had been issued by the daimyō domains with the new national currency. The Reform Office proposed an exchange at the current market value, and placed an order with Germany to print the bank notes amounting to 100 million yen. These were the “Meiji Tsuhō,” commonly known as “German notes,” which are still on display in the Currency Museum of the Bank of Japan. Incidentally, this measure of disbanding daimyō domains which took effect with the imperial decree issued in July, 1871 (Meiji 4) turned out to provide Iwasaki Yatarō with an initial opportunity to build his own business, by using the shipping facilities which had belonged to the former Tosa domain.
An even greater challenge was how to support former samurai families, who suddenly lost their previously guaranteed hereditary income. If this matter were mishandled, it could well have toppled the fledgling government. Driven by a strong sense of crisis, Eiichi spent many sleepless nights drawing up several thousand papers outlining emergency proposals. Still under 30, his amazing energy and abilities were widely recognized by the rank and file of the ministry, enabling him to establish close friendships and trust with such top leaders of the new government as Itō Hirobumi, Inoue Kaoru, and Ōkuma Shigenobu.
While thus assured of a lucrative career in the higher echelon of the Meiji government, Eiichi chose to resign in Meiji 6 (1873) and take the position of Director of Daiichi Kokuritsu Ginkō, Japan’s first privately owned and Western-style financial institution. Eiichi remained in the private sector for the next sixty years or so, never again assuming an official position or involving himself in politics.
Iwasaki Yatarō, on the other hand, set out into full-fledged business activities after the abolition of the Tosa domain that led to the establishment of Kōchi Prefecture in Meiji 4 (1871). Utilizing the facilities left from the former domain, Yatarō launched a nationwide shipping business. He was fortunate in that conflicts engineered by disaffected samurais --such as Saga-no-ran in February, Meiji 7 (1874), and the Taiwan Expedition in May of the same year--were taking place one after another, which forced the government to reinforce the shipping industry to make emergency transport of military forces possible. Specifically, 13 foreign ships were purchased and their operation was outsourced. Furthermore, the following year, these ships were sold to private companies managing their operations, and it was decided to provide these companies with an annual subsidy of 250,000 yen for the next 15 years. There is little doubt that Yatarō’s company, Yubin Kisen Mitsubishi Kaisha（Mitsubishi Mail Steamship Company, established in Meiji 8 [1875]), reaped a great deal of benefit from such arrangements.
Although the public sharply criticized such government policies as illegal collusion, the government forged ahead, arguing that the nation’s survival depended on rapid expansion of shipping facilities. According to descriptions from the “Biography of Ōkubo Toshimichi” it all started with Yatarō’s meeting with Ōkubo Toshimichi, who was highly impressed by Yatarō and who believed that this was the man who would confront any difficulty or adversity and achieve his objectives with a firm determination. In return for such trust from the chief executive of the government, Yatarō was committed to do whatever he could to meet such expectations.
In addition, fears about the possibility of internal insurgencies made the government eager to promote Japan’s private sector shipping industry in the face of encroachment by foreign interests. This was most evident after the building of North America’s transcontinental railway in Keio 3 (1866) when a company named Pacific Mail opened an ocean route connecting San Francisco and Shanghai. Receiving subsidies from the US government, the company subsequently launched regular services connecting San Francisco, Yokohama, Kobe, Nagasaki, and Shanghai. They even hoped to make inroads into such domestic routes as those between Tokyo and Osaka. Considering such a move a security threat, the Meiji government requested that Mitsubishi launch a regular ocean route to Shanghai in January, Meiji 8 (1876). Pacific Mail tried to counter by lowering its fares, but was not successful. The Japanese government enticed the private sector to monopolize the Shanghai route by purchasing four steamships, building necessary infrastructure, and promising a subsidy amounting to 800,000 yen (to be reimbursed in fifteen yearly installments). Facing such determination on the part of Japan, in October of the same year, Pacific Mail decided to withdraw from shipping ventures in the Far East.
