BUSINESS

11th

ANNUAL REPORT,.l14iilli>

THE

RESEARCH INSTITUTE FOR
AND BUSINESS ADMINISTRATIONECONOMICS
KOBE UNIVERSITY

196k

Copyright, 1964, by The Research Institute for Economics
and Business Administration, Kobe University

KOBE

ECONOMIC & BUSINESSREVIEW
Ilth

ANNUAL REPORT/ei'tt..>.

THE

RESEARCH INSTITUTE FOR
AND BUSINESS ADMINISTRATIONECONOMICS
KOBE UNIVERSITY

I964

CONTENTS
Page

Accounting Profit and Taxable Income ..................Susumu WATANABE

1

On Integration in Economic Accounting ........................Nobuko NosE

9

Vber ,,Cost Accounting Standards" in Japan .........Tetsuo KoBAyAsHi

23

A Note on the Lohmann-Ruchti Effect ........,...............Isao NAKANo

37

Management Approach to Regional Development Problems in Japan...................,......................... Minoru BEIKA

4S

A Research Report on Odice Automation of Middle-Scale Cities
in Japan ..............,.........................................................Jiro ONo

5S

Die Geschichte der Privatisierung .......,.........................Masaya OKADA

73

Recent Trends in the Balance of Payments of Japan ...Fukuo KAwATA

83

Long-Term Finance in Post-War Japan (1) ...............Masahiro FuJiTA

93

A Chronological Table of Modern Japanese Shipping
No.1; 1600rv1799 ............,.....,......-••••.•••...••••.••••••Sei.ii SAsAKI113

The Continuous Employment of Seamen in American Shipping
Industry.......................................,......,..........Hiromasa YAMAMoTo

12S

Some Problems of the Brazilian Economic Development Plan
(1963-1965) ..........................................,........Yoshiaki NisHiMuKAi

137

1

PROFIT AND TAXABLEINCOMEACCOUNTINGSUSUMU WATANABE

I

According to our Corporation Tax Law, "the periodical income of aninland corporation is determined as the excess of revenues over expenses".
And "otherwise provided by the law", revenues mean "all facts that will leadto the increase in its net assets less liabilities except by the issuance of thecorporation's own capital shares," while expenses mean "all facts that will
result in decrease in its net assets except by the retirement of capital or the

distribution of income."

In this way, the taxable income is computed as the difference between
revenues and expenses, i.e, by means of matching expenses with revenues,
and not by comparing the net assets at the beginning and the end of the period.
It is often said that our taxable income is based on the "increase in net worth"concept, but this remark is only acceptable in the sense that our law has not

adopted the "recurring income theory" - which excludes from taxable income
non-recurring income such as capital gains or donations - but includes intaxable income all increases in net assets (except by the issuance of capital shares)

unless otherwise provided by the law. In this case, such decreases in net assets

as have the nature of income distributionlike household expenses are not taken
into account. But as far as the method of income calculation is concerned, we

use the method of matching expenses with revenues, and do not determine theperiodical income by comparing net assets between two days. The abovementioned definition of revenues and expenses only means that all sources ofincrease in net assets are factors of revenues and all sources of decrease arefactors of expenses, but it does not assert that the income is to be computedby measuring the changes of the net assets.

Thus, we have come to understand the income concept under the tax law
in outline, but we have not yet solved all problems. The net assets means theexcess of the total assets over total liabilities of a firm at a given point of time.

So, even if all sources of increase or decrease in net assets are said to be recog-

nized as revenues or expenses, we must know for certain what are assets or
liabilities in order to clarify the entire system of income accounting. It is clearthat the purchase of fixed assets or inventories as such do not give rise to any

2 SUSUMU WATANABE
decrease in net assets, but there are some problems as to whether deferred char-ges or accrued revenues can be elements of assets, or among various reserves ofa liability nature, which shall participate in the calculation of net assets. On
these points, our tax law takes the step of settling the matter according to specificprovisions, without forming concepts of assets or liabilities. For example, it

exemplifies some deferred charges to be treated as assets, laying down themethod of amortization. Accrued revenues are considered to be assets as arule, though there is no general provision for them. Generally speaking, we
may say that the extents of assets and liabilities under the tax law are going tocorrespond with those of business accounting more and more. But according
to our corporate accounting principles allowances for bad debts belong to avaluation account, while the reserve for retirement allowances and allowances
for special repairs are classed under liability reserves, but the tax law doe'share in this view. We shall return to this problem later.

Moreover, when it requires a rather long period according to the contract
to collect the price of something sold, it is open to question whether we should

treat the whole selling price as revenue during the period of the sale on the
ground that an increase in net assets has taken place (as we have a claim to thewhole price). As to installment sales and sales with conditions of deferred pay-

ment, we find a special provision in the tax law allowing the adoption of "thedue date basis" which shall be explained later. This may be due to the factthat the law has come to recognize the impropriety of applying the "increasein net worth" concept in these cases. There are no such exceptions, however,as to a sale contract according to which the price is to be collected not in install-ments but after a considerably long period.

Thus, the income accounting system under the tax law is definitely constructed in outline, but in detail it leaves many problems to be solved in order toabsorb the principles of modern business accounting.

II
In the following, accounting profit means the net income calculated inaccordance with the corporate accounting principles. The income under ac-•counting provisions of the commercial law is also a sort of business income. But

the structure of income accounting under the commercial code, though not so
obvious, seems to lay emphasis on the calculation of a profit distributable asdividends. For example, the commercial code stipulates that current assets areto be valued at their current price, when it is much lower than its original cost,

excluding the case when the current price is expected to recover up to thes notPROFITANDTAXABLEACCOUNTINGINCOME
original cost (as the original cost basis approves valuation at cost even when
the current price is lower than the original cost, except in case of physical deterio-ration or obsolescence, this stipulation is not on the original cost basis). And,

although it is allowed to list the organization expense, development expense andexperimental and research expenses as assets on a balance sheet, the commercial
code disallows appropriating for dividends the excess, if any, of the total sumof the above-mentioned expenses over the sum of capital surplus and legally
restricted earned surplus under section 288 (including the amount of profit tobe reserved for this period).

On the other hand our corporate accounting principles state as follows:"the income statement shall cover all the revenues and expenses for the period
and show net income for the period, in order to report the result of businessactivities", and "all revenues and expenses are to be reported on the basis ofreceipts and expenditures, and they are to be properly allocated to the periods
concerned." "According to the proper accounting principles, the accrual basis isapplied in the first place for the purpose of recognizing revenues and expenses,
but besides this principle, the realization princip!e is also applied, viz. revenues

and expenses which take part in the calculation of net income for the period
should be those realized in the period." "As a general rule, the accounting
evidence of realization is provided by the fact that articles or services produced

by a firm have been sold to a customer, we call this the sales basis."

In short the net income of a period is determined by deducting all realized

expenses from revenues realized in a period. But there lies no definition ofrevenues or expenses as such.
It should be noted here that the revenue in the corporate accounting principles do not concur with that of the tax law, for the accounting principles state:"A clear distinction should be drawn between capital transactions and profit

and loss transactions, and especially capital surplus must not be mixed up
with earned surplus", treating following items as capital surplus; gains on salesof the corporation's own stock (which, they assert, are properly put in capitalsurplus because, differing from gains on sale of other securities, they are partof stockholders' paid-in capital and have essentially the same nature as the pre-mium on capital.stock), donations by stockholders with the implication of addi-

tional investment, gains from forgiveness of debts admitted by stockholders
and creditors for the purpose of making up a deficit, governmental subsidy in aidof construction, customers' contributions to the cost of constructing facilities,

and gains on insurance claims applied to the reconstruction of destroyed assets.

All these items belong to revenue under the tax law, because all of themare "those facts which will lead to the increase in its net assets except by the issu-

34 SUSUMU WATANABE
ance of the corporation's own capital shares." Surely, when revenue is produced

either by gifts of private means (including forgiveness of debt) by directors,
etc. in case of the arrangement of a corporation, or by the cutting down of adeposit in a bank, and used to make up a loss forwarded (or what remains after
deducting reserves, if any, from the loss) which is not subject to application of tax

law S 9-S (which admits 5 years carry forward of loss), then no tax is levied on

the part of these revenues applied to make up the loss. This provision, however, is nothing but an exception to the general rule of treating gifts as revenue.

The corporate accounting principles assert: "There comes out no income
from capital transactions," and considers the above-mentioned sale of the corporation's own stock, etc. as belonging to capital transaction.

Here we find a wide gap between the conception of the tax law and thatof corporate accounting principles concerning capital or capital transaction.

The capital under the tax law means, as above mentioned, what has been contributed by stockholders, while the accounting principles regard as capital not
only the contribution of stockholders but also what has been offered by a third
person, so long as it should be maintained as capital of the firm in accordancewith the purpose of the offerer. Therefore, gifts in the sense of capital invested (governmental subsidies in aid of construction, etc.) will lead to an increasein net assets, which the tax law takes for revenue, but the corporate accounting
principles consider this kind of increase in net assets as a result of a capital trans-

action, and no revenue occurs.
A remarkable difference can also be found as to the interpretation of a profit

from consolidation.

The corporate accounting principles take the viewpoint of putting a profit
from consolidation (an excess of an increase in capital of the acquiring corpora-tion over the amount of net assets acquired from the absorbed corporation) as
a whole in capital surplus, saying: "Acquisition of property from the absorbed

corporation can be regarded as an investment in kind from the viewpoint of
the acquiring corporation."On the other hand, the tax law divides a profit from consolidation into thefollowing parts: (1) the amount consisting of the capital surplus of the absorbed
corporation, (2) the amount of a gain on the reduction of capital in connection
with consolidation, (3) the amount composed of the earned surplus of the absorbed corporation, (4) the amount of other parts (consisting of the revaluation profit

of assets). And each part is subject to different treatment. Namely, (1) and(2) are not treated as revenue but as capital surplus, (3) is not put in revenue

but in earned surplus, and (4) is made an object of taxation as income. Sucha distinction is necessary in order to separate capital surplus which is free from

ACCOUNTING PROFIT AhTD TAXABLE INCOME 5
income tax even when returned to stockholders, from earned surplus (which gives
rise to the problem of income tax and dividend credit when distributed to stockholders), and to impose a tax on the revaluation profit of assets (for the writing

up of fixed assets will lead to an increase in the depreciation charge of theacquiring corporation, and the writing up of inventory will add to the cost of
sales). Therefore, it would be impossible for the tax law to admit the viewpointof the corporate accounting principles without dealing with these problems.
It is also to be noted that our revised commercial code provides that of a
profit from consolidation the amount corresponding to the earned surplus of theabsorbed corporation•may not be put in capital surplus (but in this case theamount of the earned sur'plus of the absorbed corporation shall be included in

the legally restricted earned surplus of the acquiring corporation).
''

The above-mentioned differences between business income and taxable

income is attributable to a divergence of capital concept (and so the concept

of income), and must be said to be a fundamental problem. In other words,
they are not differences in timing of revenues and expenses (if so, the total ofrevenues or expenses of both would turn out to be the same in the long run).
The disparity is absolute, for a capital surplus on the one side is treated as an

item of revenue on the other.

III
The basis of the tax law that determines the time of revenue recognition
is considered to be the "kenrikakutei-shugi" (a kind of accrual basis). Thisconsideration has a basis on the following provisions. The notification concerning the corporation tax law provides: "a profit or loss on sale of an asset

shall be included in the revenue or expenses of the period in which the sales
contract comes into effect, without regard to the registration of the transfer of title,or completion of the payment of the price. But as far as a sale of merchandise
is concerned, the profit or loss may be included in the revenue or expenses ofthe period in which the goods have been delivered." And according to thepersonal income tax law, an income from an enterprise means the gross receiptsof the year minus necessary expenses, and "the amount of gross receipts means

the sum of what are to be received."
It will be proper to interpret that the above provision of the notification

assumes the existence of objects of the sale and that "the day when the sales
contract comes in effect" means the time when the title of the object has beentransferred. For when the objects of sale are neither existent nor specified,
it-is impossible to transfer its title, and even if the sales contract has come intQ

6 SUSUMU WATANABE
force, there is no transaction in the economic sense and no increase in net as-

sets, so long as the transfer of the title has not been made. When revenue
accrues from an offer of services coming to an end in a short time, we understandthe revenue will be recognized on the basis of its completion.

On the other hand, "An opinion on the adjustment between the Tax Law
and Corporate Accounting Principles" says: "Since the tax law adopts the legal
basis of revenue recognition, the meaning of a sale tends to be interpreted asa transfer of title in a legal sense. But the selling activities in a business transac-

tion have so complex forms and implications that it is desirable for the tax law
not to adhere to the legal basis but to admit as a basis of revenue recognition
those facts which we generally accept as an execution of a sale from the viewpointof a sound commercial practice." But we think the tax law is required to establish such a legal basis as a general principle applying to all cases not otherwise

provided by the law so that it may treat all taxpayers equitably.
In case of a sale of merchandise, however, there occurs no practical problem,since it is allowed to record the profit or loss in the period in which the delivery

has been made.
The legal basis under the tax law gives rise to a difference from the corporate accounting principles as to the recognition of revenue on special formsof sale, too.

For instance, under the tax law a profit or loss on commission sale "is tobe treated as the revenues or expenses of the period in which the consignee has

sold the consigned goods. Accordingly, it is necessary to ask for the accountof sales concerning the consigned goods at least once in every period." On
the other hand the corporate accounting principles state: "As to consigned goods
there are cases, different from usual sales of goods, where it is diMcult to apply
the ordinary sales basis for the recognition of revenue on the sale, and so it isadmitted to take as the basis of revenue realization, the day when the accountof sales on the consigned goods sold has been received by the consignor." Thebasis taken by the tax law may be justified from the viewpoint of the legal natureof consignment. For if the sales revenue is allowed to be credited on the day
when the account of sales was received, it would leave room for the manipulation of the timing of revenue recognition.

In case of the installment sale, the tax law adopts "the due date basis,"while the corporate accounting principles adopt the collection basis. According

to the due date basis, the amount to be received during the present year is tobe credited to revenue, even if that amount has not yet been collected. Strict
application of the legal basis would lead to reporting all revenue on installment

sales in the period when the goods were sold (delivered), but the tax law has

ACCOUNTING PROFIT AND TAXABLE INCOME
adopted the due date basis, regarding each due date as the time when the rightof claim becomes definite, as the installment sale is a particular form of selling

requiring a long time until the collection is completed.

IV
Finally we shall take up some problems on expenses which are deductible

from revenue.
As to fixed assets the amount of expense in each period is calculated by
way of depreciation, and as to inventories by the method of cost allocation.
As far as methods of depreciation and of cost allocation of inventories are con-cerned, there are no wide differences between the corporate accounting principles and the tax law. We are faced, nevertheless, with the following problems
with regard to depreciation.

Under the tax law, the depreciation charges to be deducted should be theamount taken by a corporation and under the limit determined for using thetable of legal useful lives, which raises the following two problems. First, usefu1
lives of the same sort of fixed assets are uniformly determined by the law so thatthey are not always in conformity with the circumstances of individual firms;
and second, only the limit of depreciation is laid down by the tax law, and underthat limit each firm has the freedom of determining the amount of depreciation
to be taken. On this point the corporate accounting principles say: "Depreciation should be taken by the method elected in a regular and systematic manner.
It is not allowed to increase or decrease as one pleases the amount of deprecia-tion in order to manipulate income, for such manipulation goes against a rea-

sonable depreciation system and results in an improper income accounting,"
and further "Although only the uniform useful lives prescribed by the tax law
are now in use in our country, ...... it is necessary to establish a system of in-dividual useful lives corresponding to each firm's circumstances in order to ra-tionalize our depreciation system." And the revised commercial code also requires that a reasonable depreciation for each period be taken, supporting theso-called compulsory depreciation.

It remains unsolved whether our tax law should adopt the compulsory
depreciation system in the future. Under the existing circumstances it is possible that the amount of depreciation tax-wise and that of corporate accounting

principles or commercial code should differ, and in that case the amount ofexpenses or income may differ to that extent.
According to the tax law, expenditures of the period whose benefit extends
over a year after the day of disbursement are allowed (or ordered) to be treated78 SUSUMU WATANABE
as deferred charges, except that amount of expenditures which should be treatedas a part of the acquisition cost of an asset or as a prepaid expenses. Conse-

quently, expenditures in the period whose benefit will come to an end within
a year are to be treated as expenses of the period.

In the tax law we find the most controversial problem on the recognitionof expenses in the field of allowances. According to the corporate accounting

principles, as mentioned above, the net income of a period is determined bydeducting all realized expenses from revenues realized during a period. These
expenses should be what are regarded to be properly chargeable to current in-come, and sorne of them may not be accompanied with any confirmed liability.
For example, when'a payment of a retirement allowance is provided by a labor
agreement, the firm is liable to pay the money on the retirement of employees.
In this case it is not until an individual employee has actually retired that thefirm owes the liability to pay him (while he stays in the firm, it is unsettled whe-ther he will get the right to receive the retirement allowance or how much theamount will be), but the firm recognizes its obligation as a whole and treats theamount to be credited to the retirement allowance during this period as an
expense. In business accounting such treatment is accepted as a matter ofcourse, and also the cost accounting standards treat this expense as a labor cost.

The retirement allowance, the allowance for special repairs, and an allowancefor bad debts are also recognized in the tax law, but they do not seem to havebeen allowed as a matter of course from the standpoint of matching expenses
with revenues. Generally the tax law recognizes revenue on the basis of theconfirmation of a right of claim. So, if the recognition of expenses is assumed
to be made on the basis of the confirmation of a liability to pay, we must con-clude that it is a concession of the tax law to have admitted those allowances

before the confirmation ofaliability. 'Under the present tax law only those allowances and reserves are acceptedthat are legally provided, which have the merit of restricting firms to set up

allowances and reserves freely and deduct them from revenues. But this isaccompanied with the defect of excluding from expenses what are properly to be
charged to this period in business accounting from the standpoint of matchingexpenses with revenues. In short, the tax law must be provided with a more
up-to-date basis concerning the recognition of current expenses (especially withrespect to expenditures in the future). 'Besides what have been referred to above, differences between businessincome and taxable income are brought about by reason of a tax policy, tax
administration and also by tax theories, making it necessary to study income
accounting under the tax law as well as business accounting.

9

ON INTEGRATION IN ECONOMIC ACCOUNTING
Nobuko NosE

I
Introduction
The Integration Problem which started as the integration of the National
Income Accounting and Input-Output Tables in early 1950, proceeded to reacha further step and now covers all social accounting systems.(i)There are the following reasons to explain the present high interest in
integration: First, no social accounting system can be applied universally,
but each one has the limited function of a specific tool in a national economic

budget. Thus i.) National Income Accounting can be used only for an aggregative and real budget, because it is not able to estimate the flow of intermediate

goods, induced investment nor the flow of funds in detail. ii.) Input-Output

Tables can only be used for a commodity flow budget, because they are notable to estimate final demands, induced investment nor flow of funds. iii.) Flowof Funds Accounting can only be used for ex post financial tables, because it has

no definit economic model about flow of funds and is not connected with real
flow accounting i.e. National Income Accounting and National Balance Sheets.
iv.) The National Balance Sheet can not be used for stock budgets unless it iscombined with real accounting and its financial accounting.
Moreover, present governments need integrated systems of the above social
accounting system, because integration offers many possibilities in the choiceof national budgets according to particular economic situations. Added tothis, integration gives identifiability in each account, thus saving time and money

for calculations. This is the background which promoted integration in social

accountmg systems.
Now, if we intend to succeed to integrate individual social accounts, wemust solve at least two problems, because the above-mentioned systems havetheir own specific purposes and processes of development. At first, we haveto establish a "theory of value"(2} for the integration of each system. A "theoryof value" implies a theory which is able to set a functional relationship between( 1 ) National Accounts Review Committee, The National Economic Accounts of the UnitedStates, 19S8, p. 12.
(2) J. R. Hicks, Social Framework, 1942, p. 67, pp. 19zF195.

10 NOBUKO NOSE
the variables of all partial social accounts and to build a general model for the

economic budget of a nation. Secondly, we have to elaborate a general social
accounting principle which can reconcile the principles of all social accounting

systems. As we know, there are many established accounting principles andconventions in each social accounting system and they are all different from eachother. Present works about integration aim to solve these two problems, though
their weight is not equal.

We have set two tasks in this article: first, to epitomize the present works

about integration, and secondly, to examine and critisize these works in order
to arrive at some suggestive conclusiofi which would help to carry the problem
further.

II
Epitomixation of Present Works
When we summarize the most recent works about integration of social
accounts, we notice that i.) all these works try to integrate National Income

Accounting and the other systems, treating national income accounting as thecore in all social accounts and ii.) these works can be classified into two types:

one dealing with integration of real flow andlor stock accounting systems andthe other with integration of the financial accounting system with the real flow

accountmg system.
As for the first type, Prof. Stone's `Transaction Matrix' can be considered
as typical. Prof. Stone concentrated on the integration of real flow accounting

systems rather than on integration of real flow with real stock accounting. He

developed this system in a work, `Transaction Models',(3) which dates backto the early fifties. The basic idea of his `Transaction Matrix' is that i.) the
diagonal figure of the matrices shows always that intra-sector and intra accounttransactions cancel each other out, ii.) Transaction Matrices are square matrices,iii.) Transaction Matrices are applicable in all cases i.e. to show structural
relationships and to show more aggregate levels, iv.) these matrices have general

response matrices, which are applicable to the Leontief matrix as BV*+A*and to the Keynsian model as BV+A. In this line of thought,{`) Stone tried
to construct a general social accounting matrix(5) and to group matrix Gi and( 3 ) R. Stone, Simple Transaction Models, Information and Computin.a, The Review of Economics and Statistics, 1951-52, pp. 67-84.

(4) R. Stone and J. E. G. Utting, The Relationship between Input-Output Analysis andNational Accounting, in Input-Output Relation, 1953, pp. 195-224.
(5) R. Stone, Input-Output and the Social Account, in The Structural Interdependence of
the Economy, 1954, pp. 153-172,

ON INTEGRATION IN ECONOMIC ACCOUNTING
G2, which are now used for classifying and integrating row of columns of social
accounting matrices to obtain specific accounts suited to specific economic models.

As footnote{6) shows, he got the Input-Output Table and the National Income
Accounts by using G, and G2 respectively and then concluded that there is no
dithculty of transformation of each other nor of their integration.

On the other hand, concerning integration of accounting principles, Stone

did not give it much attention. He launched this interest in the valuation
principle, after the publication of the `Quantity and Price Indexes'.(7) In thisbook, Stone recommended the idea that the purchaser's price is preferable tothe producer's price and this idea proves that his approach to integration isorientated towards `Income Approach'. In his following works,(8} he revised
this point and steadily approaches the accounting principle of the Input-Output

Tables. But his ideas which originated from `Transaction Models' are still
maintained consistently through all his works. Also, concerning integrationof the national balance sheet with real flow accounting, Stone describes it asfollows :X*=(A+B)X*+Y*-(I-A-B)-iY* .................................(1)
X+=(I-A-B)-iS ......,........,............................................(2)(6)

Stone's method is the following: Ifwe set Gie and G2, as the grouping matrix to obtain

the Input-Output Accounting and Grk and G2ic as the grouping matrix to obtain the
National Income Accounting respectively, then the Input-Output Table and National
Accounts can be derived from the Social Accounting Matrix. First, Gie=[--i--9•-)...(1)(where I is a unit matrix whose number of elements is number of industries, i is a unitrow vector whose number of elements is the number of exogeneous sectors, O on the rightside is a O matrix whose number of elements is the number of the square of exogeneous
sectors and O on the left side is a O row vetor whose number of elements is the number ofexogeneous sectors.) G2e = (-3- -;.l-, )...(2) (where o on the right side is a o column vector,

O on the left side is aO matrix and i' is a transpose ofiand the number of elementsof each symbol is the $ame as Gie). GfieTG2e==Se...(3) (where T, S stand for social
accounting matrix and Input-output matrix respectively.) Next, Grk=[-S- 9-)...(4)(where i is a unit row vector whose number of elements is the number of industries,
O on the right side is a O row vector, O on the left side is a O matrix, I is a unit matrix.)
G2ic ==[-S'- 9-)...(5) (where i' is a transpose matrix of i, O on the right side is a O matrix

whose number of elements is the square of the number of sectors in national accounts,
O on the left is a O row vector whose number of elements is the number of sectors innational accounts.) GiicTG2ic=Sic (where T, Sic stand for Social Accounting matrix

and National Income Accounts respectively and the numbers of each symbol are thesame as G2ic respectively.)

(7)
(8)

R. Stone, 9uantity and Price Indexes in National Accounts, 1956, pp. 63-68.
R. Stone and G. Croft-Murray, Social Accounting and Economic Models, 1959, pp. 3439. R. Stone, Input-Output and National Accoants, 1961, pp. 34-62.

11

12 NOBUKO NOSE
X=X*-X+(I-A-B)-i(Y*-S) .........................,....,........(3)if set E as an operator,
S=BE-iX ...............,..................................,.....................(4)then, he obtained the following equation
X=AX+BdX+Y* .....,.....,........"...................................(5)(where, symboles X, X*, X+, A, B, Y*, I, S, mean vector of actual level of total
output, vector of the total output where there is no initial stock, vector of un--necessary output because of initial stock holdings, matrix of input-output coefficient, matrix of input-capital coedicient, final demand vector which excludes
stock change, unit matrix and vector of stock respectively.)

Then, Stone concluded that these two systems - real stock and real flow are integratable by using the transaction matrix. In this case, he did not give
any reconciliating principle of the two accounting systems.

Next we have to epitomize the second type: the approach toward integration of Flow of Funds Accounting with National Income Accounting.
There are two approaches to this problem: one is contained in the reporton the Federal Reserve Bulletin of the Board of Governors of the Federal Reserve

System of the U.S.A. and the other in the report of the OEEC. First, let us
epitomize the Federal Reserve's work and those of scholars following its ideas.
In 1959, the Federal Reserve changed its accounting structure which is epito-

mized in Figure 1<9) into a new accounting structure shown in Figure 2(io).

Figurel FOF's 195S Table
Accounting Structure Accounting Equation
1. Non-financial Transaction Account S,+F== Ui

2. Financial Transaction Account S,=U2+F(where Si, S2, F, Ui, U2 mean:total of source of funds in non-financial transaction accounts, total of source of funds in financial transaction accounts, excess offunds, total of use of funds in non-financial transaction accounts, and total of use

of funds in financial transaction accounts respectively.)( 9 ) Board of Governors of the Federal Reserve System, Federal Reserve Bulletin, Oct., 1955,

pp. 1085-1124. The prototype of these accounts is Copeiand's `money flow accounting.' See M. Copeland, Studies in Money Flows in the United States, 1952.
(10) Board of Governors of the Federal Reserve System, Federal Reserve Bulletin, Aug., 1959,

pp. 828-859, pp. 1046-1062.

ON INTEGRATION IN ECONOMIC ACCOUNTING 13

Figure2 FOF's 1959 Table
Accounting Structure Acdounting ldentity
1. Income and Appropriation Account Y.+T==C+S

2. Capital Account L+S==I+If
3. Financial Account If=I'f+L(L =dFe, If=:AF.)
4. Financial Balance Sheet F.=Fe+B
5. Summary of Flow of Funds Accounts ES=.SI+XI'f(where Y., T, C, S, L, I, lf, I'f, F., B, Fe mean: available income, transfer,consumption, saving (gross), current liability, real gross investment, financial
investment, net financial investment, financial assets, balancing items and liabilities respectively.)

By a revised accounting structure where the principle of sectoring anditemizing becomes more functional, the Federal Reserve intended to show i.)
the financial behavior of individual economic units, i.e. the portfolio selection
under a constant or a changing flow of funds and the level of financial stock ii.)

the way which interlocks investment as a strategy of real budget and the Flowof Funds as a strategy of a monetary budget in economy as a whole. As thisintention shows, it implicitly constitutes a new theory of the Keynesian liquidity

preference and tries to go a step further to integrate the Flow of Funds system,

National Income accounting and the Financial Balance Sheet. Moreover, it
compares the accounting principle of the former two systems in order to reconcile their principles.

Prof. Siegel(i') tries to make a further step in this line. He describes('2)
the difference between the three social accounting systems and sets the purposeof integration of National Income Accounting with the Flow of Funds System
as a first step and integration of the Flow of Funds system with Input-Tables
as a second step. In his recent work, Siegel constructs the new flow of funds

accounts as shown in Figure 3.

Fi'gure3 Siegel's FOF Accounts'

Accounting Structure Accounting ldentity

1. Production Account X=U+Y'(11) S. Siegel, An Approach to the Integration of Income and Product and Flow of Funds
National Accounting Systems: A Progress Report, in The Flow of .Funds Approach toSocial Accounting, Studies in Income and Wealth, vol. 26, 1962, pp. 11-102.
(12) S. Siegel, A Comparison of the Structures of Three Social Accounting Systems, inJnput-Output Analysis: An Appraisal, Studies in Income and VVealth, vol. 18, 1955, pp.

253-289.

14 NOBUKO NOSE
2. Appropriation Account Y==T+Y.
3. Current Purchase Account Y.==C+S
4. Tangible Capital Account S+d=I+F

5. Financial Account 17+L=I+If
His work is founded on the assumption that the Federal Reserve's revision of1959 is imperfect and that a greater activity basis should be introduced to in-tegrate the two systems. He says moreover that the accounting principle of
the Flow of Funds system has to be reformed to be brought nearer to the principleof National Income Accounting.

Secondly, we must epitomize the Financial Accounts established by the
OEEC.{i3)The principle in making these accounts is not founded on Keynes' and his
followers' theory, but on a neo-classical view. The OEEC tries to integrate
directly the operating account in National Income Accounting and the financial

account. As a corollary, the financial account does not include S, I, If andtheir principle of sectoring the economy is different from the one of the Federal
Reserve. There are only three main sectors : nonbank, bank and rest of the world.

Financial intermediaries, households, firms and governments are aggregated into

the one group-nonbank sector.
The accounting structure of the OEEC is as given in figure 4.

'
Figure 4

Accounting Structure Accounting ldentity
1. National Account Operating Account X+I=X+E

Nonbank Sector Financial Account X+M==X+Ft-Fe
Banking Sector Financial Account IVe+F`=M

2. External Account E+Fe=I+Ne(where Y, M, I, E, M, Fi, Fe, Ne mean: GNP, GNE, import, export, incrementof money supply, monetization of inland credit, monetization of foreign credit,
increment of claim in external sector to inland banking sector respectively.)

These accounts can be used for describing financial transactions in a given
year. But they have another use, that of analysis and estimate of the relation-

ship of financial flow and real national products. And in the latter use, theOEEC builds a model founded on Prof. Polak's work `Income Formation and(13) OEEC, Statistics of Sources and Uses of Finance, 1948-1958, 1959.

ON INTEGRATION IN ECONOMIC ACCOUNTING 15
Balance of Payment'.('`) The OEEC model which is called an analytical tablefor `expenditure gap' is as follows:

X-Yo=(Y-Yo)Po+(P-Po)y+D •••••.......•••••.•••••••••••••••.........(1)M=1io(Y-Yo)+lto(P-Po)y+D ••••••••••••••••••••••••••••••••••..............(2)(where M, Y, y, P, D, M, pt mean: GNE, GNP, real national product, general1

price level, excess import, total money supply, v and suMx o means previous
year.) As for the financial flow, quantity of monetization is defined as follows:

M.=Fi+Fe+Fnt
M= 2"M- 2'Mo == pt Y-#o Yo=#o( Y- Yo)-(ps-pt) Y=pte(YmYo)P-(P-P,)y-F'n(where Fi, Fe, are defined as above and F"' is the relative contraction of thequantity of liquidity in an economy, caused by pt decrease, makes an elementof the quantity of total monetization that produces the total expenditure gap. pt.1 k and corresponds to Marshallian

t7 in the Polakian model. Therefore, thecharacteristics of the OEEC system are an integration from the neo-classical viewand have no saving-investment-financial investment relationship.

III
Critigue of Present Works on Integration
First, we have to examine the integration of the `real type'. The main problem in Stone's work is the question whether the inter-industry table derived
from the social accounting matrix is a true Leontief table or not. As we haveseen in the previous chapter, Stone's Inter-industry Table is a transaction matrix

in the same way as a social accounting matrix is a transaction matrix. Therefore, in his Input-Output Table drived from the social accounting matrix, allintrasector transactions being cancelled out, the input-output coeMcients exclude
all a,,. This matrix is evldently not equal to the original Input-Output Table,

where a,, is not equal O. In other words, the original Input-Output Table isa gross basis and Stone's Input-Output Table is a net basis and they are not(14) J. J. Polak, Monetary Analysis of Income Formation and Payment Problems, Staff Papers,
Nov., 1957, pp. 1-50. J. J. Polak and L. Boissneault, Monetary Analysis of Income andlmports and its Statistical Application, Staff Papers, Apr., 1960, pp. 227-240.

16 NOBUKO NOSE
identical. On this point, Evance,('5) using Kronecker's delta, tried to change
the gross real flow into a net real flow and this work is suggestive for us. But

Evance's work intended to transform the two physical flow systems. About
this, we must adjust it to get a value fiow table, because the operational andintegratable Input-Output Table with the other social accounts should be
represented in terms of money. Thus, we have to get an equation to change
Stone's table into a true Leontief table in the following way:

First, the open Leontief model is represented as in the equation:[iili Y;']==[;li] .-."m....,."................-.".............".".....(i)(where xij is the amount of ]' industry to produce an output of i industry, yi.
arersectors' final demands to i, Xi is the total output ofiindustry, v.i arer fac-

tors of production used iniindustry and V. is the total of w.i.)

