Trial Balance in Japan

THERE are many signs of the disappearance of the feudal militaristic régime in Japan and the emergence of a new order of liberal democracy -- a strange and startling manifestation in the east. How real is the change which the signs proclaim, and how lasting will it be? No one knows. But the Occupation has lasted now for three full years, and the time has come to strike a trial balance of its accomplishments and to interpret some of the clues which indicate the reaction of the Japanese people to the efforts to fashion a democratic, middle-class, peaceful Japan. For the course ahead must now be plotted in some detail.

The aims of the Allied Powers were to destroy entirely the military power and potential of Japan, to weaken the institutions that might nurture militarism, and, if possible, to create institutions and attitudes that would prevent its revival. The Potsdam Proclamation stated the objectives in almost deceptively simple terms: "The Japanese Government shall remove all obstacles to the revival and strengthening of democratic tendencies among the Japanese people. Freedom of speech, of religion, and of thought, as well as respect for the fundamental human rights shall be established."

The aims were spelled out in the "United States Initial Post-Surrender Policy for Japan," sent to General MacArthur on August 29, 1945 (announced September 22, 1945). This document, the first major directive to him as Supreme Commander for the Allied Powers (SCAP), called for a thorough military, economic and spiritual demilitarization of Japan. Not only was the country to be physically disarmed, but "Institutions expressive of the spirit of militarism and aggression will be vigorously suppressed." To this end, "Encouragement shall be given and favor shown to the development of organizations in labor, industry, and agriculture, organized on a democratic basis. Policies shall be favored which permit a wide distribution of income and of the ownership of the means of production and trade." This in turn called for a recommendation significantly affecting the future economic development of Japan: "To favor a program for the dissolution of the large industrial and banking combinations which have exercised control of a great part of Japan's trade and industry." All these objectives were to be achieved through the existing governmental machinery, which included the Emperor. But the Post-Surrender Policy made it very clear that the Emperor and the administrative apparatus were there by the sufferance of the United States, and would be retained only if they served the purposes of the Allied Powers.

It remained for General MacArthur to formulate the concrete terms of these objectives and to carry them out. His discretion and judgment were given wide rein: "You will exercise your authority as you deem proper to carry out your mission." What General MacArthur did with this authority constitutes the history of the Occupation. It is worth noting here that he was not merely the instrument of a policy drawn up in Washington, but to a large degree determined the policy that was followed. Since much of the character of the Occupation flowed from his interpretation of the Potsdam Declaration and the Post-Surrender Policy, here is an instance when an individual played a major part in the shaping of history. And whatever the judgment of the future historian on the American occupation of Japan, it seems clear that the original objectives and their implementation by General MacArthur bear the mark of a liberal and democratic approach.

II

The immediate task was the demilitarization of Japan. At the time of Japan's surrender her fighting power was shattered and her navy virtually wiped out, but she still possessed a tremendous military organization -- several million men under arms, and more than 11,000 aircraft of all types. The liquidation of this machine, including the war industries, commenced the morning after the surrender. In less than a year, the first objective of the Occupation had been attained. Not a shred of Japan's former fighting strength is now in evidence. SCAP's job of demilitarization has been so thorough that it may be asserted dogmatically that within the foreseeable future Japan cannot possibly become a threat to her neighbors, unless, of course, the Allied Powers openly or tacitly agree to her rearmament.

"Beating swords into plowshares" is now a common process in Japan. This does not mean, however, that war-mindedness has necessarily been eliminated. Though many Japanese know now that war, or at any rate unsuccessful war, does not pay, a really peaceful outlook does not come overnight to a nation after decades of swashbuckling militarism. If it comes, it will be as a result of long-range constitutional, economic, labor, agrarian and educational reforms. These have been called a species of American "political evangelism." Yet it is by no means impossible that the scoffers are mistaken and that the reforms will turn out to mark the end of the Meiji and the beginning of the democratic eras in Japan.

