Economic Policy and the Zaibatsu, 1914-32
The Japanese Government, as we have seen, played an important part during the Meiji era in laying the foundations for rapid industrialization and also in initiating and supporting industries or services which were necessary to realize its political and economic objectives. Yet the number of enterprises in the field of manufacturing industry which were directly administered by the State were few at the end of the Meiji era, and their relative importance diminished as private industry developed. Certain Government monopolies, established for fiscal reasons in the salt, tobacco and camphor industries, were continued; a great part of the railway system remained under Government control; and there were Government dockyards and munitions plants. Yet, in the twenties, the only major manufacturing industry in which the State had the predominant part was the iron and steel industry in its primary branches. Even though the relative importance of the Government's Yawata Works was diminishing, as late as 1931 it was still responsible for over three- quarters of the pig iron and half the ingot steel produced in Japan. In the carrying trade the Government continued to own and operate a number of steamships; for instance, it controlled a company founded in 1919 to take over tramps from shipowners who at the end of the war-time boom found themselves with a large surplus tonnage. Thus the undertakings actually owned and operated by the State were confined to those which in all countries are considered to occupy a special position (such as the railways), or were necessary for national security and unlikely in Japan to reach a substantial size under private control (such as the iron and steel industry), or were valuable for fiscal reasons (as salt and tobacco).
Apart from these State undertakings, however, there were a number of other concerns to which the State provided part of the capital either directly or through the medium of the special banks, particularly the Industrial Bank of Japan. Most of these concerns were in industries of strategic importance. They included enterprises on the Continent of Asia or in the Japanese colonies, and these became increasingly important in the second and third decades of the century. The chief of them was the