Next, to obtain a matrix where intra-sector transactions are cancelled out,that is, the net flow matrix, as above mentioned, Prof. Evance gives the equation.
xij(1-6ij)+2S'jyi.==Xi-xii •••••...........................•.•...................(2)Saij(1-6)Xi+.2Yyi.=Xi(1-aij*) .............................................(3)(where 6ij, aij* stand for Kronecker's delta and the input-output coeMcient interms of physical units.) By dividing by (1-a,,*), and getting g:"1"-(liii.,.B`i)---a,j',Sa,j'Xj+.E' 1-Yth'... ==X, ...............,..,......................................(4)teThen, we must transform the equation (4) into a new one in terms of value:
2alj( 2 )PiXj+X 1ml.,,* Pi vir=pixi '''''''••••••••••••••••••••••-•••••••••(s)(where Pi, Pj stand for the prices of i products and of]' products respectively.)
If we set aij=aiJ!( illli. ), bi,= 1-Paiii* yi., PiXi== Yi, then we get.Xa,j Yj+2Vb,. == Y, (i=1, 2, ...n,) ..........................................(6)If we multiply vi,- with g., the prices of factors of production, in order toexpress it in terms of value,(15) W. D. Evance, Input-Output Computations, in The Structural lnterdependence of the

Economy, 1954, pp. 97-99.

ON INTEGRATION IN ECONOMIC ACCOUNTING
Tl
2i' grVri=grVr (r==1, 2, •••k) ....••••......•.................................(7)t==1then we can transform the equation (1) into a net matrix in terms of value.
W=(t/1'v' Y.iJ' 7//L] '''""'''''''''''''''''''''''`'''''''''''''''''''''''''''''''''''(8)(where va is a transaction matrix which has the ability to transform a net matrix
into a gross flow matrix.)

Obviously, VV has a merit which the Stone system did not have, as it allows
us to prove clearly the defects of the Stone Input-Output Table. We must elaborate on the above operation, because here value has two meanings: value means"purchaser's price" and "producer's price." Obviously, to use the purchaser's
price as in Stone's previous method, will introduce a change in the final demand
automatically and without any relation to the physical structure, i.e. a change in

the indirect tax (net) effecting a*. Therefore, we need a matrix which transforms
the purchaser price into a producer price.

The above points are applicable to the integration of real stock with real
flow. As seen above, the matrix from which Stone derives his idea about integration of stock and flow, is a transaction matrix.

These are the points which we wish to critisize in Stone's work: The InputOutput Table and the Stock table derived from a social accounting matrix, have

an isomorphic character in National Income Accounting.
Secondly, we must examine the integration of `the monetary type'. We will
face more diMculties than in the integration of the `real type'. There are mul-tiviews on the relationship between the Flow of Funds and the real commodity
market. Moreover the monetary multiplier(if we can call it like this) is not able
to define nor to estimate, because this coeMcient can easily be moved by institutional conditions.

Now we have to examine the work of the Federal Reserve. Through theirrevision, Flow of Funds accounts are apparently improved, as i.) a more functional-view of division in sectoring and in the design of accounts is introduced
and ii.) saving-investment-financial investment is clearly observable in the sum-mary account and iii.) the behavior of the individual in the financial flow andassets is observable. It seems that the above merits make this table the best inpresent national financial accounting.

But, we have some reservations on this table in spite of its improvement,
as the integration problem itself is not so much improved even in the integrationof National Income Accounting with the Flow of Funds system. The Federal
Reserve does not try to establish a definite Money-Income Relationship and

17

18

NoBUKO NosE

asserts that this table is usable not as a hypothetical budget but as a `neutral'(i6)ex post table. On the other hand, Liquidity Preference theorists do not supply
a definite model for a relatipn between fiow of funds and stock and national in-come.{i7) Concerning the integration of Flow of Funds Accounting and InputOutput Accounting, the situation is further worsened because:

1, The saving-investment accounts in the Input-Output Table are notyet established,

2. The accounting principles of the Input-Output Table and the Flow ofFunds, i.e. the principles of sectoring, differ so'

greatly one from the other, thatthe interlocking of both flows is not apparent. Therefore, the Federal Reserve

has to make a rearrangement of sector accounts on a dual iine - on the institutional level and the activity level and has to settle the money-real coeflicient(i.e. the monetary multiplier).

In Siegel's tentative approach, we have an appraisal, because the accounting structure represents capital transactions of the government and small business transactions which are not represented in the Federal Reserve's accounts.
Moreover, his attitude toward integration is rather more positive than that of

the Federal Reserve. But when we examine his new accounting design, we havethe impression that this revised system resembles very much Stone's earliest ac-

counts.{i8) We must also notice that Stone's accounts have been improved, because they had the defect of using the mixed principle of sectoring and of account-ing design and have been introduced into present National Accounts. Therefore,

Siegel's attempt follows the old-fashioned viewpoint of National Income Ac-

counting. From the viewpoint of Flow of Funds Accounting, this revised
system seems to be too comp!icated and to lose the character of Flow of Funds

Accounts. Moreover, his earlier problematical proposal about integration ofFunds Accounting and Input-Output Accounting has not yet been solved. Concerning the improvement of the technique of reconsiliation of accounting principles, we must appraise the merit of this tentative approach as we did for thework of the Federal Reserve. But Siegel's work about model-buildings, as thatof the Federal Reserve, has not been perfected so that we cannot construct an
ex ante table of integrated systems from it.

Next, we must examine the Flow of Funds Accounts as presented by the
OEEC. This table has the merit that i.) it is usable not only as an expost table, but(16) Board of Governors of the Federal Reserve System, Federal Reserve Bulletin, Aug., 1959,

ibid., p. 830.

(17) J. S. Duesenberry, A Process Apprbach to Flow of Funds Data, in Flow of l7unds
Approach, ibid., p. 173,
(18) R. Stone, Definition and Measurement of Nationat Income and Related Totats, 1947•

ON INTEGRATION IN ECONOMIC ACCOUNTING
also as an ex ante table, if we establish pt, m and the other exogeneous variables.

These relationships are limited in number, therefore this table has an operational nature; ii.) concerning the integration problem itself, this system is very in-tensive; iii.) the method to construct the table is so easy that even underdeveloped countries are able to use it. However, this table is evidently too simple

to be able to analyse the relationships between multi-sectors. For example, inthe non-bank sector, households, businesses, governments and financial intermediaries are consolidated and saving-investment through financial intermediaries is cancelled out, so that we cannot analyse in detail the circulation of moneyin the economy. Moreover, this system relies on a neo-classical view, obliging
us to adjust it, if the substitution effect on near money is large enough and theKeynesian hypothesis about L2 has a real meaning.(i") In this connection recent Japanese experience shows that monetary policy on investment is consider-ably important.(20) Moreover, Prof. Goldsmith's data show that the sphere ofmoney should be enlarged and that the function of financial intermediaries and thefunction of the capital market should be analysed.(2i) Therefore, to rely too
much on the Polakian model is not advisable, although its operational characteras a national financial budget has an undeniable merit. Thirdly, to use pt isquite feasible, but pt is only an average and if we examine pt in detail, the valueof pt differs from sector to sector and changes through institutional conditions.

Fourthly, this system implicitly sets import as an endogeneous item. But actually

M is composed by various items, such as competitive import or complementary
import and these items should be treated separately if we wish to make a step
forward in integration, and obtain an integration of Flow of Funds Accounting

and Input-Output Accounting proceeds. By applying the present OEEC system,
we can only obtain the integration of National Income and supplied money - orthe so-called quantity of monetization - at the aggregative level but nothing

more.
(19)

Some tentative works are seen in Papers and Proceedings of the 75th Annual Meetingof the American Economic Association. J. Aschheim, Financial Institutions and Monetary

Policy: A Reexamination of Their Interrelationship. A. E. R., Mar. 1963, pp. 360371. K. Brunner and A. H. Meltzer, The Place of Financial Intermediaries in theTransmission of Monetary Policy, ibid., pp, 372-382. J. Tobin and W. C. Brainard,
Financial Intermediaries and the Effectiveness of Monetary Controls, ibid., pp. 383-412.
(20)

(21)

G. R. Klein, The Keynesian Revolution, 1947, p. 66.
Research Institute of the Bank of Japan, The Character of Japanese Economy in 1959
from the viewpoint of flow of funds, in Accumulation of Capital and Financial Structure, 1961, pp. 212-237.
R. W. Goldsmith, A Study of Saving in the United States, 1955. Goldsmith, Financial
Intermediaries in the American Economy Since 1900, 1958. See, J. G, Gurley and E. S.
Shaw, Money in a Theory of Finance, 1960.

19

20 NOBUKO NOSE
The above critiques concern the systems of works which we have summarized

in section 2. Now, we must add some more points regarding the more recent
works for integration. The first point concerns the sectoring principle in National Income Accounting. The principle of which Stone outlined the criteria,is
yet unsettled because, whether all activities performed by government are productive or limited, some parts remain undetermined. As Prof. Barna said, this is anage old question{22), and an answer to this controvercy is not given by Stone nor
by his followers, so that we cannot project the effect of this strategy on the fieldof production by using this integrated national budget. Secondly, to obtain amore accurate analysis and project, we have to introduce the point of view ofsizedistribution. This point, although taken up by Prof. Jasji,(23) wasnottaken

into consideration in the above works. However, size distribution of national
income, national capital or capital of the business sector is very important,because if this principle is taken into consideration, we can not only examine theeffect of an integrated national budget by social classes, but also improve further

the social accounting systems. For example, by introducing this view, the Flowof Funds system can establish the pattern of the consumer's portfolio selection

much better and National Income Accounting can show the pattern of redistribution and of the consumption function by social classes.

Thus, we can conclude that, if the works about integration are to be
developed further, these points should be introduced to the sub-sector of eachmain sector in each accounting system.

IV
Summary and Conclusion
From the above analysis, we arrive at the following conclusions relative topresent works on integration:
1. Integration of the `real type' is yet imperfect, because i.) these works
do not consider how to obtain the gross input-output coefficient nor the grosscapital-input coeMcient nor do they supply a consistent method for the reconciliation of accounting principles, ii.) their principal approach leans toward Na-

tional Income Accounting.

(22) T. Barna, International Comparison of National Accounts in Economic Analysis, Jncome
and Wealth, series III, 1953, pp. 142-143. See, S. Kuznets, Government Product andNational Income, Income and PVealth, Series I, 1956, pp. 178-244.

(23) G. Jaszi, The Conceptual Basis of the Accounts: A Reexamination, in A Critiqueof the United States of Income and Product Accounts, Studies in Income and Wealth,Nov, 22, 1958, pp. 43-44.

ON INTEGRATION IN ECONOMIC ACCOUNTING 21
2. Integration of the `monetary type' has been improved, but has yet serious

defects, because it does not give a reliable model-building concerning the flowof funds and the real commodity market.
3. Both the types have the common defect that they are inclined to obtainan improvement of the accounting technique only and neglect to examine thebasic concepts of the present social accounting systems.

4. Moreover, present tentative approaches do not consider the viewpointof size distribution. Therefore, if we use these systems, we cannot obtain an
estimate of the effect of integrated national budgets on the income distribution
and redistribution in social classes.

These are the four points which we should consider in order to improve in-tegration in economic accounting.

23

OBER ,,COST ACCOUNTING STANDARDS" IN JAPANTetsuo KoBAyASHi

I,,Cost Accounting Standards", die in diesem kleinen Aufsatze vorgestellt
werden sollen, wurden Nov. 1962 von ,,Business Accounting Council, Ministryof Finance, Japan" als sein vorltiufiger Bericht ver6ffentlicht.

Dieses ,,Business Accounting Council" hat nach dem Ende des zweiten Weltkrieges schon einige Berichte Uber die wichtigen Probleme des Rechnungswesens

erstattet, damit das Rechnungswesen derjapanischen Unternehmungen h6her entwickelt werden kann. Seine Tlitigkeiten sind in dem unabhangigen Standpunkt
ausgefUhrt worden, und viele Professoren und andere erfahrungsreichen Gelehr-ten haben daran teilgenommen. Infolgedessen haben seine Berichte die groBen
EinflUsse auf die Entwicklung des Rechnungswesens der japanischen Unter-nehmungen und auf die angeschlossenen Gesetze und Verordnungen ausgeUbt.
Vor allem, haben ,,Business Accounting Principles" (1949) und ,,Auditing Stand-ards" (1950 und 1956), die von diesem ,,Business Accounting Council" ver6ffentlicht wurden, die wichtigen Richtlinien und Kriterien fUr die abschluBrech-nung und ihre PrUfung vorgebracht.
Auch die Aufstellung von ,,Cost Accounting Standards" wurde zu gleicher
Zeit angefangen. Aber der sich mit dieser Aufstellung beschaftigte Unteraus-

schuB brauchte mehr als 10 Jahre, um den vorlaufigen Bericht darUber zu
erstatten, denn viele Schwierigkeiten muBten im ProzeB dieser Aufstellung
Uberwunden werden.
Ubrigens, wurden in Japan bis jetzt drei wichtige schriftliche Richtlinien
zur Kostenrechnung, einschlieBlich dieses Berichtes, von 6ffentlichen Amternver6ffentlicht.

Die erste ist ,,Die Regeln zur Rechnung der Herstellungskosten", die 1937

vom Handels- und Industrieministerium (SHO-KO-SHO) ver6ffentlicht wurden.
Die Aufstellung dieser Regeln wurde 1930 angefangen, um damalige schwere
Flauigkeit durch Rationalisierung in den industriellen Kreisen zu Uberwinden.
Das Komitee, das sich damals mit dieser Aufstellung beschllftigte, untersuchte

die wirklichen Zustllnde der Kostenrechnung in vershiedenen Gebieten undzog aus diesen Untersuchungsmaterialien die Regeln heraus, nach welchen
die industriellen Kreise ihre Rationalisierung stufenweise bef6rdern konnten.

24

TETSUO KOBAYASHI

Diese Regeln zielten auf die aufkltirenden Effekte im weiteren Sinne. Man sagt,

daB ,,Grundlagen der Selbstkostenrechnung" (bzw. ,,Allgemeine Grundstitze derSelbstkostenrechnung") vom ,,Reichskuratorium fUr Wirtschaft, Deutschland"als Muster dieser Regeln bedient wurden.

Die zweite wichtige Richtlinie zur Kostenrechnung ist ,,Die GrundzUge
zur Kostenrechnung in der Fabrikindustrie" und ,,Die GrundzUge zur Kostenrechnung in der Bergindustrie", die 1941 vom Entwurfsministerium (KIKAKUIN) ver6ffentlicht wurden. Diese GrundzUge hatten nicht den aufkltirenden
Sinn, sondern die Gesellschaften wurden gezwungen, in ihrer Verfahrenweiseder Kostenrechnung diese GrundzUge zu befolgen, denn damalige Regierung
versuchte, durch diese GrundzUge zur Kostenrechnung die verschiedenen
Hilfsmittel und Produkte fUr die militarischen Aktionen zu mobilisieren. Diese

GrundzUge zur Kostenrechnung wurden nach dem Krieg partiell abgeljndert und
galten als eine StUtze vom System der oMziellen Preise in der Inflationszeit.

Nach diesen etwas abgeanderten GrundzUgen zur Kostenrechnung derFabrikindustrie bestand also der Hauptzweck der Kostenrechnung in derBestimmung des Preises, und zwar in der Bestimmung des ofiziellen Preises.

Aber mit der Wiederbelebung der japanischen Wirtschaft, ist das Systemdes ofiziellen Preises von sich selbst ge16st und auch die GrundzUge zur Kosten-

rechnung, deren Hauptzweck in der Preisbestimmung bestand, haben ihre
Geltungskraft verloren.

Aus solchem Hintergrund derjapanischen Wirtschaft, ist die neue Richtlinie

zur Kostenrechnung erschienen. Diese neue Richtlinie, d.h. ,,Cost AccountingStandards" nimmt RUcksicht auch auf die Ntitzlichkeiten der Kostenrechnung

zur modernen Kostenkontro!le und betrieblichen Planung (vor allem, zurkurzfristigen Planung, die als Ausgangspunkt der Budgetierung bedient wird).

Diese NUtzlichkeiten der Kostenrechnung sind neulich sehr stark beansprucht

worden.

Aber der Charakter dieser neuen Richtlinie zur Kostenrechnung ,,Cost
Accounting Standards" ist nicht einfach,
Erstens, wurde sie aufgestellt, indem ,iman, aus den verschiedenen Gewohn-heiten der Kostenrechnung, die heutzutage in den Unternehmungen dieses
Staates ausgefUhrt werden, die im allgemeinen anerkannten, herausgezogen hat"

(Vorwort zur ,,Cost Accounting Standards"). Sie fUhrt nicht zur einheitlichen

Kostenrechnung, sondern sie zeigt nur den Grundrahmen, innerhalb dem jede

Unternehmung seine effektiven Kostenrechnungsverfahren bestimmen und
ausfUhren kann. Sie umfasst die Grundsitze fUr die guten Gewohnheiten der
Kostenrechnung. Insofern kann man nicht darin die einheitliche Theorie finden,UBER ,,COST ACCOUNTING STANDARDSC` IN JAPAN25

Sie ist vielmehr ein Produkt des Kompromisses von verschiedenen Stellung-nahmen.
Zweitens, versuchte man solche Grundsatze und Verfahren der Kostenrechnung zu beschreiben, nach welchen die verschiedenen Zwecke der Kostenrechnung, z.B. das Angebot der Kosteninformationen zur AbschluBrechnung,
Kostenkontrolle, Budgetkontrolle und andere in einem Kostenrechnungssystemsystematisch erfti11t werden k6nnen. Dieser Versuch unterscheidet sich vom
Versuch vom ,,Commitee on Cost Concepts and Standards, American Accounting
Association", welches 1951 ,,Tentative Statement of Cost Concepts and Standards" ver6ffentlichte. Das Komitee von A.A.A. versuchte hauptstichlich, die

Zwecke der Kostenrechnung klar zu machen und die dazu passenden Kostenbegriffe klar zu definieren. Dagegen versuchte vielmehr das japanische Komitee(Business Accounting Concil), die Grundstitze und Verfahren zur Feststellung desunter der organischen Verbindung mit Finanzbuchhaltung laufend auszufUhrenden

Kostenrechnungssystems zusammenzusetzen.
Dieser Versuch hat viele Schwierigkeiten mit sich gebracht. Denn es ist
in einem Sinne widersprechend dem Axiom ,,unterschiedene Kosten fUr die
unterschiedenen Zwecke", daB man die verschiedene Zwecke in einem Kostenrechnungssystem erfUllen wollte. Und es ist auch zweifelhaft, daB man auchzu den Kostenrechnungsverfahren, die fUr die innerbetrieblichen Zwecke (z. B.
fUr die betriebliche Planung, Budgetkontrolle und Kostenkontrolle) unter speziel-len Umsttinden jeder Unternehmung beliebig ausgeftihrt werden sollen, den imallgemeinen angekannten Grundrahmen vorschreibt.
Somit wurde im ProzeB der Aufsteltung dieser Versuch etwas abgetindert.
Im verdffentlichten vorlaufigen Bericht ,,Cost Accounting Standards" sind die

im allgemeinen anerkannten Grundstitze und Verhfaren zur Kostenrechnung,in der Regel unter BerUcksichtigung von Hilfsfunktion der Kostenrechnung zur
AbschluBrechnung (financial accounting) bzw. externen Berichtung der Unternehmung, zusammengesetzt. Diese Verfeinerung kann sogleich zugestimmt
werden, denn die im aligemeinen anerkannten Grundslitze und Verfahren werden
gerade von der Seite von AbschluBrechnung (financial accounting) verlangt,
welche als die Basis fUr die Regulierung der verschiedenen Interessen um die
Unternehmung nUtzlich sein soll.
Trotzdem sind einige Grundstitze und Verfahren der Kostenrechnung fUr
die innerbetrieblichen Zwecke nicht ausgeschlossen. Sie sind in der Regel
insofern aufgenommen worden, als sie die Verfahren fUr die AbschluBrechnung
nicht st6ren, bzw. als ihre EinflUsse durch irgend eine MaBregel beseitigt werden

k6nnen. Das stellt wahrscheinlich die Hoffnung von ,,Business Accounting
Council" dar, daB das wirkliche Kostenrechnungssystem, unter BerUcksichti-

TETSUO KOBAYASHI

26

gung von verschiedenen Kostenrechnungszwecken, als Ganzes harmonisch entwickelt wird. Allerdings gibt es einige Kritiken Uber die Grundsatze und Verfahren fUr die innerbetrieblichen Zwecke, die in dieser Richtlinie aufgenommen
worden sind, denn sie k6nnen im mit den Grundslitzen fUr ,,financial accounting"verbundenen Kostenrechnungssystem, ihre vollstljndigen Gestalten nicht haben.

II

Im ersten Kapitel ,,Die Zwecke und die allgemeinen Grundsatze derKostenrechnung"(') sind zuntichst die hauptsachlichen Zwecke der Kosten-

rechnung, wie folgt' angegeben. '1. Zusammenrechnung der ,,echten" Kosten, die um fUr die Kapital-geber, GlaUbiger und UnternehmungsfUhrer, auf die Abrechnungsberichten, den
Gewinn- und Verlustzustand in einer vergangenen Periode und den finanziellen
Zustand am Jahresende darzustellen, beansprucht werden.
2. Vorbringen der Kosteninformationen fUr die Preiskalkulation.

3. Vorbringen der Kosteninformationen zu den Betriebsleitern in den
verschiedenen Klassen fUr die Kostenkontrolle. Unter der ,,Kostenkontrolle"
wird eine Reihe von Aktionen zur Steigerung der Kostenwirtschaftlichkeiten(cost efficiency) verstanden; namlich, um den Kostenwirtschaftlichkeiten zu
steigern, werden die Kostennormen vorausbestimmt, vorgegeben und mit den
tatstichlich verursachten Kosten verglichen, die Abweichungen werden analisiert

und die analiesierten Ergebnisse mit den angeschlossenen Informationen werden
zu den Betriebsleitern berichtet.

4. Vorbringen der Kosteninformationen fUr die Budgetaufstellung undBudgetkontrolle. Mit ,,Budget" ist der mit Geldziffern ausgedrUckte und zusam-•menfassend aufgestellte, konkrete Plan fUr jeden Unternehmungsbereich in der

Budgeperiode gemeint. Er ist ein Mittel zur syntetischen Verwaltung derganzen Unternehmung, mit dem das Gewinnziel in der Budgetperiode vorgegeben wird und die verschiedenen Aktionen in der Unternehmung koordiniert
werden. Wtihrend das Budget der syntetische Periodenplan fUr die AusfUhrung
jeder Aktion in der Unternehmung ist, enthZlt der ProzeB der Budgetaufstellung

die Willenentscheidungen Uber die einzelnen Alternativen, z.B. die Entschei-dung der Zusammensetzung von den herzustellenden Erzeugnissen, die Entscheidung, ob ein Halbzeug in der eigenen Fabrik hergestellt, oder von auBerhalb

eingekauft werden soll.

( 1 ) Der Aufbau von ,,Cost Accounting Standards" soll am Ende dieses Aufsatzes dargestellt

werden.

VBER ,,COST ACCOUNTING STANDARDS" IN JAPAN27

5. Vorbringen der Kosteninformationen fUr die Aufstellung des Grundplanes. Bei der Aufstellung vom Grundplan (Aufbauplan) werden die Willenentscheidungen ttber die fundamentalen Sachen der Betriebsstruktur, z.B.
die Art der Erzeugnisse als Gegenstand der Betriebsleistungsherstellung, die
Betriebsstandorte, die Produktionsanlagen, abgestellt auf die Anpassung an den

dynamischen Wirtschaftsvertinderungen, getroffen, um die Betriebsstruktur
rationell aufzubauen. Diese Entscheidungen werden gelegentlich getroffen.
Diese Systematisierung der Kostenrechnungszecke ist vom oben erwtihnten
Bericht 1951 von ,,Commitee on Cost Concepts and Standards A.A.A." ziemlich
stark beeinfluBt worden. Auch im Bericht von A.A.A. kann mam nimlich ahnliche Systematisierung finden: (1) Zusammenrechnung der Kosten fUr die AbschluBrechnung, (2) Vorbringen der Kosteninformationen zu den Betriebsleitern

in den verschiedenen Klassen fUr die Kostenkontrolle und (3) Vorbringen der
Kosteninformationen fUr die betrieblichen Planungen. Sie bildet ein Fundament
zur Systematisierung der Kostenrechnungszwecke in der japanischen Richtlinie.
Jedoch besteht das Hauptziel derjapanischen Richtlinie zur Kostenrechnung,wie oben erwtihnt, in der Feststellung solches laufend auszufUhrenden Kosten-

rechnungssystems, in dem die verschiedenen Kostenrechnungszwecke m6glichst
harmonisch erfUllt werden k6nnen, wahrend das Ziel des amerikanischen Berichtes

in der Regel auf die Erfassung der Beziehungen zwischen Kostenrechnungszwecken und Kostenbegriffen beschrankt war.
Somit sind in der japanischen Richtlinie die Kostenrechnungszwecke, deren

ErfUllung das laufend auszufUhrende Kostenrechnungssystem in Anspruch
nimmt, zu ermitteln. Und als solche sind im zweiten Abschnitt des ersten
Kapitels die Hilfsfunktionen der Kostenrechnung zur AbschluBrechnung,
Kostenkontrolle und Budgetkontrolle angegeben. Die Kostenrechnung fUr
die Analyse und WUrdigung der einzelnen Alternativen im ProzeB von Grundplanung und Budgetaufstellung, also die spezielle Untersuchung fUr die Ermittelung der speziellen Kosten (z.B. ,,differential cost" ,,opportunity cost" ,,im-

puted cost") ist als die auBerhalb des Kostenrechnungssystems gelegntlich
auszufUhrende Rechnung charakterisiert und ihre Behandlung ist gemaB derZielsetzung dieser Richtlinie ausgeschlossen.

Aus diesem Grunde nimmt diese, japanische Richtlinie zur Kostenrechnung(,,cost accounting standards") RUcksicht nur auf die Kostenrechnungszwecke,die im laufend auszufUhrenden Kostenrechnungssystem erfUllt werden sollen,

und die allgemeinen Grunds2tze der Kostenrechnung fUr diese Zwecke sindwie folgt angegeben (im ersten Kapitel 6.):

1. Fdir die AbschluPrechnung;( 1 ) Um die Kosten des bestimmten Erzeugnisses und die Periodenkos-

28

TETSUO KOBAYASHI

ten (bzw. Periodenaufwand) zu ermitteln, sollen im Kostenrechnungssystem die

Kosten, bezogen auf die bestimmte Leistung, zusammengerechnet werden.
NZmlich, in der Regel, (a) sollen fUr jedes Erzeugnis die Herstellungskosten

zusammengerechnet werden, um die Umsatzkosten jedes Erzeugnisses in derGewinn- und Verlustrechnung mit dem betreffenden Umsatze richtig verglichen
zu werden, und um die Herstellungskosten der Vorrdte von Halbfabrikaten,
Zwischenfabrikaten, Fertigerzeugnissen usw. in der Bilanz richtig dargestellt

zu werden, und (b) die Vertriebs- und Verwaltungskosten sollen zusammengerechnet werden, damit sich sie in der Gewinn- und Verlustrechnung mit den
Umsitzen der betreffenden Periode richtig vergleichen lassen.

(2) Die Kostenziffern sollen die von Urkunden des finanziellen Rechnungswesens und vertrauenswUrdigen Statistiken begrUndete Zuverlassigkeit
haben. Also sollen die tatslichlich verursachten Istkosten zusammengerechnet
werden. Das bedeutet aber nicht notwendigerweise, daB man mit dem tatslichlichen Anschaffungspreis rechnen muB. Auch der vorherbestimmte Kalkulationspreis kann angewandet werden (bei Istkostenrechnung handelt es sichhauptsachlich um die Rechnung der tatstichlich verbrauchten bzw. verzehrten

Istmengen Verf.). Und wenn es notwendig ist, kann man auch zur AbschluBrechnung mit Standardkosten rechnen.

( 3 ) Aber wenn man mit vorherbestimmtem Preise od. Standardkosten
rechnet, ist es zur AbschluBrechnung notwendig, fUr die Abweichungenzwischen diesen Sollkosten und tatsachlichen Istkosten, entsprechende AusgleichsmaBregeln zu treffen.

( 4 ) Die Kostenrechnung soll in der organischen Verbindung mit Finanzbuchhaltung ausgefUhrt werden. Also in das Kontensystem sollen die Konten,

welche die verschiedenen Kosteneintragungen zusammenfassen, eingefUhrt
werden.
2. Fdir die Kostenkontrolle.

( 5 ) Um die Verantwortlichkeit jeder Verwaltungsstelle fUr die Kostenverursachungen klar zu stellen, sollen die Kosten jeder Kostenstelle (od. jedes

Kostenplatzes) zusammengerechnet werden. Dabei unter Voraussetzung, daB
die Zustandigkeiten und Verantwortlichkeiten fUr die Verwaltung der Kostenver-ursachungen delegiert werden, werden die nach der Art der Aktion eingeteilten
Kostenstellen jeweils als die Verwaltungsstellen fUr die Kostenverursachungenangesehen.

(6) Die Kostenarten sollen nach der Art der Funktion und ferner inEinzelkosten und Gemeinkosten, fixe Kosten und variable Kosten, kontrollierbare Kosten und unkontrollierbare Kosten eingeteilt werden.

(7) Der Schwerpunkt der Kostenrechnung soll im ganzen Rechnungs-

IN JAPAN
STANDARDS"UBER ,,COST ACCOUNTING

29

prozeB, d.h. von Bestimmung und Vorgabe der Kostennorm bis Kostenberichtung, auf die Mengenrechnung gelegt werden.
(8) Die Kostennorm (cost standards) soll als MaBstab, mit dem die
Kostenverantwortlichkeiten und die Kostenwirtschaftlichkeiten (cost eficiency)

klar gestellt und gewUrdigt werden kbnnen, eingefUhrt werden. Als soiche
Norm kann man auch die Istkosten der Vergangenheit heranziehen, aber die
Standardkosten, die auf Grund der wissenschaftlichen und statistischen Unter-suchungen bestimmt werden, sind viel besser.

. (9) Die Istkosten sollen so systematisch eingetragen und zusammengerechnet werden, daB sie mit den Kostennormen richtig verglichen werden kbnnen.

(10) Die Kostenabweichungen sollen analisiert und berichtet werden.
(11) Die Kostenrechnung soll unter BerUcksichtigung von Notwendigkeiten
und Schwerpunkten der Kostenkontrolle, 6konomisch und schnell ausgefUhrt

werden.
3. Fdir die Aorfstellung vom Budget, vor allem vom Aufwandsbudget undfar die
Budgetkontrolle.

(12) Man soll mit vorherbestimmten Kosten od. Standardkosten, die
auf Grund der vorausgesehenen Bedingungen der Budgetperiode bestimmt
werden, rechnen, und die tats2chlich verursachten Istkosten sollen so systematisch zusammengerechnet werden, daB sie mit dem Budget verglichen werden

k6nnen.
III

Im zweiten Kapitel sind die Rechnungsverfahren der Istkosten er6rtert.
Aber der Unterschied der Hilfsfunktion fUr die Kostentrolle und Budgetkontrollevon der Hilfsfunktion fUr die AbschluBrechnung hat den groBen EinfluB auf

die Behandlung der Kostenrechnungsverfahren. Auch das Vorbringen der
Kosteninformationen zur Kostenkontrolle und Budgetkontrolle geh6rt zwar zu
den Kostenrechnungszwecken, die im laufend auszufUhrenden Kostenrechnungssystem erfUllt werden sollen, denn diese Kontrollen werden nicht gelegentlich,sondern kontinuirlich ausgefUhrt und die Kostenrechnung zu solchen Zwecken
kann, wenn sie in organischer Verbindung mit dem Finanzbuchhaltungssystemsteht, den sicheren und beweiskrtiftigen Grund und den Vorteil der automatischen

Kontrolle der Buchhaltungsarbeit bekommen. Aber zu den innerbetriebliehen
Zwecken wie Kostenkontrolle, Budgetkontrolle, k6nnen die Kostenrechnungsverfahren unter BerUcksichtigung von Notwendigkeiten und Bedingungen einzelner
Unternehmungen beliebig gestaltet werden. Dagegen zu Kostenrechnungsverfahren zur AbschluBrechnung gibt es den im allgemeinen anerkannten Grund-

30

TETSUO KOBAYASHI

rahmen, denn die AbschluBrechnung muB die sozialen Erfordernisse von verschiedenen Interessengruppen erfUllen.
Infolgedessen in dieser Richtlinie zur Kostenrechnung ist es fUr ungeeignet

gehalten, die Kostenrechnungsverfahren fUr die innerbetrieblichen Zwecke wie
Kostenkontrolle und Budgetkontrolle im einzelnen anzugeben. Ntimlich, wtihrend

die allgemeinen Grundsatze zur Gestaltung des im laufend auszufUhrenden Kos-tenrechnungssystems, unter umfassender BerUcksichtigung von Kostenrechnungszwecken angegeben sind, handelt es sich bei der Behandlung der ausfUhrlichen

Regeln und Kostenrechnungsverfahren hauptsachlich um die Hilfsfunktion
fUr die AbschluBrechnung bzw. fUr die externen Berichte der Unternehmung.
Uber die Kostenrechnung fUr die innerbetrieblichen Kontrollen beschreibt
diese Richtlinie, auBer den oben vorgestellten Grundstitzen, nur einige EinflUsse

auf das Kostenrechnungssystem bzw. Kostenrechnungsverfahren das
bedeutet auch das Erfordernis dafUr, daB das Kostenrechnungssystem als Gan-zes harmonisch weiter entwickelt werden soll und die MaBregeln fUr die
Verbindung der Kostenrechnungsverfahren zu innerbetrieblichen Kontrollen
mit den Kostenrechnungsverfahren zur AbschluBrechnung.
Im zweiten Kapitel ,,Rechnung der Istkosten" sind also hauptsdchlich
unter BerUcksichtigung von Hilfsfunktion der Kostenrechnung fUr die Absch-

lu6rechnung, die Kostenrechnungsverfahren fUr die Zusammenrechnung der
Istkosten und damit fUr die Feststellung der Erzeugniskosten mit Istkosten
beschrieben, und auf einige Erfordernjsse von innerbetrieblichen Kostenrechnungszwecken ist nur stellenweise hingewiesen.

