History of Global Arms Transfer, 17 (2024), pp. 81-108

Post-World War II Japan’s Defense Buildup
Plan and the Function of Industry Associations
in Rebuilding the Military Industry : The Trendof “Domestic Production” of Defense
Equipment from the 1950s to the 1970s
By SHIN-ICHI SHIRATO*
We will examine not only what kind of Japan–U.S. relationship was built throughthe strengthening of the defense capabilities of the Japanese Self-Defense Forcesfrom the end of World War II to the 1970s but also how Japanese industry groups
responded to it during that period. The rearmament of Japan by the Self-Defense
Forces was carried out under the strong control of the United States, based on theJapan–U.S. Security Treaty. In addition, the beginning of the Cold War and the
Korean War caused a major shift in the U.S. occupation policy. The United States
initially provided many arms for free for the creation of the Self-Defense Forces
and for the enhancement of defense equipment, but to restrain the outflow ofmoney, it switched from a policy of free to paid armament. In response to thispolicy shift towards strengthening self-defense capabilities, Keizaidantai
Rengokai(Keidanren) and Nihon Heiki Kogyokai tried to achieve economic
growth and acquire more advanced technology by taking advantage of the special
demand and the business opportunity of building up the defense capabilities of
the Self-Defense Forces. The “Domestic Production” of arms was important forthese groups. However, even though it is called “domestic production”, advanced
technologies used in fighter planes and other equipment were mainly licensed,
including important parts like black boxes. Therefore, Japan was a long way off
from technological independence.
Introduction
Under the Abe cabinet, which has been in power since 2012, Japan’s security posture has
undergone a series of rapid changes, including the establishment of the National Security
Bureau in 2014, the Cabinet Decision on the “Three Principles on Defense Equipment
Transfer,” which significantly changed the “Three Principles on Arms Exports”, theCabinet Decision to change the existing interpretation of the Constitution to allow theexercise of the right to collective defense, the revision of the Japan-U.S. Guidelines for
Defense Cooperation in 2015, and the passage of the several Security Laws (Security
regime). In 2015, Japan’s security posture began to undergo a major transformation. In
particular, the changes regarding the right to collective self-defense marked a milestone in* Researcher, Emeritus Professor, Institute for the History of Global Arms Transfer, Meiji University

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SHIN-ICHI SHIRATO
that they explicitly advanced the so-called alliance between Japan and the United States. In
this paper, I would like to clarify how the shift in the 2010s can be positioned by examining
how the Japan–U.S. relationship was constructed from the post-World War II period to the1970s and how Japanese industry responded to this relationship with regard to the increasein the defense capability of the Self-Defense Forces.
Japan’s postwar reconstruction can be divided into two main processes: one is the processof reconstruction by the U.S. occupation policy, and following the conclusion of the 1951
Peace Treaty and its entry into force the following year, the other is the process ofreconstruction by the Japanese government after the restoration of independence. The
Japan–U.S. Security Treaty, which was concluded and came into effect at the same time as
the peace treaty, allowed reconstruction to proceed consistently under the strong control of
the United States. To elucidate this point, we will first review the process of change in U.S.
occupation policy towards Japan and the development of Japan’s rearmament from 1945
until the revision of the Japan–U.S. Security Treaty in 1960. The dismantling andrebuilding of Japan’s military power and the establishment of the Japan–U.S. Security
Treaty are important milestones in this process. Next, we will examine what kind of vision
the industrial world had for the process of dismantling and rebuilding Japan’s military
power, how it lobbied the Japanese and U.S. governments, and how the defense industry(mainly the arms industry in this paper) actually developed its business, based on thebusiness development of some companies.

1. Rearmament and defense force development, as evidenced by the shift in
occupation policy towards Japan and the birth of the Self-Defense Forces.
In September 1945, General Order No. 1 of the Supreme Headquarters of the Allied Powers(hereinafter referred to as GHQ) ordered the suspension of munitions production. The“Initial Policy toward Japan” also stipulated the demilitarization of Japan and theelimination of militarism. Furthermore, the E. W. Pauley Reparations Committee delegationthat visited Japan in November of the same year proposed a reparations plan that would
hand over a substantial portion of munitions factories and basic heavy industrial facilities
to neighboring Asian countries and keep Japan’s productive capacity at a level that would
not exceed the standard of living of Asian countries. However, the Truman Doctrine ofJanuary 1947 called for the prevention (i.e., containment) of the expansion of Sovietcontrolled territory, and Secretary of War K.C. Royall’s speech of January 1948 set forth
the direction of promoting Japan’s economic recovery and making it “a deterrent against
the threat of totalitarian war”.1 At this point, the U.S. incorporated Japan into its campaign
against socialism and communism centered on the Soviet Union and changed its course
from a policy of holding economic reconstruction to that of neighboring Asian countries tothat of promoting higher productivity and rearmament. In October 1948, the U.S. National
Security Council reflected this change in its “Recommendations for U.S. Policy toward
Japan”, which were sent to the Japanese government as the “Nine Principles of Economic
Stability” and shifted the focus from demilitarization to economic reconstruction. The
reparations were to be lifted in full by the statement from F.R.McCoy, the U.S.
representative to the Far Eastern Commission.2
1 See https://worldjpn.grips.ac.jp/documents/texts/JPUS/19480106.S1E.html.
2 Kihara [1994], p. 55.

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Post-World War II Japan’s Defense Buildup Plan
After 1948, the Chinese People’s Liberation Army began a counteroffensive against
Chiang Kai-shek’s Nationalist Army, leading to the founding of the People’s Republic ofChina in October 1949. In June 1950, North Korean forces moved the south, triggering the
Korean War, which directly led to the rearmament of Japan by the United States. In
November of the same year and in August of the following year, MacArthur authorized thelifting of the expulsion of former regular officers of the Army and Navy, allowing them tobe promoted to senior positions in these organizations. In September 1951, the Japan–U.S.
Security Treaty was concluded simultaneously with the San Francisco Peace Treaty, andwhile the U.S. expected Japan to gradually increase its own defense capabilities, theJapanese government allowed U.S. forces to continue to be stationed in Japan to maintainpeace and security in the Far East and to quell civil unrest in Japan. GHQ authorized theJapanese government to manufacture weapons and announced to lift the designation ofcivilian factories designated for compensation, and in April, it announced the return of 850
factories, including aircraft manufacturing facilities.3
To ensure that Japan strengthened its own defense capabilities, emphasis was placed on
the 1954 Japan–U.S. Mutual Defense Assistance Agreement (MSA). 4 In March of theprevious year, Secretary of State J.F. Dulles was dispatched to Japan to press for the
expansion of defense capabilities, and in October, a joint statement was issued in
Washington by Liberal Party policy chief Ikeda and Assistant Secretary of State W.S.
Robertson. The statement stated that in relation to the Mutual Security Act of 1951 (MSA
Act), there were constitutional and economic restrictions on Japan’s ability to increase its
self-defense capabilities but that the United States would make every effort to promote
such an increase, that the United States would provide key items of equipment for Japaneseland, sea, and air forces to assist in their formation, and that under the MSA Act the U.S.
would supply $50 million worth of agricultural products (the “wheat fund”), the proceedsof which would be used to increase Japan’s defense production and industrial capacity inthe form of overseas purchases (extraterritorial procurement) and investments.5 Before suchan agreement was reached, however, there was considerable in-depth debate over theseriousness of Japan’s self-defense buildup.
Before the meeting, the U.S. Embassy asked the Japan Federation of Economic
Organizations (Keidanren) what it thought of the MSA. Keidanren replied that it understood that the MSA included military assistance and defense assistance (economic
assistance), and that for the latter, it would accumulate “wheat funds” ($10 million worth)in Japan in accordance with Section 550 of the MSA Act, which would be used tomodernize industrial technology and equipment. The U.S. side responded that since the
MSA is a bilateral agreement, Japanese side should specify reasonable measures that could
confirm the increase in self-defense capability that the U.S. was seeking. In the IkedaRobertson meeting, “only the basic policy of economic assistance was agreed to” as a result
3 Keidanren Committee on Defense Production [1964], p. 292.
4 In 1951, the U.S. enacted the Mutual Security Act, which obligated countries receiving U.S. assistance tomake efforts to defend themselves and the free world, and this act also required Japan to increase its defense
capabilities in concluding the MSA between Japan and the U.S. (https://www.digital. archives.go.jp/das/image-j/
F000000000000000108228, Defense Production Board [1964], pp. 64-75, Kondo and Osanai [1978], p. 221).
5 Prior to this, an exchange document between the U.S. and Japanese governments published in June 1953
clarified the relationship between the degree of Japan’s self-defense capability and the aid sought by the U.S. The
Defense Production Board, in its “General Request Opinion on Acceptance of MSA,” in July, requested theconclusion of an MSA aid agreement while mentioning the positive significance of extraterritorial procurement.
Ten million dollars out of the agricultural products to be supplied in the Ikeda-Robertson talks was to be available
to finance the modernization of weapons production facilities (Keidanren Committee on Defense Production[1964], p. 67; Kondo and Osanai[1978], p. 221).

83

SHIN-ICHI SHIRATOof the Japanese side presenting its First Defense Force Buildup Plan under considerationand explaining its goals of 180,000 troops on land, 124,000 tons at sea, and 1,300 aircraft.6
Thus, Japan's rearmament efforts rapidly progressed in response to U.S. demands andassistance in the wake of the Korean War. In 1952, the year the Japan–U.S. Security Treaty
came into effect, the Police Reserve Corps was renamed the National Guard Corps, and its
ground forces were increased to a capacity of 110,000 and equipped with tanks andhowitzers. In maritime defense, frigates and landing support boats were borrowed from the
U.S. military and used to form a defense force for guards. It was not until the establishmentof the Self-Defense Forces under the Defense Agency in July 1954 that the SDF became athree-military organization consisting of land, sea, and air forces. At the time of its
establishment, the SDF seemed to have 139,000 personnel on land, 16,000 personnel and
58,000 tons of naval vessels at sea, and 6,738 personnel and 148 aircraft in the air. It can besaid that the SDF strengthened its self-defense capabilities in line with the Japan-U.S.
MSA.7
The government will consider a draft five-year defense force Buildup plan for the SelfDefense Forces, but in 1956, the National Defense Council was established as an advisory
body for the prime Minister, and the following year, the “Basic Policy for National
Defense” was decided there. The National Defense Council formulated the basic policy fornational defense and the National Defense Program Outline. This council committee
consisted of the prime minister, the deputy prime minister, the ministers of foreign affairs
and finance, and the directors-general of the Defense Agency and the Economic Planning
Agency, among others.8
It states that “the defense force shall be developed gradually and efficiently to the extent
necessary for self-defense, in accordance with national strength and conditions”. Based on
this, in 1957, the Council of National Defense and the cabinet meeting determined the“Defense Force Buildup Plan” (primary Defense Buildup Plan) for the 1958-19609. Table 1
shows the objectives set in the Defense Buildup Plan (hereinafter abbreviated as DBP)
implemented over the four plans periods. It shows the target figures and their actual results.
In the Ground Self-Defense Force (hereinafter abbreviated as GSDF), the target of 180,000
active Self-Defense Force personnel has been consistently and the goal of the Tertiary DBP
was almost achieved. The Guided Missile Unit has been newly established since theSecondary DBP. Guided Missile Unit (GMU) has remained on target, although it has been
added as a new piece of equipment. The Maritime Self-Defense Force (MSDF) was ontarget in the initial and fourth rounds of DBP. In particular, the target for the fourth DBP
had to be changed midway due to major economic fluctuations10. In the Air SDF (ASDF),
the focus is still on aircraft buildup. In the case of primary DBP, although the number of

6 Kondo and Osanai [1978], p. 238.
7 The size of the SDF at the time of opening is according to the official website of the Air Self-Defense Force(https://www.mod.go.jp/asdf/about/organization/).
8 In 1972, the Minister of International Trade and Industry, the Director General of the Science and Technology
Agency, and the Chief Cabinet Secretary were added to the council.
9 Keidanren Committee on Defense Production [1964], p. 165.
10 At the National Defense Council and Cabinet meetings in December 1975, it became clear that it would be
difficult to achieve the targets for major equipment, and it was decided to postpone the following reductions: 31
Type 74 tanks from the originally planned 280 to 249; 60 Type 73 armored vehicles from 136 to 76; 17 naval
ships from 54 to 37; and 42 support fighter aircraft from 211 to 169. The Defense Agency [1976], p. 159).

