Zaibatsu

The term zaibatsu was coined in 19th century Japan from the Sino-Japanese roots zai {{lang|zh|財}} ('asset', 'wealth' from Middle Chinese {{transliteration|ltc|dzoi}}) and {{transliteration|ltc|batsu}} {{lang|zh|閥}} ('clique', 'group', from Middle Chinese {{transliteration|ltc|bjot}}). Although zaibatsu themselves existed from the 19th century, the term was not in common use until after World War I. By definition, the zaibatsu were large family-controlled vertical monopolies consisting of a holding company on top, with a wholly-owned banking subsidiary providing finance, and several industrial subsidiaries dominating specific sectors of a market, either solely or through a number of subsidiary companies.

The zaibatsu were the heart of economic and industrial activity within the Empire of Japan, and held great influence over Japanese national and foreign policies. The Rikken Seiyūkai political party was regarded as an extension of the Mitsui group, which also had very strong connections with the Imperial Japanese Army. Likewise, the Rikken Minseitō was connected to the Mitsubishi group, as was the Imperial Japanese Navy.{{Citation needed|date=October 2008}}

The zaibatsu were viewed with suspicion by both the right and left of the political spectrum in the 1920s and 1930s. Although the world was in the throes of a worldwide economic depression, the zaibatsu were prospering through currency speculation, maintenance of low labour costs and military procurement. Matters came to a head in the League of Blood Incident of March 1932, with the assassination of the managing director of Mitsui, after which the zaibatsu attempted to improve their public image through increased charity work.{{Citation needed|date=October 2008}}

The zaibatsu were at the heart of economic and industrial activity within the Empire of Japan since Japanese industrialization accelerated during the Meiji era.{{cite web |title=The Rise and Fall of the Zaibatsu: Japan's Industrial and Economic Modernization |first1=David A. C. |last1=Addicott |publisher=Pepperdine University |work=Global Tides |series=Vol. 11 |date=2017 |url=https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1259&context=globaltides |url-status=live |archive-url=https://web.archive.org/web/20231126220526/https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1259&context=globaltides |archive-date= Nov 26, 2023 }} They held great influence over Japanese national and foreign policies which only increased following the Japanese victory over Russia in the Russo-Japanese War of 1904–1905 and Japan's victories over Germany during World War I.{{cite web |website=Encyclopædia Britannica |url=https://www.britannica.com/topic/zaibatsu |title=zaibatsu |url-status=live |archive-url=https://web.archive.org/web/20230108161737/https://www.britannica.com/topic/zaibatsu |archive-date= Jan 8, 2023 }} During the interwar period the zaibatsu aided Japanese militarism and benefited from the conquest of East Asia by receiving lucrative contracts.

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File:1cho london2.jpg headquarters for the Mitsubishi zaibatsu, 1909]]When Japan emerged from the self-imposed, pre-Meiji era sakoku in 1867, Western countries already had very dominant and internationally significant companies. Standard Oil, Carnegie Steel Company, AT&T, General Electric, Western Union, Friedrich Krupp, Thyssen, Robert Bosch GmbH, Lloyd's of London, Reckitt & Sons, and East India Company were very dominant and were the major players in international trade. The British Empire, under the leadership of the Baring family, the Rothschild family and the Guinness family, as well as Imperial Germany and other Western countries were colonizing much of the undeveloped world, and Japanese companies realized that in order to remain sovereign, they needed to develop the same methodology and mindset of Western companies, and the zaibatsu emerged.

The {{Nihongo|"Big Four" zaibatsu|四大財閥|extra=Yondai Zaibatsu}} of, in chronological order of founding, Sumitomo, Mitsui, Mitsubishi, and Yasuda were the most significant zaibatsu groups. Two of them, Sumitomo and Mitsui, had roots in the Edo period while Mitsubishi and Yasuda traced their origins to the Meiji Restoration. Throughout Meiji to Shōwa, the government employed their financial powers and expertise for various endeavors, including tax collection, military procurement and foreign trade.

Beyond the Big Four, consensus is lacking as to which companies can be called zaibatsu, and which cannot. After the Russo-Japanese War, a number of so-called "second-tier" zaibatsu also emerged, mostly as the result of business conglomerations and the awarding of lucrative military contracts. Some more famous second-tier zaibatsu include the Ōkura, Furukawa, and Nakajima groups.

The early zaibatsu permitted some public shareholding of some subsidiary companies, but never of the top holding company or key subsidiaries.

The monopolistic business practices by the zaibatsu resulted in a closed circle of companies until Japanese industrial expansion on the Asian mainland (Manchukuo) began in the 1930s, which allowed for the rise of a number of new groups (shinko zaibatsu), including Nissan. These new zaibatsu differed from the traditional zaibatsu only in that they were not controlled by specific families, but not in terms of business practices.

Image:Seizure of the Zaibatsu families assets.JPG

The zaibatsu had been viewed with some ambivalence by the Japanese military, which nationalized a significant portion of their production capability during World War II. Remaining assets were also highly damaged by destruction during the war.

Under the Allied occupation after the surrender of Japan, a partially successful attempt was made to dissolve the zaibatsu. Many of the economic advisors accompanying the SCAP administration had experience with the New Deal and were highly suspicious of monopolies and restrictive business practices, which they felt to be both inefficient, and to be a form of corporatocracy (and thus inherently anti-democratic).

