| B. Zaibatu are born. | |
| 1. 1868 (the Meiji Restoration) | |
| a) Japan began an overnight transformation from a govmt by hereditary[= genetically transmitted or transmittable from parent to offspring ] shoguns acting in the name of emperor to a govmt by elite civil servants. | |
| 2. The Japanese leaders noted that in the capitalist nations they studied wealth was often concentrated in the hands of a few families. | |
| a) e.g.: Krupp and Thyssen, Rothschild, Rockfeller, Morgan.(These families controlled vast empires of oil, mining, steel, railroads, and finance.) | |
| b) The problem with the Jpn situation then was that the wealthy merchant families were led by uneducated men who had made their fortunes under the old regime. | |
| c) 1870s: The Jpn govmt set up numerous industries on its own, and paid hadsomely to acquire industrial plants and equipment, all out of the public treasury. silk factories, cement factories, glass factories; shipyards, coal mines. | |
| d) The govmt hired foreign experts at extravagant[= exceeding the limits of reason or necessity ] fees to operate them. | |
| 3. the early 1880s: Most of these businesses did not fare[= get along; SUCCEED] well. | |
| a) The result was a massive govmt fire[= extreme vigor or energy] sale in the early 1880s. | |
| b) The only people in a position to buy were the nouveau[= late, modern, neoteric, hypermodern; new-born, new-fashioned, new-fangled, new-fledged; of yesterday; just out, brand-new] riches of the moderun era: | Iwasaki at Mb. (=Mitsubishi),Asano of Asano Shipping, Furukawa of Furukawa Mining, and the Mitsui family. |
| 4. By the turn of the century: Jpn had given birth to severa lgroups of widely diversified companies, each owned and operated by a single family. | |
| a) As these few faimlies' wealth continued to expand, they became the "financial cliques[= a narrow exclusive circle or group of persons; esp : one held together by a presumed identity of interests, views, or purposes]" or zaibatsu. | |
| b) zaibatsu=a diverse group of large industries controlled by a single family, usu. through a central holding company. | |
| c) a holding company= a company that holds a stock of other company(ies) not for the purpose of simply investing but of actually controling them. [Today, it is prohibited in Jpn.] | |
| d) the Asano zaibatsu, the Furukawa zaibatsu, the Fujita zaibatsu, the Mb. zaibatsu, the Mitsui zaibatsu, the Yasuda zaibatsu, the Sumitomo zaibatsu, etc, | |
| e) the early 1900s: The majority of the zaibatsu were started in the early 1900s and grew to prominence around the time of WW I. | |
| C. Growth of the Zaibatu: Through wartime business | |
| 1. 1914-1919: WW I | |
| 2. 1937: Sino-JapaneseWar | |
| 3. 1941-1945: WW II (1945: Unconditional surrender of Jpn to U.S. and Allied forces.) | |
| a) By the end of WW II half the nation's financial system and a third of its heavy industry wree controled by just the Big Four groups. | |
| D. End of the Zaibatsu | |
| 1. August 1945-April 1952: Allied Occupation | |
| a) To assure that Jpn would never again become a threat to world peace, the U.S. Occupation deemed it to necessary to disband the military and to eliminate the industrial forces that had supported it, i.e., the zaibatsu. | |
| 2. The officers of the Supreme Commander for the Allied Powers (SCPA) made an initial effort to dissolve "large Japanese industrial and banking combines." | |
| a) SCPA ordered members of 56 designated zaibatus families to give up not only their honorary titles and executive positions in the subsidiary companies but their personal assets as well. | |
| b) The family members were fobidden to take up any mgmt position in their old zaibatsu companies. To permanently eliminate the threat of zaibatsu power, SCPA ordered a purge of the top magtmt of many of the major subsidiary companies. | |
| c) MacArthur's General Head Quarters (GHQ) orderd the 15 largest zaibatsu to freeze all their assets for inverntory and reallocatiion. | |
| d) April, 1947: The SCPA-devised Antimonopoly Law was passed. Article 9 made holding companies illegal. | |
| d1) From SCPA's perspective, the zaibatsu had one thing in common: central control by a single bloodline whose legal incarnation was the family-owned holding company. | |
| d2) Without these holding companies, it was assumed, the zaibatsu ties would be greatly loosened. | |
| e) It turned our later, however, that their success was extremely limited. |