A development which brought a windfall fortune to Yatarō and his business was the outbreak of the Seinan Sensō (War in Kyūshū) in February, Meiji 10 (1877), an armed uprising of the sort long-feared by the government. Saigō Takamori led 15,000 members of Kagoshima Shi-Gakkō into rebellion, who were quickly joined by other disaffected samurai warriors. The rebels totally 30,000 as the rebellion spread into other parts of Kyūshū.
Determined to crush the insurrection by all measures, the government sent some 70,000 troops over land and sea. The battle lasted for eight months before being terminated when Saigō took his own life on September 24 at Shiroyama, a suburb of Kagoshima City. During this period, Mitsubishi deployed all its resources to help the government by transporting soldiers, artillery, and its entire logistics. For this operation, the company purchased seven foreign-made steamers to be operated along with the thirty-eight it already owned. By the time the war ended, the company possessed sixty-one ships in all, representing 73% of the nation’s entire merchant fleet.
Of the total expenditure of 41.56 million yen paid by the government for this war, more than 10% was spent on maritime transportation. In 1877 (Meiji 10), Mitsubishi earned revenue of 4.44 million yen, with related expenses amounting to approximately 3.22 million yen, resulting in an extraordinary profit of around 1.2 million yen.
Incidentally, the Mitsui Bussan company, which was established in July, Meiji 9 (1876), earned 8,000 yen in profit in its initial year. In the subsequent year, its profit jumped to 200,000 yen due largely to the war-related business. Although 200,000 yen was a huge amount of money at the time, and it certainly helped to consolidate the foundation of Mitsui’s new venture, even that was dwarfed by the staggering fortune which Mitsubishi had accumulated.
Although often criticized for somewhat dubious collusion with the government, Yatarō was undoubtedly an outstanding entrepreneur. With clear and cool observation of the structure of power, he nurtured personal relationships with such men of power as Ōkubo Toshimichi, and when he felt the time was ripe, invested his entire resources promptly and daringly, and thereby made profits that were so huge as to be hardly comprehensible in Japan’s economic scale at that time. Perhaps it was such astounding ability and strength of character which prompted Yatarō to conceive his somewhat un-Japanese ethos of management where all the power should converge on the personality of a single person, the president.
The rules of Mitsubishi Kisen Kaisha, written in Meiji 8 (1875), stated that “The company is owned and administered by the Iwasaki family; the President holds all the power; all the profit and loss accrue to the President himself.” They also made clear that, “Even though the group currently bears the name of ‘a company’ and appears like a joint stock organization, in reality, it is entirely a family business. Unlike companies established by collecting funds from others, all matters related to this company, including personnel affairs, rewards and punishments, shall be determined by the President himself at his sole discretion.”
Large business houses like Mitsui and Sumitomo, with traditions dating back to Edo or even earlier, placed particular importance on risk management. The members of the founding family usually kept their distance from the day-to-day operation, and the entire responsibility was entrusted to professional administrators. This style took root as a feature of Japanese-style business administration. In contrast, Yatarō’s proposal for a monopoly of power was something quite different, heralding the birth of a new corporate culture in Japan.
The outstanding managerial prowess with which Eiichi appeared to have been born is known to have drawn attention from many quarters. He first demonstrated this when he traveled to France and Europe in the capacity of a general manager-cum-treasurer assigned to a group of around thirty samurais, including the younger brother of the Shōgun. On his return home, he submitted to the treasury of the former Bakufu administration an accounting report covering all the costs and expenses the group had disbursed during its sojourn of a little over a year. Not only was the report quite accurate in detail, he surprised the Bakufu accountants by paying back a surplus which the group earned by investing some of its surplus funds in various financial instruments in France.
In addition to such outstanding ability as an accountant executive, his track record during the four years when he was at the forefront of Japan’s modernization, along with the personal relationships which he cultivated with the top elite of the government, made him a valuable resource for the business community. Thus he drew the attention of both the Mitsui and Mitsubishi groups, which were eager to recruit promising individuals to man their businesses.