Dieses Kapitel besteht aus fUnf Abschnitten, und die Kostenrechnungsverfahren, die sich auf den ganzen RechnungsprozeB, d.h. auf die Kostenartengliederung, Kostenartenrechnung, Kostenstellenrechnung und KostentrEgerrechnung erstrecken, sind umstandlich beschrieben. Aber weil wir wegen desbegrenzten Raumes nicht alle vorstellen k6nnen, m6chten wir nur auf einige
charakteristische Merkmale solcher Kostenrechnungsverfahren hinweisen.
1. FUr die Kostenartengliederung gibt diese Richtlinie zur Kostenrechnung
fUnf Gliederungsgesichtspunkte an, die nicht nur fUr die Herstellungskosten,sodnern auch fUr die Vertriebs- und Verwaltungskosten gelten: (1). Gliederungnach der Form der Kostenentstehung (z.B. Materialkosten, Lohnkosten, Anlagekosten) (2). Gliederung nach der Betriebsfunktion, fUr welche die Kosten•gUter eingesetzt werden (z.B. Hauptmaterialkosten, Hilfsmaterialkosten, Betriebs-

stoffkosten, Reparaturmaterialkosten bzw. Werbungskosten, Marktuntersuchungskosten, Transportkosten) (3). Gliederung (od. Spaltung) nach der Bezie-hung zum Erzeugnis bzw. Leistung (d.h. Einzelkosten und Gemeinkosten)(4). Gliederung (od. Spaltung) nach den Entwicklungsverhaltnissen bei der

UBER ,,COST ACCOUNTING STANDARDS" IN JAPANBeschtiftigungsveranderung (d.h. die variablen Kosten und die fixen Kosten)und (5). Gliederung (od. Spaltung) nach der Kontrollbarkeit (d.h. die kontrollierbaren Kosten und die unkontrollierbaren Kosten).

Also hier sind die Erfordernisse nicht nur von AbschluBrechnung, sondern

auch von innerbetrieblichen Zwecken in Betracht genommen. Der Grundbesteht darin, daB die Kostenartengliederung den wichtigsten Ausgangspunkt

fUr die harmonische Entwicklung des Kostenrechnungssystems bildet. Wenn
die Erfordernisse von innerbetrieblichen Zwecken hier nicht in Betracht genom-

men werden, also wenn die Kostenarten einmal nur von Erfordernissen derAbschluBrechnung gegliedert werden, kdnnen die Kostenrechnungsverfahren
fUr die innerbetrieblichen Zwecke nicht vollsttindig entwickelt vtrerden.

2. Die Kostenartenrechnung ist als die Gliederung und Messung der ineiner Periode verbrauchten Kostenarten definiert und es ist als erstes Erfordernis

zur Kostenartenrechnung in der Rechnung der Istkosten angegeben, daB die
Mengen- und Preisrechnung einzelner Kostenarten auf Grund der Kostenerfassung in der Buchhaltung und damit auf Grund der tatsachlich verbrauchten
Kostengtitermengen durchzufUhren ist. Dabei ist in der Preisrechnung auchdie Anwendung des vorherbestirnmten Preises erlaubt, insofern man die Abweichung des vorherbestimmten Preises vom tatslichlichen Preise in der betreffen-

den Periode m6glichst klein zu machen versucht. Aber die Mengenrechnung
muB auf Grund der tatslichlich verbrauchten Mengen durchgefUhrt werden.

3. Uber die Kostenstellenrechnung sind die Grundsatze der Kostenstellenbildung, die Verfahren fUr die Zusarnmenrechnung der Stelleneinzel- undStellengemeinkosten und fUr die Umlage der Hilfskostenstellen auf die Hauptkostenstellen, und ferner die Erfordernisse der Kostenplatzrechnung angegeben.

Dabei ist betont, daB die Kostenstellen unter umfassender BerUcksichtigung
von den Gesichtspunkten, die nicht nur fUr die genaue Kostenermittlung zur
AbschluBrechnung, sondern auch fUr die Betriebskontrolle beansprucht werden,

zu bilden sind, wahrend die Zusammenrechnungs-und Betriebsabrechnungsverfaren hauptstichlich von Erfordernissen der AbschluBrechnung beschriebensind.

4. Die Kostentrigerrechnung ist in vier Hauptformen eingeteilt: (1).
die reine Divisionsrechnung (process cost system), (2). die Divisionsrechnung
mit Aquivalenzziffern (class cost system), (3). die Sorten- bzw. Serienrechnung(lot cost system) und (4). die Zuschlagsrechnung (job order cost system).

Dabei zeigt die dritte Form zwar die kombinierte Form der Divisions-und
Zuschlagsrechnung, aber in dieser Richtlilinie ist sie als eine Kategorie derDivisionsrechnung klassifiziert. Solche Auffassung hat man in Japan haufig.
Der Grund liegt darin, daB man in Japan gr6Beren Wert auf die Produktionszu-

31

32

TETSUO KOBAYASHI

sttinde, die dieser Kostenrechnungsform zugrunde liegen, legt. Ntimlich in

Betrieben, wo die Sorten- bzw. Serienrechnung angewandt wird, handelt es
sich, wie in Betrieben, wo die reine Divisionsrechnung angewandt wird, um die

Produktion der Erzeugnisse, die nicht von besonderen Kundenauftragen beansprucht, sondern von Lagern verkauft werden, und weil in solchen Betrieben

die Kenntnis von periodischen Beziehungen zwischen Erzeugnismengen undihren Kosten sehr wichtig ist, legt man gr6Beren Wert auf den Bestandteil derDivisionsrechnung von der Sorten- bzw. Serienrechnung.
AuBerdem beschreibt diese Richtlinie die verschiedenen Verfahren der
Kostentrtigerrechnung, die vor allem zur bilanziellen Rechnung nUtzlich sind.

FUr die Betriebskontrolle bzw. Bugedtkontrolle ist es zwar bemerkenswert,
daB diese Richtlinie auf die Grenzkostenrechnung in der Divisionsrechnung
hinweist (es ist auf die praktischen DurchfUrungsschwierigkeiten zurUckzufUhren,

daB diese Richtlinie nichts von der Grenzkostenrechnung in der Zuschlagsrechnung beschreibt). Aber nur auf das Dasein solcher Kostenrechnung undihre EinflUsse auf die AbschluBrechnung ist hingewiesen, und die Funktionen
solcher Kostenrechnung zur Betriebskontrolle und Betriebsplanung sind nicht
erwahnt. Allerdings ist das auf die Zielsetzung dieser Richtlinie zurUckzufUhren,

und das bedeutet also nicht, daB die Grenzkostenrechnung bzw. das Teilkostendenken in der japanischen Praxis gering geschtitzt ist.

5. Uber die Vertriebs- und Verwaltungskosten sind nur die oben erwtihnten Grundsatze zur Kostenartengliederung und damit einige Grundsazte zu
ihrer Kostenartenrechnung angegeben, aber die Grundsatze und Verfahren
ihrer Kostenstellenrechnung und Kostentrligerrechnung sind nicht beschrieben.
Auch das ist darauf zurttckzufUhren, daB die Vertriebs-• und Verwaltungskosten
in der Regel den Kostenwert der Vorrate in der Bilanz nicht konstituieren, alsodaB sie gew6hniich direkt als Aufwand der verursachten Periode verbucht wer-

den. Als die innerbetriebliche Rechnung gibt es zwar die Notwendigkeit der
Selbstkostenrechnung, aber sie ist in Japan als die Kostenrechnung fUr AbschluB-

rechnung nicht im allgemeinen angewandt.

IV
Im dritten Kapitel ,,Rechnung der Standardkosten" sind die Zwecke derStandardkostenbestimmung, die Bestimmungsweise und Revision der Standardkosten und die Vorgabe der Standardkostenziffern er6rtert. Aber die Verfahren der Standardkostenrechnung, die sich auf die Kostenartenrechnung,
Kostenstellenrechnung und Kostentragerrechnung erstrecken, sind nicht imeinzelnen angegeben, denn die einzelnen Verfahren der Standardkostenrechnung,

UBER ,,COST ACCOUNTING STANDARDS" IN JAPANdie ursprUnglich von innerbetrieblichen Erfordernissen entwickelt ist, sollen je

nach der Notwendigkeit jeder Unternehmung gebildet werden. Hier ist nur der
fundamentale Charakter der Standardkosten er6rtert und es handelt sich haupt-

slichlich um die Bewertung der Erzeugnisse mit Standardkosten.
Zunachst sind die Zwecke der Standardkostenbestimmung, wie folgt, angegeben.

1. Die Standardkosten werden als die Kostennorm bestimmt, welche die
Voraussetzung der effektvollen Kostenkontrolle bildet. Das ist der wichtigste

Zweck der Standardkostenbestimmung.
2. Die Standardkosten bilden als die echten Kosten die Basis fUr die
Bewertung der VorrZte in der Bilanz und fUr die Berechnung der Umsatzkosten.
3. Die Standardkosten bieten die zuverltissige Basis zur Aufstellung desBudgets, vor allem fUr die Aufstellung der vorhergeschatzten Bilanz und Gewinn-

und Verlustrechnung (d.h. des Gesamtbudgetes).

4. Die Standardkosten kdnnen die Verbuchungsarbeiten einfacher undschneller machen, indem man sie in das Kontensystem einfUhrt.
Die Sollgr6Ben der Standardkosten sind eigentlich je nach dem Zwecke
unterschiedlich. Namlich zur Kostenkontrolle sollen die Standardkosten zu
jeder Kostenstelle das zu erreichende Ziel zeigen, also auf den ziemlich hohen

Wirtschaftlichkeitsgrad beruhen. Dagegen zur Budgetierung handelt es sichum die Vorherbestimmung der Istkosten, die in der Budgetperiode tatsachlichverbraucht werden, denn solche Standardkosten sollen in diesem Falle die umfas-

sende Koordination aller Aktivitaten bewahren, also z.B. auch die Prognose desFinanzbedarfs erm6glichen. Und die Standardkosten als die echten Kosten,
die fUr die Bewertung der Vorrljte in der Bilanz beansprucht werden, sind die

Kosten, die keinen Verlust, bzw kein Ungew6hnliches, Zufalliges, Extremes
enthalten.

In dieser Richtlinie zur Kostenrechnung sind drei Typen der Standardkosten angegeben (im ersten Kapitel): (1) die realistischen Standardkosten, (2)die Normalkosten und (3) die vorherbestimmten Kosten. AuBerdem sindauch die idealistischen Standardkosten, die mit gr6Bter Wirtschaftlichkeit und
bei gr6Btem Beschtiftigungsgrad realisierbar sind, berifhrt, aber weil sie fast
unrealiesierbar, also wirklichkeitsfremd sind, sind sie aus Typen der Standard-kosten im Standardkostenrechnungssystem ausgeschlossen.
Mit den realistischen Standardkosten handelt es sich um die Sollgr6Ben,
die mit guten Wirtschaftlichkeiten realisierbar sind. So enthalten ihre Sollgr6-

6en die Uberschtisse fUr Mengenabnahme, Ausschu6, Leerlauf usw. ifisoweit
sie in gewbhnlichen Zustanden erscheinen werden. Und zwar sollen solcheStandardkosten auf den jeweiligen Beschaftigungs- und Preiszustand in naherer

S3

34

TETSUO KOBAYASHI

Zukunft zugeschnitten sein.

Unter Normalkosten sind die Standardkosten verstanden, die auf Normalwirtschaftlichkeit, Normalbeschaftigungsgrad und Normalpreis beruhen. Um
die Normalwirtschaftlichkeit, den Normalbeschaftigungsgrad und den Normalpreis zu ermitteln, schaltet man das Ungew6hnliche, Zufillige bzw. Extreme
aus, nivel!iert mit der Statistik die Istziffern der Betriebsaktivittiten in 1ljngeren

Perioden der Vergangenheit und berticksichtigt die Zukunftstendenzen.

Die vorherbestimmten Kosten sind die Kosten, die mit dem erwarteten
Istverbrauch und Istpreis gerechnet werden. Weil solche Kosten in der Praxis
hljufig als ein Typ der Standardkosten angesehen sind, sind sie in dieser Richtlinie als ein Typ der Standardkosten dargestellt, obgleich sie, genau genommen,

nicht zu Standardkosten geh6ren.

FUr die Kostenkontrolle sind unter diesen Typen der Standardkosten die
realistischen Standardkosten am besten geeignet, fUr die Bewertung der Vorrate

in der Bilanz die Normalkosten (im Falle des stabilen Wirtschaftszustandes)
und fUr die Budgetierung die vorherbestimmten Kosten.
Aber in dieser Richtlinie zur Kostenrechnung (,,cost accounting standards")
ist der Unterschied von drei Typen nicht so klar dargestellt. Vielmehr erkennt
sie an, daB ein Typ der Standardkosten, der fUr einen Zweck am besten geeignet
ist, auch fUr andere Zwecke nUtzlich ist. Es ist z.B. geschrieben, daB die realistischen Standardkosten nicht nur fUr die Kostenkontrolle am besten geeignet,

sondern auch bei der Bewertung der Vorrlite in der Bilanz und bei der Budgetie-

rung brauchbar sind. In diesem Sinne kann man auch sagen, daBjeder der oben
erwtihnten Typen der Standardkosten, nach der Auffassung dieser Richtlinie die
Erfordernisse der innerbetrieblichen Kontrolle und die externe Berichtung nicht
ausschlieBt.

Die unklare GegenUberstellung der verschiedenen Typen der Standardkosten mag von innerbetrieblichen Erfordernissen kritisiert werden. Jedoch
ist es von der Zielsetzung dieser Richtlinie zur Kostenrechnung besonders
notwendig, eine Meinung Uber die Brauchbarkeit der ursprUglich von innerbetrieblichen Erfordernissen entwickelten Standardkosten zur AbschluBrechnung bzw.

zur externen Berichtung darzustellen. Und es soll aufmerksam sein, daB dieseRichtlinie die Brauchbarkeit der oben erwtihnten Typen der Standardkosten zur
AbschluBrechnung und externen Berichtung bejtiht.

Diese Meinung auBert sich auch in der Behandlung der Kostenabweichungen fUr die Abschlu6rechnung (im 5. Kapitel). Nimlich werden nachdieser Richtlinie die Abweichungen der Standardkosten von Istkosten, wenn
sie nicht wegen des ungew6hnliches Zustandes verursacht werden, als Aufwand
derbetreffenden Periode verbucht. Anders gesagt, werden die AbweichungenUBER ,,COST ACCOUNTING STANDARDS" IN JAPAN
gew6hnlich, ohne sie auf dieverbucht, also die oben erwi
Bewertungsbasis in der Bilanz

Vorrtite in der Bilanz aufzuteilen, als Aufwand

hnten Standardkogten sind im Prinzip als die
anerkannt.

v
Zum SchluB soll der Aufbau dieser Richtlinie zur Kostenrechnung in Japan(Cost Accounting Standards) dargestellt werden.

Erstes Kapitel: Die Zwecke und die allgemeinen Grundsatze der Kostenrechnung
1. Die Zwecke der Kostenrechnung
2. Das Kostenrechnungssystem

3. Das Wesen der Kosten
4. Die Begriffe der Kosten
5. Die Faktoren, die nicht zu Kosten geh6ren
6. Die allgemeinen Grundstitze der Kostenrechnung
Zweites Kapitel: Die Rechnung der Istkosten
7. Die Rechnungsverfahren der Istkosten
Erster Abschnitt: Die Gliederungsgrundsatze der Herstellungskostenarten

8. Die Gliederungsgrundsdtze der Herstellungskostenarten
Zweiter Abschnitt: Die Kostenartenrechnung
9. Die Kostenartenrechnung
10. Die Gliederung der Kostenarten bei der Kostenartenrechnung
11. Die Rechnung der Materialkosten
12. Die Rechnung der Lohn- und Gehaltskosten

13. Die Rechnung der Unkosten
14. Die Anwendung des vorherbestimmten Preises usw. auf die Kostenartenrechnung
Dritter Abschnitt: Die Kostenstellenrechnung
15. Die Kostenstellenrechnung
16. Die Bildung der Kostenstellen
17. Die Stelleneinzelkosten und die Stellengemeinkosten
18. Die Verfahren der Kostenstellenrechnung
Vierter Abschnitt: Die Kostentrigerrechnung
19. Die Kostentrtigerrechnung und die Kosteneinheit
20. Die Formen der Kostentrtigerrechnung
21. Die reine Divisionsrechnung
22. Die Divisionsrechnung mit Aquivalenzziffern

23. Die Sorten- bzw, Serienrechnug

35

36

TETSUO KOBAYASHI

24. Die Gesamtkosten der Fertigerzeugnisse in einer Periode und die
Halberzeugnisskosten am Periodenende bei der Divisionsrechnung
25. Die mehrstufige Divisionsrechnung
26. Die Divisionsrechnung, bei der die mehrstufige Rechnung nur auf
die Bearbeitungskosten angewandt wird
27. Die Behandlungsweise der Fehlleistung und Mengenabnahrne
28. Die Behandlungsweise der Nebenprodukte und die Bewertung desNebenproduktes
29. Die Rechnung der Kuppelerzeugniskosten
30. Die Grenzkostenrechnung (direct costing) bei der Divisionskostenrechnung
31. Die Zuschlagskostenrechnung
32. Die Zurechnung der einzelnen Kosten
33. Die Verteilung der Gemeinkosten
34. Die Verteilung der Bearbeitungskosten
35. Die Rechnung der Fehlleistungskosten und ihre Behandlung
36. Die Behandlungsweise des Ausschusses
Fifnfter Abschnitt: Die Rechnung der Vertriebs- und Verwaltungskosten
37. Gliederungsgrundslitze der Vertriebs- und Verwaltungskostenarten

38. Die Rechnung der Vertriebs- und Verwaltungskosten
39. Die Kosten der Untersuchung der Techniken
Drittes Kapitel: Die Rechnung der Standardkosten
40. Die Zwecke der Standardkostenbestimmung
41. Die Bestimmung der Standardkosten
42. Die Revision der Standardkosten
43. Die Vorgabe der Standardkosten
Viertes Kapitel: Die Ermittlung und Analyse der Kostenabweichungen
44. Die Ermittlung und Analyse der Kostenabweichungen
45. Die Kostenabweichungen im Istkostenrechnungssystem
46. Die Kostenabweichungen im Standardkostenrechnungssystem
Ftinftes Kapitel: Die Behandlung der Kostenabweichungen fUr die AbschluBrechnung
47. Die Behandlung der Kostenabweichungen fUr die AbschluBrechnung

37

EFFECT
A NOTEONTHELOHMANN-RUCHTI
Isao

NAKANoI

The Lohmann-Ruchti Effect('} means the automatic growth of productive
capacity of a group of plant assets by a certain policy of replacement, namely bycontinuous investment of accrued depreciations. It was in West Germany that
this effect first drew the attention of the people and became a subject for theore-tical study. In post--war West Germany the industries suffered most seriously
from a scarcity of plant capital, and they had to solve the problem of finding
new funds. For the purpose of recovering production in the industries, it wasnecessary to avoid introducing borrowed capital and to check outflow of proprietors' capital in restraint of dividends, applying these funds to the reconstruction

and development of firms. Induced by these circumstances, the effect of the
expansion of productive capacity by continuous reinvestment of depreciations
has turned out to be an object of strong attention.

II

The above-mentioned effect is attributable to a characteristic of deprecia-

tion. In most cases the depreciation on plant assets merely means a decreasein their book values rather than a deterioration in their capacities, so that funds

retained by depreciation, different from those corresponding to other expenses,
are not reinvested within a short period. As this kind of funds need not be used
to replace the depreciating assets for the time being, it becomes clear that they

can be used to purchase additional plant assets.
To illustrate this effect, we assume the following case.(2) A group of 50
machines of the same sort are acquired and put to use. Depreciation accruing

from these assets each year is directly applied to purchase the same kind ofmachines, whose purchase price (100 DM per machine) does not change during

the whole period. Accordingly the number of machines increases at least in(1)(2)

This designation is taken from the names of two German scholars, M. Lohmann and
H. Ruchti, who were the first to make a systematic study of this problem.
Cited from: Karl Hax, Die Substanxerhattung der Betriebe, K6'l,n und Opladen, 1957,
pp. 230-231,

8
Movement of a group of machines (SO at first) With astraight-1lNumber
Beginning
1ofMachines

End

3

2

ine method of depreciation, and

Cost
Price

useful Iife

4
o.

Year

AnnualSum

DepreciationofChargeDepreciation

2oo/,

Charges5of five years per machine,

contmuous replacement

Book

Additional

Value
3-6

New

Number of Machines

Book
Purchase

Value

Going
out

6

7

8

9

10

Entering

Stock

11

12
50

50

1. Yearso

50,OOO

1.

Year

10,OOO

10,OOO

40,OOO

10,OOO

50 OOO

1060

2. Year60

60,OOO

2.

Year

12,OOO

22,OOO

38,OOO

12,OOO

50,OOO

1272

3. Year72

72,OOO3.

Year

14,40036,40035,60014,OOO

49 60014

86

4. Year86

86,OOO4.

Year

17,20053,60032,40017,OOO

49,40017

103

5. Year103

103,OOO

5.

Year

20,60074,20028,80021,OOO49 80050

2174

6. Year74

74,OOO

6.

Year

14,80039,OOO

35,OOO

15,OOO

50,OOO

10

15

79

7. Year79

79,OOO7.

Year

15,80044,80034,20015,OOO

49,20012

15

82

8. Year82

82,OOO8.

Year

16,40049,20032,80017,OOO

49,80014

1785

9. Year85

85,OOO

9.

Year

17,OOO

52,20032,80017,OOO

49,80017

1785

10. Year

85

85,OOO

10.

Year

17,OOO

S2,20032,80017,OOO

49,80021

17

81

11. Year

81

81,OOO

11.

Year

16,20047,40033,60016,OOO

49,60015

16

82

12. Year

82

82,OOO

12.

Year

16,40048,80033,20016,OOO

49,20015

16

83

13. Year

83

83,OOO

13.

Year

16,60050,40032,60017,OOO

49,600

17

17

83

1

'

a
o
Z
>
i)•

,

x
>
Z
o

A NOTE ON THE LOHMANN-RUCHTI EFFECT 39
the early years. Further we assume that the funds provided by depreciation
at the end of each year is wholly available and used to acquire new machines
on the first day of the following year, while the machines which are completely

depreciated are scrapped. Column 3 shows the book value of the machine stillin use each year, which becomes the basis of depreciation. Column 5 contains

the depreciation of each year, and column 6 the sum of depreciation charges
for the machines still in use (depreciation allowances). The amounts in column
7 are given as the differences between the cost prices of existing machines andthe depreciation allowances on them. As annual depreciations (column 5) areused to purchase machines again on the closing dates, the book value rises throughthese additions again (column 8). And as seen from columns 2 and 12, thenumber of machines (and so periodic productive capacity) grows considerably
by the policy of continuous reinvestment of depreciation charges (from 50 in
O. Year to 83 from 12. Year onward).
In essence this process of reinvestment of funds recovered from depreciation means that a certain amount of funds originally invested comes to be con-nected with a larger number of machines, so that we may call it a process ofdiffusing funds. Then, to what degree is this growth of productive capacity
by diffusing funds possible? This problem depends on some conditions rela-tive to the purchase of additional plant assets ex. whether new ones orused ones are acquired, whether price changes occur or not, and whether technicalimprovement has taken place or not on one hand, and on the ratio of theuseful life of these assets to the average period required to recover the plant

capital(3) on the other hand. If the assets to be purchased with recovered
depreciation funds remain the same in quality and price as the original ones,
the continuous reinvestment of depreciation will lead to a growth of the produc-tive capacity to the extent determined merely by the above-mentioned ratio.
When the capacity has expanded to this degree, "(1) the existing plant assets are

distributed evenly among all ages. (2) The annual depreciation is just suMcient
to replace the assets to be scrapped in each period, so that the balance on hand

remalns unchanged in number and book value."{`) This state of equilibrium
is reached because the essence of the Lohmann-Ruchti Effect lies in allocating
the currently recovered depreciation funds in excess of those necessary for current

replacements to future periods in the forrn of reinvestments in additional
productive capacities.

(3) E. Schljfer, Abschreibung und Finanxierung, Zeitschrtft fab'r handelswissenschaftliche

Forschung, 1955, pp. 139-140.
(4) Karl Hax, op. cit, p. 233.

ISAO NAKANO

40

III
For the purpose of establishing a law on the Lohmann-Ruchti Effect, oneof following three patterns is assumed concerning the original investment inplant assets: (1) all the homogeneous assets are acquired at a time; (2) they are
acquired gradually until the planned scale is reached; (3) various assets dissimilar in purchase prices and 1 or useful lives are acquired at a time. (ex. H. Langen,E. kosiol and K. Hax have recourse to (1), while H. Ruchti and K. H. Forster
adopt (2) or (3) as the starting point). As there are no essential differencesamong them, however, we shall consider only case (1) in this paper.

When the original plant assets are thus assumed to have been acquired
at once, the depreciation may be calculated by (a) the straight-line method or(b) the fixed percentage method, with the course of depreciation (a) corresponding to the course of provided services or (P) the depreciation going on fasterthan the course of provided services.

(a) The straight-line method is used.
(a) The course of depreciation corresponds to provided services.
In this case, the average period required to recover the plant capital being
half the useful life of the machines, it may appear at first that the reinvestment

of depreciation may double the productive capacity. It is not realistic, however, to assume a continuous reinvestment. When the useful life is n years, andthe reinvestment is made at the close of each year, the average period required torecover the plant capital wm amount to i+-ll+......+:=.il; . g(n+1)= n;1 ,that the extent of capacity expansion is nÅÄ n;1 === n2+nl (=: li-1 ) times•
son(P) The course of depreciation goes on faster than the course of provided.
servlces.

This is the case where the depreciation is completed before the end of theuseful life of plant assets. Reduction of the period of depreciation (whencompared with case (a)) leads to a shortening of the average period required torecover capital, which will increase the expansion of capacity to that degree.
When the useful life of plant assets is n and the period of depreciation m(n>m),the average period to recover piant capital is -mpll, with the resuit that theEFFECT
LOHMANN-RUCHTIA NOTE ON THE

41

capacity expansion will amount to--m-lill = m2+tl times. (ex. n: lo years,2

m:8years, m2+t l= 2 gO==2-g-). So long as we take the case ofasingle asset
firm, the sum of depreciation charges remains within its original cost, and so
the over-depreciation in early years is surely offset by the under-depreciation(or no depreciation) in future years. But when reinvestment is being madesuccessively, a state of equilibrium is attained where the over--depreciation on

new assets is equal to the under-depreciation on old assets with some secretreserve existing at all times. Therefore the amount of invested plant capital
is not constant but increases by the secret reserve.

(b) The fixed percentage method is used.

(a) The course of depreciation corresponds to the course of provided.
servlces.
When the pattern of services provided by the plant assets each year
declines corresponding with the depreciation charges, it is impossible to increase

the productive capacity by reinvestment of depreciations. It is true that theassets increase in number, but as the services provided each year drop withthe lapse of their usefu1 Iives, the totar provided services each year remains

unchanged.
On this point H. Langen shows the following example.(5) Suppose a firm
acquires a group of homogeneous machines capable of producing 200,OOO
units in total, with a useful life of 5 years and scrap value of 1 at a purchaseprice of 100,OOO DM in total. In this case, it is a depreciation rate of(1-}5/' loolooo ) = 900/o that will depreciate the assets to 1 DM in five years.

100

We assume that the course of depreciation corresponds to the course ofprovided services.

TABLE IYear

Remaining Capacity at

Provided Service

the Beginning of the Year

-900/eof (2)

Remaining Capacity at
the End of the Year

(1)

(2)

(3)

(4)

1950

loo ooo DM 2oo ooo units

90,OOO DM180,OOO units
9,OOO DM 18 OOO units'

lo,ooe DM 20,OOO units
1,OOO DM 2,OOO units

1951

1952
1953
1954

(5)

,

'
10,OOO DM20,OOO units

1 ,OOO DM 2,OOO units

100 DM
10 DM

200 units
20 units

900 DM
90 DM

1,800 units

100 DM

200 units

180 units

10DM

20 units

9DM

18 units

1DM

2 units

H. Langen, Die Kapa2itljtsausweitung durch Reinvestition liquider Mittel aus Abschreibung, Zeitschrtift ftir handelswissenschaftliche Forschung, 1953, pp. 62-63.

42 ISAO NAKANOWhen the funds recovered from depreciation are reinvested successively;

TABLE IIthe book value

Year

(1)

(2)

1

100,OOO
10,OOO+ 90,OOO

2

I

at the beginningof the year

M' - 1- OO',OLO'-O-

900/. deprecia-

the residual value
after depreciation

tion of (2)at the end of

the year(3)

90,OOO
9,OOO+ 81,OOO

E 9-OJoooremvestment atbook value after

the beginning

the reinvest-of the next year

ment

(4)

(5)

(6)

10,OOO
1,OOO

90,OOO
9,OOO+ 81,OOO
90,OOO

100,OOO
10,OOO+ 90,OOO
100,OOO+ 9,OOO
10,OOOThe services provided by the assets are represented by the depreciation incolumn (3) of Table II. As they are constant, it is clear that no increase inproductive capacity will take place by the reinvestment of depreciation.

(P) Provided services are constant.
When the acquisition price of original assets is A, we have a depreciation
charge of Ap (p = depreciation rate) for all years, because the depreciation charges

are currently reinvested so that the net book value after deducting depreciation
allowances remains constant and so the annual depreciation is also unchanged eachyear. On the other hand, the gross book value of machines increases constantly by'
A ul'Poo each year during their first useful lives through additional purchases.
When the useful life of the original plant assets is n years, the total gross bookvalue reaches its maximum plimit A+(n-1)•A•-

io-o. In the nth year theoriginal assets are scrapped and a state of equilibrium is attained, where thegross book value is A+n • A • -i?o• --t7--A :- n • A • - //g- tt . Compared with thestraight-line method, the fixed percentage method recovers a larger part ofplant capital in the early years of the useful lives of the machines, resulting
in a shorter period of capital recovery and so a larger expansion of productive
capacity. As in cases (a)-(P), here is an establishment of a secret reserve anda real increase in the amount of invested capital.

IV
It is pointed out that some premises are required for the Lohmann-Ruchti
Effect to be realized in practice. K. Hax explains them as follows: (1) new capital to be invested in plant assets must be introduced into the firm first of all;

ANOTE ON THE LOHMANN-RUCHTI EFFECT 43(2) the selling price of the manufactured goods must at least compensate the costs,

namely the depreciation must really be recovered; (3) the funds collected throughdepreciation must be currently reinvested in new plant assets. If the recovered

funds are not reinvested but applied to repayment of liabilities, the process
of expansion of productive capacity will stop immediately. (4) The whole plantmust be divisible to a large extent so that the depreciation for a year may beinvested in a part of the plant immediately. The larger the waiting is in comparison with the useful life of the plant, the less the expansion effect becomes.

(5) There must be necessity of increase in productive capacity. The expansionof production will be meaningless, if there is no market for the products(6}.

Further it is said that other sources of funds are necessary for this effectto be developed to the full, for the effect must be diminished to a considerable

degree, when depreciation must also be the source of liquid assets to be
increased corresponding to the expanded capacity.

v
When we are going to inquire into the significance of the LohmannRuchti Effect, we must be aware of the fact that the effect does not require theexpansion of productive capacity to be realized when it is not economicallynecessary. The Lohmann-Ruchti theory asserts merely that depreciation canbe a source of funds for additional investment in plant assets when there isalready the necessity of growth of the firm and expansion of productive capacity.
And so long as the growth of capacity is necessary economically, it is a naturalrequirement from the viewpoint of application of funds that the fund recoveredfrom depreciation (and the retained profit) shbuld be its source first of all, andit seems that this kind of application of funds is already practiced throughfinancial planning.

Even if the funds recovered from depreciation and retained profit are firstof all used as the source of funds for expansion as well as replacement of plant

assets, there may be in practice such a case where it becomes necessary to mix
other kinds of capital vsTith them. And in this case it is not the financial effectof depreciation alone but the effect of the combination of it with other sourcesof capital that can be obtained. Therefore, with the technique of accounting
today it is diMcult, they say, to ascertain the effect of depreciation alone. And

further it becomes hopeless to measure it as the Lohmann-Ruchti Effect has to
do with a long period, making the significance of this theory dubious.

(6) K. Hax, op. cit., p. 226.

44

ISAO NAKANO

Indeed it would be diMcult to ana!yze a practical case to determine how
far the growth of plant assets has been due to the Lohmann-Ruchti Effect.
But for financial planning the most important problem lies in making receipts
cover expenditures for investment in plant assets rather than an analysis ex post

facto. And when the funds recovered from depreciation are appropriated forthe purpose of expansion of plants, we find a form of the Lohmann-Ruchti
Effect there.

Perhaps we may regard this effect as a matter of common knowledge. But
this theory has contributed to demonstrating the possibility of the function of theinternal finance of depreciation and to determining its maximum extent. And
it will give us some advantages by making us aware of this function of depreci-

ation. For instance, the Lohmann-Ruchti Effect will be of great importance,
when in spite of an urgent necessity to expand productive capacity in the faceof increasing demand external capital is inavailable and the high corporate
income tax makes it hopeless to resort to retained profit. In such a case !iqui-

dated funds from depreciation can be planned to be set aside and reinvested.
Of course it may not be possible to assert that we are all suffering from such an

extreme scarcity of external funds as was found in post-war West Germany where
this effect became the object of public attention. But it is possible there areindividual firms which are in want of external funds and retained profit, though
they have a hopefu1 market. And in these cases this theory will offer a valuable
guide.

To sum up, the Lohmann-Ruchti Effect seems to be naturally realized
through financial planning in case of a growing concern, and when it does notappear very hopeful to have recourse to external funds and retained profit inspite of the urgent necessity of expansion of productive capacity, we must plan
an application of the depreciation funds in accordance with the Lohmann•-Ruchti
theory.

45

MANAGEMENT APPROACH TO REGIONAL
DEVELOPMENT PROBLEMS IN JAPAN
Minoru BEIKA

I
Regional development depends on dynamic activities by various public
and private organizations, and individuals in the community, balanced physical-

ly, economically, and socially. Industrial development is not the only way todevelop prosperous regions, but yet is one of the most effective. This article

aims to approach comprehensibly the regional development problems in Japan,
laying stress on industrial development by the application of management phylosophy.