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Post-World War II Japan’s Defense Buildup Plan
Table1 Objectives and Achievements of the 1-4th Defense Buildup Plans
Ground Self-Defense Force
Self-defense
Reserve
Guided missile
personnel
Officers
unit
(mn)
(mn)
(squad)
track
track
track
targettargettargetrecordrecordrecordprimary DBP
1958-60
secondary DBP
1962-66
tertiary DBP
1967-71
quaternary DBP
1972-76

Maritime Self-Defense Forcetrack
recordtargettrack
recordAir Self-Defense Force
Guided missile
Aircraftunit(squad)track
track
targettargetrecordrecordNaval vessels(ten thousand tons)
targetAircraft

180,000

170,000

15,00015,000

12.4

11.2

222

218

1,342

1,133

180,000

171,500

30,00024,000

2

2

14.4

14.0

235

239

1,036

1,095

2

2

180,000

179,000

39,00036,000

4

4

14.2

14.4

220

250

880

940

4

4

180,000*154,805

8

8

21.4

19.8

210

200

770

840

6

5

＊The number of Ground Self-Defense Force officers in the Quaternary Defense Plan is the figure from the
Defense Agency[1977],p.177.
・In March 1977, the Air Self-Defense Force had 881 Aircrafts(see Defense Agency[1977],p.184.
・Source: Figures from Asagumo Shimbun [2022] (viewed ) were used for the primary through quaternaryplans. However, the target for the quaternary plan was lowered in December 1975 dut to rapid changes inthe economic environment.

aircraft scheduled to enter service did not reach the target number due to the short threeyear period, it is clear that the target number of aircraft is rapidly being met, supported by
the U.S.government’s cost sharing and other factors.
Table 2 Total Procurement Results by Defense Agency Item(Central Procurement)
DefenseBuildupPlanperiod(fy)total amount(100 million yen)primary DBP

1958-60

2,301.7

secondary DBP

1962-66

4,757.7

tertiary DBP

1967-71

10,864.1

quaternary DBP

1972-76

17,557.0

main product lineup
aircrafts54% telecommunications12%
vessels12% wapons10%
aircrafts24% telecommunications14%
vessels11% weapons12%
prototype2.3%=10.9billion yen
aircrafts35% telecommunications14%
vessels8% weapons8% guided weapons7%
prototype1.7%=25.5billion yen
aircrafts39% telecommunications13%
vessels10% weapons5% guided weapons 6%
prototype2.4%=41.3billion yen

・Guided weapons prior to 1967 are included in weapons.
・Prototypes prior to 1962 are included in each of the applicable items.
・Source: Figures for total value and major commodities are from Kihara [1994], pp.92-93.

Table 2 shows the budget amount and main item composition for the procurement ofdefense equipment for central procurement in each DBP. Let us examine what kind of
equipment was strengthened at each stage, referring to this table. The period of the primary
DBP coincided with the revision of the security treaty by the Kishi cabinet, which was aperiod of “political season”. The contents of the primary DBP, which called for the buildup
of a minimum necessary self-defense force (“core defense force”), included 180,000 GSDF
personnel, 124,000 tons of MSDF vessels, and 1,300 ASDF aircraft at a total cost of 404.1
billion yen, with “a significant portion of the equipment” to be provided by the United85SHIN-ICHI SHIRATO
States.11 Prime Minister Kishi travelled to the U.S. with this DBP to gain the approval of
the U.S. side and reached an agreement to withdraw U.S. ground forces from Japan and to
make adjustments towards the revision of the security treaty. In August 1957, the Pentagon
announced the withdrawal of U.S. ground forces from Japan, and the withdrawal wascompleted in February of the following year. Although aircraft were prominent in the item
mix, the U.S. grant of aircraft was significant.
The new Japan–U.S. Security Treaty concluded in January 1960 stipulated in Article II
the promotion of economic cooperation, Article III the strengthening of Japan’s defense
capability, and Article V the obligation of the United States to defend Japan, as well as theobligation of Japan to defend itself and U.S. forces within Japan in the event of an armed
attack. It also stipulated that the treaty could be terminated by either party upon notice oftermination 10 years after its entry into force.12
In July 1961, the Secondary DBP, which had been postponed due to growing opposition
to the revision of the Security Treaty, was decided at the National Defense Council andcabinet meetings. The Secondary DBP was to cover the five-year period from 1962 to
1966, coinciding with the start of the Ikeda cabinet’s income-doubling policy, the start of
the U.S. bombing of North Vietnam, and the Vietnam War in full swing. The basic policy
was to “focus primarily on qualitative enhancement of defense capabilities,” including themodernization of equipment, enhancement of mobility, improvement and enhancement oflogistical support systems, stockpiling of ammunition and ammunition for combat,
introduction of anti-aircraft equipment, and promotion of technological research anddevelopment. The goals for Secondary DBP included 180,000 GSDF (13 divisions) and
30,000 reserve SDF officers, 143,000 tons of MSDF vessels, approximately 1,000 ASDF
aircraft, four surface-to-air guided missile battalions (two each of Nike and Hawk), an
average annual increase in Defense Agency expenses of 20.5 billion yen, and theachievement of the Secondary DBP. The total maintenance cost required was 313.5 billion
yen, the total defense budget was 1.16 trillion yen, and research and development anddomestic production of new equipment was considered important for achieving this DBP.13
During this period, the U.S. switched from grant aid for equipment to paid aid under the
Kennedy administration, due to the worsening balance of payments that became a reality
from 1962 onward.14
The U.S. intervention in Vietnam escalated with the start of the bombing of North
Vietnam, and U.S. military bases in Japan and Okinawa became more important as sortie
bases. In November 1966, the National Defense Council and the cabinet decided on theoutline of the Tertiary DBP (1967-71), and in March of the following year, the main items
and budget scale for the Tertiary DBP were decided. This was the latter half of the periodof rapid economic growth and the period when Prime Minister Sato’s negotiations for thereversion of Okinawa to Japan, which was to be “nuclear-free and comparable to that ofmainland Japan,” were in full swing. As in the case of the Secondary DBP phase, thegeneral policy called for the enhancement and reinforcement of the SDF’s ability torespond to invasions of local or sub-local scale with conventional weapons and the
11 Keidanren Committee on Defense Production [1964] pp. 165,166, Japan Association of Arms Industry[1983] p. 8.
12 See https://www.archives.go.jp/ayumi/kobetsu/s35_1960_01.html.
13 Keidanren Committee on Defense Production [1964] pp. 160, 257, 267-270; Japan Association of Arms
Industry [1983] p. 11.
14 About 45% of the equipment procurement value in FY1950-61 was provided by U.S. grant aid, but the grant
aid ended in FY1969. Domestic procurement has accounted for more than 80% since the mid-1960s, and almost
90% in the 1970s (Tomiyama [1979], p. 39).

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Post-World War II Japan’s Defense Buildup Plan
construction of elite units. It also called for the promotion of technological research anddevelopment, equipment modernization, the improvement of domestic technologicalstandards, and the appropriate domestic production of equipment. In the maritime sector, tostrengthen defense capabilities in the surrounding seas, the MSDF was to build 14
destroyers, including those carrying ship-to-air guided missiles and helicopters, and 56
naval vessels, including five submarines, totalling 48,000 tons, as well as 60 fixed-wing
anti-submarine aircraft, 33 anti-submarine helicopters, etc. In the airspace, two squadrons
each of surface-to-air guided missile, Hawk, and Nike Hercules equipped units were to beformed, and preparations were also made to form one squadron each. In addition, toimprove the air defense strike capability, the selection of new fighter aircraft models andtheir maintenance were initiated. The plan also called for the development of 55 aircraft, 4naval vessels, and supersonic advanced training aircraft in Japan to improve the educationand training system and rescue system. Total defense-related expenditures were projected
at about 2.34 trillion yen.15 Overall, the plan emphasized anti-submarine and air defense
capabilities and was in line with the intentions of the United States.
In April 1971, the Defense Agency, under the leadership of Defense Minister Nakasone,announced the Quaternary DBP(1972-7 6). This was a period of dramatic changes,
including the 1970 Security Treaty, the shift to a floating exchange rate system, therestoration of diplomatic relations with China, the return of Okinawa to Japan, the oilcrisis, the end of Japan’s rapid economic growth, and the end of the Vietnam War. Again,
the goal was to establish a defense system capable of dealing with an invasion by
conventional weapons in a localized warfare situation, and the budget was expected to be
more than twice the amount of the 3rd DBP, 5.2 trillion yen, with an emphasis on themodernization of ground equipment, domestic production of equipment, and research anddevelopment. However, due to the collision between an SDF aircraft and an All Nippon
Airways plane in July of the same year and the impact of the dollar crisis, the total cost was
lowered to 4.63 trillion yen in the Fourth DBP outline decided the following year. The mainequipment items were as follows: (1) GSDF: 280 tanks, 170 armoured vehicles, 90 selfpropelled guns, 159 operational aircraft including 154 helicopters, and 3 surface-to-air
guided missile hawks; (2) MSDF: 13 escort ships including 2 helicopter-carrying destroyers
and 1 ship-to-air missile escort ship, In addition, 5 submarines, 1 supply ship, and various
other vessels for a total of 54 ships; approx. 69,000 tons; (3) ASDF: 3 units equipped with
Nike J surface-to-air guided missiles, 46 fighter aircraft with improved warning capability
and modernization, 68 support fighters, and 24 transport aircraft. 16 In the same year,
Okinawa returned to the mainland, Japan-China diplomatic relations were restored, andMinister of International Trade and Industry Tanaka announced his “Theory of Remodeling
the Japanese Islands.” In 1973, the oil crisis occurred, and the defense industry was hit by
the frenzy of prices17. The result of the emphasis on R&D can be seen in the increase in
expenditures on prototypes in Table 2. At any rate, the quaternary DBP, which faced major
economic changes, differed from the conventional maintenance plan, as described above,
and was forced to be drastically scaled back at a defense conference and cabinet meeting
held at the end of 1975.
With Japan’s rapid economic growth, defense equipment was steadily upgraded from theprimary DBP through the tertiary DBP, even though “exclusive defense” was the basic
policy. In fact, the actual total amount of procurement by item for the Defense Agency was
15 See https://www.cas.go.jp/jp/gaiyou/jimu/taikou/4_3jibou.pdf.
16 Japan Association of Arms Industry [1983], pp. 18,19
17 Japan Association of Arms Industry [1983], p. 19.