As a successful business group known for its extraordinary longevity, Mitsui operated both dry store and money exchange houses during the Edo period. After the Meiji Restoration (1868), they attempted to adapt themselves to the change of times by investing in the Daiichi Kokuritsu Ginkō (1873) and experimenting in general trading by launching Mitsui Bussan, etc. (1876). The man in charge of such new ventures was Minomura Rizaemon. In conversations recorded between 1926-27, Eiichi revealed Minomura’s secret wish to have Eiichi join Mitsui and take over his position: “Minomura Rizaemon of Mitsui tried to entice me to take over his position, saying that new knowledge was essential for the business of the future. He gave me a formal kimono robe bearing the family crest of Mitsui. I thought that although I was willing to help, I would not be employed by them. However, I thought I would be helpful to them. This was what brought me close to the Mitsui group.”
Thinking, perhaps, the formal kimono robe was not enough to move Eiichi, the Mitsuis held a grand banquet to entertain Eiichi and his wife, Chiyo, with the entire Mitsui family in attendance. As Utako, Eiichi’s eldest daughter, recalled, Chiyo was a little nervous to mingle with the wives of Japan’s wealthiest family. In the end, however, wearing a conservative yet high quality kimono specially ordered for the occasion, Chiyo was said to have behaved in a graceful and dignified manner along with her husband.
Unlike in the case of Mitsui, Iwasaki Yatarō was quite straightforward in asking Eiichi to join and work with him in the Mitsubishi enterprise. Yatarō expressly assured Eiichi that together they could accomplish just about anything in this country. Eiichi’s own narrative described the occasion as follows: “Iwasaki Yatarō of Mitsubishi said that the joint stock business model which I advocated was no good, and that he and I should work together in an autocratic framework of management to expedite Japan’s development. He insisted that we should take a boat ride on the (Sumida) river and talk further. Yatarō was so insistent that one day, I went to a restaurant named Kashiwaya where Iwasaki waited for me, surrounded by fourteen or fifteen geishas. We got onto a boat and after throwing out a net or two to catch some fish, Yatarō said to me, ‘How should we proceed with our businesses from now on?’ I responded, ‘I advocate Gappon, or the joint stock company system, and I believe that much has to be done to correct the current affairs.’ Iwasaki responded, ‘The Gappon system would not work. We need to proceed with a more dictatorial arrangement,’ and then we began to argue on the relative merits and demerits of the two systems.” With the argument going nowhere, Eiichi got up and left the boat, taking several of the geishas with him.
This boat-ride incident drew attention, with the rumor that Yatarō and Eiichi had parted ways after a heated argument. In reality, however, the basic nature of the meeting was for Yatarō to invite Eiichi to join him and for Eiichi to decline the offer. Years later, Eiichi’s grandson, Shibusawa Keizo, tried to clarify the point as a part of the process of collecting materials for Eiichi’s biography, and asked his grandfather whether the two men became hostile to each other following the incident. Eiichi responded saying that it was never a matter of hostility. “Our ways of thinking differed from the beginning, and we both agreed to move along with the conviction in which each of us believed.”
In around Meiji 11 (1878), Iwasaki Yatarō and Shibusawa Eiichi joined hands in launching the Tokyo Marine and Fire Insurance Company, with the political blessing of Ōkuma Shigenobu. Eiichi’s database contains an interesting passage concerning Eiichi’s visit to Ōkuma at his residence in Kiji-bashi. Fukuzawa Yukichi happened to be there, too, and he and Eiichi played the game of shogi. Eiichi recalls, “With his usual sharp tongue, Fukuzawa said that for a wily merchant, I played the game well, to which I retorted that for a mediocre scholar, he was not bad either.” The episode appears to tell us that, in the midst of a heavy workload, those early Meiji elite were able to enjoy relaxed, informal, and even humorous interactions.
Behind the idea of creating an insurance company was a shift in the tax law which demanded the payment in cash rather than in produce such as rice. Eiichi was the one who advocated such change when he was in the government, and it was realized between the end of Meiji 6 (1873) and Meiji 7 (1874) by a government ordinance issued after Eiichi had left the government. As a result, the taxpayers were now required to transport their produce to the city and convert it into cash to pay their taxes. An insurance set-up was indispensable for protecting them against the risk involved in transport.