The regional development policy of our central government of Japan is
now to restrict the exce$sive concentration of industrial activities in a few central

industrial districts and to diminish the economic differences in backward Iocal
districts. This clear policy was begunjust three or four years ago. The govern-

ment policy relating to regional development started about 1950, after WorldWar II. At first, the policy of this new act for the national development program

chiefiy aimed at land conservation and the development of natural resources
unutilized as yet, since the country had been desolated and reduced to direpoverty by the War. At the same time, the local government and communities
were eager to induce new industrial plants in their districts to recover theireconomic condition, with the chance of raising their property tax. Someregional development acts by several regions had been established for morecomprehensive development programs on the one hand, while excessive competition for the inducement of new industrial plants by the local governments

and communities had resulted in the establishment of a systematic policy of
information about suitable locations for industries by the central government.

In spite of these policies, the recent rapid economic development has greatly
deterorated the balance of physical, economical and social conditions for indus-

trial and living development in the central district, and yet has increased thedifference of the economic levels between central and local districts. Ever
continuing regional concentration of industries has brought about trafuc conges-

tion, misuse of land, and industrial nuisances on the one hand, while the rural
population, especially younger labour force engaged in agriculture, has decreased

46

MINORU BEIKA

year by year on the other hand. That is the reason why the government policy

for a comprehensive regional development program as stated above has been
adopted recently.

The government has divided the whole of Japan in three parts, that isthe excessively concentrated areas, adjustment areas, and development areas,from the standpoint of the new regional development policy. In excessively
concentrated areas the construction of new industrial plants are restricted inprinciple; the adjustment areas are the outer regions where there is danger ofthe same misuse of land as in the central district through rapid development,
since they asssume the part of adjustment areas to solve the problems of excessively concentration areas; and the development areas are local districts whichin the future will become the focal point for the industrial development policy.

We are now confronted by some peculiar problems of regional development
different from those of foreign industrial countries. The reasons are as follows.

European and American industrial countries have accumulated many experiences, through trial and error regarding regional development problems inthese one hundred years, and as a result, they have not only made relatively ap-

propriate laws and regulations for their regional development, but have also
gradually formed their experiences into a relatively suitable behavior for organi-zations and individuals constituting the communities for a desirable regional
development, even though it is not so satisfactory. Our country, as early as
1910, drew up several laws and regulations for some regional activities or city
planning. But although these laws and regulations were not suficient for regional development, Japan was not confronted with difficult problems so as toneed a comprehensive development program before World War II, because
our leading industries belonged to that of light industries, which in size weremuch smaller than that of heavy industries, and they were developing gradual-ly. After the War, our industries have developed with such extremely long
strides that their location factors have become worse and worse, and the living

conditions of urban districts also have been affected undesirably by them, as

stated before. We have now been confronted with many diMcult regional
problems within this very short time, differing from those of foreign highly
industrial countries.

Therefore, special consideration and efforts are necessary for overcoming
these dificulties in regional development. Regional activities are related tomany public or private organizations and individuals constituting the communi-ties. Cooperation and coordination between them are especially indispensable

to solve the urgent complicated problems in regional development. It is thereason why management approach is one of the most necessary means in our

MANAGEMENT AP?ROACH TO REGIONAL 47

DEVELOPMENT PROBLEMS IN JAPAN
free economic system.

II
Regional development depends largely on the industrial activities of national
and local enterprises, which are closely related to industrial location problems,
The industrial location problems are related to both conditions of the industrial
location in the districts and the management policy of the industrial enterprises.
The former, location factors, are well recognized in general, while the latter, themanagement side, is often overlooked, The spatial characteristics of industries
are built up by mutual relations of the locational conditions, chiefly relating
to public activities, and the management policies, relating to private activities.
The process for the selection of an industrial location consists of two steps,

which are the location selection and the site selection, and each step has its
peculiar procedure of consideration for the most desirable economic and social
development. The first step means the selection of the plant location in a widearea, and the second step means the selection of the plant site in the limited
sphere selected in the first step.
In the first step, that is the location selection, the problems for considera-tion lie in the discrepancy between the government and business policies. The
government expects industrial plants to locate in the so-called adjustment ordevelopment areas, avoiding the excessive concentrated areas. But individual
enterprises, which are facing severe competition tin their market, do not always
act in such a way, because of their cost consciousness and profit seeking policy.

The recent considerable public investment in these desirable areas is not fully

ready to meet the late high industrial development. However, in spite of theshortage of public investment, the industrial enterprises also must be held respon-sible for their business policies relating to industrial location problems. Thisis because the business feature and business policy of the enterprise is characteriz-

ed by the spatial specialities, which have accumulated because of the physical,
economical, and social structure of the region located, until now. Accordingly,

the enterprises need to adopt, more or less, a new business policy and reformtheir old business feature to adapt to the future regional structure which thegovernment intends to develop following a different regional pattern from thepast, if they see that the government policy is desirable for them too from along range standpoint. Our former regional structure of industries has been
the highly accumulative concentration of most kinds of industries in few central
districts, while the expected structure of the future is to orient to some degree

the regional decentralization as stated before. The business feature and busi-

48 MINORU BEIKA
ness policy of an enterprise should be changed to meet the change in the industrial

structure of the region. Such a process for enterprises may create the uniquebusiness activities for their further development. It is needless to say thatpublic investments in physical improvement are very important for regional

development, The writer emphasizes simultaneously the importance of thecreative activities of private enterprises which tend often to be overlooked.
The problems of the second step, the site selection, are related to the desir-able land use of the district. The most suitable site for industrial plants does

not always coincide with the most desirable land use of the communities. In
most cases, it does not mean that the site selection by private enterprises is direct-

ly contradictory to the interest of the communities, but it means that the enter-

prises should be a little more community-minded, going beyond being only
eMciency-minded. Undesirable disorder of land use has been recently broughtin succession by the enormous industrial development in metropolitan regionsof Japan. It should be recognized by industrial enterprises, that well-planned
land use is one of the necessary factors in their industrial activities, too. Of
course, the law and regulations of regional and city planning should be revisedor renewal to meet the changing circumstances of the regions. Moreover, it
is desirable that some device or facilities for industrial estates or industrial parks

to attain more easily the desirable use of land be realized.

Recently some kinds of industrial estates have been formed chiefly by local

public organizations. They have been of considerable use in assisting thedevelopment of small industriel businesses, since they could move to the newsite of the suburban district from their urban district where there was an irregular

mixture of industrial and residential use of land. But they do not seem tobe so well considered as to promote urban renewal and do not include the continuous control or maintenance of conditions in their new estates, although their

original form was to aim at many-sided considerations for industrial eMciency

and community development through maintaining continuously better land use.
The reason seems to be chiefly the sectionalism of local public activities. At

any rate, regional and community development should also be concerned as
one of the important problems in the business policies by industrial enterprises.

These will be further referred to in a later paragraph.

III
The general idea of most suitable industries in most suitable locations ormost suitable locations for most suitable industries has been a very important

standpoint in the regional development policy of our government. This is not

MANAGEMENT APPROACH TO REGIONAL 49

DEVELOPMENT PROBLEMS IN JAPANto be denied, but in spite of it, it is not so desirable, that this policy beliterally followed. Because regional conditions and industrial factors in andout of the business are likely to change dynamically. The present most suitablelocations for some industries will not always be the most suitable for them in thenear future, since industries are now confronted with high technical innovations

and living developmefit. Some industrial firms might have located in a certain
district depending on the most suitable location factors or some other special
reasons at that time, but at present, their original conditions might have beenchanged or been taken away for some reason, and might have become a little
or greatly unsuitable for the industrial activities of the firm. In spite of this,the firm might develop more and more at the same location, overcoming theirpoor conditions by their business policies through creative thinking. We haveseen many of these cases. The problems of industrial location are not to beanalysed statically, but dynamically.

The many experiences of regional problems in European and Americancountries are good examples of this standpoint. They now tend to adopt a
regional development policy of industriai diversification, because they had been

confronted with severe unemployment problems in eertain districts by thechanging structure of their industries, especially in Great Britain since 1930,

and in the U.S.A. since 1950. The diversification of the kinds of industries
in wider regions, depending on the principle of suitable industries to suitablelocations in smaller districts, is the most effective means for the absorption ofregional unemployment problems directly and further for the development ofadaptability in the changing region.

From the viewpoint of the private enterprise, the "business climate" ofthe communities and regions is now one of the essential location factors as well

as of many other physical and economical factors. A better business climate
is the leading factor for which private enterprise could more easily adapt tochanging circumstances. The importance of "business climate" has come to berecognized gradually in Japan, also. A diversified structure of industries inwider regions could generally bring out more easily a better business climate
in communities than a structure of single industries in the present innovationage, although it should not be overlooked that the regional concentration of

the same kind of industries could bring about greater eMciency by external
economies than that of diversification. Accordingly the balance of the centralization and diversification of industries is one of the most important points inregional development. Moreover, a better business climate in the region orcommunity depends highly on community relations by the industrial enterprises
themselves located there, as it is well recognized in the business world of theMINORU BEIKA

50

U.S.A. It should now be emphasized in our country that community relations
is one of the indispensable business policies of enterprises, especially as oneof the long-range policies in a free competitive economic system.

In Japan, the so-called master plan for ten years or more tends to be thecore subject in regional development planning, and for some economic goal(or index.) for a certain future year to which great importance is attached as
the leading factor in development activities. That is one of the effective means.

But it is more important to develop human energy in the communities for over-coming many changing conditions in themselves or surroundings. The planning technique seems to be too static for the problems of a dynamic regional
development.

IV
The long-range planning for regional development is originally different,
in its substance, from the !ong-range planning of a business enterprise in spiteof the same terminology, in a free competitive system. While the planningof a business enterprise is formulated and actuated by one unified decisionmaking body, the planning for regional development is related to many independent public and private bodies in the region. The problems to be overcome
tend to be misunderstood by the word planning.
The desirable regional development should depend on, above all, the close
cooperation and coordination df all the public and private bodies functioning

in the region. The so-called master plan of regional development perhaps
could clear up their respective parts to be played in the development, but mostof the regional activities are not such clear-cut problems, and they are very

complicated. We have had many cases in which some development activities
based on a comprehensive plan do not always have the desirable effects due tothe lack of coordination in the related public and private bodies, during theexecution of their planning. It is the reason why a comprehensive development
process should be carefully considered as well as the so-called master plan.

In other words, public and private bodies related to regional activities

should understand the importance of the regional and community problems,and approach them with cooperation and coordination through creative thinking; because each body which has been operating by itself based on a previously

used procedure, should cooperate to include a change in their old procedure.
These considerations are very important in our country which has less experi-ence and less time for regional development problems than European or American highly industrial countries.

MANAGEMENT APPROACH TO REGIONAL 51

DEVELOPMENT PROBLEMS IN JAPANNow we must take care of a comprehensive system for regional development,
which will consist of four steps. They are collection and data processing of
information relating to regional activities, planning of a comprehensive regional

development based on the processed data, technique of a comprehensive develop-

ment process depending on the cooperation and coordination of the relating
bodies, and feedback control of the result of development activities.

The second and the third steps which are the master plan and process
making, were dealt with here already. The first step, that of the information
system relating to the regional activities, should be reexamined as one of theessential means for eMcient development, This is the improvement problemof the administrative procedure of the central and local governments of Japan.

Recently, these organizations respectively have been equiping themselves withsome data processing equipments as accounting machines, punched card system
machines, and electronic computers, for the improvement of desk works. Gradually, these improvement activities will go to a higher level of an integrated

data processing system for regional development, This topic is dealt with byan other writer in this annals.

The fourth step is the feedback control of development activities by checking with the original plan. It tends to be overlooked very often, because thefeedback control or the aftercare of development activities is a very sober process,contrasting to the showy start of the development plan. For example, theexecution of the plan for complicated urban renewal needs the attentive feedback control of the process to minimize sacrifice. The four steps stated above

literally mean the process of management approach to regional development.

Our country has become highly industrialized after World War II and now
is gradually overcoming the many dificult problems in the regional developmentof its metropolitan and rural districts. In spite of this, we are still confronted

with more new problems. They are the conflict of location selection between
public and private interests, misuse of land between business, industrial, resi-•
dential and other functions in the communities, industrial nuisances in industriallyconcentrated and newly industrialized districts, traMc congestion, deteriorationof various industrial and social conditions of the communities. Many of thembelong to the so•-called social costs by the activities of private enterprises. It

is needless to say that the private enterprises have greatly contributed to national and local economic development through their industrial activities. And

yet they are requested to make further endeavors for overcoming their social

cost problems. The challenge to these complicated problems could be done
better by the creative cooperation of both public policies and private participa-tion.

52 MINORU BEIKA
The public policies of the central and local governments consist of someregulations for undesirable activities by private bodies, and some assistanceto private activities to overcome some of the social cost problems themselves.
Private activities, especially, their business policies, are desirable on two sides

that of active cooperation for regional and community development, and ofself-restraint when their operations become undesirable to the communities.

Notwithstanding these public and private aetivities for regional and community problems, they can not always be solved so easily in free competitive
economic system. Public control should not go far of private activities, andprivate self-restraint should also not go beyond their price limits which a severe

competition would lead to in the national and international industrial world,

These gap problems between public expectation and private intention are andshould be more or less challenged by more careful research for the key pointof the problems between the public and private interests. These attempts could
gradually solve their dithculties, but yet they would be insuMcient.

Recently, especially after World War II, some new types of solution forthe dificult gap problems seem to have been created in European and Americanindustrial countries. The industrial park or estate by public or private organi-zations are examples of the new types of desirable land use and maintenanceof industrial and social conditions. New Towns in the United Kingdom is atest of the comprehensive formation of new communities to decentralize theexcessively concentrated population in the capital. T.V.A. and many kinds ofport authorities have also been created for the effective cooperation of many
public and private activities to overcome some diMculties in regional develop-

ment problems, So to speak, these new organizations have been established
for absoring the social costs to overcome more easily and effectively the gap

problems in regional development in a free competitive economic system. The
writer believes that this is one of the test cases for management approach toregional development.
The outline of this article is illustrated by chart as follows.

Management Approach to Regional Development Problems

master•-planindustrial

locationlocafion

selection

devclopment

site

selection

dynamic

and social development

standpoint

locationpublicdiversifidation

factors

expectatlon

of industrles N.

businessfeatureandregional

physical, economical

and{suitable site}

subject

tO"M

K

Z.
z%

Å~
business policies
N N. Ia'ws and regulations,creatlve

for changing.. Nx and assistance byorganlzatlofis.

spnvateintention

desirable land use

K

g%
gk

processN>-!N

surroundings Sx. .-' public activities{

business climate-' N)cQoperation and self-// restraint by private

icommunity relationsi activities

irttegrated data proccessing and feedback control.

to overcome
the gap problem

es ce

o.o
>
efi

58
'z
X'"-.

zE

8

55

A RESEARCH REPORT ON OFFICE AUTOMATION OF
MIDDLE-SCALE CITIES IN JAPANJiro ONoI
In Japan it has recently become one of the most important tasks of local
administrations to rationalize their oMce•-works.

That is, because of the revision of the assessment-method of the residence

and municipal property taxes, increases in work entrusted by the government,
the necessity of preparing blue-prints for regional development, the claim of
public odicials for higher wages, the dificulty of securing employees and thedemand for improvement in city-oMce services, the ofice-works of each of thecities are meeting with great dificulties which are expected to become more
serious in the future.

Under these circumstances, it seems essential to me for each of the cities
to rationalize or mechanize their oflice works - in some cases even to organize

a so-called management information system dependent on a large-scale EDPS.
Taking into consideration the importance of this problem, we have conducted researches in othce rationalization and automation of middle-scale cities sinceApril 1962. In this paper, I intend to outline the results of this research andto examine some important points in regard to oMce automation of local adminis.
ratlons.

The objects of research were, as of March 1962, the ofices of fortyeightcities which ranged from 96 thousand to 728 thousand in population, and from
625 to 6170 in the number of oficials. In Japan, they constitute the ofices of
local administrations situated as middle-scale cities.

II
First, in this chapter, we shall examine the fundamental concept and general

aspects of improvement in oMce-works - except for the mechanization of oMce
works which we will consider in detail in the following chapters - of each of
the cities.

56 JIRO ONO
1. 0n the fundamental concept of oMce-works improvement
For example, some cities answered our inquiry as follows:
The city of Asahigawa; (1) synthetic modernization of administrative oMceworks, (2) eflicient and economic administration of the city, (3) maintenance ofthe rule of dealing with special administrative affairs individually, (4) main-

tenance of the rule of administration enlargement, (5) improvement of generaladministrative conditions, (6) estimation of human relations.

The city of Kawasaki; it has hitherto promoted the standardization of its
othce-works, especially of its system of forms and records. In addition to thisimprovement it will hereafter install a PCS or an EDPS to mechanize its generaladministrative oMce-works.

The city of Nara; it has fundamental purposes of executing economicallyand ethciently its administrative ofice-works, and to improve service to its
citizens. That is, it intends to expand the department of service, by means oflabor-personnel-savings or the financial surplus which is expected to be brought
about by rationalization or mechanization.

The city of Tottori; it has a regional development plan which includes
the plan for the rationalization of administrative organizations. Accordingly it
intends, (1) to turn all forms and records in regard to its citizen to cards which

are to be managed integrately, (2) to concentrate the several works at different

windows to a common counter, (3) to integrate similar departments or sections
to simplify the system of orders, (4) to integrate and to mechanize clerical works,(5) to integrate inventory control in charge of each department into one depart-

ment, (6) to standardize all records and forms and (7) to improve the physicalenvironment of the othces by rationalizing the lay-out of each department.

Thus, the statements, in regard to the fundamental ideas, offered by eachof the cities are not always the same in their understanding of the details or in
their expressions.

However, putting the answers of cities into order, we can conclude thatthe fundamental purposes of the cities are to save labour time and expenses ofoMce•-works, to turn the resulting reserve of power to the improvement ofservices for citizens and regional development, and to adjust the physical envi-

ronment of administrative oMces.

The items that are regarded as the most important means for improvement
are as follows: (1) Reformation of administrative organization, (2) Integrationand concentration of works at separate windows - in some cities a part of theworks is dealt with at the head-ofice window and another at the banch-oMce

window which are a few miles distant from each other-, (3) Integration of

A RESEARCH REPORT ON OFFICE AUTOMATION 57
OF MIDDLE-SCALE CITIES IN JAPANclerical works of similar characters, (4) Reformation and standardization of thesystem of records and forms, (5) Integrated control of all records or documents

in regard to citizens for a more ethcient administration, and (6) Promotion of
the mechanization of office-works.

But in regard to the fundamental ideas of administrative oMce-works there
are a few problems to be considered.
One is that a few cities have not as yet established a fundamental policy
for the improvement of their ofice works, That is, while on the one hand somecities have positively promoted rationalization on their basic idea as we haveseen above, on the other hand, other some cities still retain their very primitive
conditions.

We can say that the basic recognition for office-works improvement ofeach city is ill-balanced. And that conditions are also considered to be decided
by individual factors.

We are sure that the persons concerned must attach more importance tothis state because the grade of fundamental recognition substantially limits the
progress of rationalization, especially as to the installation of an EDPS for admi-•

nistrative odice-works.

Another point is that the public has more and more come to recognize that
oMce--works improvement itself is closely connected with the reformation of
the whole of local administration.

But the connection is only recognized from the viewpoint of short-term
administrative purposes such as the level-up of citizen-services or the integrationof many kinds of works at separate windows, and is not recognized from theviewpoint of long•-range purposes such as regional development or the environ-•mental adjustment of citizen-lives.

The people concerned must consider this problem, too, because a longterm improvement, especially high--grade mechanization, cannot be acceptedfrom the standpoint of a short-term planning.

2. 0n the organization of city-oMces
First, in the organization of city-oMces, except in some cities, the line
departments, for example, the department of construction or of public welfare,which are directly connected with the lives of citizens have generally a muchgreater position than the staff departments, such as the department of statistics,

of calculation, of systems and procedures and of planning.
Almost all staff departments as above-mentioned have recently been set up.
They have not so-called time-honored traditions in local administrations.
Of course it must be recognized that the organization chart is individually58 JIRO ONO
decided in accordance with the natures or the present-day tasks of each city,
but from the viewpoint of the whole local administrations and from the viewpoint of the complete mechanization of their office-works the establishment oflong-term plans of administration and the coordination of the resulting gap
among individual interests of each department in the execution-process of theplans are very important.
We are certain that a more powerfu1 department which would research,plan and coordinate for the improvement of the whole local administration fromthe long-term point of view must be established in all city-ofices, and that asection of odice management must be included in this department as an essential.
sectlon.
Secondly, we doubt whether the significance of data processing or information processing in the local administrations is fully recognized or not.

Certainly the endeabor in each of the departments-for example, thedepartments related to window services, of taxes, of records and documents,and of receipts and disbursements etc. -are eagerly seeking a solution to thebottleneck in their works process.
But it seems to me that the solution still remains at the stage of individualor partial improvement.
To be sure it is impossible for the city-oMces to take the approach of

so-called Management Information System or Total System in their works.
But individual or partial improvements which appear superficially in such special
clerical works as the calculation of residence tax or the assessment of property

tax must be directed and coordinated from the viewpoint of a long-term planningof the whole local administration and in connection with the whole organizationof a city.

For example, we must start from a viewpoint that examines what influences
the complete mechanization of oMce-works in regard to residence and property
taxes has on the future administration for industrial development of the region
through labor personnel saving and a more precise information processig, or inother words what form the mechanization of oMce-works must take in consideration of the future aspects of regional development or improvement of the physical environment of citizen-lives. .

From such a long-term point of view, we are sure that the departmentof planning which includes the sections of oMce management and of statistics,
and the department of data processing which has an EDPS as its central proces-

sor will have a much greater significance in the future organization of local
administrations.

As we stated in the beginning of this report data or information processingA RESEARCH REPORT ON OFFICE AUTOMATION 59
OF MIDDLE-SCALE CITIES IN JAPANin the present administrative oMce-works seems to be so important that its
significance must be defined from the viewpoint of the whole organization ofcity-oMce.

3. 0n the relation of the head-ofice with branch-oMces
The relation of oMce-works in the head-oMce with that of their branchoMces is one of the most important problems in the administrative organization,
which must be necessarily considered in the improvement process of office-works.

Because the integration of office-works at the windows or common works
is closely connected with this relation, though the integration of ofice-works

does not immediately mean the consolidation of branch-oMce with the headothce - as we can see in the plans of the city of Kumamoto which intends to makeits branch-ofices more powerful and at the same time to integrate ofice-works

at the window.
However, on the whole the othce-works of branches-except that partof works which is immediately in touch with citizens - is inclined to be consolidated with that in the head-othce.

At least, to some extent, adjustment of fundamental documents in regard
to the iives of citizens, preparation of all kinds of tax ledger calculations, prepara-tions, mailings of written orders for payments of taxes etc., which can be process-ed by large-scale oMce-machines, cannot but be integrated.
Therefore it is of little worth to consider whether each city must integrate
its branches' oflice-works or not, if it intends to mechanize its othce-works.

We must rather take into consideration the fact that the integration of the

branch-oMce•-works by large-scale ofice-machines should be consistent withservices to citizens - for example, the delivery of a residence certificate or a

tax-payment certificate and the acceptance of some kinds of payment or declaration - by some technical device such as the collation and the correction ofledgers by a television network.
The effects resulting from such an integration which consist of the promo-tion of rationalization or mechanization, labour-savings and cost reduction
must not be acquired at the sacrifice of good services to citizens.

Generally speaking, the oMce-works of public welfare and of receipts arenearly all kept in the branch-oMces.

Main items of oMce-works can be classified as follows:

The custody of oMcial seals, registration of residence, census, foreign
nationality and individual seals, clerical work of rationing, aceeptance of pay-ments of national health insurance premiums, of some kinds of pension prem-

iums, of taxes, of rents from public dwellings and of dues of public health60 JIRO ONO
maintenance, delivery of note-books for mothers and children and of several
kinds of certificate, grants in regard to the burial of citizens, recruiting of sold-iers and sailors, acceptance of subscriptions for emigration and of declarationof entrance into public schools or change of schools, etc,.

Formally the branch-offices belong to the department of general affairs or

the department of citizens, but practically they have the character of being

usher windows for each superintendent-department in the head-oflice, whichusually communicates with the branches by a few mail-cars or some liaison men

from one to four times per day in addition to telephones and usual mails.

And as above-metioned, it is generally-though there are such few
exceptional city-oMces as the city of Kumamoto and the city of Ohtzu thatplan to make the branches more powerfu1 because of their topography or their
populousness - recognized that the adjustment and integration of branch-oMceworks, even if it is partial, must be done in order to promote the mechanization
and rationalization of the whole administrative oMce-works of a city.

The clerical works of taxes and national health insurances cannot but bemechanized and therefore be consolidated with those of the head-ofice on account of the expense involved.

Fundamental ledgers in regard to residents and some kinds of odice-works
at windows must be - wholly or partially - integrated and adjusted, if people
intend to eliminate the duplication of ofice-work processes, the duplicate preparation of ledgers and the need for citizens to make repeated visits to the city-oMce.
In this case branch-oMces, as they are at a distance, will have to collate theirledgers with those in the head-oMee and correct them by some technical device.
We must, however, pay attention to the fact that the integration of branch-oMce-works is not always decided only from the efliciency standpoint. Thatis, it is often decided by a political consideration stressing the feeling of citizens

in individual areas, though we cannot say whether this political maneuver has
a positive or a negative influence on the integration.

4. 0n the organization in charge of oMce-works improvement
Generally saying, in most of the city-ofices, as the staff organization which

directly belongs to the top-management, the committee for improvement ofadministrative oMce-works, which consists of a deputy mayor as the chairman
and the chiefs of departments concerned as other members, investigates therationalization or mechanization, submits a report on the matter and coordinates
its execution.

On the other hand, the sections of oMce-works improvement or of oMce-

A RESEARCH REPORT ON OFFICE AUTOrvlATION 61
OF MIDDLE-SCALE CITIES IN JAPANworks efliciency which belong to one department - for example, the departmentof general affairs, the department of administration etc.-in the division ofgeneral affairs is in charge of the practical study, planning and guidance, though
in many city--offices a special section is not always set up, but such sections as

the documents and records section or the personnei section often take chargeof the oMce-works improvement as an additional task.

The number of members is usually from ten to twenty in the committee
and from three to seven in the section.
In addition to the committee and the section, the society for the study ofofice-works which is organized by the persons concerned in a city-oMce oramong a few city-offices, even if informally, plays an important part in thismatter.

Of course, it is the committee or the section such as above•-mentioned that
becomes the driving force in the promotion of the rationalization or mechanization of administrative odice-works.

We are certain that in the future these organizations will become much
more significant in both the quantity and the quality of their work. Since
the rationalization or mechanization of administrative oMce-works is one of
the most important tasks in present-day Japan, the work in this field seems tohave increased more and more, and because of this the special section or the

special department will have to more positively conduct research, planningand guiding the improvement, while at the same time the committee will haveto investigate the plan, to superintend its execution and to coordinate the in-terests among divisions or departments concerned from the higher stand-pointof the whole of local administrations.

Especially in the stage of higher mechanization dependent on an EDPS,
the present-day section will need to becorne a special department which would
include a section of system analysis, and it would have to be more closely con-nected with the department of EDPS or the departrnent of centralized dataprocessing.
' However, it is more essential that the mayor, the deputy mayor, the revenue

oMcer and the members of the municipal assembly, that is, the top-managementsof local administrations clearly recognize the importance of oflice-works improvement and that a zealous man of ability has charge of it, rather than thata special section and a special committee are formally set up, though thearrangement of formal organizations will become more necessary in proportion
to the scale of the city's growth.

In the fortyeight cities taken up in our research, we can find some cities

which have acquired an excellent performance without any committee, andJIRO ONO

62

at the same time there area few cities in which theconsisting of many kindsof "chiefs".

.
.
nominalcommlttees
remam

III
In this chapter, we will survey the actual states of mechanization in thefortyeight city-ofices.

1. 0n machines which are used today in the city-othces
There are many kinds of othce-rnachines used in the city-oMces as follows;that is, EDPS, PCS, accounting machine, book-keeping machine, automatic
calculator, handling calculator, adding machine, addressing machine, offset
printing machine, copying press, typewriter (of both English and Japanese),cash register, shredder, belt-conveyor, automatic folder, automatic inserting andmailing machine, blue-printer, micro-film camera, etc.

Only two sets of EDPS (of Tosbac 4231 which is made by the TokyoShibaura Electric Manufacturing Co. Ltd. in Japan) have been installed in thecities taken up in our research, that is, in the cities of Nishinomiya and Toyonaka,

though other large-scale cities, especially the so-called big Six of Japan haveeach a EDPS.
Therefore, the main machines for data processing in the fortyeight city-

oMces are automatic accounting machines or automatic bookkeeping machinesof NCR, Burroughs, RUF, Olivetti etc.
They are used in most of the city-othces except the city of Miyazaki andthat of Fukushima. For example, at the minimum the cities of Tottori, Ohtzu,
Hachinoe and Tokushima have each one automatic accounting machine, thecity of Amagasaki has nine and at the maximum the city of Fukuoka has fourteen. On the average each of the cities has three to four automatic accounting

machines of some type.
On the other hand, automatic or handling calculators and eopying presses
show a remarkable significance in quantity, among the othce-machines of various

kinds. As above-mentioned, the need of making clear copies, printing andcopying, which is one of the most important fields in administrative oMce-works

improvement, requires a large increase in copying presses in addition to typewriters and offset-printing machines.

Micro-film cameras are significant in the preservation or the eMcient custody of documents and records, while cash registers and belt conveyors also play

important parts in ofice-works improvement at the window.

A RESEARCH REPORT ON OFFICE AUTOiMATION 63
OF MIDDLE-SCALE CITIES IN JAPAN

2. 0n the main ofice-works mechanized
As the main objects of EDPS, PCS and automatic accounting machine we
can show the oMce-works with regard to residence tax, property tax, national
health insurance, and water and sewerage services, after which follow receipts

and disbursements, budgeting, closing account, dues for public health rents
from public dwellings, supplies for each department in city-ofice, public welfare

and pensions as sub-objects.
In addition to these works, according to the character of each city, the sections of statistics, calculations for construction and public service corporations(for example, bus service and gas service) are under consideration for mechaniza-tion. The mechanization of copying must also be paid attention to as anotherimportant mechanization field though it does not call for using EDPS, PCS or

accounting machines.
3. 0n the effects acquired by mechanization
TherlcitY-othce which use the many kinds of machines as mentioned in theforegoing section show some effects of mechanization.
For example, immediate delivery of various certificates in the city of Hako-

date; labor-savings, exact recognition of taxable objects, fair assessment oftaxes and an increase of assessed amount in the city of Hirosaki; a reduction

in payroll-working-hours in the city of Kanazawa; an increase of ofice-works
efficiency and time saving in the city of Nara; the large increase of data process-ing speed, exactness and ability in the city of Toyonaka which installed an
EDPS (Tosbac 4231); and labord-savings in the city of Matzuyama.
In short, we can show the effects of rnechanization in the local administra-tions as follows: (1) reduction in quantity of oMce-works which must be
manually dealt with, (2) application of labor and time savings acquired as aresult to the works of appraisal, research and study, (3) speed up of ofice-works,(4) increase of accuracy in processing oMce-works, (5) deveiopment of ability

to process more complicated works, (6) reduction in the cost of othce-works
by the labor saved or the drop-in of personnel increase.

Of course, the last or personnel problem is the most important in the mechanization of local administrative ofice-works. In regard to this effect, theresearch gave material for the table as follows (provided that the personnel

expenditure is 300 thousandrv400 thousand yen and that the actual working
hours is 1800 hours, for each person per year).

It is needless to say that we cannot attribute these effects only to EDPS,

PCS and accounting machines. Correctly speaking, we must appraise the

JIRO ONO

64

city

main machine

office-works mechanizedamount ofnumber of
personnel
reduction

personnel expenses

reduction(\1000)A

2 accounting machines

payroll, tax

6.5

2000 tv 2600

B

3 accounting machines

payroll, tax

412oo rv 16oo

154soo ev 6ooo

9

2700

15 tv 204500 fiv 8000

CD

8 accounting machines

payroll, tax, water-service,and others

service for residents

3 accounting machines

payrollpqyroll, receipts andE

1 set of PCS

disbursements, budgeting,national health insurance,tax, service for residents,

F

1 accounting machineG

2 addressing machinesH

2 accounting machinesI

1 set of EDPSJ

3 accounting machines

3 accounting machines,

700

tax

tax, payroll, water service

4500 fiv 6000

15

670

tax

the whole administrativeoMce-works
tax, payroll, national health5015000 .w 2ooOO

3.4

600

lnsuranceK

4 accounting machines

4000

tax, payroll'

effects from the viewpoint of the whole data processing system in each city-

oMce which uses not only EDPS, PCS and accounting machines but various
other equipments. However, here we are supposing that the main ofice machine
and its quantity express the character of the whole system, from which we get
the above table.

Though it may not always have generality because the data collected islimited to eleven city-oMces, from the above table, we can infer that an account-ing machine means a personnel expense savings of 300 thousand N 1000 thousand
yen per year, and that the period of pay-off for the accounting machine expenditure is therefore three to ten years, or five or six years on the average, andthat these facts seem to be a condition for the purchase of an accounting machineor another general othce-machine, though logically we do not accept the pay-off
period of five to six years.

These relations are considered to be acceptable also in the case of a PCS.
But in the case of an EDPS, its pay-off period is a little complicated though

we must not jump to a conclusion because of the insuMcjency of data. For

A RESEARCH REPORT ON OFFICE AUTOMATION 65
OF MIDDLE-SCALE CITIES IN JAPAN

example, if at the price of sixty million yen a city-oMce purchases an EDPS
which can save twelve million yen or the personnel expenses of forty persons
a year the pay--off period is five years. And if it can only save six million yenor the work of twenty persons, the period is ten years.

This personnel reduction or the amount of personnel expense reduction
is decided by the quantity of the city's main oflice-works, that is, the othce-worksof residence tax, property tax, national health insurance, water-service, etc.
And the quantity is in turn decided by the scale of the city, especially its population.

For a middle-scale EDPS at the price of fifty million yen, we infer thatthe pay-off period will be five years on the average in cities with a populationof about 250 thousand, and that the period will be shorter in cities with greater

populations and longer in cities with smaller populations.
Therefore, in view of these facts, under the existing state of things, theinstallation of a rental EDPS is very dificult in cities with a population under
300 thousand, as far as appraising the effects from the view-point of personnel

expense reduction is concerned.