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SHIN-ICHI SHIRATO
230.17 billion yen for the primary DBP (FY 1958-60), 475.77 billion yen for the secondary
DBP (FY 1962-66), and 1.09 trillion yen for the tertiary DBP (FY 1967-71), The quaternary
DBP (FY1972-76) was 1.75 trillion yen. The total amount raised in each period was morethan twice that of the immediately preceding DBP up to the tertiary DBP, but in the case of
the quaternary DBP, it was only 1.6 times that of the tertiary DBP. Nevertheless, Japan’s
SDF had reached a level of strength that was quite impressive in the world18.
In April 1967, at a meeting of the House of Representatives Accounts Committee, Prime
Minister Sato, in his answer to a question regarding the export of the Pencil Rocket
developed at the University of Tokyo, stated that exports of weapons and other items were
not allowed to the Communist bloc, countries prohibited by UN resolutions, parties tointernational conflicts, and other countries under the Operational Guidelines for Export
Trade Control Orders and other regulations. This later came to be known as “the Three
Principles on Arms Exports”, which reminded the arms industry that overseas markets wereseverely restricted.

2. Keidanren19 and Japan Association of Arms Industry’s efforts to rebuild thedefense industry
In this section, we will elucidate the role of the Japanese industry in the reconstruction of
the defense industry. Although the defense industry encompasses industries involved in the
production and distribution of a wide range of goods and services supplied for military use,
this section will limit its examination to industries involved in weapons production. In addition, we will focus on the roles of the Keidanren Committee on Defense Production(hereinafter abbreviated as CODP) and the Japan Association of Arms Industry (hereinafter
abbreviated as JAAI) as the industry’s response.
After the defeat of the war, the U.S. forces moved into Japan, and the occupation policy
developed under the indirect rule of GHQ. In December, the interim report of the E. W.
Pauley reparations mission stated that the Japanese economy should be maintained at aminimum level. Japan will be liable for compensation for the removal of machinery andequipment unique to the munitions industry. The policy for handling compensation was totransfer the assets to the country that Japan was responsible for the compensation and to
make effective use of the assets. The Far Eastern Commission’s statement in May was thestarting point, and the properties subject to compensation in each industrial sector wereplaced under the control of GHQ by order of the Far Eastern Commission. The results ofthis process were a series of decisions on the facilities to be compensated for in 11 sectors.
As a result, military arsenals and aircraft factories, civilian arms factories and basic heavy
industrial facilities were planned to be removed one after another as designated reparations
factories. In January 1947, the Far Eastern Commission set the standard of living of theJapanese people at the level of 1930-34, and therefore, the economic revival of Japan after
the removal of the designated factories for reparations was expected to have a very difficult
time recovering. Not only the Japanese government but also the U.S. viewed such removal
18 Kihara [1994] pp. 92, 93.
19 Keidanren (Japan Business Federation) was formed in August 1946 as an organization representing thebusiness community, with national and industry-specific economic organizations as regular members andindividual companies as supporting members. The Japan Federation of Economic Organizations, which wasformed in 1922, was dissolved and joined Keidanren in order to unify economic organizations and negotiate with
GHQ.

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Post-World War II Japan’s Defense Buildup Plan
as undesirable. In the end, with the Truman Doctrine and the Royall Secretary of War’s
speech, as already mentioned, the U.S. occupation policy shifted. Shifting its focus fromthe designation and removal of factories for compensation to Japan’s economic recovery, in
May 1949, F.R. McCoy, the representative to the Far East Commission U.S. announced thesuspension of collections under the interim compensation plan.20
On the other hand, Japanese companies that had focused on munitions production during
the war were unable to continue their operations due to the order to cease munitions
production and were forced to rebuild their businesses through civilian production.
However, the loss of overseas assets and the GHQ’s policy of terminating wartime
compensation (imposition of a special wartime compensation tax) caused many relatedcompanies to face business crises, and the Japanese government was forced to take relief
measures through the Corporate Accounting Emergency Measures Act and the Corporate
Restructuring and Improvement Act.21 In this process, the change in U.S. occupation policy
and the outbreak of the Korean War brought about a turning point, which triggered thepeace issue and the movement of Japanese economic organizations in response to thespecial procurement boom. Although munitions production had been halted following thedefeat in the war and was subject to demolition and dismantling, the Cold War and the outbreak of the Korean War brought about a major change in occupation policy, and munitions
production and even weapons production were suddenly resumed. Table 3 shows that
CODP, JAAI, and other organizations lobbied GHQ and the government. The following
section examines the relationship between the requests submitted by these organizations to
GHQ and the Japanese government and the subsequent defense industry.
Table 3 List of Requests and Recommendations of KEIDANREN CODP and JAAI
year
1951

1952

month
matters
1 Keidanren announced "Basic Requests Regarding the Peace Treaty"
1 (Japan-U.S. Economic Alliance Roundtable established as a special Keidanren
organization → reorganized as the Economic Cooperation Roundtable in 52.8;
Defense Production Committee and other committees established)
3 Keidanren's Opinion on Japan-U.S. Economic Cooperation Readiness3 Keidanren's 8th General Meeting resolution, "Our resolve on the occasion of our
return to the international community"
10 (Japan Technology Production Cooperation Association established → 52.7
Weapons Production Cooperation Association → 53.10 JWIA → 88.9 Japan Defense
Equipment Industries Association)
2 Keidanren requests opinions on administrative agreements
3 Keidanren announced "Opinion on Measures to be Taken by the Government
for Japan-U.S. Economic Cooperation"
6 Keidanren announced "Opinion on various issues related to U.S. militaryprocurement"
10 CODPannounced Opinion on Urgent Requests Concerning the Utilization ofState-Owned Military Industrial and Other Facilities

20 Ministry of Foreign Affairs [2017] pp. 1432-1439.
21 In November 1945, GHQ ordered the termination of wartime compensation to companies on the grounds

that “it should be known that war is not profitable from an economic standpoint” and the Japanese government
was eventually forced to accept the order in July of the following year (SCAPIN337ESS/FI, “Removal of War
Profits and Fiscal Reconstruction” (Financial History Office, Ministry of Finance [ 1981] pp. 517-519)). The
number of special accounting companies that were required to submit development plans under the Corporate
Reconstruction and Development Law for approval was 5114 as of November 1948 (Fiscal History Office,Ministry of Finance [1983] pp. 753,814).

89SHIN-ICHI SHIRATO
1953

1954

1955

1956

90

2 CODP announced Opinion on Requests Concerning Domestic Production of
Aircraft Ordered by the National Security Agency, Opinion on Requests Concerning theService Life of Aircraft, Weapons, and Other Manufacturing EquipmentCODP
2 CODPannounced "A Proposal on Defense Force Buildup" and "ResearchMaterial on Defense Production"
2 JAAI submitted "Requests to U.S. government agencies in Japan regarding
special procurement"
4 CODP announced "Requests to the government regarding requests to the U.S.
Air Force, etc."
5 CODP announced "Requests and Opinions regarding special procurement
contract conditions, etc."
7 CODP announced "General Requests Regarding the Acceptance of MSACODP"
10 CODP announced "Memorandum of Understanding on Securing Working Capitalfor Special Demands Weapons"
12 CODP announced "Requests Concerning the Establishment of Machine Tool
Foundations" and "Securing Funds for Equipment Related to Defense Production"
1 CODP announced "Opinion on the Development of the Aircraft Industry"
3 CODP announced "Opinions on the development of the defense production
system" →55.1 CODP published "Analysis of the Current Status of Japan's Defense
Production Sector"
3 JAAI submitted "Opinions on fostering the arms industry" to MITI and theEconomic Deliberation Agency"
4 (JAAI and MITI jointly organized a two-month tour and survey of U.S. firearms
and ammunition production facilities by engineers from member companies)
7 (An arrangement between U.S. and Japanese contractors for the domestic
production of jet aircraft was established. CODP worked hard to achieve this based on an
informal proposal from the U.S. Far East Air Forces Command.)
8 CODP distributed "The Necessity of Self-Defense Forces and the Role of Defense
Production". JAAI submitted its opinion on the establishment of a defense production
system to the U.S. and Japanese governments
9 GM (Guided Missile) Roundtable Meeting by CODP, JWIA, Japan Aviation
Industry Association, etc. submitted opinions on GM research policy
10 JAAI submitted "Opinion on Current Issues in the Arms Industry" to the Minister ofInternational Trade and Industry
2 KEIDANREN Vice President Kogoro Uemura submitted "Problems in the Industrial
Structure of Japan and the Defense Industry" (KEIDANREN Monthly Report)
3 JAAI submitted "Urgent Request for Continued Production of Ammunition"
4 JAAI submitted "Request for the Establishment of Defense Industry" to the
Minister of International Trade and Industry, the Economic Deliberation Agency, andthe ruling party.
8 CODP submitted the "Draft Guideline for Maintenance of Ammunition
Manufacturing Facilities" to the government and announced the necessity of maintaining
self-defense forces and the role of defense production.
9 JAAI submitted "Opinion on the Handling of Industrial Property Rights for Weapons
Research and Prototype Commissioning Ordered by the Defense Agency" to the Defense
Agency.
2 "JAAI established a new Technical Advisory Board and a Radar Research Group(research on domestic production of equipment)."
3 JAAI petitioned the U.S. Far East Command and the U.S. Embassy to continueordering additional arms and ammunition, and petitioned the Defense Agency in June toincrease ammunition procurement
3 (KEIDANREN dispatched an economic cooperation goodwill civilian mission to
Southeast Asia. It was also intended to study the export market for equipment.)Post-World War II Japan’s Defense Buildup Plan
1957