When Eiichi brought up the subject after the shogi games, the guests commented that Eiichi’s pushing for an insurance company was due to his self-interest. However, Ōkuma Shigenobu was quite positive, recommending that Eiichi proceed with the idea as soon as possible, since he believed that without the safeguard of insurance, financial institutions could not function properly. After a number of twists and turns, it was finally agreed that Yatarō would invest 11,000 yen out of the 600,000 yen capital in the insurance company. In the end, with a permit granted from the Tokyo government, Tokyo Kaijō company was duly launched on December 12, 1878 (Meiji 11).
Unlike in the case of the insurance business, Yatarō and Eiichi were to confront each other over the shipping industry starting in Meiji 15 (1882). Yatarō’s monopoly in the shipping industry incited strong criticisms and jealousy in the business community in general.
Following the assassination of Ōkubo Toshimichi in Meiji 11 (1878) and the subsequent fall of Ōkuma from power in Meiji 14 (1881), men like Shinagawa Yajirō and Inoue Kaoru, etc., mainly from the Chōshyu clique, founded a rival shipping company, Kyodō Unyu Kaisha, for the single purpose of combating the monopolistic power of Mitsubishi. Even Eiichi himself agreed to put his name on the list of those men. Drawing subsidies from the government, the company set out to challenge Mitsubishi with cutthroat competition, verging on a suicidal price war. With both sides’ honor and prestige at stake, a two-and-a-half-year struggle ensued, a rather unusual development in Japan’s business environment.
Yatarō was full of fighting spirit and, having enough resources to keep him going for a long time he would not budge an inch to his opponents. It’s difficult to say what would have happened had their rivalry continued for many more years. However, unfortunately for Yatarō himself, he was afflicted with malignant stomach cancer and struggled for his life. The very best medical treatments available at the time were of no avail, and Yatarō’s dramatic fifty-year life came to its abrupt end on February 7, Meiji 18 (1885). Enduring extreme pain, closely watched by his mother, Miwa; wife, Kise; younger brother, Yanosuke; and several executives closest to him, he uttered his grievous and heart-rending final words: “Born as a man of the Orient, I was able to accomplish but one or two out of the ten goals which I had aspired to realize. Unfortunately, however, as things have come to pass, I cannot do anything anymore.”
On February 16, 1885, Iwasaki Yanosuke, Yatarō’s younger brother by sixteen years, took the office of Mitsubishi president. Although Yanosuke inherited Yatarō’s spirit as well as the policy of autocratic, family-centered management, he was soon to take the initiative to bring the chaotic price war under control. By September 25, Meiji 18 (1885), the age-old confrontation was resolved by way of merging Mitsubishi and Kyōdo Unyu, establishing a new entity, NYK Line (Nihon Yusen Kaisha), which began to operate on October 1, only eight months after Yatarō’s demise. In terms of capital structure, Kyōdo Unyu had a share of 6 million yen, while Mitsubishi held a stake amounting to 5 million. However, since many shareholders were de facto Mitsubishi affiliates, the company came to be considered a part of the Mitsubishi group.
With Daiichi Bank as his base, Eiichi continued to help found and manage some 500 enterprises. They covered all areas of Japan’s modern industries, ranging from paper mills to cotton spinning, from mining to manufacturing, from railways to marine transport, from research institutes like RIKEN to life insurance, from hotels and theaters to resort developments.
Eiichi was always willing to extend support and give thorough guidance to those who wished to start a new company, explaining how to take out a loan from the bank and how to draw up accurate financial statements. He would lend his name as promoter to the business and personally contribute part of the start-up capital. When he realized that the business in question had gotten off to a sound start, in many cases he would sell the stocks he thus held and invest that money in launching another enterprise. Showing little interest in making the company his own possession, he appeared wholeheartedly committed to the greater purpose of promoting and supporting the nation’s modernization.