In other words the reasons why an EDPS cannot be installed in middlescale city-ofices are considered to be (1) that an EDPS is too expensive for thern

to purchase, (2) that the peak of each ofice-work appears one above anotherat the same time and that, as a result, on the average the rate of operation ofoMce-machines decreases, and (3) that the quantity of othce-works which will
acquire a fair marginal eMciency by its mechanization is not so large as justifies

the installation of an EDPS.

4. 0n some problems in the oMce-works mechanization of local administratlons

The problems which were pointed out by persons in charge of othce-works
improvement in each city are as follows, as placed in the order of their importance.

(1) In order to rationalize ofice-works the fundamental policies of thecentral government authorities towards local administrations must be reformed.

(2) Funds for mechanization are insufficient.
(3) The peak of each oMce-work is about the same time, therefore clashes.
( 4 ) The calculation-, assessment- and self-assessment-procedures of taxes
are too complicated.

( 5 ) The top management, municipal assembly and general oMcials must
more firmly recognize the necessity of oMce-works mechanization.

(6) The department or section in charge of othce•-works improvement
must be given more power.

66

JIRO ONO(7) OMce-works in regard to property tax assessment considered to become more laborious in the future (because the procedure has been recently re-vised to be make more exact but very complicated while the assessment will bemade once every two years though it has been once every three till now).
( 8 ) Administrative oMce-works will find a greater shortage of hands, especially those of specially trained men.

(9) The arrangement and custody of documents and records will become
more and more dithcult because of their quantity.

(10) The data processing ability of oMce-machines is insuficient.
(11) OMce-buildings are too small.
(12) Ledgers which must be prepared for each of the central government
authorities concerned are too numerous.
The lack of knowledge of the central government authorities in regard to
local administrations is one of the most fundamental problems in othce-works
improvement. Some substantial problems - for example, reformation of theprovisions in the property tax law without regard to the increase of clerical works

in local administrations, dfficulty in unifying the fundamental ledgers for resi-

dents because of discrepancies among the provisions of each central government

authority, duplication of works brought about as the result etc. - must be
solved in agreement with the alteration of the central government authorities'
policy.

These facts appear in some of the above-indicated points, that is, "duplication of peaks of works", "too complicated procedure for calculation or assessment""too many ledgers for the central authorites concerned" etc. Especially the
duplication of peaks makes the installation of an EDPS very difficult.
As regards this point, the city of Kawasaki insists on the alteration of thecentral authorities' ploicy towards local administrations as follows, that is, "Themain items to be reformed are (1) arrangement of laws and provisions in relation
to the residents, especially resident registrations, (2) adoption of more flexible

policies of the central authorities concerned towards local administrations. (Forexample, the Ministry of Justice and the Ministry of Public Welfare should always
takemore practical measures respectively for each of the cities), (3) advancementof the date for cities to close their accounts to set up an appropriate time-lag fromthe central government, (4) consideration to distribute a well-balanced quantityof clerical works throughout the year, (5) examination of coding budget-subjects,and (6) planning of various necessary institutions by which the ofice-works
mechanization of higher grade would be accomplished."
The cities of Amagasaki, Matsuyama and Ohmuta insist that the central government should set up a research and education institute for the improvement

A RESEARCH REPORT ON OFFICE AUTOMATION 67
OF MIDDLE-SCALE CITIES IN JAPANof local administrative oMce-works, in order to examine the various laws andprovisions in comparison with the real quantity of clerical works necessary to
put them into effect, in order to standardize all kinds of forms which are usedin the city-offices in Japan and in order to train the managements and specialstis for local administrations.

It is pointed out, too, as one of the most fundamental problems that the top-

management, municipal assembly and general oMcials have little understandingof the necessity to rationalize administrative oMce-works. This fact appears
in some of the above-mentioned points, that is, "The insuficient funds for mechanization," "The necessity of a more powerful department in charge of oMce-

works improvement," "The lack of hands in the city-oMces" and "The insufficient data processing ability of office-machines."

The most important obstacle in the process of mechanizing ofice-works
is the lack of funds, or the unreasonable requirement for personnel expense redu-

ction. Though it must be recognized as very dithcult for a city-oMce to installan EDPS, we feel that the top management should examine the mechanizationof ofice-works from the viewpoint of a more long-range planning.
At the same time, the top-management, municipal assembly and othcials
in each city seem to be inclined to regard only the city's interest, and this is con-sidered to make the standardization or simplification of othce-works of all cities

dificult. For example, the adherence to the so-called "right of independent
taxation of a municipality" makes oMce-works very complicated.
The cities of Otaru, Utsunomiya, Yokkaichi and Kumamoto indicate thatthe understanding of the top•-management, the enhancement of general oMcials'
spirit and reformation of the organization of the city-oMce, are basic conditions
for othce-works rationalization.

IV
Last, in this fourth chapter, we shall consider the plan of oMce-works mechanization and the direction of its future development in each city.
Under present conditions each city positively endeavors to rationalize its oM-

ce-works with various ofice-machines, especially automatic accounting machineswith which we have already dealt.
As we surveyed in the beginning of this paper, the quantity of local administrative oMce-works is foreseen to increase greatly, and the quality is also ex-pected to become more complicated in the future. Because the city-oMces will
have to hear much heavier burdens, that is, an increase in population, a greater
charge of clerical works entrusted from the prefectures or the central government,

68 JIRO ONO
complication of taxation procedures, new institutions for social welfare, prepara-tion of a master-plan for the regional development, etc.
Therefore, each of the city-ofices plans to install new ofice-machines, toovercome the burden though there are some other problems to be examined.
1. 0n the increase of ofice-works in the future.
We are sure that the increase percentage of each of the main oMce-works inthe future three to five years, on the average of twenty-two cities, will be as follows.

odice-work
service for residents

in 3

years

in 5

years

25

e/o

35 o/opayroll21

o/o

29 e/oaccountmg

19o/o

33 o/olnventory
residence tax

22

O/e

39 o/o18o/o

26 o/oproperty tax
national health insurance

21

o/o

30 e/o12o/o

18 o/osocial welfare

34

o/o

38 o/openslons
water servlce

26

o/o

36 o/o21o/o

34 o/ostatlstlcs

37 o/o56 o/oIt is evident that each city is considering how to overcome this heavier burden of ofice-works, though the general trend of all the cities' ofice-works should

not be appraised only from this table because the real increase is to be decided
by each city's individual condition such as the grade of its industrialization.

We must pay attention to the fact that the othce-works in regard to social
welfare, pension, service for residents and statistics are considered to increase
sharply, contrary to our expectations, and the works of sewerage service and otherkinds of taxation - though they are not shown in the above table - are expected to increase very much.

2. 0n the plan of oMce-works mechanization
Aganinst the expected increase of oMce-works such as aboveny•mentioned,
each city has a plan to install new ofice-machines.

In eight city-ofices, for example, the cities of Kawasaki, Nara, Hiroshima,
Kochi, etc., they intend to install a smali- or middle-scale EDPS within a few
years.

And fifteen city-oMces plan for each to purchase one to three accounting
machines in a few years, for example, the city of Otaru intends to purchase two
accounting machines, the city of Nagasaki three machines, the city of Kure one

A RESEARCH REPORT ON OFFICE AUTOMATION 69
OF MIDDLE-SCALE CITIES IN JAPANmachine, etc.

In addition to the EDPS and accounting machines, MCP (multiple cards
processors), automatic calculators, copying machines, cash registers, addressing
machines, typewriters, belt conveyors, filing cabinets, shredders, automatic folders,micro-film cameras, etc. are included in the plans of mechanizing city-othce.
The increase of copy presses and offset printing machines are expected to be fairly

remarkable.
The fields of ofice-works which are shown as objects of these various ma-•chines are placed in order of their importance as follows: They are oMce-works
in regard to (1) residence tax, (2) making clear copies, printing and property tax,(3) payroll, (4) national health insurance, (5) public welfare, census registration
and receipts, that is, clerical works at the window, (6) water service, (7) custodyof documents and records, (8) statistics, (9) accounting, (10) pension, (11) publichealth.

Thus the high level of mechanization of works in regard to taxation, nation-

al health insurance, payroll, accounting and pension will be the most importanttask in city-oMces.

The most immediate and main factor is taxation works, in which quality andquantity will decide the future state of the whole oMce-works mechanization ineach of the cities.

On the other hand, works to make clear copies, the custody of documents
and records, and works at the windows will be very positively mechanized, though

they are not always connected with EDPS, PCS and accounting machines underpresent conditions.

Those fields which are to be rationalized by sub-oMce-machines will haveto be investigated, as important elements, in relation to EDPS from the viewpointof the whole data processing system.

3. 0n the possibility of using EDPS or PCS in city-oMces
On the ground of our research we are certain that cities which have populations over 250 thousand and residence tax items over 70 thousand to deal withcan economically - in the sense that its pay-off period is five to six years - use

a PCS or a middle-scale EDPS.
Cities with populations of 200 ev 250 thousand and with residence tax itemsof 60 N 70 thousand are considered to be still in such a stage that they cannot

always economically install a PCS or a middle-scale EDPS, though accounting
machines are insuficient to deal with their oMce works.

However even in the former cities, there are some obstacles in the way of
installing a PCS or an EDPS. The obstacles to be eliminated are placed in the

70 JIRO ONO
order of their significance as follows.

(1) EDPS or PCS is too expensive.
(2) The city-oMce has not yet prepared its various internal conditions forreceiving EDPS or PCS.
(3) Lack of understanding of top-managements.
( 4 ) Preparation for installation is too complicated and laborious.

(5) Some kinds of customs and laws make the installation dificult.

(6) The quantity of oMce-works is too small to be processed by EDPS
or PCS.
(7) Exceptional ofice-works are too many to process the whole data by

EDPS or PCS.
( 8 ) Lack of specialist,(9) After--service for the installation is uncertain.

(10) In order to install PCS or EDPS, city-oMce buildings must bereconstructed.

(11) The EDPS or PCS cannot print Japanese KANA letters with thesame high speed as alphabetical letters.

(12) A well-balanced quantity of oMce-works cannot be distributed throughout each season of the year.

"The EDPS is too expensive", "Poor economy of EDPS", "InsuMcient preparation for the installation" and "Lack of top-management understanding" meanthat the top management and general oMcials of city-othces do not understandthe correct significance of EDPS or PCS in administrative oMce-works improvement.
As above-stated, in the near future, city-oMces of certain scales are consi-

dered to be able to use a middle-scale EDPS economically. But the lack of understanding of this fact - in other words, the lack of understanding of the wholeof administrative oMce-works or the lack of logical examination of the economy

of EDPS -brings about the lack of funds, and criticisms that the EDPS is.
too expenslve.
We must first regard that there are some cases in which the demand of the
EDPS's economic effect is too serious to be met. That is, people appraise theeffect by the immediate amount of personnel expense reduction only from theshort-range viewpoint while disregarding the theoretical examination of its eco-nomic effect, ignoring the quality of persons who can be applied to other works

by othce-mechanization and evaluating lightly the improved service as theresult of the installation.

Second, we can point ont that the lack of understanding of the central go-

vernment authorities is one of the reasons for the expensiveness of EDPS.

A RESEARCH REPORT ON OFFICE AUTOMATION 71
OF MIDDLE-SCALE CITIES IN JAPANAs we stated above, it decreases the rate of operation of EDPS - in otherwords, it increases the cost of the electronic data processing-in that the peaks

of many kinds of ofice-works appear at the same time at certain seasons of the

The policies, laws and provisions which the central government authorities make in disregard to their influences on actual othce-works increase the expensiveness of EDPS and make its installation very diMcult.
If the oMce-works of each city are appropriately assorted in quality and distributed in a well--balanced quantity in each season of the year, the rate of opera-tion of EDPS and also the savings would naturally increase. In other words,
if the entire quantity of office-works in a year is the same, even an EDPS whichis smaller and therefore cheaper can deal with the oMce-works. Therefore its
installation will also become much easier.

Other problems indicated, for example "Obstacles resulting from customs,""Difficulty brought about by exceptional works" and "Decrease of printing
speed by use of Japanese KANA letters " are considered to be able to be solved
technically. They are not substantial factors in promoting ofllce-works mechanization.

4. 0n a city-office's sharing of a data processing system with others, or
entrusting its data processing to a center.
At present, some offices of satellite cities around the city of Osaka plan tobuild an elctronic data processing system to share; the city of Sapporo and Hokkaido Prefecture similarly intend to install an EDPS in co-operation; and thecity of Himeji used to entrust a part of its data processing to the IBM data processing center in Osaka. So, sharing a data processing system or entrusting dataprocessing to a center becomes an important factor in city-oMce works.
The city-oflices taken up as our research object have not yet experienced
such sharing or entrusting. But several city-oflices have interest in this problem

and have examined the possibilities because sharing an EDPS with others is
considered to reduce the cost of data processing.

However, here also, the greatest obstacle is that the peaks of ofice-worksof each city appear at the same time in certain seasons of the year, so that, thedata processing center is considered not to be able to operate eMciently, becauseof the great discrepancy of oMce works between the peaks and off-peaks.
If each city insists on receiving suMcient service from the center, a largescale expensive EDPS must be installed. If the center can install only a middlescale EDPS, each city cannot receive suflicient service.

So, in the sharing of a data processing system, the city-oMces must each ad-

72 JIRO ONO
just its peak of othce-works so that they do not coincide. Therefore, in order tomake the adjustment possible, the laws, provisions and each city's relation withthe central authorities should be reformed, or at least must be examined once

more from the viewpoint of such a form of oMce-works mechanization.
On the other hand, it is considered that there will be much profit if somecities should build an independent data processing organization which would
not be restricted by various laws such as the Labor Standard Law or the law ofpublic oMcial's wage system.

The adoption of two shifts or three shifts can make the rate of operationof the EDPS increase and a high salary system can attract specialists of data pro-.
cessmg.
5. 0n the possibility of integrating the ledgers of residents and other materials for administration into punched cards, magnetic tapes and othermagnetlc memones.
If the records of resident registration, ledgers for properties and for various
taxes, that is, the data in regard to individual residents, factories, shops, farms,

forests, etc. can be all stored on punched cards, or magnetic tapes, or other mag-netic memories, and if they can be immediately updated, and are at the serviceof citizens and other administrative works, the administration of cities will bemuch improved in eMciency.
In our research, thirty-two cities stated that they will have to develop sucha system which uses an EDPS of fairly high grade as the central processor, though in the process to install the highest EDPS they vvill have to go through various steps, that is, (1) integration of various ledgers, (2) conversion of integrated

ledgers to visible cards which can be hand-sorted, (3) mechanization of sorting,matching and retrieval of visible cards, (4) conversion of integrated ledgers topunched cards, and use of a PCS or an EDPS, (5) installation of an EDPS andconversion of the integrated ledgers to magnetic tapes, (6) addition of some kin-ds of random access memory etc.

(1963. 12. 19)

73

DIE GESCHICHTE DER PRIVATISIERUNG
Masaya OKADAIDie Geschichte der heutigen Privatisierungsbestrebungen reicht weit indie Vergangenheit zurUck; denn seit es bffentliche Wirtschaft gibt, gibt es auchKritik an ihr.

Hier sollen im wesentlichen die letzten Jahre behandelt, fUr die tiltere

Vergangenheit aber auch einige Hinweise ausfUhrlich gemacht werden.
Nun was ist Privatisierung? Die Antwort erscheint leicht: die OberfUhrung

von Verm6gen der 6ffentlichen Hand in private Hand(i). Aber erst in den
letzten Jahren ist ein anderer Sinn allmahlich im Wort Privatisierung enthalten.

Die Privatisiertungsforderung hat ein gr6Beres Gewicht durch die These derEigentumsstreuung erhalten, so daB die alte Privatisierung konnte die neue
Privatisierung ersetzt werden.

Man kann einige groBe Abshchnitte der Privatisierungsstrebungen unterscheiden. Hier sollen sie nach der Reihe behandelt werden.

II
LljBt man frUhere Jahrhunderte auBer Betracht, so kann der ersten Periode
die Zeit vor 1914 zugerechnet werden.
In ihr war die deutsche Wirtschaft in sttindigem Ausbau begriffen. Sieforderte und enthielt vom Staat krZftige UnterstUtzung. In jenen Jahren
wurde das System der Handelsvertrtige und der Schtttzz611e auf- und ausgebaut,der AuBenhandel florierte, die Industrialisierung schritt lebhaft voran.

In jener Zeit gibt es auch Kritik an der erwerbswirtschaftlichen Bettitigung

des Staates. Als Beispiel dafUr sei erwahnt, daB der 10 Deutsche Handwerks-

und Gewerbekammertag im Jahre 1909 die Fragen des Wettbewerbs durch
staatliche und sttidtische Betriebe behandelte und in einer Resolution die "m6gli-

chste Einschrljnkung der Regiebetriebe" forderte{2). Aber diese Kritik wuchs
sich nicht zu Privatisierungsforderungen von der Art aus, wie sie heute erhoben(1) Hirche, Kurt: Die Kom6die der Privatisierung, Der Kampf um die 6ffentliche
Wirtschaft, 2. Aufl., 1959, S. 85. NQch siehe hierzu die andere Abhandlung.
(2) Hirche, Kurt: a, a. O., S. 10,

MASAYA OKADA

74

werden.

Es braucht hier nur an die Ausdehnung(Gas, Wasser, Elektrizittit usw.) in Landern undder Versorgungsunternehmenlichen Bettitigung des Staates (an die damalige

Gemeinden und der wirtschaftVerstaatlichung von wichtigen

Unternehmen und Wirtschaftszweigen) erinnert

zu werden.

III
Die zweite Periode des Privatisierungsgeschichte kann die Zeit nach dem
Zusammenbruch des Wilhelminischen Kaiserreiches 1918 zugerechnet werden.

Damals waren die Betriebe-wie nach 1945 - ausgeblutet, ohne Reserven. Sie brauchten Rohstoffe, Kredite, Subventionen - kurz: staatliche Hilfe.

Und sie brauchten die Arbeitnehmer, um ihre Betriebe aufzubauen, auf dieFriedenswirtschaft umzustellen und den AnschluB an den Weltmarkt wieder.
zugewlnnen.
Und aus der Arbeiterbewegung erscholl der Ruf nach Sozialisierung. In
der Sozialisierung der volkswirtschaftlich entscheidenden Wirtschaftszweige
erblickten Millionen von Menschen das Mittel, nicht nur die durch Krieg,

Zusammenbruch, Kontributionen und Reparationen hervorgerufene Not zu
Uberwinden, sondern auch zu einer besseren Gesellschaftsordnung zu gelangen.
Das Schicksal der damaligen Sozialisierungsforderungen ist bekannt(3).

Nun sobald Ende 1923 mit der Stabilisierung der Mark der SchluBstrich
unter Infiation gezogen war, sobald sich erwies, daB die in jenen Jahren mit

vieler MUhe und groBem Kapitalaufwand neu geordnete 6ffentliche Wirtschaft
gesund und eintrtiglich war, wandte sich das Unternehmertum mit zunehmender
Kritik gegen die 6ffentliche wirtschaftliche Bettitigung. Die damaligen Vorst6Be

richteten sich unter anderem gegen die Reichsbahn und Reichspost und hatten
bereits den Teilerfolg, daB beide aus dem Reichshaushalt ge16st und zu selbstan-digen Unternehmen gemacht wurden. Da die ErtrZgnisse der Reichsbahn in
der Folgezeit ftir Reparationszahlungen verpftindet werden muBten, wurde das

Unternehmen verblieb im Reichseigentum(`). Um so stljrker wurden allmlihlich die Vorst6Be gegen die Wirtschaftsunternehmen der Lander und vor allem

der Komrnunen. WortfUhrer dieser Forderungen waren die Verbljnde derprivaten Wirtschaft, insbesondere der Reichsverband der Industire und Hansabund. Vornehmlich auf ihr Betrieben fanden sich die damaligen Spitzenver-

bande der Wirtschaft am 10. November 1926 zu einer Kundgebung zusammen,(3) Hirche, Kurt: a. a. O., S. 11.
(4) Reichsgesetz Uber die Deutsche Reichsbahn-Gesellschaft (Reichsbahngesetz) vom
30. August 1924.

DIE GESCHICHTE DER PRIVATISIERUNG
in der gegen das "Eindringen der 6ffentlichen Hand in die private Wirtschaft"protestiert wurde(s).

Diese groBe Kundgebung bildete den Auftakt fUr einen auf breitester
Kampffront angelegten Feldzug gegen die 6ffentliche Wirtschaft. In den
gemeinsamen EntschlieBungen wurde gefordert, daB "entsprechend dem geschichtlichen Werden der deutschan Wirtschaft" und "der Eigenart unseres
Volkes" das Privateigentum die unantastbare Grundlage der deutschen Wirtschaft bleiben mUsse, und diese durch mit der Privatwirtschaft konkurrierende

6ffentliche Unternehmungen nicht geftihrdet werden dUrfe. Es wurde grundsitzlich gefordert, daB 6ffentliche Betriebe nicht mit der Privatwirtschaft in

Konkurrenz treten dUrfen, daB alle Eingriffe der 6ffentlichen Hand gemeinsam

abgewehrt werden mUBten und daB die bUrgerlichan Parteien des Reichstags
und des Landtags sich bei allen gesetzgeberischen Beratungen Uber die wirtschaftliche Betatigung der 6ffentlichen Hand nach den Grundsatzen der Spitzen-

verbande des Unternehmertums richten sollten. Diesem Appell folgte derkonzentrische Angriff, zuntichst durch Absperrung der 6ffentlichen, insbesondere

der kommunalen Wirtschaft, von den ausltindischen Kapitalmarkten. Unter
der Finanzdiktatur Schachts wurde eine Anleihesperre tiber die Kommunen,
die wichtigsten Trtiger der dffentlichen Wirtschaft, verhangt(6).

Uberdies auf der Tagung des Reichsverbandes der Deutschen Industriewurde die Parole der "Entkommunalisierung" ausgegeben. Und dem mit
aller RUcksichtslosigkeit gefUhrten Bestreben der Privatisierung ist es gelungen,auf das gr6Bte interkommunale Elektrizitljtsunternehmen, die Vereinigten
Elektrizittitswerke Weslfalen, maBgeblichen Einflu6 zu gewinnen. Die Stadt
Breslau hat zwar den kommunalen Eigenbesitz ihres Elektrizittitswerkes bewahren

k6nnen, muBte jedoch aus Kapitalbeschaffungsschwierigkeiten dem GesfUrelKonzern auf 20 Jahre hinaus das Recht der zustitzlichen Strombelieferung ein-r2umen. Berlin hat seine wertvolle Beteiligung am Elektrizitatswerk SUdwest
verkaufen mttssen und einige kleinere Elektrizitatswerke sind privatisiert worden.

So hat die Kommunalwirtschaft auf wichtigen Positionen der Elektrizittitswirt(5)Hirche, Kurt: a. a. O., S. 12.

Tr2ger dieser Kundgebung und der auf ihr gefaBten EntschlieBung waren:
1. der Deutsche Industrie- und Handelstag, 2. der Reichsverband der Deutschen Industrie, 3. der Reichsverband des Deutschen Handwerks, 4. der Centralverband
des Deutschen Bank- und Bankiergewerbes, 5. der Zentralverband des Deutschen
GroBhandels, 6. die Hauptgemeinschaft des Deutschen Einzelhandels, 7. der Reichsverband der Privatversicherung, 8. der ReichsausschuB der Deutschen Landwirtschaft. (a. a. O., SS. 12-t3.)(6)

Handbuch der 6ffentlichen Wirtschaft, herausgegeben vom Vorstand de$ Gesamtverbandes der Arbeitnehmer der 6ffentlichen Betriebe und des Personen- und Warenver-kehrs, 1930, S. 643. •75

MASAYA
OKADA

76

schaft Terrain verloren(7).

Den EinbuBen steht sogar auf wichtigen Gebieten ein weiteres Vordringen
der 6ffentlichen Wirtschaft gegenUber, so z.B. die EinfluBnahme der PreuBischen

Elektrizitlits AG auf die ThUringer Gas AG, den Erwerb von Erd61feldern indeutschen Erd61gebieten durch die PreuBische Bergbau- und Htitten- AG und
die Beteiligung der Viag an dem wichtigen ostdeutschen Braunkohlenbergbauunternehmen der IIse-Bergbau AG(s).

Und "gesetzliche MaBnahmen zur Beseitigung aller in dffentlicher Hand
befindlichen Geschaftsbetriebe" ist gefordert worden und dies mit dem einen
lapidaren Satz begrUndete: "daB die Beh6rden unfahig seien, Wirtschaftsbetriebe

zu leiten." Die deutschnationale Landtagsfraktion hat zunachst eine wesentliche Verschirfung der staatlichen Aufsichtsrechte Uber die Kommunen auf
allen wirtschaftlichen Gebieten gefordert. Die Deutsche Volkspartei forderteim GemeindeausschuB des PreuBischen Landtages (18. 0ktober 1929) ein Verbot
jeglicher wirtschaftlicher BetZtigung, die dazu bestimmt oder geeignet sei, den

Gewerbetreibenden des Handwerks oder des Einzelhandels Wettbewerb zu
machen(g).

Wenn es in jenen Jahren dennoch nicht zu gr6Beren EinbuBen der 6ffentlichen Wirtschaft kam, so ist dies auf die 1930 hereinbrechende groBe Weltwirt-

schaftskrise zurUckzufUhren(iO). Und nochmals wenige Jahre danach begann das
nationalsozialistische Reich, in dem die Privatisierungsforderungen vollstandig

verschwunden waren. Und nach einiger Zeit verging das Nazireich.

IV
Die dritte Periode der Privatisierungsbestrebung beginnt nach 1945 undreicht bis in das Jahr 1953 hinein. Die zerst6rten Betriebe unter groBen Opfern

der Arbeitnehmer und mit tatkrtiftiger Untersttitzung ihrer Gewerkschaften
wieder aufgebaut. Die Hauptlast des Kampfes gegen sinnwirdrige Demontagen
wird von der Arbeitnehmerschaft getragen. In dieser Zeit gibt es von derNotwendigkeit einer Privatisierung 6ffentlicher Unternehmen nichts zu k6ren.

Nun der Warenhungen und der Nachholbedarf der deutschen Bev61kerungsind riesengroB. Auch in den Ubrigen Lljndern der Welt werden Industriewaren, Maschinen und Ausrttstungen aller Art verlangt, da die groBen Welthandelsv61ker unter RUstungslasten seufzen, die Markte noch nicht voll versorgen
(7)
(8)
(9)

Handbuch der 6ffentlichen
Handbuch der 6ffentlichen
Handbuch der 6ffentlichen(10)

Hirche, Kurt:

a. a. O., S.

Wirtschaft,Wirtschaft,Wirtschaft,
13.

644.
64S.
s. 647.
s.

s.

DIE GESCHICHTE DER PRIVATISIERUNG

77

k6nnen und wenig sptiter in die Koreakrise verstrickt sind. So ist fUr die
schnell wachsende deutsche Produktiofi im Zeichen des Verkaufermarktes bei
stark Uberhohten Preisen ein flotter Absatz gegeben. Die Aufwartsentwicklung
der Ifidustriebetriebe wird noch dadurch auBenordentlich gef6rdert, daB erst
Kredite der Besatzungsmachte, sptiter Marshallplangelder die zuntichst fehlenden

Kredite ersetzen, der Staat Steuer- und AusfuhrvergUnstigungen gewtihrt und
die Arbeitnehmer trotz laufend erh6hter Arbeitsleistungen mit LohnforderungenzurUckhalten, Hand in Hand mit diesem allgemeinen wirtschaftlichen Aufstieg
waren natUrlich auch zahlreiche 6ffentlicke Betriebe vorangekommen(ii).

Man begann sich ftir die dffentliche Liegenschaften und Unternehmen zu
interessieren. Ohne daB die Offentlichkeit davon unterrichtet und von Privatisierung gesprochen wurde, sind von 1945 bis in das Jahr 1950 hinein zahlreicheGrundstUcke und Gebtiude, die der ehemaligen Wehrmacht geh6rten, sowie
Betriebe und Betriebsteile des alten Reichs-und preuBischen Verm6gen an
private Interessenten verkauft worden. Diese Verkaufe erfolgten durch die
Ltinder, teilweise auch durch die Gemeinden und Treuhtinder, die von den
Besatzungsmtichten mit der Verwaltung dieses Vermdgens betraut waren,
solange die Bundesrepublik Deutschland noch nicht existierte. Aber auch als
das Grundgesetz(i2) in Kraft getreten und durch die Artikel 134 und 135 das

frUhere Reichsverm6gen sowie die preuBischen Unternehrnungen zu Bundesvermdgen erkltirt worden waren, hat es noch Jahre gedauert, bis eine einheitliche

Bundesverm6gensverwaltung aufgebaut und den keineswegs bereitwilligen Landern die Mbglichkeit entzogen wurde, selbstherrlich Uber dieses 6ffentliche

Eigentum zu verfUgen. Aber im November 1949 muBte die SPD-Fraktion die
Bundesregierung fragen, ob es stimme, da6 der Bundeswirtschaftsminister die
Absicht einen Privatisierung des Volkswagenwerkes bekanntgegeben habe.
Und im Herbst 1951 war durchgesickert, daB sich mehrere Interessentengruppen,

darunter auch eine amerikanische, um den Kauf der Howaldtwerft bemUhten.
In diesem Zusammenhang kam es zu einer Aussprache im Bundestag, bei deres sich um die erste bundesparlamentarische Privatisierungsdebatte Uberhaupt
behandelt. Aus ihr ist zweierlei festzuhalten. Erstens forderte damals keine
Partei offen die Privatisierung der Werft, selbst die FDP hielt es noch fUr geraten,sich gewunden auszudrUcken; zweitens die Bundesregierung war damals nochkeineswegs privatisierungsbegeistert, mindestens hielt sie es noch nicht fUr

zweckmaBig, sich in der Frage zu engagieren. Sieht man von deisen beiden
Bundesunternehmen ab, so kann bis in das Jahr 1952 hinein noch nicht von(11) Hirche, Kurt: a. a. O., S. 14.
(12) Grundgesetz fUr die Bundesrepublik Deutschland (Bonner Grundgesetz) vom 23. Mai

1949.

78

MASAYA OKADA

einer allgemeinen Bewegung gegen die Offentliche Wirtschaft gesprochen werden(i3).

In Frtihjahr aber wurde auf Vorschlag des Bundesverbandes der Deutschen
Industrie vom GemeinschaftsausschuB der Deutschen Gewerblichen Wirtschaft
den Fraktionen des Bundestages und der Landtage eine Erklarung gegen dieterwerbswirtschaftliche
Betitigung der 6ffentlichen Hand zugeleitet. In dieser
Erkltirung wird zunachst von der unrichtigen Voraussetzung ausgegangen, daB

die Markt-und Wettbewerbswirtschaft des privaten Unternehmers durch das
Grundgesetz garantiert sei, und dann behauptet: "Mit den verfassungsmaBigen Grundrechten steht es demnach in Widerspruch, wenn die bffentliche
Hand sich ttber das MaB hinaus, das zur ErfUllung hoheitlicher Aufgaben erforderlich ist, mit Eigenbetrieben auf erwerbswirtschaftlichem Gebiet betatigt.
Tut sie das dennoch, so vollzieht sie in einer FUIIe von neuen Einzeltatbestanden

bis hinab in die kleinsten Gebietsk6rperschaften fortlaufend eine Enteignungdes Bereichs privater Wirtschaft ohne die geringste Entschtidigung. Der private

Unternehmer als der Trtiger des wirtschaftlichen Leistungswettbewerbs unddes damit verbundenen Risikos sieht sich einer wesensfremden Konkurrenz
ausgesetzt, die v611ig risikolos und unwirtschaftlich ihn unterbieten kann, weil

hinter ihr jederzeit deckungsbereit die 6ffentliche Hand steht, die derselbe

Privatunternehmer-wie er mit Erbitterung feststellen muB-mit seinen
Steuergeldern erst zu der Unterbietung befahigt." Zum SchluB wird derAntrag begrti6t, den die Bundestagsfraktion der CDU!CSU zu dieser Frage im
Bundestag eingebracht hat, und an die gesetzgebenden K6rperschaften, auchder L2nder, appelliert, gegen alle eigenbetrieblichen Einrichtungen der 6ffentli-

chen Hand - soweit sie nicht im Interesse des Allgemeinwohls dringend erforderlich sind - die erforderlichen MaBnahmen zu treffen .......{i4)Das Wort "Privatisierung" ist hier noch nicht gefallen, man spricht nur
davon, die bestehenden 6ffentliche Betriebe einer allgemeinen UberprUfung zu
unterwerfen und sie gegebenenfalls abzubauen.

Und am 28. April 1953 spricht der Prtisident des Landesverbandes derBayerischen Industrie, Generaldirektor Dr. Otto Seeling, auf einer Tagung desVerbandes Pfalzischer Unternehmer in Bad DUrkheim. Er spricht: Der Staatverliert an Ansehen und Autoritat, wenn er sich den Tages- und StraBenkampf
des wirtschaftlichen Wettbewerbs begibt. Will er dem ausweichen, so bleibt
ihm kein anderer Weg Ubrig, als ins Monopol zu gehen. Er tut dann etwas,
was seinen BUrgern verboten ist. Die Zusammenballung wirtschaftlicher Macht(13) Hirche, Kurt: a. a. O., SS. 15-16.
(14) Hirche, Kurt: a. a. O., SS. 16-17.

DIE GESCHICHTE DER PRIVATISIERUNG

79

in den Hljnden des Staates ist viel gefahrlicher als wirtschaftliche Macht inprivaten Handen. Beim Staat gesellt sich zur wirtschaftlichen Macht die politische Macht. Dadurch wird eine Totalittit geschaffen, die mit den Grundsatzen
eines demokratischen Staates nicht vereinbar ist. Mit dem Staatskapitalismus('5)
ist es wie mit der Planwirtschaft: beide streben zur Totalittit<i6).

Und auBerdem durch den Krieg und die Kriegsfolgen haben zahlreiche
deutsche Unternehmungen und EigentUmer wertvolle Verm6genssubstanz im
Ausland verloren, zu deren Ersatz sich der Bund verpflichtet hat. Zur ErfUllung dieser Entschtidigungspflicht wljre die Privatisierung der in 6ffentlicher

Hand befindlichen Wirtschaftsunternehmungen der einfachste, gerechteste undzugleich wirtschaftlich sinnvollste Weg(i').