1958

1959

1960

1961
1962

1963
1964

1965

1967

1969

8 CODP submitted a "Request for the Establishment of Basic Policies for theDevelopment of the Aircraft Industry".
11 JAAI was commissioned by the National Defense Council to conduct "researchand study of various problems related to the procurement of equipment" (reportsubmitted in 1958.5).
12 CODP issued an opinion paper on the early determination of the next fighter aircraftmodel.
1 CODP requested that a bill for the promotion of the aircraft industry be submitted
to the current Diet session→Aircraft Industry Promotion Law was promulgated in
1958.5.
6 CODP proposed the establishment of a Defense Industry Study Group. This study
group was formed by CODP, JWIA, Aircraft Industries Association, and GM Council.
8 CODP submitted ""Request for Continuation of Measures to Maintain Firearms andAmmunition Manufacturing Facilities".
6 (The Economic Cooperation Roundtable was dissolved.) (Japan Aircraft
Manufacturing Co. was established.)
7 (A Market Measures Committee consisting of 10 leading trading companies andthe Japan Machinery Export Association was established within the CODP.)
3 (A survey team of the rocket industry under the jurisdiction of MITI was
dispatched to Europe and the U.S., which included members of the CODP Council
Office.)11 CODP and JWIA jointly proposed a "Request for a long-term lump-sum contractsystem for arms".
5 (The Advisory Council for the Domestic Production of Defense Equipment wasestablished, and this advisory council submitted eight opinions in September.)
2 The Advisory Council on Domestic Production of Defense Equipment, consisting of
the Keidanren, the Liberal Democratic Party, and related government agencies, issued"Opinions on the Basic Policy for Domestic Production of Defense Equipment."
7 CODP submitted "Opinion on Arms Export".
10 (In order to transform JAAI from a defense business guidance and development
organization to a business-centered economic organization, a representative of a main
member company was appointed chairman.)
5 CODP issued "Opinion on Continued Production of F-104 Fighter Aircraft". (TheGM Council was reorganized as the Rocket Development Council.)
2 JAAI submitted "Opinion on the Suspension of Grant Aid to Japan" to the Director
General of the Defense Agency.
7 JAAI Operations Committee released "Opinion on Domestic Production of
Equipment and Development of Defense Industry".
8 JAAI submitted "Request for the Connection Production between Secondary DBP and
Tertiary DBP and the Contents of the Next DBP" to the Director-General of the Defense
Agency.
12 JAAI submitted "Request for Tertiary DBP" to the Director General of the Defense
Agency.
6 JAAI submitted "Request for Long-Term Lump-Sum Contracts for Equipment" to
the Defense Agency
12 JAAI submitted "Request for Dollar Defense" to the Defense Agency.
5 JAAI submitted "Request for Cost Accounting of Equipment Procurement" to the
Defense Agency
9 JAAI cooperated with CODP and organizations related to defense production to
conduct a survey after the start of TertiaryDBP.

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SHIN-ICHI SHIRATO
1970

6 JAAI submitted "Request for Quatery DBP" to the Director General of the Defense
Agency.
8 CODP released "Opinion on the Next DBP".
10 JAAI submitted "Opinion on the Revision of Laws and Regulations Related to theArms Manufacturing Law".
11 JAAI submitted "Opinion on the Defense Agency's Three Policies on the
Production and Development of Equipment".

・KEIDANREN (Japanese Business Federation) Committee on Defense Production is abbreviated as CODP
and Japan Association of Arms Industry is abbreviated as JAAI.
・Defense Buildup Plan is abbreviated as DBP.
・The items are mainly based on CODP [1964] and JAAI [1983], but not all requests, etc. are filled in.

(1) Establishment of the Keidanren’s Committee of Defense Production (CODP)
In August 1950, the U.S. Far East Command established a Logistics Command in Japanand began placing orders for fuel tanks, napalm tanks, and other equipment. In January
1951, when Special Envoy Dulles came to Japan to conclude a peace treaty, Keidanren
requested not only emergency procurement for the Korean War but also economic
assistance and development of economic cooperation after peace.22 To this end, in February,
Keidanren, in consultation with GHQ, established the Japan–U.S. Economic Alliance
Roundtable to “formulate a private-sector approach to the basic principles of Japan–U.S.
economic cooperation. In March 1952, GHQ lifted the ban on the manufacture of weaponsin Japan, allowed the repair and manufacture of aircraft and weapons, and lifted thecompensation designation of former military arsenals and civilian weapons factories,
among others, so that the U.S. military could procure finished weapons (from May 1952).
The organization was expanded and strengthened from a forum for general economic
cooperation to one that dealt with comprehensive and realistic issues, such as armaments,
defense policy, and Asian reconstruction and development, and its name was changed to
the Council for Economic Cooperation.23 According to the organization’s establishment
outline, the purpose is “to cooperate in strengthening defense production in the Far East
region in partnership with the United States and other countries, and to cooperate in thereconstruction and development of Southeast Asia with Japan’s industrial capabilities andtechnology, etc.” The organization will work in constant collaboration with Japanese andU.S. government agencies and related private organizations to discuss private sector
opinions and basic policies for cooperation and to formulate and implement the researchand implementation of specific measures. The organization was to cooperate in theformulation of basic policies for private sector input and cooperation and in the study andimplementation of specific measures. 24 The council had three subcommittees: generalpolicy, Asian reconstruction and development, and defense production, whose members
consisted of more than 30 executives from leading Japanese companies at the time. When
22 March 1951, Japan–U.S. Economic Partnership Roundtable, “Opinions on the Cooperative Posture of theJapanese and U.S. Economies” (Keidanren Committee on Defense Production [1964], p. 7).
23 Although this was before the establishment of Keidanren Committee on Defense Production, the RoundTable presented the “Requested Opinions on Administrative Agreements” to the U.S. side in February 1952 andobtained an understanding that the U.S.-Japan Joint Committee, which serves as an operational coordinating
body for the administrative agreements associated with the Japan–U.S. Security Treaty, would discuss
coordination, dispute settlement, contract methods and compensation for losses in the extraterritorial procurementof U.S. forces (Kondo and Osanai [1978], p. 225).
24 Keidanren Committee on Defense Production [1964], pp. 44-47.

92

Post-World War II Japan’s Defense Buildup Planthe U.S. began calling for the conclusion of an MSA between Japan and the U.S. to build amutually defensive Japan–U.S. relationship based on the Mutual Security Act and tostrengthen Japan’s self-defense capabilities, this organization actively advocated for theconclusion of such an agreement.
CODP formed within Keidanren’s Council for Economic Cooperation, is a central
organization in the development of Keidanren’s line. As mentioned above, it wasestablished in August 1952 when the council was reorganized, and it became an importantbody for disseminating Keidanren’s proposals on the defense industry and defense issues.
Initially, CODP was chaired by Kiyoshi Goko (former president of Mitsubishi Heavy Industries, Ltd. and advisor to the Japan Industrial Council), and permanent members included representatives of leading companies, such as Mitsubishi Heavy Industries, Komatsu,
Nippon Kayaku, and Hitachi, Ltd. The committee then established specialized committees
on weapons, ships, aircraft, explosives, electricity, fuel, machinery, funds, and service life,
each chaired by a representative of a leading company in the industry, such as Taizo
Ishizaka, president of Tokyo Shibaura Electric Co. In addition, a deliberation room was set
up in CODP, with Kogoro Uemura, advisor to Keidanren, as head of the office, and former
military officers familiar with equipment, including Zenshiro Hoshina, former lieutenant
general of the navy and director general of the Ordnance Bureau of the Ministry of theNavy, Sadanori Harada, former lieutenant general of the army and director general of the
Air Weapons Directorate I, Ministry of Munitions, and Masao Yoshizumi, former lieutenant
general of the army and director general of the Military Affairs Bureau of the Army
Ministry, as members, as well as assistants including a former military officer of the rankof colonel and a former military officer of the rank of engineer. In addition, a general-level
former military officer was selected as a technical advisor, and Haruji Kan, a former
lieutenant general and director of the Army Ordnance Administration Headquarters andvice president of the Weapons Production Cooperation Association (see below), was added
as a technical advisor.25 Such a lineup would appear to indicate that CODP was attempting
to create a full-fledged roadmap for getting weapons production off the ground in Japanand developing the defense industry.
After the Peace Treaty came into effect, the U.S. began to strongly urge Japan tostrengthen its self-defense capabilities and switch from grant aid to paid aid, with a view toconcluding an MSA as a way of providing assistance to Japan. Korean special procurement
had restarted Japan’s military production, but the extent of its potential and the extent towhich the Japanese government and industry were willing to enhance Japan’s self-defense
capabilities had not yet been confirmed. The Yoshida cabinet of the time expected as much
U.S. assistance as possible for economic reconstruction while allowing U.S. forces toremain in Japan, and when the armistice talks began in July 1951, industry also expected
new assistance (new special procurement) to replace the Korean special procurement.26
CODP decided to compile the gradual increase in defense force required in line with thesecurity treaty into a proposal with detailed specific numerical targets and present it to thegovernment and U.S. branch office as reference material to help plan the ordering ofspecial procurement. The “Draft Proposal on Defense Force Development” and the
25 Keidanren Committee on Defense Production[1964], pp. 42-48; Kondo and Osanai [1978], pp. 216, 218-220.
26 Regarding the special demand for Korea, Nakamura Takafusa and Yoshio Asai indicate $592 million and$740 million, respectively, for the period from the start of fighting in June 1950 to the end of large-scale fightingwith the start of armistice talks in July of the following year. In any case, the impact of the special demand paidin dollar amounts must have been large when exports in 1950 and 1951 were $800 million and $1.4 billion peryear, respectively (see Nakamura [2012], p. 569 and Yoshio Asai [2003]).

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SHIN-ICHI SHIRATO
underlying “Survey Data on Defense Force Production” submitted in February 1953 .27
According to the “Draft” and the “Survey Data,” the scale of the defense force targeted tobe achieved five years later, in FY1958, would be 300,000 troops in 15 divisions, withequipment equivalent to 30 divisions for the ground forces, 70,000 troops in 290,000 tonsof naval vessels for the sea forces, 130,000 troops in 3,750 aircraft for the air forces, and anannual average cost of 480 billion yen. The total cost would be 2.9 trillion yen. However,such defense expenditures “cannot be borne in their entirety by our national economy”(annual defense expenditures/projected national income = 7.3–10.2%), and thecorresponding “production capacity of Japan’s defense industry cannot be developed in agiven period. The report concluded that Japan’s defense expenditure, which it could financially bear, would be about 56% of the target, or 1.6 trillion yen (3.8 to 4.9% of projectednational income), and that the remaining 44%, or 1.3 trillion yen ($3.5 billion), would haveto be provided by the United States. The $3.5 billion in U.S. dependence consists of 559
billion yen ($1.5 billion: naval vessels, aircraft, and other specific weapons = tanks, antiaircraft guns, some underwater weapons, etc.) in kind and 710 billion yen ($2 billion) in
financial assistance. For all equipment (tanks and firearms) for the ground forces, Japandepended on the U.S. It also did for more than 80% of the construction cost of naval
vessels for the maritime forces, including in-kind donations, and for half of the aircraft in
the air forces, including in-kind donations. So the initial stage was envisioned to be
overwhelmingly dependent on the U.S.28
This “tentative plan” was prepared by the above-mentioned deliberation room, and since
experts from the army and navy who were in charge of logistics during the war joined thecommittee, it was a very elaborate draft plan and was also large enough to aim at thecreation of a self-defense force that could stand on its own.29 However, it was unrealistic at
the time to assume such an injection of funds and grant aid on the part of the United States.
Even within CODP, which prepared the “draft”, there were some who questioned the plan,but it was nevertheless published without any reduction. It can be said that the planreflected the unity of interest between the ex-servicemen and industry, despite thedifferences in perception between the two. In other words, ex-servicemen who had
experienced wartime control and mobilization envisioned a military force capable ofdefending itself, while the industrial world aspired to economic development and a stable
expansion of the defense industry through the continuation of special procurement demand
and were eager for new business opportunities through U.S. grant aid for Japan’s selfdefense buildup and increased aid to the Southeast Asian region. It is believed that bothsides had a common interest in drawing more U.S. assistance.
In preparation for the conclusion of the four MSA-related agreements, the Japanese andU.S. governments also worked out a plan to enhance Japan's defense capabilities and thenature of U.S. assistance. Prior to the Ikeda-Robertson talks mentioned above, CODP
proposed the “General Opinion on Acceptance of MSA” in July 1953, emphasizing thatJapan had a natural responsibility to improve its self-defense capability on its own initiative
and that MSA assistance should be used to systematically introduce special demand as atransitional measure until Japan achieved economic independence. The committee also
expressed its support for the conclusion of the MSA by the industry, arguing that not only
27 Keidanren Committee on Defense Production [1964], pp. 93-105. As for the position of this “TentativePlan,” Ishii [2003] also sees it as a “rearmament plan” for the acceptance of MSA assistance.
28 Defense Production Board [1964], pp. 91-105.
29 Senga Tetsuya, then secretary general of the Defense Production Board, later recalled that the “TentativePlan” was “a very brave idea to cooperate with the U.S. on an equal footing” (Kondo and Osanai [1978], p. 229).