The heart of the attempt to democratize Japan lies in the new constitution. There was no alternative to drawing up a new one. The power of the oligarchy rested on a set of economic and cultural forces, but it was the Meiji constitution that provided their legal framework. To have left it unchanged would have perpetuated the totalitarian structure of Japan. The new Constitution was promulgated on November 3, 1946, and became effective May 3, 1947. The preamble gives its revolutionary flavor:

"We, the Japanese people . . . do proclaim that sovereign power resides with the people and do firmly establish this Constitution. Government is a sacred trust of the people, the authority for which is derived from the people, the powers of which are exercised by the representatives of the people, and the benefits of which are enjoyed by the people. . . ."

This in turn rests on the principles of limited monarchy, popular sovereignty, universal suffrage, parliamentary government, ministerial responsibility, decentralized administration and a comprehensive bill of rights. The bill of rights includes "the right and the obligation to work" and the right of the workers "to bargain and act collectively," and goes far beyond the guarantees of the American and the unwritten British constitutions. Its unique feature (Article 9) is the renunciation of war and prohibition of armed forces. It is not surprising that a member of the Liberal Party observed with some asperity that Japan might even be denied United Nations membership if she were totally disarmed.

The constitution has been criticized as too sophisticated for the present rudimentary conditions of democracy in Japan. Would it not have been better, it is asked, had the constitution been based more clearly upon a few established liberal principles, and the process of amendment made more rigid so that quick change would not be possible? American critics openly have taken exception to the new constitution on the ground that it is not a product of Japanese thought, but of the ideas of General MacArthur and his experts, and hence will not survive the Occupation. Japanese critics have guardedly expressed the same idea. But the criticism is really beside the point. No doubt the opponents of liberal democracy in Japan will try to take advantage of the liberal provisions of the constitution for the very purpose of overthrowing it. Yet all the reforms of SCAP are in a sense alien. If the Japanese were to move toward democracy, the nature of the road which leads there had to be staked out, and if this were not done by guidance from outside it would not have been done at all. The Japanese can amend the constitution as they deem fit, but if it is amended out of all recognition, so that it is virtually abolished, we shall have a plain sign that the old set of militaristic and imperialistic masters is back in control. The provision of the constitution renouncing war is not as Utopian as it may seem at first glance, and has real merit to thoughtful Japanese. It does not jeopardize Japan's national security. The Japanese are pragmatists, and know that the world situation will for a long time be such that Japan will be very likely to receive protection against an aggressor.

The dissolution of the Zaibatsu ("money clique"), the family holding companies that controlled so much of the wealth of the country -- banks, ships, mines, factories and land -- was one of the basic objectives of the Occupation. The task was described by General MacArthur on November 6, 1945, as an effort to "permit a wider distribution of income and of ownership of the means of production and trade," and to "encourage the development within Japan of economic ways and institutions of a type that will contribute to the growth of peaceful and democratic forces." The Holding Company Liquidation Commission was set up as the repository of all the assets of the holding companies subject to dissolution, amounting to 400,000,000 shares worth 25 billion yen at face value. The proceeds of the sale of these assets, minus amounts due in taxes and to creditors, are to be turned over to the Zaibatsu in the form of government bonds, non-negotiable and non-transferable for ten years. HCLC is now in process of disposing of these securities, and success in distributing them among many small holders is an acid test of the plan. To date the answer is not encouraging. Only about 24,000,000 shares, or 8 percent, have been disposed of. Many people are in no position to buy securities, while those with ready money are not familiar with the stock market, or prefer to speculate in commodities or buy tangible property.

In order to forestall a return to the monopoly pattern, so peculiar to Japan's rise as an industrial power, with a new set of Zaibatsu taking the place of the Mitsui, Mitsubishi, Yasuda and Sumitomo families, SCAP has devised the anti-monopoly and the deconcentration laws. The first bans private monopolies, participation in international cartels, interlocking directorates, and the ownership of more than 10 percent of the stock of competitive companies. The Deconcentration Law aims to establish a reasonable basis for the competition and freedom of enterprise through the elimination of those concentrations of economic power which stifled efficiency as well as competition. It seeks to eliminate "the companies which not only would be subject to the Anti-Monopoly Law but would also be so powerful as to prevent any effective administration of such law." The law provides for a set of standards that will determine which enterprises are subject to deconcentration, and an American Board of Review has been created and is now in the process of passing on appeals. Out of approximately 93,000 corporations, some 325 major companies, which control from two-thirds to three-quarters of Japan's industries, were originally designated as enterprises that might be affected by the deconcentration law. To date, 194 companies have been released as not representing excessive concentrations of economic power. The final outcome of the program depends, of course, upon the treatment of the remaining companies.