Nun auch nach ErlaB des Vorschaltgesetzes(i8) hat es noch rund zwei Jahre
gedauert, bis der Offentlichkeit erstmals wenigstens in gr6Ben ZUgen ein Uber•-blick tiber das Erwerbsverm6gen des Bundes gegeben wurde. Das geschahdurch einen ausfUhrlichen Artikel "Der Bund als Unternehmer," den der damalige
Ministerialdirektor und enge Mitarbeiter des Bundesfinanzministers, Prof. Dr.
Oeftering (heute Prtisident der Bundesbahn), im amtlichen Bulletin der Bundes-

regierung am 18. Juni 1953 ver6ffentlichte. Diesem Beitrag kommt historische

Bedeutung in der Geschichte der Privatisierungstendenzen zu; denn mit ihm
wird die Periode der Einzelvorst6Be abgeschlossen. Jetzt sieht man den Gegner
6ffentliche Wirtschaft klarer von sich, nun werden die Fanfaren geblasen zum
groBen Sammeln aller Privatisierungsfreunde. "Der Bund als Unternehmer"das war eine Herausforderung in den Augen aller Wirtschaftswunderlinge und
Lobpreiser untcrnehmerischer TUchtigkeit, die nicht hingcncmmen wurde(i9).

v
Von Mitte 1953 ab kann der Beginn einer von den verschiedensten Seiten
gesteuerten und aus mehreren Quellen genihrten Privatisierungsbewegung
detiert werden. Es ist die Periode, in der die verschiedensten Pline aufgestellt(15)

Staatskapitalismus ist der Einsatz von staatlichen Mitteln oder von Steuergeldern zum

Zwecke der GrUndung oder des Erwerbs wirtschaftlicher Unternehmungen oder der

(16)
(17)
(18)
(19)

Beteiligung an solchen. Unter den Begriff des Staatskapitalismus fallen somit nicht
die Subventionen und Kredite, die der Staat entweder aus eigenen Mitteln oder unter
seiner BUrgschaft wirtschaftlichen Unternehmungen gewUhrt. (Seeling, Otto: Staatskapitalismus - eine neue Gefahr, 1953, S. 6.)
Seeling, Otto: a. a. O., S. 10.
Seeling, Otto: a. a. O., S. 13.
Gesetz zur vorlliufigen Regelung der Rechtsverhtiltnisse des Reichsverm6gens und derpreuBischen Beteiligungen vom 21. Juni 1951.
Hirche, Kurt: a. a. O., SS. 20-21.

MASAYA OKADA

80

und in der auch einige kleinere Privatisierungen - sozusagen als Abschlagzahl-

ung - vorgenommen und bekanntgegeben werden.
Nun der Bundesfinanzminister beifUgte bei der Vorlage des Haushaltsplanes

1954 erstmal auch einen allgemeinen Nachweis Uber das Bundesvermdgen und
die Bundesschulden. Und der Bundestag beschloB am 6. Mai 1954 im Rahmenseiner Haushaltsberatungen, einen UnterausschuB "Bundesbeteiligungen" ausden AusschUssen fifr Wirtschaftspolitik, Finanz-und Steuerfragen, Geld und
Kredit und dem HaushaltsausschuB zu bilden, der sich mit der Prttfung und
Klarung aller Fragen, die mit dem Bundesverm6gen zusammenhingen, befassen
und Vorschlage fifr seine Neuordnung vorbereiten sollte{20).

Nun Dr. Atzenroth schlug zur Befriedigung der AnsprUche der Gltiubiger
der fundierten Schulden des alten Reichs vor, eine groBe Holdinggesellschaft

zu schaffen, in der das Erwerbsverm6gen des Bundes zusammengefaBt wird.
Die Schuldner sollten dann mit Anteilen an dieser Holding befriedigt werden(2i}.

Dr. Duhmer schlagt ein Gesetz Uber die erwerbswirtschaftliche Bettitigung der

6ffentlichen Hand und eine Planung der "Entstaatlichung" vor{22). Erwin
H5ussler vorlegte 1956 einen Privatisierungsplan, nach dem die Bundesunter-nehmen und- beteiligungen in mehrere organisch zusammengehdrige und aus
verschiedenen Rentabilitatsstufen m6glichst gleichmaBig gernischte Konzerne
gegliedert und ihre Aktien in eine Zentralinvestmentgesellschaft eingebracht
werden sollten. Diese Bundesinvestmentgesellschaft sollte dann ihrerseits
Zertifikate verkaufen-und zwar zwecks breiter Eigentumsstreuung zunlichst

hauptsichlich an Arbeitnehmer, denen zugleich bestimmte VergUnstigungeneingertiumt werden sollten<23). Diesem Plan hommt historische Bedeutung in
der Geschichte der Privatisierung zu.
()berdies verfuhren auch 47 Privatisierungsfreunde aus den Fraktionen der

CDUICSU, der DP und FVP, die am 5. Juli 1956 beantragten, die Bundesregierung m6ge einen Gesetzentwurf Uber die Privatisierung des Volkswagenwerkes
vorlegen. Und der FDP legte am 26. September 1956 einen Gesetzentwurf"Uber die wirtschaftliche BetUtigung der 6ffentlichen Hand" vor.

Nach diesem Entwurf sollte gesetzlich festgelegt werden, daB alle wirtschaftlichen Unternehmen und Regiebetriebe der 6ffentlichen Hand (also nicht

nur die des Bundes, sondem auch der Ltinder, Gemeinden und Gemeindever-(20) Hirche, Kurt: a. a. O., S. 24. Schon am 9. April 1954 hatte die SPD in einem EntschlieBungsantrag die Einsetzung eines Ausschusses "zur Klarung der strittigen Fragendes ehemaligen Reichsverm6gens" gefordert. Der Antrag wurde abgelehnt.
(21) I-Iirche, Kurt: a. a. O., S. 27.
(22) Hirche, Kurt; a. a. O., S. 31.
(23) Hirche, Kurt: a. a. O., S. 33.

DIE GESCHICHTE DER PRIVATISIERUNG 81
bande), die nicht bestimmten, sehr eng umgrenzten Voraussetzungen genUgen,
zum B6rsenkurs zu verliuBern seien. Ein mit groBen Vollmachten auszustattenden UberprUfungsausschu6 sollte Richtlinien fUr Zeit, Art und AusmaB der
VertiuBerung erlassen, die fUr Regierungen und Verwaltungen verbindlich zu
sein h5tten(24}.

Nun zwar konnte die Regierungspartei darauf hinweisen, daB in der Folgezeit einiges geschehen war. Sie konnte sagen, daB der Bundesfinanzminister

mit seinen Ver6ffentlichungen Uber die Bundesunternehmen von Jahr zu Jahr
offenherziger alle Datum auf den Tisch gelegt habe, daB der UnterausschuB"Bundesbeteiligungen" einsetzt wurde, eine Anzahl Betriebe verkauft worden
sei und die stindige Bereitschaft bestUnde, weitere zu vertiuBern. Dennoch war

sich jeder im klaren, daB sich am Gesamtbestand der Bundesunternehmen von1953 bis 1957 verhaltnismtiBig wenig getindert hatte und mit Beibehaltung derbisherigen "normalen" Verkaufsmethoden wahrscheinlich auch kUnftig wenig
indern wtirde, einfach deshalb, weil der Kreis derjenigen, die ein Wirtschafts-

unternehmen zu Marktpreisen kaufen k6nnen und wollen, ein sehr begrenzten
ist(25}. Diese Periode der Privatisierungsgeschichte wird mit dem Erscheinender Eigentumsstreuer kennzeichnet.

vr
Mit der Volksaktie beginnt die fUnfte Periode der Privatisierungsgeschichte,

die vom FrUhjahr 1957 bis in die Gegenwart reicht. Diese Periode ist die
Periode der Verwirklichung,Auf dem Hamburger Mai-Parteitag der CDU wird vom Bundeswirtschaftsminister Erhard die Ehe zwischen Privatisierern und Eigentumsstreuern verkUndet und gesagt, daB beide ein Kindlein gezeugt hatten, das sie "Volksaktie"

nennen. Dieses Kind sollte im Volkswagenwerk zur Welt kommen. Die
CDU einbrachte kurz nach ihrem Hamburger Parteitag, am 22. Mai 1957, denGesetzentwurf tiber die Regelung der Rechtsverahltnisse des Volkswagenwerkes
im Bundestag. Und in der Tat hat diese Partei den Wahlkampf 1957 in wesentlichem Umfang mit den Parolen "Privatisierung" und "Volksaktie" bestritten(26}.

Nun unter Leitung des CDU-Abgeordneten Dr. Hermann Lindrath wurde
ein besonderes Privatisierungsministerium geschaffen. Von diesem neuen"Bundesministerium fUr wirtschaftlichen Besitz des Bundes" ist nach einer(24) Hirche, Kurt: a. a. O., S. 34.
(25) Hirche, Kurt: a. a. O., S. 36.
(26) Hirche, Kurt: a. a. O., S. 38.

82 MASAYA OKADA
gewissen Anlaufzeit eine rege Tatigkeit entfaltet worden(27).

Bundesschatzminister Lindrath wies darauf hin, daB das Ziel der Bundesregierung bestUnde darin, "mit der Privatisierung des erwerbswirtschaftlichen

Bundesverm6gens einen vvirtschaftlichen Beitrag zur Bildung von Eigentum inder Hand breiter Volkskreise, insbesondere der arbeitenden Bev61kerung, zu
leisten. Die Volksaktie ist die Voraussetzung daftir, daB privatisiert wird."

Der Abgeordnete und Geschaftsfuhrer der CDU-SozialausschUsse Hans Katzer
versichert guten Glaubens: "Unser gesellschaftspolitisches Ziel heiBt nicht:

Privatisierung des Bundesverm6gens, sondern es heiBt: Eigentum fUr jeden.
Die Privatisierung des BundesvermOgens ist dabei ftir uns ...... ein erster, abersehr sinnvoller Anfang(2s),"

Und die erste Volksaktie kam zur Welt Ende Mirz 1959 nicht im Volk-N
swagenwerk, sondern in der PreuBag(29), PreuBag wurde als Testfall der Volk•-

saktie ausgewahlt. Und nach einiger Zeit, im FrUhjahr 1961, wurde die Privatisierung des Volkswagenwerkes mit der zweiten Volksaktie verwirklicht.

Im Vergleich mit den frUheren Perioden hat diese Periode die neue verschiedene Eigenart. Diese Privatisierungen mUssen wir soziale PrivatisierungenheiBen. Die Volksaktie ist ihre notwendige Voraussetzung. GewiB in derVolksaktie sind die Wirtschaftspolitische- und Sozialpolitische Ziele der Privatisierung vereinigt worden.

(27)
(28)
(29)

Hirche, Kurt: a. a. O.,
s. 39.
Hirche, Kurt: a. a. O.,
s. 49.
PreuBische Bergwerks- und HUtten AG.

83

RECENT TRENDS IN THE BALANCE OF
PAYMENTS OF JAPANFukuo KAwATAI
The purpose of this article is to make a survey of the trends in the balanceof payments of Japan in recent years. A nation's balance of payments accountis usually divided into current account and capital account. The former is
subdivided into visible and invisible trade accounts and the latter into long-term

capital and short-term capital accounts.

The recent figures of our balance of payments and our foreign exchange
reserves are shown in the following table. (See Table 1.)
Table 1. Japan's Balatice of Payments in Recent Years(in millions of U.S. dollars)
Current Account

Capital AccountFiscal

Year

1957
19S8
1959
1960
1961
1962
as 1962(Jan.-Dec.)* a963(JanrDec.)

VisibleInvisible

Trade

Trade

-235
369
155
3
-864
292
241

145
131
38
-73
-139
-225

-207

LongBalancetermCapitalShort-

term

Capital

-90
soo
193
-70

-10
90
-27

-1,O04

173

-204

67
37

297

262

-125
182
676
456
29
172

-365

-572

471

184

1

-84

ForeignErrorsOverallandExchange
OmisBalance
Balance
Holdings
sions

677
629
326
434

-120
39
29
-62
-91
-116

-109
345
387
636
-436
302
355

655

-46

37

-94
-35
155

75

629
974
1,361
1,997
1,561

1,863
1,841

1,878

The fiscal year begins in April and ends in March of the following year.
es Calendar year.
Source: Bank of Japan, Foreign Escchange Statistics.

Table 1 shows the following facts:( 1 ) Balance of visible trade fluctuates very widely.

(2) Balance of invisible trade has turned negative since 1960 andtheamount of deficit tends to increase year after year.

' (3) The net receipt of long-term capital has been growing larger
larger year by y. ear.

and

84 FUKUO KAWATA( 4 ) The balance of short•-term capital was highest in 1960, and thereafter
it has been decreasing. •(5) Overall balanee registered negative in 1957 and in 1961, but in otheryears it was positive.

(6) Our foreign exchange reserves showed a remarkable increase, trebling their' amount from 629 million dollars at the end of fiscal year 1957 (thatis in March 1958) to 1878 million dollars in December 1963.

'

II
As shown in Table 1, our visible trade balance makes wide fluctuations.
This is chiefly attributed to changes in imports. Table 2 shows the movementof our export, import and balance of trade since 1951.
Table 2. Japan's Expert, Import and Balance of Trade(in millions of U.S. dollars)
Fiscal Year

ExportImportBalance

1950

920

962

1951

1,405

1,658

1952
1953

1,168

1,790

1,24S

2,243

1954
19S5

1,601

1,767

2,095

1,9S6

-42
-253
-622
-998
-166
239

2,494

2,782

-- 288

1956
1957
1958
1959
1960

2,951

3,146

-235

2,849

2,480

3,42S

3,270

3,920

3,917

1961

4,123

4,987

1962

4,824

4,587

1962 (JanrDec.)

4,787

4,546

1963 (Jan.TDec•)

5,3S8

5,56S

369
155
3
-864
292
241
-207

Source: Bank of Japan, Foreign Exchange Statistics.

Table 2 has made it clear that our exports have generally made a steady growthyear by year, although they declined a little in 1952, and in 1958, whereas
our imports rose heavily every four years, that is in 1953, in 1957 and in 1961,

bringing about a large deficit in the balance of trade. This is explained byour trade cycle. As Japan is poorly endowed with natural resources, her economic

expansion depends greatly upon the import of foreign resources. It is, there-

RECENT TRENDS IN THE BALANCE OF PAYMENTS OF JAPAN 85
fore, quite natural that in a boom period her imports should rise considerably,

causing her foreign exchange reserves to dwindle. To check the outfiow of
our foreign exchange reserves, the government takes a tight money policy, thus
restricting imports. In addition to these general causes, the crop failure of ricemade our food import expand in 1953, and the Suez issue in 1957 considerably
raised the value of our imports.

It is very interesting to note that in the year when import becomes solarge that our balance of payments shows a remarkable deficit, the rate of growthof our economy in the following year is also reduced to a very low level. Table
2-1 shows the correlation between the large deficits in the balance of trade (in1953, 1957 and 1961) and the fall in the rate of growth of our economy in thefollowing years (for example, 19S4, 1958 and 1962.) (See Table 2-1.)
Table 2-1. Deficits in the Balance of Trade and Change of G.N.P. over Previous Year
Deficits in the Balance of Trade(in millions of U.S. dollars)

Fiscal Year

Change of G.N.P.
Over Previous Year (e/.)

-998
-166
139
-288
-235
369
155
3
-864
292

19S3

1954
1955
1956
1957
1958
19S9
1960
1961

1962

17.0*
3.3
10.3

9.0
7.9
3.2
17.9

13.2
14.0
5.1

* Calendar year.

III
Our invisible trade had registered a positive balance before 1960, and had

usually offset the negative balance of visible trade, turning the balance of

current account into surplus except in 1953 and in 1957. However, since1960 the balance of invisible trade has turned negative and the amount of deficit

has still been increasing.(') Table 3 shows our balance of invisible trade.
Why in recent years has our balance of invisible trade become negative andbeen deteriorating? We could mention the following reasons:(2}(1) As to our invisible trade situation, please refer to my article: F. Kawata, "A Studyon Japan's Invisible Trade," in Kobe Economic and Business Review, No. 9, 1962.
( 2 ) Mr. N. Matsuo, Trends in our Invisible Trade, Monthly Butletin for Financial Statistics,

June 30, 1963. (in Japanese)FUKUO KAWATA

86

Table 3. Balance of Invisible Tradeof Japan
U.S. dollars)(in millions ofBalance

Receipt

Receipt from

Fiscal Year

Except Receipt from
Foreign Military

Expenditures

Expenditures

(375)

185
224
232
255
348
516
515
477
613
796
943

(363)

1,051

(366)

1,O17

326
145
131
38
-73
-139
-225
-204

(345)

1,243

-365

1951

1,O03

(677)

1952
1953

939
917
764
745
842
660
608
651
723
804
826
813

(801)

883

1954
1955
1956
1957
1958
1959
1960
1961
1962

1962
(JanrDec.)
1963

Payment

Foreign Military

(761)
(S98)

(570)
(587)

(398)
(374)

(349)
(402)

(Jan.-Dec.)

918
715
685
509
210

(241)
(-86)
(-76)
(-89)
(-360)(-261)(-253)(-243)(-311)(=475)(-512)(-588)(-570)(-710)

Source: Bank of Japan, Foreign Exchange Statistics.

(1) In accordance with the expansion of our foreign trade, the expenditures incidental to foreign trade, - such as freight, insurance, port disbursement,

agent commission, and so on -have also increased.
( 2 ) As the result of the increasing induction of foreign capital and technicalknow-how, the payments of investment income, such as interests and dividends,
and of patent royalties have also been increasing.

( 3 ) With the progress of foreign exchange liberalization, payments forforeign travel, oMce expenses and miscellaneous remittances have increased.

(4) The receipts from foreign military expenditures, which had taken
up a greater part of our invisible trade receipts, have recently been decreasing.

Now let us examine the balances of our main invisible trade items.

(1) Transportation
The balances of the transportation account have shown deficits every year

in the post-war period, and the amount has been growing larger and larger,
while in pre-war days (for example, in 1936), our transportation account register-

ed a large surplus. (See Table 3-1)
Then, what are the causes for the deficits in our transportation account?
One of the most important causes is the shortage of our vessels owing to war

OF JAPAN
IN THE BALANCE OF
PAYMENTSTRENDSRECENT
Table 3-1.

Transportation

Items

1936

Account
1957

u.s.

(millions of

1958

1959

87

dollars)(Fiscal

Year)

1960

1961

1962

80

Freight

Receipt-

Payment
Balance

PortDisbursement
Receipt

Balance

Other
Receiptm-

Payment
Balance
Total

69

84

62

82

139

192

169

180

143

-104

-107

-98

-63
37
126
-189

-99

-

Payment

97
196

-70

24

20

26

30

48

44

42

40

95

113

-20

-22

-14

-65

-65

3

4

5

5

8

37

17

31

57

84

-34

-13

-26

-S2

-76

20
82
-62

Receipt

136.

124

93

114

97

138

Payment

68"

278

199

263

321

377

137
3Sl

Balance

68#

-154

-106

-149

-224

-239

-214

* The amount includes msurance.

damages. The expansion of our foreign trade has been so remarkable that it
far surpassed the increase
ratios of goods carried byin the tonnage of our merchant Heet. The recent
Japanese vessels have been very low compared with

pre-war days. (See Table

3-2.)

Table 3-2.

Ratios ofGoods Carried by Japanese Vessels (o/o)

Fiscal Year

ExportImport

1934

72.3

65.2

1957
1958
1959
1690

Total

54.0

42.8

44.1

60.5

57.4

57.8

S7.8

53.9

54.3

54.5

47.5

48.2

1961

53.7

41.3

42.3

1962

52.4

45.6

46.3

Source :Economic Planning Agency, Economic Survey of Japan.

As to port disbursements, one of the main factors for the deficit of thisaccount is bunker oil. When foreign vessels fi11 their tanks with oil in Japanese

ports, they use the oil stored in bond by foregn companies, and pay the priceof the oil in foreign currency outside Japan. On the other hand, Japanese
ships also use the oil stored in bond by foreign firms, both in foreign and inFUKUOKAWATA88

domestic ports, paying the price in foreign currency. This is the reason why
bunker oil is one of the most important elements for deficits in port disburse-

ments.
Port disbursement items other than bunker oil, are wharfage, buoy charges,
pilot charges, and so on. These charges are so low in Japan as compared withthose of foreign countries that our port disbursement account always shows adeficit. Port charges and loading and unloading expenses in various ports of

the world are shown in Table 3-3.
Table 3-3.

Comparison of Port

Charges and Expenses for Loading and Unloading.

(in U.S. dollars)
Port Charges

Port(per vessel)

Unloading Expenses(per ton)

Loading Expenses(per ton)

Yokohama
Kobe
New York

492
515

1.33

1.34

1.59

1.62

1,315

8.50

9.SO

Los Angeles

1,041

8.8S

10.92

London

4,771

4.SO

2.80

Hamburg

2,117

3.83

3.S6

Rotterdam

1,048

3.68

2.96

Bombay

947
835
808

1.66

1.51

O.76

O.96

2.43

2.03

Hong Kong

232

O.99

1.02

Sydney

1,800

6.87

17.26

Bangkok
Singapore

Source: Mr. N. Matsuo, ibid.

(2) Foreign Travel
The balance of foreign travel account had been positive in pre-war years,
for example in 1936, and also in post-war days before 1959, but in 1960 it turned negative owing to the relaxation of restrictions for travel abroad. (See Table34.) In 1961, the government tightened the regulations for foreign travel asa measure for the improvement of our balance of payments. This restriction
was effective in balancing the account that year. It is, however, expected that
Table 3-4. Foreign Travel Account(in millions of U.S. dollars) (Fiscal Year)
1962

1936

1957

1958

1959

1960

1961

Receipt

25

23

29

38

47

59

59

Payment

16

17

18

25

51

59

61

Balance

9

6

11

13

-4

o

-2

RECENT TRENDS IN THE BALANCE OF PAYMENTS OF JAPAN 89
after the liberalization of foreign travel in the spring of 1964, this account may
register an increasing negative balance,(3) Investment Income
The balance of investment income account had been positive in the prewar period, (for example in 1936), but in post-war days it turned negative.
The amount of net deficits has been increasing since 1960. (See Table 3-5.)This is due to the large scale induction of foreign long-term capital. The negative balance of this account is expected to grow larger.
Table 3-5. Investment Income Account (in millions of U.S. dollars) (Fiscal Year)
1936

1957

1958

1959

1960

1961

1962

Receipt

93

43

Balance

50

23
48
-2S

23
50
-27

43
61
-18

58
69
-11

64
90
-26

66

Payment

118-52(4) Patent Royalties' been overwhelmingly negative.
The balance of patent royalties account has
This is because of the induction of foreign industrial techniques. Althoughsuch an induction is a factor in foreign exchange payments, it may largely con-tribute toward the innovation in Japanese industry and the promotion of her ex-

ports, and thus to the improvement of her international balance of payments.

(See Table 3-6.)'
Table 3-6. Patent Royalties Account (in millions of U.S. dollars) (Fiscal Year)
1957

1958

1959

1960

1961

1962

40
-40

1
46
-45

1
60
-59

2
94
-92

3
111
-108

5
113
-108

Receipt

Payment
Balance(5) Commission
The balance of the commission account has been negative; although theamount of receipts has been increasing, still the amount of payment has grown
Table 3-7. Commission Account (in millions of U.S. dollars) (Fiscal Year)

Receipt

Payment
Balance

1957

1958

1959

1960

1961

1962

13
24
-11

12
26
-14

15
34
-19

20
49
-29

36
86
-50

i4.ZV

118

-74

FUKUO KAWATA

90

faster. With the growth and development of our foreign trade, expenditures
will also increase. But these expenditures may be regarded as necessary expenses for the expansion of our trade.

(6) Receipts from Foreign Military Expenditures
It is true, our receipts from foreign military expenditures have largely

contributed toward the improvement of our balance of payments. But since
the end of the Korean Conflict, the amount of receipts has gradually been decreas-ing, and especially, since the end of 1960, when the dollar defence policy was
enforced.
Table 3-8. Receipts from Foreign Military Expenditures(millions of U.S. dollars) (Fiscal Year)
1955

1956

1957

1958

1959

1960

1961

1962

273

277

241

207

210

213

185

201

202

172

156

159

127

189

188

162

Others

16

12

1

8

12

Toral

491

461

398

374

349

402

373

363

Yen Sales
Limited Depository

Account of U.S. Forces

Source: Bank of Japan, Foreign Exchange Statistics.

IV
The balance of capital transactions has been positive, and this contributes

largely toward making our overall balance of payments positive. The balance
Tab.le 4-1. Balance of Capital Account(in millions of U.S. dollars) (Fiscal year)
1962

1963

Jan.-Dec.

Jan.-Dec.

476
179

458
196

751

173

297

262

471

676

456

29

172

184

155

677

629

326

434

655

387

636

436

302

355

37

1957

1958

1959

1960

1961

1962

43
53

149

132

156

384

Payment

59

159

155

211

Balance

-10

90

-27

1

-84 -125

182

-94

-35

-109

345

Long-term Capital

Receipt

280

Balance of Short-term

CapitalBalance of Capital

Account
Overall Balance ofPayments

Source: Bank of Japan, Forettgn Exchange Statistics.

RECENT TRENDS IN THE BALANCE OF PAYMENTS OF JAPAN 91
of the short-term capital account fluctuates so widely that it is impossible toforetell how it will move. But the balance of the long-term capital accounthas been positive since 1960. It is generally believed that the balance of thelong-term capital account will become the most important item in covering the
deficit of our current balances of payments.

v
As stated above, our current account tends to register negative balances,

especially owing to the increase in payments and decrease in receipts of theinvisible trade.

The negative balance of our invisible trade seems to have now become
chronic, and it may be diMcult to reverse this trend. But we should try tostrengthen the international competitive power of our shipping industry toincrease our traMc revenues. As to port disbursements, those charges, which
are too low compared with the international level, should be raised.
As to foreign travel, we should try to attract foreign tourists on one hand,

and to refrain from wasting our foreign exchange on the other hand.
With regard to patent royalties we should endeavour to develop a new
industrial technique of our own, and try to export our technique. At any rate,
it seems to be dithcult to realize a positive balance in our invisible trade within a short period, but we should try to improve the balance gradually.

The net receipt of long-term capital, as we have mentioned above, hasrecently been the main item to keep positive our overall balance of payments.
It is, however, questionable to expect the increasing net inflow of foreign longterm capital for two reasons. In the first place, the tempo of its inflow has been

declining since July 1963, when President Kennedy proposed the adoption of
the interest equalization tax.

Secondly, the outflow of long-term capital has recently been growing,
chiefly owing to the repayment of foreign capital which has become due. Although we may expect a fairly large inflow of long-term capital even if the in-terest equalization tax should be enforced, yet the net receipt may not reachso high a level as before, taking the outflow into account.

After all, the most proper way, to improve our balance of payments is toexpand our export so large as to offset the chronic deficits in our invisible
trade, by establishing a long-term policy for export promotion.

93

JAPAN (1)
LONG-TERM FINANCEPOST-WAR
IN
Masahiro FuJiTAI
Our long-term financial institutions had been given special character in the

pre-war capitalistic economic development and still more during World War II

had an abnormal function to perform under the war-economy system. 'Meanwhile, the Occupation Army after our•surrender on August 15, 1945
tried to democratize our political and economic system at once. As the monetary and banking policies were also included in these measures, G. H. Q. wasabout to reform our long-term financial institutions based on the American
Banking system. Thus, Japan's extremely controlled long-term financial institutions had to be modelled along American long-term financial institutions, but
it was these organizations that peaked the securities market. Post-war reforms

in our money and banking system were very drastic. The features of the pre-war long-term financiai institutions were as follows:-(1) They depended
greatly upon banks and financial institutions, above all, there was a very highreliance on the xaibatsu banks, (2) They helped the underdeveloped securities

market, (3) Special banks (especially bond debenture issued banks) played avery large role. Therefore, the pre-war supply system of long-term equipment
funds in big enterprises corresponded to 600/. of the purchased amount of stocks
and shares, corporate bonds and debentures. As the greater part of these securities were indirect investments (circuit investments) by holding companies, life-

insurance companies, non-life-insurance companies, the special banks (invest-

ment bank) supplemented the deficits. By the weakening of the 2aibatsu banks
through the dissolution of xaibatsu and the abolition of special banks there
undoubtedly had to be plans for their reform.

In the course of the severe fluctuation, our economy started again as acapitalistic economy from the so-called "second original accumulation of capital

period," but the reorganization course for long-term financial institutions forvast demands for equipment funds changed from the post-combinationS (monopolistic large enterprise ->2aibatsu bank "special bank -->national capital ortreasury loan) to new combinations (monopolistic large enterprise -> big bank->long-term credit bank ->securities market ->trust bank ->life insurance

94 MASAHIROFUJITA'
companies, non-life-insurance companies) and added a powerful or supplementary national or treasury loan.

The reconstruction process of our post-war economy was brought about
by the reestablishment of bank capital first of all, and afterwards of our indus-

trial capital. As Japanese capitalism finished its abnormal development after

this war, our abnormal long-term finance existed where the rate of economic
growth was high and our norma! long-term finance appeared in the case of alow rate of economic growth.
Still, the method of raising enterprise capital in the pre-war period was asfollows: own capital 840/., stocks and shares 340/,, depreciation 240/., reserve
fund 250/., borrowing fund or debt 16.40/., reliance (degree) on corporation bonddebenture 1.10/. in 1935, but each parameter changed in 1960 to the following:
41.5o/., 10.5o/., 160/., 150/,, 51o/,, 6.80/,.

As for recent shipbuilding and ship mortgage finances, we find that there
were a high reliance upon long-term financial institutions and huge city banks.

Moreover, 55 important corporations had the following debts in March 1963:
a borrowing balance (debt) for equipment funds which was a treasury Ioan,
184.8 billion yen and private funds (city bank loan) of 124.1 billion yen, thetotal amounting to 308.9 billion yen, and arrears for the principal (capital) being

96.1 billion yen (in detail, treasury loan 42.5 billion yen and private bank loan

53.6 billion yen). In other words, they had diMculties of which the shortagein amount of repayment was about 100 billion yen with actually the same amountin arrears, their own capital ratio shows 19.70/o, the interest ratio in total expenditures 10.50/,.

II
During these ten years, our economy has reached the pre-war level andgreatly out-distanced it. Especially, the high rate of growth since 1951, has shown

an average pace of over 9 per cent per year, and has won the glorious admira-tion "consider Japan" from all over the world. "A Survey by the (London)
Economist, September 1, 1962," is a remarkable instance of this case. As theresult of the Pacific War, we lost about 450/. of our territory, the national wealthof remaining Japan proper was decreased by 400/,, while the decrease of indus-

trial capacity was estimated at over 400/,. From the monetary aspect, we had

to pay huge amounts for military expenditures for the Occupation Army, andthe amount went on increasing in order to conduct all sorts of postwar-affairs
which after all raised prices. In other words, this expenditure called "Post-

war affairs management expenditure" (Shasen-shorihi), occupied an important

LONG-TERM FINANCE IN POST-WAR JAPAN (1) 95
and large part of our yearly budget, until the peace treaty was concluded in

September 1950.
In addition to these huge expenditures, a reconstruction fund was needed forour economy under the control of the Supreme Commander of the Allied Powers(SCAP) or General Headquarters (GHQ), with General McArthur at its head.
In spite of the extraordinary demand for current funds, no longer could
savings be expected from incomes, for unemployment had increased drasticallyand there was an extreme shortage of food, resulting in black marketeers andraising of black market prices, while bank deposits decreased and the level ofproduction was only 150/, of the pre-war level in February 1946, half a year

after the surrender. The concentrated expression of these worst post-war
economic conditions can be observed in the confusion of the severe inflation ofthis country. The first stage of the controlling policies by G. H. Q. aimed todisband Japanese military powers and to democratize the political and economical institutions. The authorities of G. H. Q. planned for the dissolution of

the Zaibatsu, reformation of agricultural land property, social reforms, andother economic evolutions. They thought it was possible for a direct and quick
reestablishment and reconstruction of this economy.
We must recognize the actual economic ability or real activity by the mili-tary rate of exchange (this was fixed arbitrarily between the American dollar
and yen) and the change of the oMcial price of gold.
Table 1. Military Rate and Price of Gold
Date

Military Rate

Date

Dec. 31,194S$1-\ 15

June 22, 1933

Official Price of Gold

Mar. 11, 1947
Mar. 12, 1947

$1-:\ SO
L1-\ 2SO

Apr. 6,

1934

Jan. 11,

1935

July 6, 1948

$ 1=-\ 270

May 2, 1938

L 1-\1080

Jan. 20,
July 17,1946

lg==\ 8.05
lg:-\ 2.95
lg==\ 3.09
1g==\ 3.85
1g=:\ 3.85

1947

lg=\ 75

Sept. 25,1947

1g==\150
1g==\326
1g==\385

Jan. 8, 1949
Apr. 25, 19S3

$ 1:-\ 350$ 1=-\ 360Aug. 13, 1948
July 22, 1949

Mar. 1, 1950
Feb. 2, 1953

1 g== \ 401.5

1g=\405

Source: Asahi Economic Annual Report 1956.