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Post-World War II Japan’s Defense Buildup Plan
U.S. arms assistance but also extraterritorial procurement would promote the developmentof the defense industry and be useful not only for national defense but also for supplyingarms to the Southeast Asian region.
After the four MSA-related agreements were signed in March 1954, CODP proposed“Requests and Opinions Concerning the Development of the Defense Production System,”
which requested that defense production should be planned, that the goals of defense
industry development should take into consideration not only the SDF but also the renewalof equipment and the replenishment of supplies for free nations in the Far East region, andthat subsidies for research and development costs should be provided. The committee also
requested subsidies for research and development expenses, special tax measures, financial
facilities, and subsidies for long-term contracts, etc.30 As already mentioned, when the
Defense Agency was established in the same year and became the controlling organization
for the Ground, Maritime, and Air Self-Defense Forces as a self-defense force, it further
continued its building activities, calling for a longer-term and systematic “defense buildupplan” emphasizing “defense production as the base of self-defense” and support measures
for such a defense industry.
With the conclusion of the MSA and the establishment of the Self-Defense Forces, thedomestic defense industry intensified its activities towards the domestic production of
defense equipment. The resumption of equipment production was facilitated by the Korean
Special Demands, and the April 1952 revision of the Joint Ministerial Ordinance of the four
ministries regarding restrictions on the production of weapons, aircraft, and other items
made it possible to produce and repair weapons, aircraft, and other items subject to GHQ
approval. In May, the first complete weapon (4.2-inch mortar) was ordered from the U.S.
Military Procurement Department in Japan in an extraterritorial procurement. In June 1954,
the Aircraft Manufacturing Business Act was enacted, replacing the Aircraft Manufacturing
Act, whose main purpose was to deal with the actual situation in response to special
procurement demands, and which had little regulatory power and did not consider measures
to foster the development of the industry. The Act functioned as a “coordination” law thatprevented the proliferation of weakly based companies and enabled the selection offactories with a strong financial basis and technical capabilities. CODP received an
informal proposal from the Far Eastern Air Force Headquarters to produce jet fighters andtrainers for the Air Self-Defense Force in Japan on a Japan–U.S. joint sharing basis. The
government hesitated, fearing an increase in defense costs due to the shift from grant aid topayment, but CODP persuaded the government by insisting on “defense production as thebase of self-defense”, as emphasized in the “Request for the Improvement of Defense
Production Systems” submitted in March 1954. In June 1955, the government agreed to thejoint domestic production of jet aircraft (F-86-F fighters and T-33-A trainers) in Japan.31
The main contractor for the production of 300 fighter jets was Shin Mitsubishi Heavy
Industries, while Kawasaki Aircraft Industries was the main contractor for 210 trainer jets,
which were to be manufactured during the 1956-1958 fiscal years.
In August 1955, the Council Office of CODP issued an interesting opinion. It examined“Theoretical Issues Concerning Defense Production” and published a document entitled“The Necessity of Maintaining Self-Defense Forces and the Role of Defense Production,”in which it listed five points as the contribution of defense production to the national
economy. In the document, defense production is considered to contribute to the national
30 Keidanren Committee on Defense Production [1964], p. 72.
31 Keidanren Committee on Defense Production [1964] 14, pp. 125-127.

95

SHIN-ICHI SHIRATO
economy in five ways: (1) some defense production can become an export industry, (2) it
can increase employment and national income, (3) it can promote the sophistication of theindustrial structure, (4) it can contribute to the advancement of industrial technology, and(5) it can promote the export of general commodities. In this connection, Keidanren Vice
President Kogoro Uemura discussed the “Problems of Japan’s Industrial Structure and the
Defense Industry” in the “Keidanren Monthly Report” of February 1955. Criticizing theargument that the defense industry is unnecessary, Uemura emphasizes that “theestablishment of the defense industry is closely related to the improvement of thetechnological level of general industry because the recent defense requires the highest levelof technology in aircraft, electronic weapons, etc.” and that “from the viewpoint of generalindustrial technology, the defense industry is in a very important position”.32 Since thedefense industry requires the highest level of technology, the argument goes, this will leadto advances in industrial technology. However, in the case of the application of militarytechnology to civilian products, this view would be accompanied by a number of importantreservations, since in practice there are various barriers such as secrecy, mass production
techniques, and production cost reductions.33(2) Establishment of the Japan Association of Arms Industry (JAAI)
According to “The Thirty-Year History of the Japan Association of Arms Industry,” thepredecessor of this organization, the Japan Technical Production Cooperation Association,
was established in 1951. The GHQ, which was in dire straits for weapons and othersupplies during the Korean War, requested the cooperation of Lieutenant General HarujiKan, former Director General of the Army Ordnance Administration Headquarters, with aview to procuring such items in Japan. The company’s advisors included Kiyoshi Goko,
former president of Mitsubishi Heavy Industries, Keizo Shibusawa, former minister offinance, and Ryozo Asano, former president of NKK. However, because it was a group ofpeople who had been expelled from public office, it could only be organized as a jointstock company.34 The company was capitalized at 3 million yen, and its purpose was to“gather together dilapidated weapons manufacturing facilities and dispersed engineers tostand between the U.S. military, the Japanese government authorities, and privatecompanies to cooperate in the manufacture, repair, and supply of U.S. military weapons. In
1952, this organization was reorganized into the Weapons Production Cooperative
Association, a voluntary association of member organizations, and the following year into
JAAI. It had Goko as chairman, companies related to weapons production as regularmembers, civilian and former military engineers as technical members, and a mandate todeal with Korean special demand and weapons orders from the National Security Agency
and Defense Agency and to maintain relations between the Japanese defense industry. The
organization maintains relations with the Japanese government and the U.S. military byhandling Korean special procurement and weapons orders from the National Safety Agency
and the Defense Agency. At the time of its establishment, the organization was not engaged
in profit-making activities but was engaged in the investigation and collection of
information on dilapidated weapons production facilities and scattered military technology,
32 Keidanren Committee on Defense Production [1964], pp. 112-117.
33 Fujita [2018] takes a negative view of the Keidanren’s perspective, which encourages the development of“dual-use technologies” today, citing transistors, electronics technology, and NC machine tools as examples ofsuccessful “civilianization of military technology”.
34 Japan Association of Arms Industry [1983], p. 2. In 1988, the association was transformed into the Japan
Defense Equipment Industry, and in 2012, it was transformed into the Japan Association of Defense Industry(JADI), a general incorporated association, to continue its operations.

96

Post-World War II Japan’s Defense Buildup Planliaison, and coordination among dispersed engineers and in “consulting work” in response
to inquiries from the U.S. military and foreign countries concerning weapons technology.
In 1952, when the organization was reorganized as the Weapons Production Cooperative
Association, a constitution was established, and the organization’s activities included
introducing the status of weapons orders, providing guidance and assistance regardingordered items and their production methods, researching and introducing professional
engineers, planning weapons production facilities, submitting research materials,
cooperating with receipt inspections, responding to inquiries from military and government
officials who placed orders, and introducing the industry’s actual situation and offering
opinions. The objectives of the Society, which was renamed the Japan Association of Arms
Industry in October 1953, were to contribute to the promotion and development of the arms
industry and the improvement of related technologies, as well as to promote friendshipamong members. The association initially supported the supply of U.S. forces during the
Korean War, but with the establishment of the National Safety Forces and the Japan SelfDefense Forces, interest in equipment research and supply increased. Around 1954, a Tank
Committee, Underwater Weapons Subcommittee, Fire Control System (FCS) committee,
Rights of Industrial Property Committee, Radar Study Group, Pistol Study Group, Rocket
Study Group, Electronics Committee, and Ammunition Domestic Production Study Group,etc. were established. These were also in preparation for the domestic production of
defense equipment in response to the request of the Defense Agency.35
In 1953, the Arms Production Council was established with respect to the Law on the
Production of Arms, etc. In February 1954, when the Minister of International Trade andIndustry asked for advice on subsidies for the arms industry, Mr. Goko, president of JAAI,
was appointed chairman of this council, and many of the association’s technical experts
became members of the technical subcommittee established within the council. They wereinvolved in the drafting of the report, which included the early establishment of a defense
plan, ensuring economical production, maintaining production on an appropriate scale,giving consideration to the export industry, and maintaining the firearms and ammunitionindustry.36
In 1955 and 1956, JAAI was involved in the protection of corporate interests in industrial
property rights and ammunition procurement, as shown in Table 3. In response to a decline
in the number of orders, JAAI submitted a letter of opinion requesting the maintenance ofrelated companies by placing additional orders, thereby encouraging the development of
the defense industry. In the 1957-1959 fiscal year, about 140 million yen was granted as a
subsidy for the maintenance of defense industrial facilities. This was probably the result of
these opinion letters.
In addition, from 1956 to 1961, JAAI was commissioned by the Defense Agency andother government agencies to prepare drafts of standards for equipment and other products.
In this respect, it can be seen that JAAI was building a close relationship with government
agencies and was taking on the task of responding to technological advances in weaponry
and other products.
(3) Domestic defense production after primary DBP and the functions of CODP andJAAI
It will be only after the Japanese government begins to decide on the DBP that the National
35 Japan Association of Arms Industry [1983], p. 6.
36 Japan Association of Arms Industry [1983], p. 7.