General MacArthur is opposed equally to the principle of private monopoly and to socialization, and his unyielding support of all the anti-Zaibatsu and anti-monopoly measures is motivated by his desire to eradicate the former without fostering the latter. His attitude was made quite clear in his New Year's message (January 1, 1948) to the Japanese people:

Only through its [Zaibatsu] dissolution could the way be cleared for the emergence of an economy conducive to the will of all the people -- an economy embodying the principle of private capitalism based upon free competitive enterprise.

The fact remains, however, that the application of the deconcentration law has run into difficulties. In certain quarters in the United States the reorganization program is considered merely an attempt to pulverize Japan's economy in order to satisfy the whim of theoretical planners, and the legislation has also been the target of bitter opposition in Japan. The original task is not made easier because influential circles in Washington perceive a conflict between deconcentration of excessive economic power and economic recovery. Secretary Royall, of the Department of the Army, stated the problem in these words in San Francisco on January 6, 1948:

The dissolution of the Zaibatsu may present in itself no serious economic problem, but extreme decentralization of industry, while further impairing the ability to make war, may at the same time impair manufacturing efficiency . . . of Japanese industry, and may, therefore, postpone the day when Japan can become self-supporting. Such is our dilemma . . . deconcentration must stop short of the point where it unduly interferes with the efficiency of Japanese industry.

The economic purge offers the same dilemma. Many of the men who ran Japan's war machine were among the ablest business leaders of the country, according to Mr. Royall, and "we cannot afford to sterilize the business ability of Japan." The fact is that the elimination of excessive concentration of economic power as planned by SCAP should increase industrial efficiency and aid Japan's economic recovery. Excesses of some phases of the economic purge can be corrected without endangering the effort to free Japanese industry from a monopolistic straitjacket. But if Mr. Royall's statement is to be interpreted as foreshadowing a decision to soft-pedal the Zaibatsu reform on the ground that it prevents economic recovery, then the resurgence of the great Japanese monopolies and all they stand for may follow.

III

From the outset the Occupation was aware of the need for reconstructing the labor movement of Japan. The sole guidance for action was the broad reference of the Initial Post-Surrender Policy to the desirability of stimulating the development of free labor organizations. SCAP gave substance to this aim with vision, energy and promptness, through the promulgation of such basic legislation as the trade union, labor relations adjustment, labor standards and employment security laws, and the establishment of a Ministry of Labor. The trade union law guarantees workers the right to join unions of their own choosing and to bargain collectively with employers; the right to strike is part of the new charter of freedom. The labor relations adjustment law provides machinery for settling disputes under the auspices of Labor Relations Committees. The labor standards law for the first time sets up adequate safeguards for working conditions, and the employment security law is intended to eliminate the labor boss system and to provide for democratic recruiting and employment practices.

A lusty and vigorous trade-unionism has sprung up almost overnight. In less than three years Japan has come to have more than 32,000 labor unions with a membership of nearly 6,600,000, as against a peak membership of 420,000 in 1936. The spontaneity with which Japanese workers created local unions testifies to their need for them. The mushroom growth, however, produced trade unions that are strong in numbers but weak in leadership and lacking in understanding of union functions and democratic procedures. Moreover, trade unionism in Japan is growing up under extremely difficult economic conditions. Collective bargaining has resulted in many wage increases, but inflation has largely nullified these gains. Labor unrest is serious. SCAP has stated that "strikes, lockouts and other work stoppages which are inimical to objectives of the military occupation are prohibited. Mediation and arbitration of labor disputes which are not inimical to occupation objectives are responsibilities of the Japanese Government." There has been a recent tendency to frown upon strikes for higher wages not only because they interfere with military objectives of the Occupation, but because they presumably seriously impede the economic recovery of the country. Should this become a stated policy, then every strike in inflation-ridden Japan can easily be put into that category. Whatever gains were made toward economic recovery through the unwilling acquiescence of a highly political-minded working class would be offset by the loss of prestige of the Occupation, as well as by the strengthening of undesirable political elements. The workers, caught between a spiraling cost of living and the denial of the right to strike, might well turn to the Communists for militant leadership.

