A History of Japan: From Stone Age to Superpower (70 page)

The dismantling of the
zaibatsu
was stopped, for their economic effectiveness was recognised. The definition of ‘excessive concentration’ in the anti-trust legislation was changed subtly but significantly from ‘concentration preventing effective competition from market newcomers’ to ‘concentration disadvantageous to efficient production’.
⁷⁰
The postwar
zaibatsu
were known as
keiretsu kigy
, or ‘aligned companies’.

The payment of reparations to victim nations was also stopped.
⁷¹
These had been intended mostly to be in the form of industrial machinery rather than money, in view of Japan’s struggling economy. Machinery that had already been seized by the Occupation forces for this purpose, mostly from the
zaibatsu
, was now largely returned to Japanese industry. However, it was not returned to the
zaibatsu
. They were investing in more modern equipment. Instead, it was given to smaller companies, who would normally never have been able to acquire such equipment, even if it was becoming dated.

Labour laws were toughened to prevent industrial disruption. New legislation in 1948 denied workers in public operations the right to strike, and restricted direct political action by workers’ organisations.

MacArthur himself had envisaged some of these measures. He personally had from the outset been reluctant to carry out purges in the business world, or to pay reparations. His deliberate stalling in these matters in the early years of the Occupation made the new policy more effective than it might otherwise have been. Nevertheless, he was considered in need of ongoing economic advice. Early in 1949 President Truman sent out the financial expert Joseph Dodge as the official SCAP economic adviser, a job he was to hold till the end of the Occupation.

By this stage Yoshida was back as prime minister. Katayama had resigned in February 1948 after less than a year in office, due to internal
dissent within the Socialist Party – a problem that was to plague it for its entire existence to the present day. He was replaced by Ashida Hitoshi, the leader of the Democratic Party, but this cabinet fell after just a few months, largely owing to corruption scandals. Yoshida returned in October, and was confirmed by a sound victory for his newly formed and conservative Democratic Liberal Party (
Minshu Jiy
t
) in the subsequent general election of January 1949.

His new party had been formed in 1948 from a merger of the Japan Liberal Party (
Nihon Jiy
t
) and Democratic Party dissidents, bringing together the lineages of both major prewar parties, the
Seiy
kai
and the
Minseit
respectively. The party was conservative, and despite reservations about Yoshida’s prewar style its banner of stability was clearly what an anxious public wanted. Conservatives were to govern Japan right through to the present day (with the exception of a very brief hiccup in the mid-1990s). Yoshida himself, the government figure most associated with the Occupation, was to remain in the prime minister’s office till 1954. The man who disliked an ‘excess of democracy’ clearly struck a chord with the public.

As if to confirm Cold War fears of communism, the communists in Japan had to started to renew their activities after the setback of 1947. They were starting to regain influence and popularity. In the same 1949 elections that gave a vote of confidence to Yoshida’s conservative government they sharply increased their Diet seats from four to 35. Something needed to be done. From late 1949 through 1950, some 12,000 communists were removed from office in the so-called Red Purge.
⁷²
However, their proportion of Diet seats was to remain typically in the order of 5 per cent through to the present day.

The Yoshida government was ordered to stabilise the economy and balance the budget, a task to be overseen by Dodge. Under Dodge’s direction inflation was greatly reduced, the exchange rate stabilised, and government subsidies cut back. His austere approach was effective, and in 1949 Japan was able to present a balanced budget. By June 1950 real wages were some 30 per cent ahead of 1936 levels.
⁷³
However, his measures also caused hardship and antipathy among many employers and workers. Bankruptcies and unemployment rose.

The greatest boost for Japan’s economy, however, came from another external source. In June 1950 communist North Korean troops crossed south of the 38th Parallel, the recognised dividing line between the zones on the Korean Peninsula, and the Korean War started. Yoshida termed this a ‘gift of the gods’.
⁷⁴
The greatest economic benefit was ‘special procurements’ (
tokuju
) from the US Army as it fought in Korea. The value of these procurements was to total some 2–4 billion US dollars over the three year period of the war, equivalent to about a third of all Japan’s foreign income during that time. In effect, it doubled Japan’s disposable income, permitting double the amount of imports. It also enabled key industries dependent on imported raw material to double their scale of production.
⁷⁵
By the end of the Korean War, pre-Pacific War production levels were regained.

The Korean War had a number of other major consequences. One of these was the rearmament of Japanese forces. The bulk of the Occupation troops were to be on duty in Korea, so to maintain security in Japan MacArthur ordered the formation of a National Police Reserve of 75,000 men in July 1950. In order not to breach Article IX of the constitution this was designated a self-defence unit, but rearmament nevertheless caused considerable controversy. To clarify its defensive nature the unit was renamed the National Safety Forces in 1952, and finally given its present title of Self-Defence Forces (
Jieitai
) in 1954. At this point it contained some 165,000 personnel.

Another major consequence of the Korean War was the dismissal of MacArthur. He had responsibility for commanding US forces in Korea, and by his own account seems to have effectively won the war – in conventional terms – within a matter of months.
⁷⁶
He retook Seoul by late September and captured Pyongyang by late October, which he believed symbolised the defeat of North Korea. He could not understand the lack of follow-up by Washington to his victories, and the fact that instead restrictions as to further action were placed on him. When Chinese communist reinforcements entered North Korea without warning, he was denied permission to take action against them. Washington was now waging a new type of warfare – so-called ‘limited warfare’. MacArthur could not understand this ‘meeting of naked force with appeasement’ and the failure to preserve a ‘will to win’.
⁷⁷
He openly criticised Washington and Truman. Eventually the gap between their ways of thinking became so great that, on 11 April 1951, Truman relieved him of his duties both in Korea and Japan. He was given a hero’s send-off from Japan, and a hero’s welcome on his return to America.

With MacArthur’s dismissal a short but intense era came to an end. His replacement, General Matthew Ridgway, lacked his charisma and vision, but in any case seems to have been appointed simply in a caretaker capacity. There was certainly little that was memorable about Ridgway’s time in office. Even his name is barely remembered. Among other
‘non-happenings’, he did not even meet Hirohito during his term as SCAP.
⁷⁸
The Occupation, certainly in the minds of the Japanese, was eternally linked with the great presence of MacArthur – a figure who loomed so large that his very dismissal was, as many have observed, perhaps the greatest of all lessons in democracy that the Japanese were taught during the Occupation.