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SHIN-ICHI SHIRATO
Defense Council and the Cabinet meeting will be able to consider and decide on defense
force development in a somewhat systematic manner. In order to stably provide defense
equipment indispensable for self-defense reinforcement on its own, the Japanese
government was required to spend a large amount of money from the national budget. 4
DBPs were formulated from 1958 to the 1970s. Defense equipment procurement trends
were as shown in Table 4. The equipment in the founding period of the SDF was heavily
dependent on U.S. grant aid.37
Table 4 Procurement Trends by Fiscal Year, Long-Term Plan, and Procurement Methodclassification

Domestic Procurements(A)amountof moneyfiscalyear

propotion
(%)
A/D

A/F

General Import(B)amountof money

FMS(C)

propotion
(%)
B/D

B/F

amountof money

propotion
(%)
C/D

C/F

subtotal

Grants-in-Aid(E)amount(D=A+B+C) of money

propotion
(%)
E/F

total
(F=D+E)

1950-57

241,519

95.3

39.6

9,477

3.7

1.6

2,499

1.0

0.4

253,495

356,863

58.5

1st DBP(1958-60)

278,913

91.0

62.4

10,8603.5

2.4

16,8485.5

3.8

306,621

140,49431.4

610,358
447,115

1961

70,249

85.1

64.7

6,311

7.6

5.8

5,972

7.2

5.5

82,532

26,08024.0

108,612

2nd DBP(1962-66)

578,135

87.8

81.6

42,397

6.4

6.0

38,2035.8

5.4

658,735

49,7107.0

708,445

3rd DBP(1967-71) 1,282,897

91.8

91.6

66,202

4.7

4.7

47,833

3.4

3.4

1,396,932

3,275

0.2

1,400,207

4th DBP(1972-76) 2,158,818

93.0

93.0

100,123

4.3

4.3

61,6562.7

2.7

2,320,59700.02,320,597

91.9

82.4

235,370

4.7

4.2

173,011

3.4

3.1

5,018,912

576,42210.3

5,595,334

Total

4,610,531

・The amount of the grant aid was recorded based on the amount received.
・FMS：Foreign Military Sales. The grant aid includes the loan of vessels. Receipt of the grant ended in
FY1969.
・Source: FY1975 financial results (House of Councillors Accounts Committee Research Office).
・Source: Reproduced from figures in Nagamatsu [1979], pp. 62, 63.

U.S. aid is shifting from grant aid to paid aid, but in terms of amount, it does not accountfor a large proportion of the total. The percentage of domestic procurement has expanded
dramatically. In primary DBP, U.S. grant aid has been greatly reduced, and as a result,domestic procurement now accounts for more than 60% of the procurement value, with
U.S. grant aid ratio accounting for only 31% of the total. In the case of secondary DBP,
domestic procurement now accounts for more than 80% of total procurement, indicatingthat domestic defense production has begun to take off in earnest. However, the scale ofdomestic procurement does not imply independence in terms of weapons and militarytechnology, as Japan is heavily dependent on the U.S. for advanced technology and fighter
aircraft..38 In addition, even if there is a price increase, taking into account the fact thatdomestic procurement amounts for primary to quaternary DBP have each more thandoubled or increased significantly over the previous period, it is thought that there has beena remarkable development of the domestic defense industry in the background. We will
discuss this point later and examine the role of CODP and JAAI in each period.

37According to Keidanren Committee on Defense Production [1964], p. 169, the U.S. arms aid (grant aid) toJapan amounted to 345.5 billion yen during the period 1951-1957, of which 108.7 billion yen was for equipment,
95.2 billion yen for the Ground Self-Defense Force, of which 62.7 billion yen was for 170 ships and 13.4 billion
yen for 163 aircraft, and 54.3 billion yen for the Air Self-Defense Force. This indicates that equipment during
this period was heavily dependent on this grant aid. Note that the amounts differ slightly from the grant aid
amounts in Table 3.
38 In the case of domestic procurement and production, since it includes licensed domestic production of
products developed in foreign countries in addition to products based on proprietary technologies, thetechnological dependence cannot be determined by the amount of procurement alone.

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①Primary DBP period: 1958-60
Primary DBP began in 1958 after the withdrawal of U.S. ground forces in Japan wascompleted. As shown in Table 2, the first emphasis during this period was on air defense interms of equipment, and CODP also submitted a draft proposal, “Request for the
Establishment of Basic Policies for the Development of the Aircraft Industry” in 1957, andin 1958, CODP also submitted a proposal to the Diet, “Requesting the Submission of an
Aircraft Industry Promotion Bill to the Diet” (Table3). The former called for theestablishment of a long-term plan, the establishment of measures for the export of aircraft,and special measures for their development in the areas of finance, taxation, subsidies fortesting and research, proper cost accounting, and the introduction of technology, while thelatter also called for the development of a law to promote the aviation industry for thedomestic production of aircraft, which led to the promulgation of the law in May of thesame year. CODP actually promoted domestic production of medium-sized aircraft, and theresults became evident during the 2DBP period.
Next, in 1958, CODP called for the Defense Industry Study Group to be formed bydefense industry-related organizations to promote the domestic production of defense
equipment in general in response to U.S. aid to Japan being paid for. This study group
aimed to analyze the current status and future prospects for domestic production in eachsector of the defense industry, and to contribute to the formulation of the government’s
annual plan. In addition to CODP, JAAI, the Japan Aviation Industry Association, and the
Guided Missile (GM) Research Association participated in this study group, and within thisstudy group, the General Coordination Committee, the Policy Committee, and theTechnical Committee were established. The following subcommittees were establishedunder these committees: Aviation(studies on domestic production of P2V anti-submarine
patrol aircraft, intermediate jet training aircraft, large helicopters, FX fighters, etc.);
Weapons (armouring of the 7th Mixed Group, development of land-based equipment andmass production system, continued development of weapons for maritime forces and studyof production system); Missiles (study on research and basic trial production of 28 relatedcompanies, which had been almost undeveloped); Electronics (study on research anddevelopment system of code analyser, secret communication device and its analyser, radar,navigation aid device, etc.); Naval vessels (study of building submarines, missile-carrying
patrol vessels, and helicopter carriers) and Fuel. 39 The contents of these studies were
submitted as an interim report in 1959, and it is believed that they were referred to in theannual plan of the Defense Agency.
In 1959,the Market Measures Committee was established within CODP, consisting of thepresidents of 10 trading companies, including Mitsubishi Corporation, Mitsui & Co.,Marubeni Corporation, Itochu Corporation, and the Machinery Center for Trade andInvestment. This Committee considered the development of overseas markets and special
export measures to overcome bottlenecks in the weapons and defense equipment industry,
such as high-mix low-volume production and rapid obsolescence. Part of the results of thestudy was submitted as the “Opinion on Weapons Exports” in 1962, and after discussion at
the Defense Equipment Domestic Production Roundtable, it was proposed as a reference
opinion to the prime minister, relevant ministers, and the LDP’s Political Affairs ResearchCommittee.40
In addition, members of CODP and the GM Council (see below) accompanied the
39 Keidanren Committee on Defense Production[1964], pp. 148, 172-181; Japan Arms Industry Association[1983], p. 8.
40 Keidanren Committee on Defense Production[1964], pp. 198-206.

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SHIN-ICHI SHIRATO
Liberal Democratic Party (LDP) survey team and travelled overseas under the jurisdictionof MITI to investigate the international military situation in 1959 and the rocket industry in
1960. They reported on the current status of international joint R&D and joint production,
as well as problems in importing finished products and licenced production.41
By the way, as already mentioned, JAAI, circa 1956-61, was commissioned by the
National Defense Council to survey the procurement of equipment. At the same time, JAAI
has been commissioned by the Japan Defense Agency and other government agencies todraft standards for defense equipment and devices. Although JAAI describes itself as “theonly industrial organization in charge of domestic arms production in both name andreality,” it can be seen that as the domestic production of defense equipment expands, JAAIis taking on the task of keeping up with technological advances in weapons and otherequipment. While it played an important role in following up on the technical aspects ofdefense equipment, it was also a member of the above-mentioned Defense Industry Study
Group, and in 1960, jointly with the CODP, it was involved in demand activities related tothe profitability of defense industry management, such as the “Request for a Long-term
Lump-sum Contract System for Weapons” (Table 3).42②Secondary DBP period: 1962-1966
The Kishi cabinet resigned in July 1960 due to the Security Riots. The drafting of DBP
came to a standstill due to political instability, but DBP was officially decided in July 1961.
We will review four characteristic matters in which the industry was involved in defense
industrial policy during this period.
First, as Table 4 shows, the ratio of U.S. grant aid to Japan has declined sharply, theamount of U.S. paid aid has increased sharply, and the ratio and amount of domestic
procurement have increased sharply. In response, the industrial sector has been lobbying
the U.S. to avoid reductions in extraterritorial procurement and U.S. aid to Japan and has
demanded that the government substitute domestic production for foreign procurement. In
addition to the opinion submitted by JAAI in 1964, as shown in Table 3, the industry has
also lobbied the U.S. government and business community for good measures against theprohibition of the exchange of military vehicles in FY1963 and thereafter, which had been
continued since FY1957 in the U.S. fiscal year.43 The exchange of military vehicles is
structured as follows: procurement of new Japanese vehicles by the U.S. military → freetransfer to the Self-Defense Forces → return of used vehicles by the Self-Defense Forces→ refurbishment by the U.S. military and provision to Southeast Asian countries.
Next was the promotion of domestic aircraft production. In 1957, due in part to the highcompatibility between military and civilian aircraft, the Japan Transport Aircraft Design
and Research Association began research on the design of a medium-size transport aircraft.
In 1959, the Japan Aircraft Manufacturing Corporation was established with a capital of
500 million yen as a joint public-private investment. The capital was increased to 4.9
billion yen. Kawasaki Aircraft, Shin Mitsubishi Heavy Industries, Shin Maywa, and Fuji
Heavy Industries completed the major parts of the aircraft, except for the engine, propeller,
and other parts, which had to be imported. This was the first domestically produced
41 Keidanren Committee on Defense Production [1964] pp. 222, 226, 227, 230-235. Already at this stage, theadvantages of international joint development and production and the problems of importing finished products or
producing under licence are pointed out, but no mention is made of constitutional restrictions.
42 Long-term contracts are realized in the 1962 budget process. Keidanren Committee on Defense
Production[1964], pp. 157, 160 and Japan Association of Arms Industry [1983], pp. 3, 11.
43 Keidanren Committee on Defense Production[1964], pp. 191-196.