In stopping the threatened general strike of February 1947, General MacArthur issued the following reassuring statement: "I have taken this action in a dire emergency and do not intend otherwise to restrict the freedom of action heretofore given labor in the achievement of legitimate objectives. Nor do I intend in any way to compromise or influence the basic social issues involved." In July of this year General MacArthur sent a letter to Premier Ashida advising him that "no person holding a position by appointment or employment in the public service of Japan or in any instrumentality thereof, should resort to a strike or engage in delaying or other dispute tactics which tend to impair the efficiency of governmental operations." This was immediately made the basis for an order by the Cabinet. The question of strikes by government workers is admittedly a difficult one, but it is not likely that SCAP, which has contributed so much to the rise of the labor movement, will succumb to the pressure to revise the existing legislation further in order to "put labor in its place." Occupation labor officials and responsible Japanese labor leaders know that Japanese labor unions have many shortcomings, but responsible trade unionism cannot be fostered by regressive labor legislation. Its development is a long-range process in any country, and particularly in Japan, where labor leaders, employers and the Japanese Government, as well as the workers, must be made to understand the fundamental concepts of free trade unionism.

IV

If the ultimate fate of some of the reforms of the Occupation is still in the balance, the agrarian reform, at any rate, is plainly a success, and will be completed, in its main aspects, in the course of this year. The old system of land ownership in Japan helped keep a huge tenantry -- two-thirds of the farm population -- in poverty. The landlords were the autocrats of rural Japan. For years before the war thoughtful Japanese recognized the need of reform, but practically nothing was done about it. General MacArthur's order to the Japanese Government of December 9, 1945, to take measures to insure that those who till the soil shall enjoy the fruits of their labor marked the beginning of the emancipation of the Japanese tenants.

The two principal aims of the Land Reform Law promulgated on October 21, 1946,^[i] were to enable the majority of the tenants to become owners of the land they cultivated and to improve farm tenancy practices for those who remained as tenants. In effecting these changes, the Occupation is attempting to strengthen the forces that create a stable, middle-of-the-road, petit-bourgeois society. The entire emphasis, therefore, is on small private holdings. The Communists and the landlords, for quite dissimilar reasons, have been opposing this type of reform, but with no success. The Government has already purchased from the landlords most of the land earmarked for sale under the program (4,500,000 acres), and the tenants have already purchased 75 percent of this land from the Government, on very favorable terms. Sound credit and taxation systems must be instituted for the protection of the new owner-cultivators. Though the landlords have lost economic power, they still possess much prestige and influence, but the farm unions and the land commissions are beginning to supply new rural leadership. Today, the old and new forces are sharing responsibility in rural Japan -- a noteworthy crack in the seemingly unbreakable cake of custom of the Japanese village.

Changes in the system of Japanese education are necessary if reforms such as these are to be integrated into the life of the Japanese people. The American Education Mission which visited Japan in early 1946 drew up recommendations, which have since become the keystone of Japan's educational system. They provide for the extension of compulsory education from six to nine years, legalize coeducation, establish equal educational opportunities for both sexes, abolish discriminatory practices in universities, decentralize control of the Ministry of Education, transfer responsibility for local school matters to the local school boards, and introduce new curricula and new methods of teaching.