In those days, our exchange rate system was basedon both the military rate

and multiple exchange system at the same time. But

our system was a proper
by G. H. Q., differing

monetary and exchange policy which was controlledfrom the system which Latin-American countries

had adopted after theFUJITAMASAHIRO

96

world crisis. We can call it the "Price Ratio System (P. R. S.)", the rate ofconversion being fixed for each commodity or commodity group calculated
conversely from the rate of the domestic price versus the international price(American price) of commodities, on the foundation of past government tradeexperience up to that date. The purpose of adoptjng this system was to con-nect our closed and separated economy with that of international economy.
As shown in the next table, the general trend was the establishment of the yen
rate reflecting the unbalanced condition, the low rate for imports and high rate
for exports. As a whole, the rates for import goods were cheap, while the rates
for export goods were high, for they were derived from the remarkable inflationof our economy. Moreover, they implied that imports to Japan during the inflation were necessarily overvalued in yen, while it was vice versa for exports, thatis undervalued in yen. For instance, the past fixed price for cotton and wool

was cheap (cotton: \80, wool: \120), because these goods were not obtainable

at home and had to be imported as raw materials.
Table 2. Multiple Rates of Exchange(on Jan. 31, 1949. unit==yen)
Import Rate

Export Rate

cotton IDOmestic use

80

IExport Use

250

cotton lglaortnh

259
250-420

Pig-Iron

67

Silk Fabrics

300--420

Iron Ore and Concentrates

125

Staple Fibers

Coking Coal

178
147
154
158

Rayon Goods
Wollen Goods

300
300
350
300
240
500
340-380
390-400
300
430
420
SIO
300
320-420600

Steel

Rock-Phosphate
BauxitePotassium

Crude Petroleum

Crude (Raw) Rubber
Hides and Skins (Pelt)

Chemicals
Salt

Sugar

Wheat
Wool

82
284
154
120
200-350
103
177
165
120-140

Wollen Ya' rn
Bar Steel
Steel ShipThin Board
Zin Plate

Locomotives

Motor-Car
Raw Silk
BicycleTinned Goods

Wood
Ceramic Ware

Source: Asahi Year-Book,

1951,

Therefore, the fear of

inflation after this second war was intensified as

the purchasing power which
war poured out. Still worse, in the past without an exchange control, specula-

had been frozen in compulsory savings during theLONG-TERM FINANCE IN POST-WAR JAPAN (1) 97
tion in foreign exchange used to be a marked cause for the rate of exchange tofall drastically. The so-called hyperinflation in our economy after the war,
had exhaustively destroyed and crushed Japan's credit organization.

On February 16, 1946 the so-called "Kiny"-KinkyG-Sochi" (Monetary
Emergency Measures) was put in force, and there was a compulsory exchangeof circulating back notes (over 10 yen notes) for new ones (after March 7, theold notes were prohibited from circulation) and a freezing of all deposits in all

kinds of banks over and above a certain amount. The drawable amount from
deposits was determined as \100 per person a month for living costs, the rest
Table 3. Issue of the Bank Note and Price Index
Wholesale PriceBanl<-note
Period(millien yen)

1945, Ju!y28,456Aug.
Dec.

42,30055,440

1946, Jan.

58,56SFeb.

61,824Mar. 12

15,204/1937= 100 1 945, July = 100

258.6
266.4
531.5
629.3
688.0

Black-Market
Wholesale Wholesale
Price
Price
Price
in U.S.A.
in U.K.
1945, Sept.rlOO i937 -= 100 1937:= 100

100

123

ISS

140

161

176

176

102.8
268.6

122

243.2

169

265.9

191

Dec.

93,397

1,784.3

689.4

223

1947, Jan.

100,040

1,844.9

713.1

May

129,685

2,5182

973.3

Aug.
Dec.

150,683

4,746.0

1,831.6

254
370
4S2

219,414

6,611.3

2,550.2

558

1948, May

223,4986,988A

2,701.5

Aug.
Dec.

2S4,209

12,492.8

4,829.4

355,280

14,847.0

S,739.5

710
744
769

1949, Aug.

298,201

16,897.7

6,532.1

765

177

211

Dec.

320,397

17,356.4

6,709.5

65S

175

222

1950, Jan.

320,397

18,104.3

6,998.9

625

176

225

Sept.

328,781

20,681.9

7,995.0

550

196

Dec.

422,063

22,550.5

8,717A

580

203

1951, May

399,332
414,705

27,704.2

10,709.6

678

212

2SO
269
294

27,616.1

10,675.1

298

28,250.6

10,901.5

630
638

206

506,385208

303

1952, May

444,O02

27,S89.2

10,671.3

301

Aug.
Dec.

464,223

27,620.9

10,683.6

204
204576,431

28,153.0

10,496.6201

301

1953, May

501,136

27,787.4

10,741.8

201

304

June

516,352

27,917.5

10,79e.2

201

303

Source:Bureau of Statistics,
1952 and Statistical

Aug.
Dec.

OLtiice of the Prime Minister, Japan,

Year-Book (The Bank of lapan) 1953.

Statistical296

Year-Beok,

MASAHIRO FUJITA

98

of purchasing power was frozen, and the capital supply for business enterprises

was limited in separate deposit accounts. Besides, the general economic policy
was a strong anti-inflationary policy calling for a contracted monetary policy,

a disclosing policy bringing out hidden merchandises for speculative purposes,

and property tax policy. These policies fi11ed Japan's budgetary gap and thevast sum of bank-notes issued (IVichi-Gin-Ken: note of the Bank of Japan)
shrank rapidly and showed clearly the eMciency of the series of the monetary

emergency measures.
Economic Stabilization Board was estab!ished in August 1946, and Iater
the Reconstruction Finance Corporation (Fukk6-Kinya-Kinko) in January 1947
which began to lend and finance key-industries to raise the production of coal,iron, electricity, shipbuilding fertilizer, textile, etc. Although taking thesemeasures, they caused the prices very soon to rise again so that the amount of

the Bank of Japan notes which once contracted to 15.2 million yen on March
12 from 61.8 million yen on February 18, increased again to the starting levelof 60 million yen in September. At the end of 1946, the circulation of notes
amounted to 93.4 million and all efforts concentrated in these monetary measures--

were ln valn.
Table 4. National Budget
G. N. P.

(A)
1946
1947
1948
1949
1950
19Sl

19S2
1953
1954
19S5
1956
1957
1958
1959
1960

379,109
1,128,700
2 165 300
2,737,253
3,361,048
4,S35,319
5,195,3S5
5,964,897
6,197,OOO
8,230,669
9 272 278

Revenue
General (B)Special alc

118.9
214.5
S08.0
758.6
716.8
895.5

190.8
419.1

(million yen)

Expenditure
General (C)

Ratio

Special alc

BIA O/,

178.2
372.5

31.4

1,144.3

115.2
205.2
462.0

1,O09.6

23.5

1,839.S699A

1,757.3

27.7

2,092.1

1,900.0

21.3

1,350.0

633.3
749.8
873.9

1,219.0

1,481.S

1,185.1

1,660.1

1,126.4

1,879.9

1,232.5

2,231.5

10,O17,OOO

1,399.9

10,394,7eO

1,453.7

12 572 500
14,664,800

pp1,400.1

19.0

CIA O/,
/

30.4
18.2
21.3
25.6
18.8
16.5
16.8
17.0
16.8

1,275.1

19.7

1,213.6

20.8

1,O17.2

1,333.S

20.4

1,040.8

1,522.0

19.1'

1,O18.2

1,726.6

13.7

12A

1,069.2

2,O07.5

13.3

2,376.3

1,187.7

2,139.3

13.9

3,058.5

1,331.6

2,802.8

14.2

1,5972

3,411.9

1,495.0

3,096.3

12.7

1,858.2

3,964.S

1,784.9

3,659.3

12.7

1,078.8

1961

17 740 500

2,515.9

2,965.8

2,063.4

3,345.9

14.2

1962

19,315,200

2,487.0

3,048.0

2,174.0

5,613.0

12.8

11.5
11.8
13.0
11.9
12.2
11.6
11.3

1963

"21,950,OOO

3,O19.0

3,595.0

2,723.0

6,486.0

13.8

12A

)t

))

)s

* Preliminary
Source: The Bank of Japan, Economic Statistics Monthly, Jan. 1964.

LONG-TERM FINANCE IN POST-WAR JAPAN (1) 99
Then, as mentioned above, our government could not help taking a longrun anti-inflationary policy.

On the contrary, against the remarkable economic growth of today's prosperity since 1951, "the so--called Dodge Stabilization" has given rise to a mone-tary distortion, known as "over-loan" and a continuous inflationary process.
Commercial banks (especially big city banks) have been forced to rely on the
Bank of Japan all the time, as a result of increasing their loans and investment

in excess of deposits. However, at the same time, the increasing basic demandfor. reconstruction funds which completely crushed Japan's capitalism by thissurrender had to be started again as soon as possible to finance enormous amounts

for eguipment investment funds to key-industries through long-term financial
institutes and intermediaries (i.e. special banks) rather than through big commer•cial bank loans.

Post-war inflation continued until 1949, when on April 25, a single rate ofexchange $1==\360 was fixed and our economy started again to be independentand have its voluntary behavior in world economy. This moment was alsocommernoratively epochal in developing and expanding our economy. As soon
as the conflict started in Korea on June 15, our market suddenly was enlarged
to a world-wide scale. In those days, the export trade of Japan was still only

300/. of the pre-war level, So the home market was quickly overflooded. The

special procurement demands of the U.S. Army of Japan jumped to meet thiscountry's economic situation. As the result of the Korean War, the priceof commodities rose in all countries: the United States 14e/., Germany 230/.,
England 250/., France 290/.. Above all, our price rise of 450/. was the highest.

Table S. The Rate of Growth( ): nominal rate of growth (O/o)
Japan
1952

10.9

(15.3)(16.5)

1953

3.2

(7.7)

11.2

(10.7)

19S4
1955
1956
1957
1958
1959
1960

7.3 (10.1)
9.4 (12.5)-O.1 (-1.5)

1961

1962

18.3

(20.7)

13.0(16.0)

15.2(21.8)

5.9(8.9)

U. S. A.

3.5
4.4
-1.6
8.2
2.1
1.9
-1.8
6.8
2.9
2.9
6.1

Germany

U. K.
(8.2)

(-O.6)

O.2
4.2
4.4

(5.9)

(95)

25

(7.2)

(S.5)

2.8
2.9
O.1
2.9
4.1
2.3
-O.3

(7.8)

(5.5)
(5.3)

(5.6)
(O.4)
(8.6)
(4.5)
(3.4)
(6.4)

12.2

(14.3)

France2.4

Italy(17.1)

2.6

(5.3)

8.2

(8.5)
(6.4)

(7.3)

3.9

(4.4)

7.4

(7.5)

4.9

(5.8)

5.2

11.5

(14.0)

5.7

(7.0)

6.3

<9.4)

6.9

(10.2)

5.t(10.4)

4.2

(7.8)

(5.8)

5A

(8.8)

5.7

(11.8)

5.5

(7.6)

(4.5)

3.2

(7.0)

1.4

(13.7)

5.5

(6.9)

(3.9)

6.4

(8.5)

2.1

(8.4)

6.6

(7.1)

(5.4)

8.8

(12.0)

6.5(11.1)

7.0

(9.2)

(5.7)

5.3

(9.9)

4.4

(9.2)

82

(9.9)

(4.4)

4.4

(8.0)

5.8

(11.0)

6.0(12.5)(6.9)

7.5

Source: Year-Book ofForeign Economic Statistics(Gaihoku-Keixai-Tokei), The Bank ofJapan,

1962 and 1963,

100 MASAHIRO FUJITA
But, the production index for 1952 showed an increase of 260/. and exceeded the
pre-war level (1934-36) by 340/.. The wholesale price rise was 5.70/. in one year

from March 1951.
Thus, our wonderful economic development after the Korean War was
defined as "the so-called Korean Boom", and after this turning point in our
economic activities at large it went on expanding. So, today's splendid rate of
growth was realized and there was even Kanetsu Keiki (an excessive prosperity)

as we have rarely experienced in our history which finally began to sound awarning rather than admiration for the expansion of economy without price rises.

We shall divide into five periods this economis expansion after the Korean
War as follows:(1) The post-war inflation period and later contraction put into effectby the Dodge Plan. (1945-1949)( 2 ) The boom period caused by the Korean War ensuring a reactionary
contraction. (1950-1951)(3) The expansion policy taken after the conclusion of the peace treaty
and the resulting contraction. (1952-1953)(4) The expansion in the period of the so-called "Stiry6-Keiki" (Quantity prosperity) and the contraction to check its over-heating (excessive prosperity), (195ZF1955)(5) The Boom period brought forward by the remarkable increase ofexports and the contraction to repress over-investments. (1956-1961 and after)

Our economic success was estimated by oversea economists as follows: Oneof them was the case in the article titled "Consider Japan" in "The London Econ-omist" September 1, 1962 (which contains 15 pages) and September 8, 1962
(which was 11 pages), the total pages of the former and the latter being 26 pages.

In this work, they pointed out the Japan's remarkable merit and success by her

non-orthodox measures in two chapters of which one was "The Most Exciting

Example" and the other, "Not So Exceptional Case". The measures mostenumerated as concrete plans appeared in "Easy Budget", "But Tight Money","The Planning of Exports", and "Can It Last?" Perhaps, they may haveregarded "easy budget" as an "easy money" policy and similarly had better haveconsidered "easy" as "stimulating". As the result of the high pace of economic
growth in Japan and the over-heating prosperity, Japan suffered from a crisis offoreign currency and was forced to take a "Tight Money" policy or contraction

policy. However, this "Tight Money" policy was very effective in Japan,
because her monetary circumstance was the so-called "over-loan". The "London Economist" analysed the possibility of the application of Japan's success-ful experience as a policy for underdeveloped areas. This was contained inTable 6.

Period(\ rnillion)

DepositsBank

Borrowingfrom theCall

Checkinga/cTimeBank ofAll Deposits

DepositDebentures
Issued

Money

Total

Discount

Securities

Numberof Banks

Bank Lending

Total ofJapan

Loans & Discounts

Investments

in

1945

69

i19,829

10,80435,152

12,973518

97,621

2,854

55,228

1946

69

144,868

29,27913,809968

146,406

7,735

58,8991947

69

234,375

32 527'63,e4934,05014,9zro502

168,243

6,766

83,681

1948

75

S05,349

147,580

73,4198,785

48,666

3,542

381,347

57,281

117,033

1949

74

v

o
z
Q
e
m
pa
K
N
Z
>
Z
o
m
zv
g
1

729,O18

208,674

189,O06

22,91885,4994,818

679,051

156,747

106,146

1,048,e66

275,571299,820

48,838135,4214,285

994,746

290,O19

134,S96356 794

496,592

94,872203,258

12,885

1,517,813

523,074

175,926

793,383

142,258

212,649

32,461

2,128,022

745,994

236,054

1,040,315

202,828

288,986

47,477

2,671,286

970,710328,284

1,272,958

242,782

232,491

63,304

2,991,968

976,737

404,035

1950

76

19Sl

80

1,506,308

1952

85

2,223,820

1953

86

2,707,612

1954

87

3,036,687

557 664'
561,035

19S5

863,724,382

697,058

1,562,191

286,187

29,67383,711

3,195,818

1,103.562

518,7451956

86

4,764,26S

997,099

2,O02,697

333,407

127,079

120,074

4,066,199

1,354,319

659,0671957

87

5,504,847

1,134,236

2,501,913

397,554

542,O03

181,313

5,024,456

1,592,228

795,803

1958

86

6,484,02S

1,217,701

3,133,889

530,606

3S2,483

235,939

5,812,942

1,734,t26

972,054

19S9

87

7,413,694

1,125,570

3,825,308

685,576

305,154

269,156

6,802,811

2,IS9,215

1,209,272

1960

87

8,892,212

1,336,441

4,596,475

880,e98

4S4,200

276,839

8,182,698

2,6S6,896

1,S24,309

1961

87

10,332,426

1,591,O02

5,346,702

1,054,768

1,244,759

284,8079,770,119

3,263,946

1,896,297

1962

88

12,118,745

1,676,718

6,335,556

1,257,238

1,208,700

4S9,619

11,494,604

3,743,842

2,201,813

Source:'535,318

The Bank of JaPan, Economic Statistics Monthly,

Jan. 1964.

-;-i

E
>
pu

->

v>
Z

=
v

o
-

MASAHIRO FUJITA

102

the following chapters "Lessons for Developers?" and "The Front Runners",
but the answer was negative. In other pages, they studied the peculiarity ofJapanese Economy from the viewpoint of "Unions, Management, Competition,""Technicians and Trouble-Makers," and "South Seas Shuffe" and added"Jobs for a Lifetime," "Living Standard", "After the Zaibatsu," and "Savers
like the Swiss?"

So, we must examine this high accumulation of capital and extraordinaryrate of growth of Japan after our surrender. These sources, as mentioned,
above were the various successful measures taken including the appropriatemonetary policies by the Bank of Japan and leading commercial banks, especiallylong-term credit institutions.

III
The reconstruction and consolidation process of our post-war long-term
credit and financial intermediaries may be divided into the four stages as follows:(1) The confusion and reconstruction, consolidation period of long-termbanks or financial institutions. (1945-1947)(2) The fluctuation period of private banks or financial institutions andthe effective functioning period of the Reconstruction Finance Corporation(Fukk6-Kinya-Kink6). ( 1947-1948)(3) The consolidation period of the long-term banking system. (19491951)(4) The reorganization period of the long-term banking system-thesignificance in the enactment by law of the long-term credit bank. (1952-)

The reform direction of the post•-war long-term banking system aimed to correct the pre-war special distortion and to return to a normal economy (or peace-time economy) from the war--economy or that controlled by the military fundsupplying system. There was controversy in the investigatory commission forthe money and banking system (Kinyfi-Seido-Ch6sakai) which announced two
separate reports. The former report in 1946.implied the reestablishment
method of centering securities market by the Occupation Army and the !atter
report in 1947 was of dual form, that is, the traditional long-term finance methodor the bond and debenture issue banking method which was added newly tothe securities market as the capital procurement market, but both were in
opposition with a basic difference between the adoption of the bond, debentureissuing, and long-term finance.

The weight of the xaibatsu banks on pre-war private banks was overwhelming, On the paid-up capital side, the big four gaibatsu banks occupied 480/o of

LONG-TERM FINANCE IN POST-WAR JAPAN (1) 103
all banks, the big six xaibatsu banks were 2.40/,, the big ten 2aibatsu banks
50.40/.. The reestablishment process after this world war was as follows: thedissolution of the 2aibatstt banks-> the financial panic confusion after oursurrender• "Kinya-Kinkyfi-Sochi-Rei" (Regulation of Monetary Emergency
Measures) + reestablishment and consolidation of money and banking institutes• 74 private banks started again as reestablishment banks from October 1, 1948.

Owing to the dull securities market and diMcult liquidation of deposits,
industrial capitalists required increasing bank loans, but when the reconstruc-•tion and consolidation of the banking system was finished, our private banking
systems, which topped the xaibatsu banks fuifi11ed their self-capital by increasing their capital and were at last able to play a leading part in the accumulationof capital aspects.

Thus, the monetary aspect in the accumulation of capital is as follows: on

the Keynsian model used

Y-C+I, Y=-C+S
so, S=Iin this case, Y, C, I, S imply national income, consumption, investment,saving, the rate of capital accumulation in relation to gross national productsIand private caPital formation, government investment is I= :S (ex-post), as'ill-, remlarkable point is national saving S as for S , industrial fund supplyYi

as for -- if we consider the financial assets and financial transactionY,

M-L(r,Y) M==M,+M,===Li(Y)+L2(r)Y-C(c, Y)+I(r, Y)(M=:money, L==liquidity preference, Y=national income, r=rate of interest,
C== consumption, c==propensity to consume, T=investment)
if the accumulation process develops and the reproduction scale expands

I+M,+AEg.!-S+M,+B (IEE.FS)(I=investment, S = saving, A=advance or loan, B =borrowing, Mi=net increaseof holding in money, cash deposit, M2=net creation of fund or money, Mi, A=:financial assets, M,,B=financial liabilities (debts))

therefore, I-SF-(B-A)+(M2+Mi)
In these aspects, M2+Mi is the banking and financial institutes sides.

Though the abolishment and reform of the special banks were one of themost dithcult occupation policies, the Japan Hypothetic Bank (Nippon Kwangyo

104 MASAHIRO FUJITA
Gink6) was converted from an ordinary commercial bank by the military financial

intermediaries in March 1950, also the Japan Industrial Bank (Nippon-K6gy6-

Gink6), which was in charge of the working funds side in the war economy
task on another character by the end of 1948. This implied the starting of theReconstruction Finance Corporation (Fukko-Kinya-Kinko) by new debentures
issued by long-term financial intermediaries as a government institute, so otherspecial banks-Hokkaido Development Bank (Hokkaido-Takushoku-Gink6),
Yokohama Specie Bank (Yokohama-Sh6kin-Gink6), Taiwan Bank, Korean Bank
(Ch6sen-Gink6) and Korean Colonial Industrial Bank (Ch6sen-Shokusan-Gink6)- were completely abolished by March 1946. However, of these special banks,

the Yokohama Specie Bank was coverted into the Tokyo Bank as an ordinary
commercial bank in 1946 and similarly was the Hokkaido Development Bankin 1948.

Thus, the Reconstruction Finance Corporation was established as the only

industrial fund supply bank under the selective Production Encouragement
Method (Keisha-Seisan--H6shiki) on January 24, 1947.
With the completion of reconstruction and consolidation in the form of
the Reconstruction Finance Section (Fukkin-bu) of the Japanese government
which was given the chief function in managing government funds, the Japan
Industrial Bank was reestablished as a bond-issued long-term financial institution

and took the place of the Reconstruction Finance Corporation at the end of
1948.
Table 7. The Final Loan Balance of the Section of Reconstruction Finance(in Japan Industrial Bank) Jan. 24, 1947. (unit=\1000)
Chief Industry

Equipment FundWorking Fund
Total
Mining Industry
Chemical Industry
Machinery Industry
Marine Products Industry
Metal Industry
Electricity and Gas Industry

Communication and Transportation Industry
Ceramic Industry
Foodstuffs Industry
Textile Industry

OthersAmount of Loan

Ratio (e/,)

1 379 534

)74)J117 579)}
1 732 38S
pJ
755,314

2 738 04S

513,106
207,72S
92,713
40,OOO36,97630,27021,07020,762
667,260

Source: The 50-year of theJapan Industriai Bank, History of theJapan Jndustrial Bank, p. 719.

33.5
66.5

1000
42.1
18.3
12.5

5.0
2.3
1.0

O.9
O.7
O.5
O.5

16.2

FINANCEIN POST-WAR JAPAN (1)
LONG-TERM

lojr

As for the supplying side of the industrial equipment fund in those days,
the private banks financed about 90/. of all bank loans in 1947, 170/, in 1948,

but the part of the Reconstruction Finance Corporation finance was about
720/. in 1947 and 600/. in 1948.

Even if the fund supplying root could have been possible to be amply met

by the private banking systems, in this case, it was undesirable. And thecause existed in the fact that Japanese economy in the recovering period had
to give preponderately large industrial loans to only exceptionally huge

enterprises under the Selective Production Encouragement Method, andthe financing of the Reconstruction Finance Corporation was concentrated on
important or key industries by the creation of the Treasury Fund. Therefore,

the supplying weight of the Reconstruodon Finance Corporation is shownas having an overwhelmingly high position in our financial and banking circlesof those days. As the result, the treasury fund more and more strengthened
our big enterprises, and our private banks were very busy among thernselves
trying to get established as strong commercial banks. Similarly our securities

market found it impossible to throw off easily the confusion surrounding it
after this war.

As a matter of course, the position of our private banking system seemed
to be declining rapidly as the supplying long-term equipment funds. Apparently

these conditions made the Reconstruction Finance Corporation our only powerful fund organ from the monetary aspect in the Selective Production Encourage-Table 8-1. Holding of the Bond of the Reconstruction Finance Corporation

by Banking and Financial Intermediaries. (March 1948)(unit=\ million)
Banking Institutes

Holding

Ratio <O/,)

The Bank of Japan

70,30464.0

Others38,795

36.0

Banks

30,35028.0

Deposit Section of Treasury

4,300

4.0

3,816

3.S

Central Cooperative Bank of Agriculture andForestry
Trust Bank

280

Peoples Finance Corporation

6

Mutual Saving Bank
Insurance Company

17
18

Credit Associations

Total

Source: Asahi Economic Year-Booh, 1949.

O.5

4
109,097

100.0

MASAHIRO FUJITA

106

Tab!e 8-2. The Reconstruction Finance Corporation Bond andthe lncreasing lssue of Currency (million yen)Jan. 1947
Mar. 1947
Mar. 1948
Mar. 1949
Jan. 1947
Mar. 1949

IssuedIncreased

Fukkin (R. F. C.) Bond

Increased

Bank Note(A)

Holding by the Bank of Japan

(B)

[

1

-B

A-(o/o)100,040
115,726

15,686

2,824

2,824

18.1

218,77S

103,046

42,46339,63938.S

312,547

93,77270,30527,84229.7

70,30570,30533.1

100,040
212,507

312,547'

Source: Asahi Economic Year-Book, 1949, p. 188.

ment Method. Accordingly, to start this system, our bad economic crisis had
to be improved from the severe situation in which the production of coal increas-

ed only by one million tons in November from 16.4 million in March and $teel
was showing only a 20-30 thousand-ton monthly increase, while electricity was
also extremely short and without these raw materials the increase of industrial
output could not be expected.

Due to the establishment of the Reconstruction Finance Corporation, it
was given priority in receiving financing from this system and funds for thiscorporation were raised by issuing debentures which, however, were diMcult of
being absorbed by savings, so two-thirds had to be undertaken by the Bank ofJapan in the middle of 1948.

Doubtlessly the Reconstruction Finance Corporation played an importantfunction as the reestablishment base'-maker of Japanese capitalism by helping in
the recovery of productivity in key-industries, in other words, coal, iron, electricity, shipbuilding, fertilizer, textile industry.

Table 9-1. The Reconstruction Finance Corporation Loan

(unit=\ million)
1947

1946

1948

Industry

Loan

o/o

Loan

o/o

Loan

o/o

Coal

1,036

17.30/,

19,87433.3 0/.

47,51936.oo/,

Steel

291
561
302

4.8

1,856

3.1

3,526

2.6

9.4

3,751

6.3

6,030

4.5

5.1

1,166

4.7

22,40017.0

Fertilizer

Electricity

Middle and Small
Scale Enterprise
Public Corporation
Total

18,1995,986

59,463

30.6

6,807

5D

18,181

13.7

131,965

Source: Takeo Suzuki, Contemporary History of Public Finance, Vol. 2, p. 666,

(l)FINANCE IN POST-WAR JAPANLONG-TERM

Table 9-2. The

and

Reconstruction Finance Corporationof All Banks at the End of 1949.

107

Loans
(unit=mill

ion yen)
BIA (O/.)All Banks (A)R. F. C. (B)33,87733,42498.1

33,373

13,903

41.7

67,25147,328

70.4

`

Coal

Equipment Fund (1)Working Fund (2)
Total

(3)

Steel

(1)
(2)

2,821

2,071

73.4

19,110

1,608

8.4

(3)

21,931

3,680

16.8

(1)
(2)

7,113

4,555

64.0

9,030

1,564

17.3

(3)

16,143

6,119

37.9

(1)
(2)

20,58019,125

92.9

4,842

3,270

67.5

(3)

25,422

22,395

88.1

(1)
(2)

15,56913,079

84.0

5,O09

IS6

3.1

(3)

20,57813,235

64.3

(1)
(2)

11,088

4,975

44.9

58,778

20

O.03

(3)

69,8664,995

7.1

Fertilizer

Electricity

Shipbui lding

Textile

Total

(1)
(2)

127,380

94,341

74.1

438,738

37,6238.6(3)566,118

131,965

23.3

Gross Equipment Fund
Gross Working Fund

28,720 (70/.)

85,616 (750/.)

2980/,

379,S26 (930/.)

28,16770/oGross Total

408,246

113,783

Source ; TheBank of Japan, Honp6- Keixai-T6kei, (Japanof 1950.

(25 0/,)

Econemic Statistic), Annual Report108 MASAHIRO FUJITA
Of course, this function of the Reconstruction Finance Corporation wasappreciated fairly by most specialists in this country. However, with the increasing demand for equipment funds, this corporation was forced to issue more
and more debentures in the form of additional credit and this brought into being

the "Fukkin-inflation" phenomenon at last.

The Fukkin debenture, thus, supplied long-term funds in spite of the
reduction in special bank debentures issued during the period when the forced
accumulation of capital by national authorities or government was the only policy.

However, this method was not a normal or sound form of accumulation ofcapital, so the private savings centred method was to become the true policy.
In order to respond to the urgent wish in which saving funds were desirousof being absorbed into the authentic banking foundation, a private bank method
in which the accumulation of capital did not depend upon the creation of credit

was started under the Dodge Plan. According to this method, investment bytreasury loans and governmental funds changed positions with private banks,
being changed from the leading role to a supplementary part,
Afterwards, the xaibatsu banks were revived again. Huge banks became
overwhelming forces in the money market and three special banks whose de•bentures-issuing privilege had once been abolished started to redevelop by "thelaw of debentures-issuing of bank and finanÅëial institutes" in 1952. Further-more, the securities market was renewed through three post-war reforms or

democratization that the Securities Coordinating Liquidation CommitteeS.C.L.C.-established in June 1947 and which legislated the Law of Stock
Exchange in April 1948 and reopened the Stock Exchange in April 1949. Though
this policy was the most effective counter-plot for loosening the tightness ofmoney, there was still great dependence upon the banks and other financial
institutions.

Meanwhile, the accumulation of capital in our reconstruction days had thesame features as the pre-war method and was returned again as a function of
big banks and special debentures•-issued banks. It is true that this is a Japanesecharacter for long-term finance or in other words, we shall call it the historicalfeature of long-term finance in Japan.

Owing to the rapid increase of equipment funds after the Korean War,"over-loan" was inevitable, so ordinary commercial banks had to take chargeof both long-term and short-term finances. In accordance with these circumstances, the government attempted to establish a special long-term bank on
account of wanting to separate long-term and short-term finances in commercial

banks, so the Nippon-Ch6ki-Shinyo--Gink6 (Japan Long-Term Credit Bank)
started into business under this plan in June 1952.

LONG-TERM FINANCE IN POST-WAR JAPAN (l) 109
Generally speaking, this bank was established as the only special long-term

financial institution to dissolve "over-loan" or "over-borrowing." Moreover,it has the following various functions:-(1) to promote the growth, to rear, andto strengthen the securities market, (2) to fi11 up insuthcient vacancies in internal

reserves, (3) to separate into both long-term and short-term finances, (4) totintervene
in the systematic function of both the monetary and fiscal systems.

Though the post-war securities market had great weight in long-`term money
markets, its pre-war position in the money market was as an organ for investment

by corporations whose debenture and stock securities were of the greater part.
On the other hand, the post-war direction was to absorb popular saving funds;
the pre-war combination being - big bank Z special bank which was reorganized

into a new combination in the post-war period of-the long-term credit bank'.,- the securities market, and here we are also able to point out the features ofthis country.

IV
Now, our modern long-term financial system has changed with our recent

remarkable economic growth. After World War II days, direct investments
increased more than indirect investments and the rate of increase ran parallel.

It is clear that these tendencies in economic growth and investment seemed
equivalently to be observed in both our economic growth period and super
economic expansion period. We can divide into three periods our wonderful
growth in economy which realized the highest rate of econom.ic growth in theworld.
The first period is the reconstruction time (1946-1952), the second is thetransitional stage of our economic expansion (1952-1960) and the third is thesuper expansion days headed by the machinery industry (1961-1963). Furthermore, the first period is divided into the following three detailed stages. (1)from the confusion after the surrender to the Selective Productiofi Encourage-

ment Method (1946-1949), (2) from the Dodge Plan to the occurence of the
Korean War (1949-1950), (3) aftermath of the Korean War (1950-1952). During these seven years there was the reconstruction and consolidation of ourlong-term banking system. The second period was the starting point of theJapan Long-term Credit Bank. On the contrary the third period can be divided into four more stages as follows:- (1) Investment prosperity period (April

1956-April 1957), (2) recessional stage (April 1957-June 1958), (3) reconstruction and expansion stage (July 1958-June 1959), (4) super-expansion
stage (July 1959-1963). First of all, we must analyse the super-expansion

110 MASAHIRO FUJITA
period in our post-war economic growth process. Its direction will be thestudying of the relation between our high economic growth and our long-term
finance structure which is connected with the securities market and Japan Long-

term Bank Loan, equipment fund raising by other financial institutions andbanks, additional credit by the Bank of Japan, and increasing personal savings.

Our wonderful economic growth was remarkable in the steel, shipbuilding,construction and machinery production process, and especially during the super-

expansion period by the increased domestic demand (1956-1957) which continued from the expansion of productivity on which our increased exports isbased. During this period, the first stage was the gradually increased demandof steel, shipbuilding, and machinery construction sections ; the next stage was the

rapidly increased demand for the steel and shipbuilding fields while the demand

for the construction and machinery section expanded only gradually. However,in the middle of 1957, the productivity in each of the sections leveled down
while production in the shipbuilding section especially declined on account of
the depression.

The rate of production growth had its turning point and converted thetempo of the rate. Still, the industrial cycle, the alternative development andrecession phenomena in this country had four stages - (1) expansion of produc-tion and gradual reduction in stock stage (January 1956-October 1956), (2)our production developing by leaps and bounds period and increasing graduallystock stage (November 1956- June 1957), (3) the rapid decline of production
and the sudden rise of stock stage (July 1957- February 1958), (4) the rising

curve stage of production and prosperity (since March 1956).
The first stage gradually increased the demand for ordinary steel in thesteel, shipbuilding, construction, and machinery sections; in the second stage
there was a rapid increase in demand in the steel, and shipbuilding section anda relative increase in the construction and machinery section; in the third stage

the demand declined in the shipbuilding and steel section; and in the fourthstage the export demand for ordinary steel suddenly increased while thedemand from each of the domestic industrial sections expanded by degrees.
As the result, equipment investments by the first and second relationaliza-tion plans were extended and the character of the equipment investments supplying structure did not imply an "over-loan" by the banking system. However,

the increasing tendency for a long-term fund supply is due to be examined byour monetary economist as an emergency task. (to be continued)

LONG-TERM FINANCE IN POST-WAR JAPAN (1)Bibliography
Ministry of Finance and the Bank ofJapan, Statistical Year-Book of Finance andEconomy of Japan, 1948.
Shigeru Yamaguchi, The Banking System in lapan and its Problems, Tlie Annualsof the Hitotsubashi Academy, vol. no. 1, 1950.
Masahiro Fujita, The Exchange Control Policy in Post-war lapan, Kobe Economic
Clie Business Review 1, 1953.