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aircraft, the YS-11, which was purchased and put into practical use by All Nippon Airways
and the Defense Agency Secondary DBP.44
Furthermore, the introduction of anti-aircraft equipment was considered a new plan forthe secondary DBP period, and surface-to-air guided missile (Nike and Hawk) units were
deployed at the end of the secondary DBP period. The Guided Missile Committee wasestablished in 1953 within CODP as a specialized committee for weapons, aviation, andelectricity, and was followed by research and study by the GM (guided missile) Advisory
Council, which included government agencies, JAAI, and the Japan Aerospace Industries
Association. After research and study by the GM (guided missile) Advisory Council,
formed in 1957 by 41 member companies from the weapons, electronics, and aviationindustries under the guidance of the Defense Agency’s Equipment Bureau, the equipment
was provided by the United States under a grant and cost-sharing licensed production
system.45 Then, domestic production of Nike and Hawk began in FY1966 through licensed
production. The GM Council also took charge of space development, and in 1964, it was
renamed the Japan Rocket Development Council. It was dissolved in 1974 on the grounds
that it had accomplished its mission. The Japan Aerospace Industries Association tookcharge of space development, and JAAI took over military missile development.46
Finally, it should be noted that JAAI underwent a certain change in its activities during
this period, abolishing technical membership and replacing it with associate membershipand individual membership in a 1959 revision of the Articles of Incorporation, as thenumber of weapons-related engineers increased within corporate member companies and
JAAI no longer needed to provide technical guidance. In October 1962, the association
invited Mr. Kono, president of Mitsubishi Nippon Heavy Industries, Ltd., as its chairman,
and in 1964, it established the Operations Committee as an advisory body to the chairman
to strengthen cooperation with the Defense Agency, the Ministry of International Trade andIndustry, and other government agencies closely related to the defense industry. In 1964,
the company established the Operations Committee as an advisory body for the chairman
to strengthen cooperation with the Defense Agency, MITI, and other government agencies
closely related to the defense industry. As seen in Table 3, the number of opinion letterssubmitted to government agencies has increased since then. They have demanded “bridging
production” to fill the gap that may occur between secondary and tertiary DBP and to
improve subsidy amounts that are less than the actual R&D costs of companies from thesurvey on the actual status of secondary DBP. 47③ Tertiary DBP period:1967-71
The tertiary DBP pointed to the improvement in the domestic technology level, appropriate
domestic production of equipment, and emphasis on anti-submarine and air defense
capabilities. As shown in Table 4, domestic procurement of equipment has exceeded 90%,and some assess that “we have entered the full-scale phase of ‘independent’ equipment”.48
Three points regarding the involvement of industry in defense policy should be reviewed
here.
The first point is the policy of increasing anti-submarine and air defense capabilities. As
seen in Table 2, the actual amount for procurement from the secondary DBP to the tertiary
44 Keidanren Committee on Defense Production[1964] pp. 207-215.
45 Keidanren Committee on Defense Production[1964], pp. 136-146; Kondo and Osanai [1978], p. 264.
46 Japan Association of Arms Industry [1983], p. 86.
47 Japan Association of Arms Industry [1983], pp. 11-13.
48 Kihara [1994], p. 104.

101SHIN-ICHI SHIRATO
DBP (central procurement) exceeded 1 trillion yen, an increase of approximately 2.3 times,
with an extremely large increase of 3.6 times in aircraft purchase expenditures. Although
not shown in the table, the aircraft purchase cost for tertiary DBP was 384.3 billion yen,accounting for 35% of the central procurement cost and far exceeding other items. In theaviation sector, the Maritime Self-Defense Force’s PS-1 anti-submarine amphibian(formally introduced in 1970) C-1 jet transport aircraft (under research and development),
T-2 advanced jet trainer aircraft (research and development started in 1967), P-2J antisubmarine patrol aircraft (deployed in 1969), and F-4EJ fighter aircraft (next main fighter
aircraft; licensed production started in 1969) were all introduced during this period.
Research and studies were also being conducted on the PXL anti-submarine patrol aircraft(the next anti-submarine patrol aircraft, yet to be decided).49 And in terms of increasing air
defense capabilities, the domestic production and deployment of Nike and Hawk missiles,
introduced in the final phase of the secondary DBP, became a key issue. As shown in Table
3, JAAI continued to actively request the Defense Agency to secure a budget, place orders
based on a long-term plan and long-term lump-sum contracts, develop future-oriented
technologies, and secure a budget for such development, while at the same time demanding
the promotion of domestic production of Nike and Hawk.50 In 1968, partly as a result of
these efforts, the Japanese government approved the “Technical Collaboration Agreement
for the Design and Manufacture of Nike Hercules Missiles” between Mitsubishi Heavy
Industries and McDonnell Douglas, and the “Technical Collaboration Agreement for the
Manufacture of Hawk Systems” between Mitsubishi Electric and Raytheon Technologies of
the U.S., and licensed production was started in Japan. As a result, procurement of guided
weapons now accounts for 7% (about 75.5 billion yen) of the major items in thecomposition of tertiary DBP in Table 2, approaching the composition of ships and weapons.
Second is the issue of R&D and prototype support, as well as the costing of defense
equipment. Since the conclusion of the MSA, the industry has advocated “defense
production as the bace of self-defense capabilities” and has demanded that the government
provide adequate support for R&D. However, tertiary DBP required equipment that
required advanced technological capabilities, such as aircraft and guided weapons
production, and the defense industry was also required to increase its R&D capabilities. In
response, in 1969, JAAI and CODP, in cooperation with other defense production-relatedorganizations, conducted a survey of the actual situation after the inauguration of the
Tertiary DBP, focusing on the Defense Agency’s technological R&D in fiscal 1967 and1968. As a result, it became clear that the private sector’s share of R&D expenditures was
extremely high, particularly for weapons, missiles, and vehicles. Considering the fact thatthe ratio of actual procurement to prototypes in Table 2 has decreased for the Tertiary DBP,
and that the increase in the amount is not significantly different from the increase in the
total amount, the reality emerges that despite the publicity about the importance of R&D,
prototypes and R&D expenditures have not increased. In this regard, JAAI calls forsecuring a budget that can be allocated to R&D expenses51 and, as shown in Table 3, for“appropriate contract prices” based on “budgets set in line with actual conditions and costaccounting commensurate with reality” in accounting for defense equipment procurement.52
As a reason for this, they pointed out that while rising prices and labour costs are affecting
production costs due to inflation during a period of rapidly rising GNP, weapons are special
49 Kondo and Osanai [1978] pp. 276, 288, 289.
50 Japan Association of Arms Industry [1983], pp. 13, 14.
51 Japan Association of Arms Industry [1983], p. 17.
52 Japan Association of Arms Industry [1983], p. 15.

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Post-World War II Japan’s Defense Buildup Planproducts for which companies themselves cannot develop their own markets, and cost
reductions through increased production are not expected.
The third is about “the Three Principles on Arms Exports”, as stated by Prime Minister
Sato in his 1967 Diet speech. Even after the Korean special procurement, overseas arms
transfers peaked at 15 billion yen in the mid-1950s, and exports continued to some extent
since 1963, due to extraterritorial procurement and new special procurements. However,
the Three Principles on Arms Exports, which may have reflected anti-Vietnam war
sentiments, led to the implementation of restrictions on exports. In 1968, since there wereno restrictions on plants, the company exported ammunition manufacturing equipment to
the Philippines as postwar compensation. On the other hand, a significant portion of
weapons manufacturers switched to civilian demand during the process of rapid economic
growth, and companies that continued to produce weapons also shifted their focus to
producing weapons for the Self-Defense Forces. As a result, they appear to have remained
static with regard to these three principles.53 JAAI, which had stipulated in its articles ofincorporation “matters related to the promotion of arms exports” as its business, “decided
that its basic policy was to follow government policy, effectively abandoning any
expectation of arms exports.”54 Later, in 1976, the Miki cabinet expanded the scope of thethree principles and the areas to which they applied, but at the same time, it graduallyhollowed out the arms export regulations by narrowing the category of “arms” and creating
exceptions that exempted them from application.
④ Quaternary DBP period: 1972-76
Defense Minister Nakasone, who had been advocating self-defense partly because of the
Nixon doctrine and the revision of the Japan–U.S. Security Treaty in 1970, emphasized“exclusive defense” as a basic policy while modernizing land-based equipment, domestic
production of equipment, and emphasizing R&D, with the view that equipment
development and production should be “in principle limited to the home industry”. He wasperhaps a politician who was favourably disposed to the defense equipment industry.
However, in the development of the defense industry, he mentioned the “introduction of
appropriate competition principles,” and JAAI immediately issued an order that “theintroduction of competition principles should be handled with caution.55 In this section, we
will examine the trends in the domestic industry and production of equipment, which wereemphasized in the defense policy.
In 1970, when the fourth DBP period was under consideration, JAAI submitted a request,
as shown in Table 3. In it, they requested the consideration of an appropriate budget and reasonable contract prices, with emphasis on R&D to promote domestic production, theformulation of a long-term plan to stabilize defense production, and the improvement of anadvance payment system to deal with the increasing size and length of procurement.56
Although these were matters of concern to the defense industry, it can be said that theserequests were made out of consideration for the economic situation at the time, when
labour costs and prices were rising, and because of the increase in large-scale projects foraircraft and other equipment. The requests were also because of the increasing number of
53 Tetsuya Senga, who was secretary general of the Defense Production Committee, looks back on those days
and states that the focus was on aircraft and weapons production for the SDF and that “enthusiasm for developing
export markets had waned” (Kondo and Osanai [1978], p. 256).
54 Japan Association of Arms Industry [1983], p. 32.
55 Japan Association of Arms Industry [1983], p. 15.
56 Japan Association of Arms Industry [1983], p. 18.

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SHIN-ICHI SHIRATO
cases in which production continued for several rounds, and the companies that received
orders therefore asked to take good measures to continue production. In the fourth DBP
period of the war against the dollar, oil shocks, and other challenges, there was a reductionin the amount of equipment ordered, and on behalf of the companies that received orders,the Procurement Implementation Headquarters was often asked to take measures to prevent
such reductions.57 As shown in Table 2, R&D was emphasized during the fourth DBP
period, as indicated by the increase in expenditures for prototypes, but according to asurvey conducted during the fourth DBP period by five industry organizations, including
CODP and JAAI, the number of direct man-hours for weapons-related manufacturing andrepair decreased to 75 in FY1976 on an index of 100 for FY1972, and the number of direct
man-hours for missile and rocket fields in particular decreased to 55, and in the
pyrotechnics field, 49, a significant decrease. JAAI was aware that the fourth DBP period“clearly fell behind in the second year due to the unforeseen circumstances of the oil crisis”
and strongly urged that the Defense Agency’s Basic Defense Capability Concept reflect
measures to formulate defense production and R&D capabilities. 58
Domestic production of aircraft was also underway during this period. The F-4EJ fighter
aircraft was produced as planned, but the PXL, the next-generation anti-submarine patrolaircraft, was “returned blank” at the National Defense Conference in October 1972, despite
the fact that both industry and the Defense Agency had a policy of domestic production
until 1971, and five years later it was officially decided to adopt Lockheed’s P-3C. The
P-3C was adopted by the Defense Production Board in 1974. Although the Defense
Production Board had requested domestic production in 1974 in such opinion pieces as“Proposal for PXL Development and Production (Memorandum)” and “Security andEquipment Acquisition Methods,” the P-3C ended up being imported. This process haspointed to technical problems and uncertainties that cannot be explained simply as ameasure to reduce Japanese dollars in consideration of Japan–U.S. relations.59

Summary and Future Issues
The beginning of the Cold War and the outbreak of the Korean War led to a major shift in
U.S. occupation policy, moving Japan from demilitarization and restraining economic
recovery to promotion of reconstruction and rebuilding of military power. Symbolically,
the U.S. withdrew from the policy of designating munitions factories and industrial
facilities for compensation and removal, and began to actively utilize the former militaryarsenals and other facilities by selling them to weapons producers. Then, the U.S.
57 At the National Defense Council and Cabinet meetings at the end of 1970, 31 tanks, 60 armored vehicles,
and 70 self-propelled guns for the Ground Self-Defense Force, 17 naval vessels for the Maritime Self-Defense
Force, and 42 fighter aircraft for the Air Self-Defense Force were excluded from the initial targets (“The Fourth
Defense Force Development Plan” (4th Defense), https://www.asagumo-news.com/hbdl/bouei/1 -4jibou/4ji-bou.
pdf).
58 In 1977, CODP published “Analysis of the Current Status of Japan’s Defense Industry and Future
Responses”, a survey of 67 companies in the industry conducted by Japan Association of Arms Industry , CODP,
Japan Aerospace Industries Association, Japan Shipbuilding Industry Association, and Japan Electronic
Machinery Manufacturers Association during the fourth defense period, which served as one of the bases for therequest (Japan Association of Arms Industry [1983], p. 23).
59 Senga questioned the “blank slate” return at the National Defense Council, saying, “It seems as if it was
decided by the voice of heaven. Tomiyama [1979] also questioned the selection process. Furthermore, NHK’s“Unsolved Cases” Reporting Team (2018) has approached the core of the matter through interviews with those
involved at the time. Similar opaqueness is also pointed out in the selection of the F-104 (Kondo and Osanai[1978], pp. 261, 309).