Neither the history nor the make-up of the Japanese people justifies the assumption that they are incapable of assimilating so radical a change in the system of education. The relative ease with which the Japanese can be reëducated is best illustrated by the introduction of the idea of Emperor-worship. For 300 years before the Restoration of 1868, the Emperor was a poor, ignored, lesser lord; emperors were assassinated, were forced to abdicate, and never exercised actual control. The real ruler was the shogun. But then an elaborate propaganda, carried on primarily through schools and the Shinto temples, created the image of a divine Emperor, and in half a century the ruler who had for years been utterly neglected was accepted as God. Of course, the Occupation alone cannot bring about the acceptance of the present reform, and as Mr. William J. Sebald, Deputy for the Supreme Commander, said last November, "The new school system is being introduced by the Japanese Government in the face of tremendous odds." It is hampered by a dire shortage of teachers, the destruction and deterioration of thousands of school buildings, and a shortage of paper and textbooks. Persons unfavorably disposed toward the program claim that Japan cannot afford it, and the insistence that the Japanese budget must be balanced may serve as pretext for reducing necessary appropriations.

The intangible obstacles, which even a balanced budget and an ample treasury could not remove, are more serious. No school system can be better than its teachers. More than 100,000 teachers and educational officials in Japan have either resigned or been purged, and the remaining 300,000, though perhaps not opposed to the new program, were trained under a totalitarian system and undoubtedly retain some prewar ideas about education. Years of effort will be required to reorient them. In short, the new system of education is only a blueprint.

What is true of the teachers is true of all the bureaucrats, officials and politicians who were raised under the old traditions, but who are now the direct agents of democratization of Japan. The outstanding militarists and imperialists have been weeded out, but hundreds of the old leaders and members of ruling cliques, and a bureaucracy steeped in tradition, are still in positions of influence. The chances of the emergence of a forward-looking leadership depend upon the development by the new institutions of a new set of vested interests and new sources of power and prestige. As we have noted, new leaders are being bred by the land reform; and the rise of trade unions will have a similar effect. The emergence of a middle class, which will in turn produce a new crop of politicians, journalists and intellectuals who are dependent upon it and who will show loyalty to it, is perhaps the most important factor in the growth of democracy in Japan. Its growth depends upon whether the monopolies in industry and finance are broken up, and on the economic rehabilitation of the country. A full stomach does not guarantee democracy, but democracy certainly does not thrive on an empty one.

V

The economic situation in Japan has improved since the surrender, but the recovery has been too slow to halt the inflationary spiral. Inflation can be avoided after war only in countries capable of converting their economies swiftly to meet peacetime demands at home and abroad. Not even the victorious Powers could avoid varying degrees of inflation, and a warravaged Japan, shaken by defeat, the loss of overseas possessions and foreign trade -- the key to her economic stabilization -- could not possibly escape it. Nonetheless, more positive measures might have prevented the economic crisis from reaching so sharp a pitch. The Governments of Higashi-Kuni, Shidehara and Yoshida procrastinated, shifted responsibility for their shortcomings to the Occupation, and insisted upon treating a very bad case of inflation as if it were a sympton of deflation. Not until the advent of Katayama's Social-Democratic Cabinet was a real effort made to introduce a semblance of order into Japan's economy. The Occupation laid down the policy that in order to forestall disease, unrest and starvation Japan had to be provided with a minimum sufficiency of food, and imported a total of 3,800,000 metric tons of foodstuffs from the United States at a cost of $500,000,000. The Occupation also took measures leading to an increase of agricultural production, and to the restoration of the fishing industry, including Antarctic whaling.

SCAP's intervention in the field of industrial production and finance was only nominal during the first year and a half after the surrender. It had received contradictory orders on the subject. The Joint Chiefs of Staff's basic directive to General MacArthur (dispatched November 8, 1945) stated: "You will not assume any responsibility for the economic rehabilitation of Japan or the strengthening of the Japanese economy;" but in a subsequent paragraph General MacArthur was told to see to it that "Japanese authorities . . . develop and effectively carry out programs . . . to avoid acute economic distress . . ." and, in the event the Japanese authorities failed to do so, that he should "direct them to take such measures as in your judgment are necessary." The growing economic crisis in Japan settled the question, and forced the Occupation to take a stand on problems of foreign trade, rate of exchange, reparations, levels of production and degree of American financial assistance. If Japan is to be removed from the relief rolls, on which she now draws about $400,000,000 a year from American taxpayers, and put on her own feet, she must be given access to markets overseas. In a recent speech Under Secretary of the Department of the Army William Draper estimated that Japanese exports must increase "to almost seven times the present level before they can pay for food and raw materials necessary to provide a tolerable standard of living for the Japanese nation." This implies a generosity of treatment and unanimity of understanding among the Allied Powers that, to say the least, had best not be taken for granted.