As Eiichi’s activities and intentions were understood by the public, and as the power and prestige of such organizations that are currently known as the Japanese Bankers’ Association and the Tokyo Chamber of Commerce became recognized, the leadership which Eiichi demonstrated as chairman or president became widely respected and valued.
When Nakamigawa Hikojirō joined the management of Mitsui group in Meiji 24 (1891), he was eager to expand and strengthen the manufacturing sectors of the conglomerate by buying up such companies as Kanebō and Shibaura Works. In addition, he asked Eiichi to sell the equities of Shoshi Kaisha, the paper manufacturing company that became the predecessor of Oji Paper. Shoshi Kaisha was conceived by Eiichi himself in Meiji 7 (1874) and developed through considerable difficulties. Therefore, Nakamigawa and his group had some doubt about whether Eiichi would be willing to agree to the proposal. As it turned out, however, Eiichi readily consented, surprising not only the Mitsui group but the business community in general.
In Meiji 26 (1893), Eiichi received a visit at his home from Iwasaki Yanosuke, who made a cordial request for Eiichi to join the board of NYK Line. After reminiscing about past difficulties, Yanosuke expressed his belief that, because of the nature of a shipping business, NYK should graduate from a private venture of the Iwasaki family and grow into a full-fledged public concern. Eiichi’s archives contains Yanosuke’s narrative: “Knowing that you [Eiichi] have had a great design and vision for the shipping industry, we would be most grateful if you’d participate in the administration of NYK Line. Thus, not only can we benefit from your great wisdom and experience, but also show society that the company is no longer a family business but indeed has become a public endeavor.” Hearing this, Eiichi decided to let bygones be bygones and accept Yanosuke’s offer to serve NYK as a member of its board of management.
Yanosuke inherited his brother’s legacy of centralized management and within this framework expanded the company’s business into diverse areas from mining to shipbuilding, from foreign trade to banking, etc. One of his monumental achievements was the purchase of a parcel of land, a little more than 108,000 tsubo, located in central Tokyo (Marunouchi), which was to grow into the nation’s most lucrative real estate company. Commenting on Yanosuke’s character, Eiichi mentioned that “his disposition was different from his brother, Yatarō’s, and he was quite a fair-minded and kind gentleman. While Yatarō was a great founder, Yanosuke was an extraordinary successor who was wise and thoughtful in carrying out the wishes of the founder-predecessor.”
It is often difficult for members of a founding family to continue running the enterprise. Many companies give up or transfer power to an outsider other. In the case of Mitsubishi, however, Yatarō was succeeded by his brother Yanosuke, and Yanosuke transferred the presidency to Yatarō’s eldest son, Hisaya, who, at the age of 50, in 1916, handed the reins of the company to Koyata, Yanosuke’s son. Thus, the rule of the Iwasaki family, along with the founder’s vision and philosophy, continued for over seventy years, until the fall of 1945, when the group itself was liquidated by the Occupation Forces.
There is a photograph of a wedding ceremony held on May 23, Taishō 11 (1922) at the Peers’ Club in Tokyo. The groom seated at the center is Shibusawa Keizo, the grandson and an heir to Eiichi. Graduated from the Tokyo Imperial University the previous year, Keizo worked at Yokohama Specie Bank, and was about to be transferred to its London branch. The bride, Tokiko Kiuchi, was the younger sister of one of Keizo’s high school classmates. She was a daughter of Isoji Kiuchi, the second daughter of Iwasaki Yatarō, thus making Tokiko Yatarō’s granddaughter.
To the left of Keizo is Toyoji Wada, who played the ceremonial role of a matchmaker between Keizo and Tokiko. Next to him is Kise, Yatarō’s widow and Tokiko’s grandmother, followed by Kiuchi Jushirō and his wife Isoji, Tokiko’s mother and Yatarō’s second daughter, while at the far left in the front row is Iwasaki Hisaya and his wife. The lady fifth from the left in the second row is Haruji, Yatarō’s eldest daughter, whose husband, eighth from the left, is Kato Kōmei, who was to serve as prime minister between June, Taishō 13 (1924) and January, Taishō 15 (1926).