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Post-World War II Japan’s Defense Buildup Plan
recognized the restoration of Japanese sovereignty by concluding the Peace Treaty. The
Japan–U.S. Security Treaty and the MSA Agreement allowed U.S. forces to be stationed inJapan and the U.S. has mandated an increase in self-defense capabilities in line with U.S.
desires. The U.S. initially provided many weapons for the creation of the Japan SelfDefense Forces and the defense equipment buildup.
The U.S. government provided the loans free of charge, but to curb the outflow of dollars,
it switched to paying for the loans, Foreign Military Sales and then to exporting them. The
Japanese government, on the other hand, steadily enhanced its defense capability from the
1950s to the 1970s, the Primary DBP through the Quaternary DBP.
In response to this policy shift towards increased self-defense capabilities, Keidanren, thecenter of Japanese industry, responded to this policy shift by taking advantage of thespecial demand and the business opportunity of upgrading the SDF’s defense capabilities toachieve economic recovery and growth through a tie-up with the United States.
Keidanren organized the CODP, which was led by the heavy industry sector closely
related to weapons production. CODP actively lobbied GHQ, the U.S. military in Japan,
and the Japanese government to provide the JSDF with free provision of arms, to utilize“wheat funds” in accordance with Section 550 of the U.S. MSA Agreement, and to pursue
possible arms exports to Southeast Asia. CODP often emphasized “self-defense” anddeveloped a request for the maintenance and expansion of “defense production as the baseof self-defense”. Looking at the activities of CODP, as an industry group, it lobbied more
actively directly to the U.S. military in Japan and GHQ until the Defense Agency as anadministrative structure was better organized in terms of organization and personnel.
JAAI, which was organized by the United States Armed Forces, also provided militarytechnical assistance to supply the U.S. military and served as a research and study
organization that provided administrative support to the government. JAAI was alsochanging its character from a military industry development organization to an organizationthat represented the military industry’s interests, while enhancing defense equipment andstabilizing the defense industry.
By the way, as already pointed out, Keidanren insists on the importance of the defense
industry’s technological leadership in the civilian demand production sector. As mentionedin Minoru Fujita’s criticism of this argument, more careful empirical analysis will benecessary since the technological interdependence between military and civilian demandseems to have deepened since the 1990s, when development in the ICT aspect has become
more prominent.
I also mentioned that with regard to arms exports, the Sato cabinet advocated the threeexport principles in 1967, and export controls were tightened under the Miki cabinet. Whenthese issues were raised in the Diet, Keidanren and JAAI did not express a clear stanceagainst them. This was due to the strength of the anti-Vietnam War movement and to public
opinion for peace. This is probably reflected in the fact that in the 1960s and 1970s, theperiod covered in my paper, public support for the Japanese Constitution, which stipulated
the non-preservation of war potential, greatly outweighed opinions calling for its revision.60
For the defense industry, the fact that demand is limited to the domestic market means thatsales channels are limited, which should be a major constraint on corporate management
unless there is a very large domestic demand. As mentioned at the beginning of this paper,
the subsequent process has moved in the direction of lifting the restrictions, and this point
must be examined again.
60 See Miwa and Sakaiya [2020].

105SHIN-ICHI SHIRATO
How was the Japan–U.S. relationship regarding the Japan Self-Defense Forces? They
were established and DBPs were promoted from the 1950s to the 1970s. As Japan’s militaryforce was rebuilt under the leadership of the U.S., much of the equipment was initiallyprovided free of charge by the U.S., but as Japan’s military buildup plans progressed in linewith the MSA agreement, the equipment was switched from grant aid to export, and“domestic production” was promoted, reflecting the interests of domestic industrial groups.
However, even with the production of parts and equipment at domestic factories and theincreasing rate of domestic production in the price structure, “domesticization” was far
from being technologically independent, as fighter aircraft and other equipments withadvanced technology were mainly produced under license and important parts were black
boxed. In addition, the U.S. government’s consent is basically required for the selection of
aircraft models, and Japan’s passive position in defense equipment is clear. The cabinet’s
decision in the 2010s to allow the exercise of the right of collective self-defense, mentioned
at the beginning of this paper, appears to be an extension of this policy, but further study isneeded to verify this.
Furthermore, how did the domestic arms industry develop? During this period, leading
companies, such as Mitsubishi Heavy Industries (three heavy industries merged in 1964),
Kawasaki Aircraft (Kawasaki Heavy Industries after 1969), Fuji Heavy Industries(Subaru
Corporation after 2017), ShinMaywa Industries, Mitsubishi Electric, Toshiba Corporation,
Ishikawajima-Harima Heavy Industries, and Komatsu Manufacturing, grew as leaders in
the military industry, producing aircraft, naval vessels, special vehicles, and missiles. It isalso clear that these companies have steadily improved their aircraft manufacturing
technologies, as seen in the completion of the YS-11, a medium-sized transport planejointly produced by domestic companies, and the XT-2, a supersonic advanced training
plane by Mitsubishi Heavy Industries, Ltd. Many companies switched from military
production to civilian production after the Korean War and subsequent sharp decline in
special procurement demand, but these leading companies have continued to produce
weapons while expanding civilian production within their companies.61 The study of therelationship between civilian and military production within their companies is a futureissue.

61 Sawai [2018] mentions examples of continued weapons production at Osaka Metal Industries (renamed
Daikin Industries in 1963) and Komatsu Ltd.

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Post-World War II Japan’s Defense Buildup Plan
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Yoshitsugu Kosuke [2018], Nichibei Anpotaisei Shi (History of the Japan–U.S. Security Treaty System),
Iwanami Shoten.
NHK “Unsolved Cases” Reporting Team [2018] Kieta21okuen wo oe- rokkido Jiken 40nenme no Sukuhpu(“Chasing the Missing 2.1 Billion Yen - The Lockheed Case: The 40th Scoop,” Asahi Shimbun
Publications.
Takeda Haruhito [2019], Nihon Keizai Shi (Economic History of Japan), Yuhikaku.
Koketsu Atsushi [2020], Omoi Tobira no Muko ni- Rekishi Wakai to Senzenkaiki no Soukoku- (Beyond the
Heavy Door: The Conflict between Historical Reconciliation and Prewar Regression), Midorikaze
Shuppan.
Yokoi Katsuhiko (ed.) [2021], Reisenki Ajia no Gunji to Enjo (Military and Aid in Cold War Asia), Nihon
Keizai Hyoronsha.
Asagumo Shimbun [2022] (viewed) Bouei Handobukku Daunrodo (Nihon no Boueikeikaku) (“Defense
Handbook Download (Japan’s Defense Planning)”). https://www.asagumo-news.com/hbdl/bouei/boueimenu.html

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List of Papers
Adachi Hiroshi [1981], “Trends in the Japanese Military Supply Industry,” Nagasaki Sogo Daigaku Kiyou(General University Bulletin), Vol. 22, No. 1.
Asai Yoshio [2003], “Special Demand in the 1950s (1),” Seijo Daigaku Keizaikenkyu (University Journalof Economics), vol. 158.
Ishii Susumu [2003], “MSA Agreement and Japan: Formation of Postwar Economic System (1),”Gakushuin Daigaku Keizaironsyu (Gakushuin University Keizai Ronshu), Vol. 40, No. 3.
Ishii Susumu [2004], “MSA Agreement and Japan: Formation of Postwar Economic System (2),”Gakushuin DaigakuKeizaironsyu (Gakushuin University Keizai Ronbunshu), Vol. 40, No. 4.
Nakajima Shingo [2004] “IV The History of the National Defense Agency and Self-Defense Forces andOral History: Ka3ihara Osamu Oral History.
Focusing on -, Nenpo Seijigaku (Annual Report of the Japanese Political Science Association), Vol. 55,
Chikuma Shobo.
Yo Inman [2006], “The Historical Significance of ‘Enterprise Development’ in Japan during theReconstruction Period: A Case Analysis of the Automobile Industry,Tokyo Daigaku Keieikyouiku Center
Discussion Paper “ Tokyo COE Monozukuri Management Research Center, Discussion Paper, No. 77,
Center for Management Education, University of Tokyo.
Study Group on Defense Production and Technology Infrastructure [2012] “Final Report of the Study
Group on Defense Production and Technology Infrastructure - Toward the Construction of a ‘Living
Strategy’”. Available at: https://www.mod.go.jp/atla/soubiseisaku/soubiseisakuseisan/2406houkoku.pdf
Sawai Minoru [2018] From Special Demand Production to Defense Production: The Case of Osaka
Prefecture, Bulletin of Nanzan University, Academia, Social Sciences Ed. no. 14.
Fujita Minoru [2018], The Civilianization of Military Demand and the Militaryization of Civilian Demandin Postwar Japanese Capitalism, Kikan Keizairiron (Quarterly Journal of Economic Theory), Vol. 55,
No. 3.
Aoi Yoshie [2020] “Japan’s Support to Other Countries for Building Maritime Law Enforcement Capacity:
Focusing on the Provision of Patrol Vessels and Self-Defense Force Equipment,” National Diet Library,
Research and Legislative Review Bureau, The Reference, National Diet Library. https://dl.ndl.go.jp/
view/download/digidepo_11486061_po_083104.pdf?contentNo=1&alternativeNo=
Nakajima Shingo and Hiroshi Nishida [2020], “The Role of Former Military Aviation Officials and the
Involvement of the U.S. Air Force during the Founding of the Air Self-Defense Force,” Boei Kenkyujo(NIDS Security Studies) Volume 22, Number 2, Ministry of Defense.
Miwa Hirofumi and Shiro Sakaiya [2020], “Constitutional Attitudes of Postwar Japanese: An Analysis
Using the Public Opinion Survey Accumulation Method,” Nenpou Seijigaku (Annual Review of Political
Science) 2020-I. https://www.jstage.jst.go.jp/article/ nenpouseijigaku/71/1/71_1_34/_pdf/-char/en＊This paper is an English translation of a previously published paper in Japanese (Shinichi Shirato,"Japan’s Defense Buildup Plan after World War II and the Functions of Industry Groups for
Reconstruction of Military Industries: Focusing on Trends in the 1950s-1970s Regarding the ‘Domestic
Production’ of Defense Equipment”, The Journal of Research Institute for the History of Global Arms
Transfer, No. 15, 2023).

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