VI

Such are the attempts to translate the aims of the Occupation into reality. It is the tale of a moderate middle-class revolution, designed to create a stable system of capitalistic democracy. The changes that have been made have so loosened the fetters that held the Japanese people that reactionary forces would find it difficult to tighten them again. The American occupation has rendered an historical service in daring to give new direction to the economic and political arrangements of the defeated country. Such reforms as the widespread ownership of land, the recognition of the right of labor to economic security, and the measures for the control of disease and improvement of public health so effectively carried on by the Public Health and Welfare Section of SCAP, have given tangible evidence to the common people of Japan that we are actively espousing a new way of life and not merely opposing the old. It is this that distinguishes the American occupation of Japan from the occupation of other defeated countries by victors in wars, past and present.

The road upon which the Occupation has set the Japanese is sound and promising, and the Japanese have gone a considerable distance along it in the last three years. But a generation must pass before we can know how deeply its spirit has been accepted and how lasting its effects will be on Japan. The economic rehabilitation of Japan is essential to the strengthening of the social reforms introduced by the Occupation. There must be a degree of economic well-being at least as great as was possible under the old régime. The reforms do not inhibit the fullest utilization of Japanese labor, managerial skill and indigenous natural resources; nor are they of a kind which would prevent extension of American credits sufficient to cover imports of raw materials and the cost of new capital equipment, as well as the investment of foreign capital.

But we must face the fact that even if the economic climate is favorable, the reforms may not be wholeheartedly accepted. And here we touch on a crucial problem. In the past, the keynote of government and society was authoritarianism. The spirit of Japanese culture has been communal and disciplinary. Tradition and group opinion, not individual initiative, have been the mainsprings of Japanese behavior. There is no reason to believe that the cake of custom is so hard that it cannot be broken, for the Japanese were amenable to indoctrination in other times, and are more open to it now. The overwhelming defeat shook the established political and social order to its foundations and shattered many illusions, chief among them the belief in the unique mission of the Japanese people. The fact is that the Japanese are a practical and imitative people, and large groups are willing to follow a set of principles used by the country which is apparently the most successful in the world. But though the balance of forces in Japan's society after three years of the Occupation favors the sloughing off of the worst excrescences of Japanese feudal life, the Japanese people have not themselves fought for these democratic reforms. They have been a gift. The Japanese can make them their own only by using them. The processes of democracy are not simple, and the Japanese cannot hope to employ them successfully without much further guidance. But the military occupation as we have known it need not continue much longer. If the Allied Powers are satisfied that the military structure of Japan has been dismantled (and there is no doubt that it has been), if the auxiliary military guarantees for the future have been fully secured, and if, as has been sufficiently demonstrated, the purely police problems are small and the overt opposition negligible, then there is no reason why the military occupation, in its present form and extent, cannot be terminated shortly.

What will be needed is an Occupation which emphasizes training in running the newly established institutions. Now that we have taken the Japanese nation in tow, we cannot abruptly set it adrift; the main effort of education has only just begun. This is a task for an Occupation made up primarily of experts, advisers and teachers. American aims in Japan and the novel meaning imparted to them by SCAP constitute a test of the universality of certain western precepts. The future of Japan as a useful member of the society of nations depends upon America's determination to continue aid and counsel to the Japanese.

^[i]Cf. William M. Gilmartin and W. I. Ladejinsky, "The Promise of Agrarian Reform," FOREIGN AFFAIRS, January 1948.