During the occupation of Japan, sixteen zaibatsu were targeted for complete dissolution, and twenty-six more for reorganization after dissolution. Among the zaibatsu that were targeted for dissolution in 1947 were Asano, Furukawa, Nakajima, Nissan, Nomura, and Okura. In addition, Yasuda dissolved itself in 1946. The controlling families' assets were seized, holding companies eliminated, and interlocking directorships, essential to the old system of inter-company coordination, were outlawed. The Matsushita Electric Industrial Company (which later took the name Panasonic), while not a zaibatsu, was originally also targeted for breakup, but was saved by a petition signed by 15,000 of its union workers and their families.[https://www.nber.org/books/corp-owner03/morck-nakamura7-1-04.pdf Morck & Nakamura, p. 33]{{dead link|date=February 2024}}

However, complete dissolution of the zaibatsu was never achieved, mostly because the U.S. government rescinded the orders in an effort to reindustrialize Japan as a bulwark against communism in Asia.

In his 1967 memoirs, Kennan wrote that aside from the Marshall Plan, setting the "reverse course" in Japan was "the most significant contribution I was ever able to make in government". George F. Kennan, Memoirs, 1925-50 (Boston, 1967), 393. Zaibatsu as a whole were widely considered to be beneficial to the Japanese economy and government, and the opinions of the Japanese public, of the zaibatsu workers and management, and of the entrenched bureaucracy regarding plans for zaibatsu dissolution ranged from unenthusiastic to disapproving. Additionally, the changing politics of the occupation during the reverse course served as a crippling, if not terminal, roadblock to zaibatsu elimination.

Today, the influence of the zaibatsu can still be seen in the form of financial groups, institutions, and larger companies whose origins reach back to the original zaibatsu, often sharing the same original family names (for example, Sumitomo Mitsui Banking Corporation). However, some argue{{Who|date=May 2012}} that the "old mechanisms of financial and administrative control" that zaibatsu once enjoyed have been destroyed. Despite the absence of an actual sweeping change to the existence of large industrial conglomerates in Japan, the zaibatsu's previous vertically integrated chain of command, ending with a single family, has now widely been displaced by the horizontal relationships of association and coordination characteristic of {{Nihongo|keiretsu|系列}}. Keiretsu, meaning "series" or "subsidiary", could be interpreted as being suggestive of this difference.

The term zaibatsu has been used often in books, comics, games, and films to refer to large and usually sinister Japanese corporations, often involved in shady dealings or with connections to the yakuza. This may provide a plot hook, or simply provide the background for a character from an influential Japanese family.

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The "big four"

• Mitsubishi (三菱財閥)
• Mitsui (三井財閥)
• Sumitomo (住友財閥)
• Yasuda (安田財閥)

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Second-tier zaibatsu

• Asano (浅野財閥)
• Fujita (藤田財閥)
• Furukawa (古河財閥)
• Mori (森コンツェルン)
• Kawasaki (川崎財閥)
• Nakajima (中島飛行機)
• Nichitsu (日窒コンツェルン)
• Nissan (日産コンツェルン)
• Nisso (日曹コンツェルン)
• Nomura (野村財閥)
• Okura (大倉財閥)
• Riken (理研コンツェルン)
• Toyota (トヨタ自動車株式会社)
• Shibusawa (渋沢財閥)

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Bankrupt zaibatsu

• Suzuki shoten (鈴木商店)

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{{Div col|colwidth=22em}}

• Gunbatsu
• Big business
• Chaebol
• Concern
• Four big families of Hong Kong
• Four big families of the Republic of China
• Konzern
• Hong (business)
• Japanese economic miracle
• Thirteen Factories

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{{Reflist}}

• Alletzhauser, Albert J. The House of Nomura. New York: Harper Perennial, 1991. {{ISBN|0-06-097397-8}}.
• Allinson, Gary D. Japan's Postwar History. Ithaca, New York: Cornell University Press, 1997. {{ISBN|0-8014-3312-6}}.
• Aoki, Masahiko & Hyung-Ki Kim. [http://www1.worldbank.org/finance/CDRom/library/docs/aoki/aoki000.htm Corporate Governance in Transitional Economies: Insider Control and the Role of Banks]. Retrieved online 28 June 2004. Print edition: Washington, D.C.: World Bank Office of the Publisher, 1995. {{ISBN|0-8213-2990-1}}.
• {{cite book |last1=Morck |first1=Randall |author-link1= |last2=Nakamura |first2=Masao|author-link2= |editor-last1=Morck |editor-first1=Randall|orig-date= |chapter=A Frog in a Well Knows Nothing of the Ocean: A History of Corporate Ownership in Japan |script-chapter= |trans-chapter= |chapter-url=

https://www.nber.org/books-and-chapters/history-corporate-governance-around-world-family-business-groups-professional-managers/frog-well-knows-nothing-ocean-history-corporate-ownership-japan |chapter-format= |title=A History of Corporate Governance around the World: Family Business Groups to Professional Managers |script-title= |trans-title= |title-link= |url=https://www.nber.org/books-and-chapters/history-corporate-governance-around-world-family-business-groups-professional-managers |format= |type= |series= |language=English|volume= |edition= |publication-place=Chicago |publisher=University of Chicago Press |publication-date=2005 |pages=367–466|isbn= 0-226-53680-7}}

• Schenkein, Joshua (2014). [https://www.amazon.com/dp/B00NRHRMW2#reader_B00NRHRMW2 Japan, the Great Power: Industrialization Through the Lens of Zaibatsu]. {{ASIN|B00NRHRMW2}}.

• [http://www2.sjsu.edu/faculty/watkins/zaibatsu.htm The Zaibatsu of Japan]
• [http://dostoevskiansmiles.blogspot.com/2008/10/zaibatsu-dissolution-reparations-and.html Zaibatsu Dissolution, Reparations and Administrative Guidance.]

{{Keiretsu}}

{{Business organizations}}

{{Economy of Japan}}

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Category:Conglomerate companies of Japan

Category:Business families

Category:Economic history of Japan

Category:Japanese business terms

Category:Strategic management