Zaibatsu

   A Japanese term for the large financial combines, literally, “financial cliques,” that were the pillar of the Japanese economy from the 1880s through 1945. Organized around individual families and their holding companies, the zaibatsu comprised intricate networks of financial, industrial, and commercial concerns tied through interlocking directorships and mutual shareholding. They served the critical function of concentrating capital, skilled labor, and technological know-how at a time of scarcity during the rapid transition from feudal to industrial Japan.

   Although two—Mitsui and Sumitomo—of the four—Mitsui, Mitsubishi, Sumitomo, Yasuda—largest zaibatsu had their origins as commodities dealers in the Tokugawa period, the zaibatsu coalesced, in particular after the early 1880s, when the national government, in an effort to control spiraling inflation, sold off most state-owned enterprises. The men who purchased these enterprises enjoyed close personal ties with the ruling elite, with whom they shared a background as lowerlevel samurai. They benefited immensely from bargain-basement prices for state industries and from special contracts and loans obtained from the government. They also profited greatly from modern Japan’s series of wars. Mitsui financed the imperial forces in their bid to topple the supreme warlord, the shōgun, in the 1868 Restoration War. Mitsubishi got its start when the new national government leased, then donated, 13 ships to founder Iwasaki Yataro to ferry troops on a punitive expedition to Taiwan in 1874. The provision of ships, docks, warehouses, fuel, metals, chemicals, and funding during the Sino-Japanese War earned the head of the Mitsui conglomerate the title of baron.

   Although their enormous resources would also become critical in the prosecution of World War II, the zaibatsu were never a causal factor in Japanese continental expansion. The Japanese economy remained primarily agricultural when imperial forces engaged China in war in 1894. And the military instigators of the Manchurian Incident of 1931 initially hoped to exclude the zaibatsu from their newly developed territory in northeast Asia. Despite this, the allied occupation of Japan made dissolution of the zaibatsu a central component of the democratizing agenda after 1945.

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   FURTHER READING:

    Roberts, John G. Mitsui: Three Centuries of Japanese Business . New York: Weatherhill, 1973;

    Wray, William D. Mitsubishi and the N.Y.K., 1870-1914: Business Strategy in the Japanese Shipping Industry . Cambridge, MA: Harvard University Press, 1984.

   FREDERICK R. DICKINSON