To the left of Kato is Kijurō Shidehara, the husband of Yatarō’s third daughter, Masako, who became prime minister in Shōwa 20 (1945), right after Japan’s defeat in the war. The large man standing behind the two is Iwasaki Koyata, the president of Mitsubishi group. Returning to the front row, the second to the right of the bride, Tokiko, are Shibusawa Eiichi and his wife, and at the far right is Hozumi Nobushige, one of Eiichi’s sons-in-law, serving as head of the Japan Academy as well as a privy councilor, together with his wife, Utako.
As mentioned earlier, Eiichi repeatedly said in public that he had no grudge or ill feeling against the late Iwasaki Yatarō, and that the difference lay only in their business philosophies. However, regarding the confrontation involving Mitsubishi and Kyōdo Unyu, Eiichi was known to have stated that “In those days, the Iwasaki family had consolidated a virtual monopoly over the shipping business. The aggressiveness in their business activities was arousing criticism, and I subscribed myself as one of the opponents to Mitsubishi.” In all fairness, Eiichi appeared to feel a certain incompatibility with Yatarō’s lifestyle and mode of behavior.
As such, the family members thought that Eiichi might oppose the marriage of his heir, Keizo, to Yatarō’s granddaughter. In the event, however, Eiichi had no misgivings about this match and, at the party, Keizo and Tokiko were congratulated and blessed by everybody, making this gathering an unusually warm and happy union of the two big families.
In an unexpected turn of events, the bridegroom, Shibusawa Keizo, was to become Minister of Finance twenty-five years after the ceremony, in the new cabinet which was to be organized by Shidehara Kijurō, who was at the wedding, too, as Yatarō’s son-in-law. In a further twist of fate, in his official capacity, Keizo was made to play a thankless role in the process of disbanding a conglomerate built under the leadership of the Iwasaki family.
It was only a few months after Japan’s defeat in World War II, with its economy in virtual ruins as the result of repeated bombings by the US Air Force. All the worthy endeavors of Yatarō, Eiichi and many other entrepreneurs since the Meiji period appeared to have been reduced to ashes.
Keizo cordially declined the request of Shidehara to serve in his cabinet, saying that “I am not worthy or capable of taking responsibility for the nation’s finance, in this critical environment.”
Shidehara, who had just been made prime minister at the age of 73, retorted: “In fact, I said no to the Emperor myself yesterday, citing exactly the same reason as yours, plus mentioning of my age, and begged to be excused from this mission.”
Shidehara, who had served as Foreign Minister a number of times during the end of the Taisho and beginning of the Showa periods, promoted a peace initiative that came to be known as Shidehara diplomacy. However, after twenty or so tumultuous years which led Japan into war and defeat, his past accomplishments had sunk more or less into obscurity.
Having had his residence recently destroyed by an air raid along with the valuable collection of books he had accumulated, Shidehara felt quite depressed. Even his health was on the downturn. Deciding therefore to retire and spend his last days in Kamakura, with some difficulty he secured a truck to transport the remnants of his possessions. He was about to leave his house when the summons from the Emperor arrived.
The Emperor was quite frank with Shidehara, saying that he knew that there were few who would take political leadership with confidence in the present circumstance, and that was exactly why he was obliged to urge him to take the nation’s reins as prime minister. Shidehara was moved profoundly by seeing the depth of the Emperor’s distress, and decided then and there to give what strength he had left to the service of this man.
Recounting the entire conversation with the Emperor, Shidehara said to Keizo: “Few would be eager or willing to serve in the cabinet today. However, simply because of that, I beseech you to accept my and, in fact, the Emperor’s, invitation.”
Hearing of the Emperor’s pain and agony from none other than Shidehara, a great diplomat and a relative on his wife’s side, Keizo had no option other than to accept the assignment.
