Return of the Zaibatsu

Of all the Japanese traditions that dropped out of sight during the occupation, none seemed to disappear more completely than the zaibatsu, the huge cartels controlled since the Meiji Era (1868-1912) by a handful of great Japanese families. To shatter the economic foundation of Japanese militarism, U.S. authorities split such prominent family combines--Mitsubishi, Mitsui and all the rest --into hundreds of small firms, and the Japanese government itself adopted Western-inspired antitrust laws. But zaibatsu, like many another Japanese tradition, proved tougher than reform. Last week the influence and power of the zaibatsu sprawled once more across the length and breadth of Japan, firmly in control of all its major industries except steel.

By mergers, interlocking directorates and subtle cooperation, all the major groups are together again, forming giant corporations. The three biggest--Mitsui, Mitsubishi, Sumitomo--already account for well over 35% of Japan's total commercial and industrial business. Mitsubishi controls 22 major firms with 189 subsidiaries, produces 37% of Japan's ship tonnage, 57% of its sheet glass, 20% of its electrical machinery. Profits before taxes last year: $77.5 million, on sales of $2.3 billion, plus banking and insurance operations. Rival Mitsui, which reported $2.8 billion in sales and $85 million in profits in 1957, controls 24 major firms with 195 important subsidiaries, produces 25% of Japan's coal, 88% of its nylon, 33% of its autos, 41% of its paper.

The zaibatsu grow bigger almost by the week. Fortnight ago Mitsui Bank President Kiichiro Sato, 65, a nimble-witted financial expert who has spent his entire life working for the Mitsui cause, engineered the merger of two of the biggest offshoots of Mitsui's prewar trading division in a major deal that will form Japan's largest single trading company, with assets of some $500 million. "The occupation did not kill the zaibatsu," says Economics Professor Ryosei Kobayashi of Tokyo's Senshu University. "It just reorganized them."

Friday Club. The new zaibatsu are of a different stripe than their prewar predecessors. Single families, or single firms no longer control the great combines. The zaibatsu depend for leadership on the financiers of their powerful banks, have set up central liaison councils with euphemistic names designed to attract as little attention as possible. Mitsubishi's "Friday Club," presided over by blunt, crop-haired Mitsubishi Trading President Katsujiro Takagaki, 66, is simply a bimonthly meeting, of 22 Mitsubishi company presidents, who continue the cementing process by arranging loans and raising funds for brother companies.

Through their top control, the zaibatsu achieve remarkable cooperation. Mitsui Mining, which holds a major position in the Japanese mining industry, has 28 subsidiaries. They get their mining and transportation equipment from Mitsui firms, send their mined minerals to Mitsui manufacturers. Manufactured products are handled by Mitsui trading firms, stored in Mitsui warehouses, transported by Mitsui shipping. Mitsui's Taisho Marine & Fire Insurance covers any damage, and the whole operation is financed through the Mitsui Bank.

Under the Wings. The zaibatsu already do about as much business as prewar, and their fraternal rivalry has returned with increased force to spur them on to newer fields. Next month. Mitsui will inaugurate the Nippon Atomic Industry Group, jointly set up by 37 Mitsui firms to produce atomic reactors and process atomic fuels. But it is behind Mitsubishi, which set up its atomic combine in 1955. Mitsubishi, while one of the world's biggest shipbuilders, lags behind Mitsui in the petrochemical field, is trying to catch up by building a $25 million petrochemical plant.

Zaibatsu men argue that such industrial concentration became a matter of necessity in postwar Japan. Searching desperately for new export markets, Japan was hobbled by thousands of inefficient little enterprises. Many found it hard to get enough investment funds. Since many of Japan's huge banks were controlled by prewar zaibatsu interests, they tended to favor loans for their dismembered zaibatsu partners. With Allied laws removed, more and more sought protection under the wings of the bigger companies.

The Japanese government has taken no steps to prevent the resurgence of the zaibatsu, partly because they are less alarming in their present form, partly because funds are insufficient to enforce the antitrust laws properly. The zaibatsu themselves are convinced that they are doing Japan a great service. Says Kyubei Tanaka, a managing director of the Mitsui Bank: "I see no reason to be ashamed of being a zaibatsu. Let's face it. The only way Japan can build herself up into a world industrial power is through big, efficient business. We are the new zaibatsu, and that is our job."

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