Considering the seemingly impossible circumstances which surrounded Japan at that time, the Shidehara Cabinet served the nation with commendable efficiency and demonstrated good judgment. As soon as he decided to accede to the calling of the Emperor, Shidehara’s health took a major turn for the better, giving him enough energy and strength to get through trying times.
The armed forces, which were known to have obstructed the wisdom and stability of the nation in every way, no longer existed, while the political parties were not yet ready to resume the normal political process. This gave Shidehara a window of opportunity to carry out long-needed reforms, which were put into place with unprecedented speed. A number of groundbreaking changes in laws and regulations were enacted before the end of the year, which opened the way for women’s universal suffrage and labor’s right to trade union activities, etc. (“Rebuilding of Postwar Japan: The Prime Ministers under the Occupation” by Iokibe Makoto)
One of the pillars of the Occupation’s economic policy was liquidating the large industrial and financial groups that, in the Occupation’s mind, were responsible for having driven the country to a desperate war. The initial aim was focused on immediate dissolution of the four conglomerates, namely Mitsui, Mitsubishi, Sumitomo and Yasuda. In the event, Yasuda was the first to acquiesce to the directive from the SCAP (Supreme Commander of the Allied Powers); Sumitomo and Mitsui followed suit. However, Iwasaki Koyata, the president of Mitsubishi, insisted that since Mitsubishi had never committed a single act of disloyalty against the nation, he saw no reason why he ought to liquidate the company.
On October 23, Shōwa 20 (1945), Keizo visited Koyata personally and, explaining the situation surrounding the government in detail, urged him to concede to the Occupation policy, since there was no other way. Koyata responded that he would conform if it was an injunction of the Ministry of Finance, representing the Japanese government, rather than the Occupation Forces.
Keizo mentioned later that the relation of the prime minister with the Iwasaki family alone would make it quite awkward to delay, let alone spare, Mitsubishi from the SCAP directive. Consequently, Koyata and Hikoyata (Hisaya’s eldest son and then vice president of Mitsubishi) resigned on November 1, completing the process of liquidating Japan’s major combines.
Koyata, who suffered from age-related arteriosclerosis for many years, died on December 2, at the age of 66. From his death bed, he left a statement to all the men of Mitsubishi: “Whatever form the company takes in the future, I believe that even the authority of the Allied Forces will not be able to take from us our spiritual bond which has been nurtured together for a long period. I wish you all good health, and continuation of your efforts for our companies.”
As Eiichi mentioned earlier, Yanosuke was a perfect successor to Yatarō, while Hisaya, though an astute business executive, was more of an intellectual, somewhat different from his father. In the final analysis, one might say that Koyata was the one closest to Yatarō, inheriting the passion and strength of the founder to the letter.
As I noted earlier, Yatarō’s ethos of life and work had more in common with that of American business leaders than that of the Japanese. To conclude this talk, I would like to make a brief comment on the difference in corporate cultures between Japan and the United States.
With the founding of the Meiji government in 1868 as a turning point, entrepreneurs with outstanding ability such as Yatarō and Eiichi began to emerge in Japan. In the United States, on the other hand, the end of the Civil War in 1865 was instrumental in producing such great leaders as Rockefeller, Carnegie, Morgan and many others.
Born in 1839, Rockefeller was four years younger than Yatarō and two years older than Eiichi. Carnegie was the same age as Yatarō, and Morgan, born in 1837, was two years younger. In other words, all of them belong to the same generation, on both sides of the Pacific Ocean.
After the Civil War, the United States annexed important southwestern states such as Louisiana, Texas, and California, and even succeeded in purchasing Alaska from the Russians, providing the nation with vast land and resources. With the security threats from the former European powers virtually disappearing, and with the completion of the transcontinental railway in 1869, the nation was now ready for great progress and development. This induced a large number of Europeans to migrate to the US, and in 1894, the US achieved the biggest industrial production in the entire world.
Four years before 39 year-old Yatarō founded the Mitsubishi Steamship Company, Rockefeller launched Standard Oil at the age of 31. He organized a system of drilling, refining, and selling oil under a single integrated management, and was active in acquiring competing businesses throughout the country. By 1897, the company owned 90% of the petroleum interests in the United States and had accumulated assets of $900 million (some $200 billion in present value).
One wonders what people would do when they had amassed a fortune beyond calculation. After making windfall profits in the Seinan Sensō in Meiji 10 (1877), Yatarō purchased the land, over 27,000 tsubo, at Kiyosumi garden in Mukōjima and, in the following year, some 120,000 tsubo around Rikugien in Komagome. Both of these properties were later donated to the City of Tokyo, and are now open to the public as beautiful parks. The idea of making this type of purchasing of assets was rather unusual in Japan’s business community. Even Yanosuke’s decision later to respond to the government tender to procure a lot of 104,000-tsubo in Marunouchi was perhaps also unusual if one considers that the land in question would turn out to be the nation’s most important parcel of real estate, indispensable for Tokyo’s city planning.
In addition to donating huge amounts of money to universities, hospitals, research institutes and many organizations, Rockefeller was instrumental in the acquisiton of a medieval European religious building and relocating it to New York. Presently the Metropolitan Museum of Art manages this under the name, “Cloisters.” Furthermore, the Rockefeller family purchased several hundred acres of forestland on the other side of the Hudson River, lest the Cloisters lose a view of the beautiful landscape across the river. Today, the forestland is managed by the State of New Jersey as a state property.
Somewhat similar to the case of Mitsubishi, Rockefeller was exposed to the fierce jealousy and criticism of society which tried to curb his further expansion by enacting a complex network of anti-monopoly (or fair trade) laws and regulations. However, Rockefeller was skillful enough to maneuver through the difference in restrictions in each state, and ended up creating a nationwide trust, Standard Oil of New Jersey.
In contrast, under Yanosuke’s leadership, Mitsubishi chose to reconcile, and even cooperate, with the Japanese social system, as shown in his invitation of Eiichi to join the board of NYK Line, even though it was after Yatarō’s unexpected and premature demise.
Despite the increasingly strict fair trade regulations, the bulk of the US business leaders still adhere to the “golden” principle of free enterprise. Harsh criticism was voiced after the collapse of Lehman Brothers in 2008; for example, executives of financial institutions were excoriated for their exorbitant salaries. However, the latest opinion poll shows that more than 70% of Americans continue to believe in the principle of free enterprise, which they consider the basis of the nation’s prosperity as well as the cornerstone of American justice. In fact, in this social environment, billionaires like Bill Gates and Warren Buffet made contributions to various non-governmental activities, reportedly amounting to a staggering several percentage of GDP.
Eiichi remained devoted to philanthropy throughout his life. The amount which he donated from his own pocket alone totaled many millions of yen. However, he appeared to be quite conscious that the capacity of the Japanese economy was limited because of the country’s small size and modest resources, as well as constant security threats which demanded large public expenditures.
At the end of the Taisho era, around 1925, responding to a question from his grandson, Keizo, Eiichi stated: “Japan is unable to approach other countries on equal terms. Progress is still slow, and its national strength is far below that of the United States and other countries.” To the observation that many Japanese companies were now reinforcing their operations overseas, Eiichi commented that that was what Japan must do: “The pie is too small for this country, and we cannot afford to stay within its borders.”
American capitalism, which was built on land holdings and abundant natural resources, has been revered for many years as representing the global standard of business. However, its position and role in the global economy appears to be undergoing qualitative and even quantitative change, partly because of the so-called Lehman shock, and partly because of the emergence of new economies. Those of us living in these uncertain times wonder how men like Eiichi and Yatarō would perceive the difficulties facing the world, and what kind of direction they would recommend as we move into the future.
I conclude here by thanking you for your kindly attention.
Originally uploaded March 18, 2022. Original English translation by Center for Intercultural Communication 2011, revised by the Shibusawa Eiichi Memorial Foundation in January 2025.
Last updated on January 31, 2025
公益財団法人 渋沢栄一記念財団〒114-0024 東京都北区西ヶ原2-16-1Copyright Reserved by Shibusawa Eiichi Memorial Foundation
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