Mitsuhaya Kajinishi, Showa-Keixaishi (Economic History in the Showa Era)

Jiro Yao, Shihon-Chikuseki-no-Kiaytiteki-Sokumen (Monetary Aspects in the
Accumulation of Capital), Banking 107, 1956.
Toshihiko Yoshino, En-no-Rekishi (History of the Yen), 1955.
Takao Tsuchiya, Showa Kiayt2shi (History of Banking in the Showa Era), 1955.
Torajiro Takagaki, Kindai-IVi pon-Kinydishi (History of Money and Banking inModern Japan), 1955.
Shigeo Kurebayashi, Nihon-Gink6-Gairon (A Fundamental Outline Theory of
Banking) 1955.
Yasuo Noritake, The Development of the Monetary and Banking System in lapan,
1932-45, Kobe University Economic Review 2, 1956.
Toshihiko Yoshino, Wagakuni-Kiaydiseido-no-Kenkydi (Study of the Japanese
Financial System), 1957.
Tokihiko Kat6, Hompo-Ginko-Shiron (On the Banking History in Japan), 1957.
Takeo Suzuki, Gendai-Nihon-Zaisei-Shi (History of Modern Japanese Pttblic
Finance) 3 vols, 1959-1960.
Bank of Japan, Ni pon-Kinydishi-Shiry6 (Showa-Hen) (Historical Materials on .
Japanese Banking and Finance-Showa Series), 1961.
Teruo Akashi and Norihisa Suzuki, Nihon-Kiaydi-Shi (History of Money andBanking in Japan), Part III, 1961.
Hiroshi Shinjo, History of the Yen, 1962.

Shiro Hara, Gendai-Ch6ki-Kiaydi-Gink6-no-Seikaku (The Character of Our
Modern Long-term Banking System), 1963.
Ryuichiro Ishii, "Over--loan" of Commercial Banks in lapan, The Annals of the
School of Business Administration Kobe University 7, 1963.

111

113

A CHRONTOLOGICAL TABLE OF MODERN
JAPANESE SHIPPING No.1; 1600•-1799 •Seiji SAsAKIIn order to introduce the history of modern Japanese shipping the author
is attempting a chronological table in English, This article is of the former
half from 1600 to 1799. Since 1543 - in this year a Portuguese vessel came to
the Island of Tanega - modern Europeans began to visit Japan actively, while on

the other hand many progressive Japanese began navigating to South East Asia.

However, Iemitsu Tokugawa, the third Shogun, closed the country in thethirtieth of the 17th century. Japanese vessels were not permitted to navigate

abroad and only chartered ships of two foreign countries, Holland and China,
were allowed to enter Nagasaki, the only open port of the country, for morethan two hundred years. This isolation stopped in 1858.
The first p!an of the author was to treat the entire period of the isolation
till 1858, i.e. all shipping affairs during the two centuries and a half, in this article,

No. 1, but it was regrettably impossible for the reason that there is a limit to thenumber of pages. Leaving out the last fifty or sixty years, this article will deal

with the event of two hundred years.

(1)

Almost all the names of foreign visitors and ships were recorded only in theJapanese letter. So, when translated they may be spelled wrongly. On thispoint the author welcomes any advice.

(2)

Dates are based upon the lunar calendar that was in use in Japan at that time,
except in a few special cases where the dates were clearly recognized in the solar
calendar.

(3)

The year-name put in parentheses following the Christian era is the name of the(4)

To old unfamiliar Japanese place-names are added their present prefecture-names(5)

To compare with European shipping history some important chronological event(6)

Both names of foreign vessels and their captains are almost all uncertain in popular

Japanese era.
(or popular local names) in brackets.

are added separately in main countries. (Marked by dotted lines).
Japanese historical books. The author will make an effort to look them up inother records hereafter, whenever possible.

114 SEIJI SASAKI
1600 (Keicho-5)Mar. 16 (Apr. 19 in the solar ca!endar) The Dutch ship, "Liefde," wascast up on the coast of Bungo [Kyushu].

May 12 William Adams, English, the captain of the above-mentioned
ship, and Jan Yorce, Dutch, met Ieyasu Tokugawa in Osaka Castle.
Jan Yorce became a naturalized subject, and was called Anjin Miura.
(-Apr. 14, 1620).
...... (U. K.); Establishment of the East India Company.

1601 (Keicho-6)Oct. An Annam ship and Philippine ships came to Japan.
1602 (Keicho-7)June A Cochin China ship came to Hizen [Kyushu].
Aug. Mutual navigation was made between Japan and Malay or the Philipplnes.
...... (Holland); Establishment of the East India Company.

1603 (Keicho-8)Jan. Mutual navigation was allowed between Japan and Cambodia or thePhilippines.

1604 (Keicho-9)Aug. An Annan ship came to Japan.
1606 (Keicho-11)
Permission for trade with Siam.
1607 (Keicho-12)
Mar. Ryoi Suminokura opened a route on the Fuji River.
1608 (Keicho-13)

A Dutch ship came to Hirato [Kyushu].
The port of Uraga (Kanagawa Pref.) was opened for Spanish ships
engaging in the Philippines-Mexico line.

1609 (Keicho-14)
Feb. Harunobu Arima sent an exploring party to Formosa.

July 25 Chaksul Winheike, Dutch merchant, received the red-stamp

A CHRONOLOGICAL TABLE OF MODERN JAPANESE SHIPPING 115(chartered letter) for trade.

Aug. 15 (S.C. Sept. 13) A Dutch mercantile house was built in Hirato.
Jacques Specx took office as the first representative (Chairman;"opperhoofd").

Sept. 3 A Spanish ship ran up on rocks in Iwawada [Kazusa=Chiba
Pref.] Don Rodorigo, the Governor of the Philippines, was in thisship.

Nov. 12 H. Arima attacked an early European vessel (so-called "Nanbansen") in the Port of Nagasaki.
1610 (Keicho-15)

June 13 Katsusuke Tanaka and others set sail from Uraga for Mexico
across the Pacific Ocean on a new ship of 120 tons, which W. Adams
built as well as another ship of 80 tons. They arrived at Acapulcoin the middle of September.
1611 (Keicho-16)

May 1 The Spanish ship, "San Francisco,"-commander; Viscayno-put into Uraga. K. Tanaka and 21 Japanese came back to Japanby this ship.

Nov. 28 Permission for trade was given to Chinese merchants.
1612 (Keicho-17)
Prohibition of Christianity.

1613 (Keicho-18)

Sept. 1 An English ship whose commander was John Saris, came to
Hirato and received permission for trade.

(Establishment of an English mercantile house in Hirato.)

Sept. 15 Tsunenaga R. Hazekura set sail from Tsukino-ura [Mutsu=
Miyagi Pref.] for Italy as the envoy of Masamune Date. Viscayno,
the above-mentioned Spanich commander, returned to Mexico by thisship. This Japanese ship navigated back and forth between Italy(Rome)and Japan via Mexico and Madrid. It was the first crossing of theAtlantic by the Japanese ship, and came home in 1620.
Dec. 19 Strict prohibition of the Christian religion.

1615 (Keicho-20 & Genna 1)

May The fall of 6saka Castle and of the Toyotomi-family.

116 SEIJI SASAKI
Sept. 9 Limitation of chartered ships (red-stamp ships, or "(Go)Shuin-Sen").
1616 (Genna-2)
Jan. 29 The chief magistrate of Nagasaki sent an exploring party to

Formosa.
Aug. 8 Foreign ships were limited to visit only Nagasaki and Hirato
except for Chinese ships, and large-sized galleons were prohibitedfrom entering any Japanese port.

Aug. M. Date sent Shogen Yokoi to the South,
1617 (Genna-3)
Aug. 16 Dutch merchants received the chartered-letter (red-stamp) andwere permitted to continue trading.

Aug. 26 The Korean envoy met the Shogun.
1618 (Genna-4)Aug. Permission for trade was given to English ships.
...... (Europe); Opening of the Thirty-Years' War.

1619 (Genna-5)
Origin of the "Higaki-Kaisen"; the first liner service between Edo [Tokyo]

and Kamigata [Osaka].

1620 (Genna-6)Aug. 26 T. Hazekura, M. Date's envoy, came back to Japan from Rome.
1621 (Genna-7)
A Siamese ship requested trade rights and was given Permission.
1623 (Genna-9)
July English merchants closed their Hirato mercantile house and wenthome.
1624 (Kanei-1)
Mar. Rejection of the Spanish request for trade.
...... (Holland); The Dutch occupied Formosa.

A CHRONOLOGICAL TABLE OF MODERN JAPANESE SHIPPING 117
1626 (Kanei-3)...... (Spain); The Spanish occupied Kilun [Formosa].
1628 (Kanei-5)

June Yahei Hamada and his friends attacked Formosa and blew up the
Dutch forces.
'
1631 (Kanei-8)'

June 20 Restriction of Japanese ocean-going vessels; They had to receive

another special permission letter "H6sho" from the Nagasaki chiefmagistrate in addition to the traditional "red-stamp".

1633 (Kanei-10)

Feb. 28 Prohibition of ocean navigation except for the "Hosho-sen"(above-mentioned chartered ships).

The Japanese abroad were prohibited from coming home.
163S (Kanei-12)
Mar. 1 The Dutch representative rnet the Shogun.

May 20 Nagasaki was designated as the trade market and foreign ships
were permitted to enter only this port.

June Completion of a large-sized ship the "Ataka-maru"; length 38-ken,width 18-ken, two hundred oars, two rowers per oar, a total of 400

rowers. (Shogun Iemitsu T. changed her name to "Tenha-maru.")

Sept. 7 Repeated prohibition of the Christian religion. •Prohibition of building large ships over 500-koku.

1636 (Kanei-13)
Mar. 28 The Dutch representative met the Shogun.
May 19 General prohibition of oversea navigation by Japanese ships.
1637 (Kanei-14)

Nov. 9 The Shimabara Revolt.
China forced Korea to surrender.
1638 (Kanei-15)
Merchant ships were excluded from the prohibition against building largesized ships.

118 SEIJI SASAKI
1639 (Kanei-16)
May 1 The Dutch representlative, Nicolace'Koekevakel, met the Shogun.

July 4 The expulsion of Portuguese from Nagasaki.
Portuguese ships were prohibited from entering any Japanese port.
' ' ' tt '1640 (Kanei-17)
June 16 The Nagasaki chief magistrate burnt a Macao ship and punishedthe Portuguese belonging to the ship. 'Sept. 26 Fraosi Calon, the Dutch representative in Hirato, was ordered
to destroy their warehouse as it had the mark of the Christian era.

'

' ttt

1641 (Kanei-18)

April 2 Maximiliaen le Maire, the Dutch representative who met the
Shogun was ordered to move the Dutch mercantile house from Hirato
to Nagasaki and was told that Dutch ships hereafter could only enter

into the Port of Nagasaki.
June 17 The Dutch left Hirato and reached Nagasaki.
Dec. 21 Jan van Elserack, the new representative of the Dutch mercantile house in Nagasaki, met the Shogun.

1642 (Kanei-19)
Sept. 4 The Dutch drove the Spanish out of Formosa.
Prohibition of foreign trade except with Holland, China and Korea.
1643 (Kanei-20) 'June 14 The Dutch ship, "Breskens" came to Yamato-no--ura [IwatePreÅí]. The captain, Hendrick Corneliszoon Schaep, and his crew
were sent to Edo.
Dec. The above-mentioned captain and crew were handed over to J. v.

Elserack. '1644 (Shoho-1)
Dec. 28 J. v. EIserack met the Shogun.

1644-47. The appearance of the "Taru-kaisen"; mainly uoped to transport"Nada-wine" for Edo.

1647 (Shoho4)
Jan. 6 Willem Verstehen, the new Dutch representative met the Shogun.

A CHRONOLOGICAL TABLE OF MODERN JAPANESE SHIPPING 119
June 24 Two Portuguese ships came to Nagasaki and asked permission
to reopen commercial relations, but were refused.
1648 (I<eian-1)

Jan. Frederick Coyet, the new Dutch representatiVe, came to Edo, but
had no reception with the Shogun.
...... (Europe); The end of the Thirty Year's War.
1649 (Keian-2)
Oct. 28 Andries Frisius, the Dutch special envoy, came to Edo and apolo-gized for the "Bresken's fault",

1651 (Keian4)
Feb. 3 Pieter Stertemius, the new Dutch representative, came to Edo.
...... (U. K.); Cromwell's Act.

1652 (Shoo-1)
Feb. 7 (Keian-4 Dec. 28) Adrian van der Burg, the 12th representativeof the Dutch mercantile house, met the Shogun. (After this year the
Dutch representatives came to Edo every year to meet the Shogun, but
their names are omitted.)
1656 (Meireki 2)
May 17 A Siamese ship came to Nagasaki and asked permission to reopencommercial relations, but was refused.

1661 (Kanbun 1)
Dec. 3 The Dutch laid down C, Chong's arms and evacuated south
Formosa.
1663 (Kanbun-3)
The Dutch attacked Formosa in league with China.
1664 (Kanbun-4)...... (France); Establishment of the East India Company.

1668 (Kanbun-8) .

Mar. 9 Reform of foreign trade-goods.
May Prohibition of export of silver coins by Dutch ships; changed to120 SEIJI SASAKI
gold coins. •Withdrawal of the Dutch from Formosa.
1670 (Kanbun-10)
Apr. 17 Heizo Suetsugu built a large ship in imitation of Dutch style ves-

sel and brought her to Shinagawa [Edo].
Zuiken Kawamura endeavored to open the coastal routes for transporting
6u-grown rice (rice from Ou district); the eastbound and westboundroutes.

1672 (Kanbun-12) .
Mar. 28 Designation of the special period for Sakai [near Osal<a] merchants

to engage in Nagasaki-trade.

May 25 The English ship, "Return" came to Nagasaki and asked permission to reopen commercial relations, but was refused.

1682 (Tenwa-2)
Sept. 18 Destruction of the "Ataka-maru" (Tenka-maru).
1683 (Tenwa-3)
Feb. 3 Designation of contrabands in Nagasaki-trade.

June 23 Z. Kawamura was ordered to inspect the route of the Yoda
River.
July 27 Formosa submitted to China.
1685 (Teikyo-2)

June 2 A Macao ship came to Nagasaki for the purpose of delivering
Japanese castaways, but received no permission to visit in the future.

Aug. Regulation of the annual amount of Nagasaki-trade, 6,OOO-kan ofsilver for Chinese ships and 3,OOO-kan of silver for Dutch ships.

1686 (Teikyo-3)
Aug. 9 Regulation of the annual amount of trade for I<orea, 18,OOO-ryo.
Dec. 15 Regulation of the annual amount of trade for Okinawa, 2,OOO-ryo.
1687 (Teikyoul)
Dec. Prohibition order for navigating abroad and exporting arms.

A CHRONOLOGICAL TABLE OF MODERN JAPANESE SHIPPING 121
1688 (Teikyo-5 & Genroku-1)
Limitation of the number of Chinese ships allowed to enter, 70 vessels
a year.
...... (U. K.); The Glorious Revolution.

1689 (Genroku-2)
Mar. 15 Remodeling of approval stamp for river-ships.
Apr. Completion of Foreigner's•-House in Nagasaki (so-called "Dejima
Tojin Yashiki").
1690 (Genroku-3)
Aug. 16 Dr. Kempel of Germany, came to Nagasaki as the physician of
Foreigner's--House. (-Sept. 22, 1962)

1696 (Genroku-9)
Mar. 29 Enactment of provisions for river-ships in the Kafito district.

1701 (Genroku-14)
Limitation ofthe number of Dutch ships to 4 or 5 ships a year. (There isanother opinion that Chinase ships were reduced to 8 ships and Dutch

ships to 5 in 1700),..... (Spain); The War of succession to the Spanish throne. (-1714)

1703 (Genroku-16)
Oct. 28 Dredging of the Yamato River (Osaka).
1708 (Hoei-5)
Aug. 28. Joan Bopchista Shidoti, Italian, came to the Island of Yaku.
(He died on the 21st of October, 1714).
1710 (Hoei-7)
Mar. 4 Regulation of trade by Dutch ships; it was prohibited to havecommercial relations with other Christian countries and to take any Chris-tians on board.

1712 (Shotoku-2)
Aug. Provisions for coastal ships.
A foreign ship appeared off the shore of Kushikino [Kyushu].

SEIJI SASAKI

122

1715 (Shotoku-5)
Jan. 2 A new regulation order for Nagasal<i-trade; it prescribed an annual
trade-scale as follows, 30 ships and 6,OOO-kan of silver for Chinese
ships, and 2 ships and 3,OOO-kan of silver for Dutch ships.

1718 (Kyoho-3)June 29 Prohibition of smugging with foreign ships in Nagasaki.
1720 (Kyoho-5)tt

Dec. 25 The Shimoda magistrate's oMce moved to Uraga.
1721 (Kyoho-6)
Jan. 26 Provisions for ship inspection in the Port of Uraga.

1725 (Kyoho-10)
A Dutch ship first imported five European horses into Japan.

(The order was given in 1723).

1727
July 26 A Cambodia ship came to Nagasaki and requested to opening'
commercial relations,but was refused. •'1733 (Kyoho-18)
Apr. A tax reduction ordinance on the basis of decline of Nagasaki-trade.
Sept. Limitation of Nagasaki-trade, after the following year Chinese ships

were to be decreased to 29 vessels, and the amount of Dutch trade to
1,100-kan of si!ver.

1736 (Kyoho21 & Genbun-1)
June Limitation of Chinese ships, from 29 to 25 vessels.
1756 (Horeki-6)

Feb. 14 Imposition of "Koku-sen" (tonnage due) for all ships entering
Osaka to dredge the mouth of the river.
1764 (Horeki-14 & Meiwa 1)...... (Russia); Creation of the Japan Navigation School in Irkutsk.

A CHRONTOLOGICAL TABLE OF MODERN JAPANESE SHIPPING 123
1765 (Meiwa-2)
The first import of Dutch gold and silver coins.

1768 (Meiwa-5)•••... (Russia); Creation of the Japanese Language School in Irkutsk.

'
1769 (Meiwa-6)''...... (U. K.); Investion of the steam eBgine by Watt.

1775 (Anei4)
July 19 Zunberry, Swedish, came to Japan. (-13 Oct., 1776) He wasthe author of "Explanatory Diagram of Japanese Plants".

A Dutch ship imported a mummy.
...... (U. S. A.); The declaration of independence.

1778 (Anei-7)

June 9 A Russian ship came to Hokkaido and requested opening commercial relations with the Matsumae-han.
1779 (Anei-8)

Aug. 7 The Matsumae-han refused to open commercial relations with
Russia.
Captain Cook navigated along the east coast of Japan.

1781 (Anei-10 & Tenmei-1),..... (U. K. &c Holland) The British-Netherland War (-1783)

1782 (Tenmei-2)
Dutch ships did not come during this year.
1783 (Tenmei-3)
July 20 The captain of the Japanese ship, K6dayu, and his crew were cast

up at Kamchatka and were sent to Irkutsk.

1786 (Tenmei-6)
Exploration of the Islands of Chishima by Tokunai Mogami.
1790 (Kansei-2)
Limitation of Dutch trade, one ship and 700-kan of silver a year. And

124 SEIJI SASAKI
after this year the Dutch representative met the Shogun once every
five years.

1791 (Kansei-3)
Sept. 1 Provisions for measures when a foreign ship came to Japan, socalled "repulse order against foreign ships.

1792 (Kansei-4)
Sept. 3 Laxman, the Russian envoy, came to Nemuro [Hokkaido] for the
purpose of delivering Japanese castaways and requested opening commercial relations.

1795 (Kansei-5)

June 27 Tadafusa Ishikawa, the Tokugawa Shogunate's envoy, met
Laxman in Nemuro and gave him a permission letter to enter Nagasaki.
1797 (Kaisei-7)

May 29 Russians came to Hokkaido and robbed a Japanese ship and hercargoes.

1796 (Kansei-8)
Aug. Browton, an English captain, came to Muroran [Hokkaido] for the
purpose of making a marine chart and anchored there for about two
weeks.
Dispatch of a Japanese exploration party to the South Sea Islands.
1797 (Kansei-9)

July 7 Browton explored the mouth of Tokyo Bay and again returned
to Muroran.
Nov. Foreign ships appeared frequently near Tsushima.
Nov. Russians landed on the Island of Etorofu.
1798 (Kansei-10)

Mar. 6 Fire of Nagasaki-Dejima.
Morishige Kondo set up a national mark, the pillar inscribed "Dai-nippon

Etorofu".
...... (France); Napoleon's expedition to Egypt.

1799 (Kansei-11)
Kahei Takadaya opened a regular service to Etorofu.

125

IN
EMPLOYMENT OF SEAMENTHE CONTINUOUS
AMERICANSHIPPING INDUSTRY
Hiromasa YAMAMoTOI
The life and working conditions of seamen are in many ways different fromthose of workers on land. In the case ofaworker on land, once he has finished
his job, he has usually no farther contact with his companions or employer andcan spend his leisure hours at home or in other places as he likes. In contrast

a seaman on board ship is almost always confined to his vessel, consequently
he has no chance to enjoy home life and to spend his leisure hours on land solong as he engages in hisjob. The vessel is not only the work place for a seaman
but is also the place where he has to lodge and spend his free hours during voy-ages. When a searnan has finished his voyage or voyages after several months,
he has to leave his ship if he desires to rest and regain contact with his family

and society on land. Therefore seamen are traditionally employed on a round-

trip basis according to their contract of engagement. Under this employment
system a seaman ordinarily changes his employer and vessel, and he ofteR has
to suffer from the unstableness of his employment and earning due to its inter-mittent character. On the other hand there is no assurance for the shipowner
to be able to select and employ desirable seamen.

During the prewar period, Japanese shipowners also employed their crew
on a round-trip basis. But after World War II all Japanese shipowners who
operate ocean-going vessels have employed their crew as permanent employees.(i)The introduction of the permanent employment system into Japanese shipping
industry may be considered as reflecting the wish of shipowners to employ
desirable seamen continuously, though the adoption of this system might bealso due in part to demand of the seamen's union to secure stability in employ-ment and earning. Japanese shipowners expressed their view that to employ
othcers and unlicensed personnel continuously was indispensable in order tofoster the crew's loyalty to the company and to improve the eMciency of vessel( 1 ) He may find a similar case in the Company Service Contract in the Merchant Navy
Established Service Scheme, which has been enforced in the United Kingdom since
1947, though in this contract the employment relation between shipowner and seamen islimited to two years.

HIROMASA YAMAMOTO

126

operation. From that point of view, Japanese shipowners stood against the
Joint Employment Pool Program proposed by the seamen's union in 1958.(2)In order to encourage the continuous employment of seamen, Japanese
shipowners provide special measures. As for wages all shipping companies
adopt a continuous service bonus system under which a seaman will be provided
with higher wages according to the length of his service in the company. Though

all Japanese ocean-going vessel operators conclude a trade agreement with the

All Japan Seamen's Union, most of them provide their employees with various
company welfare plans other than determined by trade agreement. The employers prefer to employ fresh men who leave marine academies or training courses
and will seldom hire seamen who have been employed by other companies.{"}Then, in the case of shipowners of other countries, do they admit the neces-sity for the seamen of continuous employment? Is there any measure to secure
the continuous employment of seamen? If they do not find the necessity forcontinuous employment, why do they not? As a step in answering these questions, the writer will try to survey opinions of American shipowners regarding

continuous employment.
II
In the United States, for the most part, licensed seamen and unlicensed
seamen belong to several national or international unions which maintain collec-

tive bargaining respectively with shipowners on a coastwide basis, and they aredespatched through union hiring halls to the vessels which are operated by thecompanies concluding trade agreements with the union.(4) In the united States
seamen are employed basicaHy on a single round-trip basis, but there is no legal

or contractural hindrance against continuous employment of seamen, so longas the employer and the employees desire such employment to continue.
Then, what is the opinion of American shipowners regarding the continuous

employment of seamen? In order to examine the company policy regarding
continuous employment of seamen the writer distributed a questionnaire on theemployment system to 131 United States shipowners in 1963. As the subject of(2)(3)

As the most preferable employment system the All Japan Seamen's Union proposed ajoint employment pool from which individual shipowners could hire employees.
As for the employment sy$tem of seamen in Japan and its problems, see: H. Yamamoto,"On the Employment System of Seamen in Japan" Kobe Economic &r Business Review,(4)

No. 9, 1962.
Regarding the structure of callective bargaining in Arnerican shipping industry, see:
American Merchant Marine Institute, Inrpact of Collective Bar.aaining on the Maritiine

Industry, May 1961.

THE CONTINUOUS EMPLOYMENT OF SEAMEN 127
IN AMERICAN SHIPPING INDUSTRY

this research all shipping companies which own and operate U. S. flag vessels

were selected from among the directory of shipowners of the Shi ping World
Yearbook and Who's vaho, 1963, excluding agents, ferry boat operators andshipowners who own only vessels of foreign registry.

Among the 131 shipping companies to which the questionnaire was distrib-

uted thirty-four companies answered while sixteen other companies informed
the writer that it was not possible to answer because of the dissolution of thecompany or because the company was engaged in only agent business or employed only foreign seamen. The above-mentioned thirty-four companies include
twenty-five shipping companies which are composed of seventeen cargo boat
operators(5), eight tanker operators, and nine industrial carriers such as oil

companies or manufacturing companies. However, among them the fleets of
two tanker companies are operated under the complete control of some oil company, and these three companies answered the questionnaire on the same sheet.
Therefore they are dealt with here as one oil company. Thus the research covers

thirty-two companies,
Because the answers were obtained from thirty-four ship operators who consti-

tute about a third of the whole of ship operators employing American seamen,
and it is uncertain whether these thirty-four companies represent an adequate

sample of U. S. ship operators, we can not draw up a complete picture of thewhole of U. S. ship operators regarding the employment system of American
seamen. However, our research may be helpful in the approach to the employment system of U. S. seamen.
The hiring method of seafarers in each company is determined by the trade
agreements between the company and the unions of unlicensed seamen and !icensed personnel. Therefore, for the purpose of vnderstanding the hiring methodof seamen it is necessary to know with what unions the companies conclude tradecontracts. Among the thirty-two ship operators who answered the questionnaire,

all shipping companies (twenty-three companies) with few exceptions conclude
trade contracts with national or international unions of seafarers (hereafter

mentioned as national unions) which are composed of respectively unlicensed
seamen or licensed personnel(6). With regard to collective bargaining and tradecontracts, industrial carriers are divided into three groups; three companies
concluding trade contracts with national unions of both unlicensed seamen andlicensed personnel; three companies concluding trade contracts with respective( 5 ) Among them four subsidized liner operators and two Great Lakes operators are included.
( 6 ) One tanker operator seems to have no union contract with unlicensed seamen's union.
This company did not give the name of the seamen's union, and employed no unlicensed

seamen while it employed licensed personnel.

128 HIROMASA YAMAMOTO
independent unions of unlicensed seamen and licensed personnel whose members

are composed solely of company employees(7); three companies having tradecontracts with a national union of unlicensed seamen while employing licensed
personnel of non-union members.
Companies which have collective bargaining with national unions hire theirlicensed personnel and unlicensed seamen through respective union hiring halls.{8)Each company having collective bargaining with independent unions whose members are solely employees of the company hire their crew directly through thepersonnel department of the company or company office in their home port•
Companies employing licensed personnel of non-union members, of course,
hire them through the personnel department of the company.
As for the necessity of continuous employment, all companies which answered
the questionnaire admitted the necessity of continuous employment for licensed
personnel of supervisory positions such as captains, chief engineers, chief mates,

first assistant engineers. As for other licensed personnel not mentioned above,

twenty-one companies admitted the necessity of their continuous employment
while ten companies did not. As for unlicensed seamen ten companies felt thenecessity of continuous employment and seven companies answered that only
seamen of key jobs such as stewards, bo's'ns, or pumpmen, etc. were wanted ona continuous employment basis or that their continuous employment was desirable but not necessary, while fourteen companies did not feel the necessity for

their continuous employment, Grouping of the companies according to thetypes of vessel operation does not result in any admittable difference of opinion

for continuous employment among groups with one exception, that all oil companies find continuous employment necessary for both licensed and unlicensed

seamen.

Companies which find the necessity of continuous employment pointed
out the following reasons for their necessity. The reasons common to both li-

censed and unlicensed seamen are; that continuous employees, having more interest and pride in their job, understand their job better and are more reliable;that a ship will be operated more eMciently and decrease the accident potential
with men trained for a particular vessel, trade routes and port conditions ; that con-tinuous employees create more stability in the industry and additional good-will(7)

However, regarding radio operators one company of this group concludes a trade con-(8)

tract with a national union.
One company informed that it hires unlicensed seamen mainly through union hiring halls,
but some are hired through the company office if an applicant holds a license. This

company hires licensed seamen primarily through promotion from unlicensed ranks
though it concludes a trade agreement with an indepepdent licensed officers' union.

THE CONTINUOUS EMPLOYMENT OF SEAMEN 129
IN AMERICAN SHIPPING INDUSTRY

among employees and employers; and that a high ratio of continuous employees

among the crew reduces the cost of hiring, examining and discharging. The
reasons stressed for licensed seamen are; that continuous employees are morefamiliar with the company policy and procedures relative to the upkeep of thevessel, handling of men, and efficiency in the operation of the vessel; and that

it is easy for the company to gain data for promotion and selection of men forsupervisory positions. However, it was interesting to the researcher to note thata cargo vessel operator expressed in his opinion that continuous employment
of seamen was beneficial but not necessary.

Then, what measures are adopted by ship operators to encourage the con-tinuous employment of seamen? Twenty-nine companies answered this question, among which twenty-three admitted the adoption of measures to encouragecontinuous employment while six companies denied such measures. Amongthe companies which did not adopt measures to encourage continuous employment, one company did not answer the question regarding the necessity of continuous employment while two other companies admitted the necessity of continuous employment for supervisory licensed personnel and the remaining threecompanies felt the necessity of continuous employment for all seamen. Therefore it may be estimated that the last three are dissatisfied with trade agreementswith seamen's unions in relation to the hiring method of seamen. In reality one

company answered that under the present union hiring hall system and union
rules there is no room for encouraging continuous employment.
To classify measures to encourage continuous employment by American ship
operators, companies should be divided into two categories; one for companies

concluding trade agreements with national unions, the other for companies
concluding trade agreements with unions of company employees and companies
which employ licensed personnel of non-union members. At first we shalldescribe answers which were obtained from the first group.
Five companies answered that measures to encourage continuous employment of both licensed and unlicensed seamen were vacations andlor welfare andpension plans in union contracts or that the measures were provided in union

contracts. Three other companies answered with such measures as vacations,
welfare and pension plans which were not certain as to whether they would be
provided with union contracts or company administered. If these answers refer

to welfare plans, etc., which are provided by union contracts the number ofcompanies amounts to eight. However, these plans are administered on a coastwide or industry-wide basis by respective union-contracts, and all seamen's unions

do not provide more advantageous terms in their plans for union members who
remain with the same employer, with the exception of vacation plans which pro-

130 HIROMASA YAMAMOTO
vide better terms for continuous employees.(g) Therefore these fringe benefits
may be useful in preventing seamen from leaving the shipping industry as awhole

while they are not considered as measures to encourage continuous employment
in specific vessels or companies. In addition, though vacation plans may be
useful in inducing seamen to remain with some employer, they do not result inthe seamen's preference for a specified employer.

Two companies mentioned for such measures, high wages and good working conditions such as good meals, good room facilities and time-off in ports,
but it is uncertain whether these companies provide better working conditions

than those determined by trade agreements while the wages of seamen employedby these companies are the same as given in the union contract.

As a measure for encouraging continuous employment of licensed seamen
four companies enforced their specific employment policy or welfare plan in which

service bonuses for key personnel, a company stock purchase plan, employee

dividends and longevity pay were included. Promotion among continuous
employees were mentioned as a means for encouraging continuous employment
by six companies.
The measures widely adopted to encourage continuous employment by thesecond group are continuous service bonuses based on years of service in addition

to various company welfare plans. Among six companies belonging to thisgroup four companies provide continuous service bonuses for licensed personnel
and two companies provide it also for unlicensed seamen. All companies provide
various welfare plans.

Whether companies belonging to this group provide higher wages, better
fringe benefits, and better working conditions become key points for seamen toremain under the same employer. But it is uncertain whether companies ofthis group as a whole provide better wages and better working conditions thancompanies of the first group. One company provides better wages, working
conditions and welfare palns than those provided by trade agreements of nation-

al-wide unions, while other company provides similar wages and working condition as provided by trade agreements with national-wide unions.
In addition to the above mentioned measures some companies of the second
group enforce other characteristic measures to encourage continuous employ-ment. One company, adopting a policy to promote from within, permits its
crew to take correspondence courses for upgrading and also grant them time off

with fu11 pay to take courses and examinations. The company will also pay 75( 9 ) Regarding the outline of fringe benefits of U. S. seamen, refer to: U. S. Dept. of Commerce, Seafaring Fringe Benefits, 1957.

THE CONTINUOUS EMPLOYMENT OF SEAMEN 131
IN AMERICAN SHIPPING INDUSTRY

per cent of the cost of any approved cou;ses they satisfactorily complete. The
other company spends a considerable amount of time for training both licensed

and unlicensed seamen and provide them with various company benefit plans,
expecting the employees in their fleet to remain in their jobs as permanent

employees. If the seamen do not intend to become permanent employees, thecompany will not rehire them.
We asked each company in the questionnaire the number of seamen employed in their fleet at that time and also the number of seamen who had worked con-tinuously in the company for the last two years, including vacation periods. If
we show the ratio of the number of continuous employees of each company against the number ofjobs in their fleet which are represented by the number of sea-

men employed by the company, the result is as follows:
ratio of continuous employees among employees
unlicensed seamen

licensed seamen

compames companles
e/oconcluding

concluding

trade

trade

concluding
trade

agreements agreement agreement
with
with
with
national
independent
no unlonunion
unlonstotal

concluding

concluding

trade

trade

agreements agreement
with
with
national
independent
union
unlons

total

20

4

2

6

6

1

1

2

2

2

6

6

2

2

4

4

12

12

80 rv 1OO

15

2

60 A. 8e

51

40 AJ 60
2o ,v 4oON20compames companles

companles

3

As shown in the table, the ratio of continuous employment of licensed seamen

is much higher than that of unlicensed seamen. In twenty conpanies out ofthirty the continuous employees among licensed seamen were eighty per cent andover, in contrast, regarding unlicensed seamen in six companies the continuous

employees were eighty per cent and over, while in sixteen companies the continuous employees were under forty per cent among unlicensed seamen. In thecompanies which conclude trade agreements with independent unions of licensed

or unlicensed seamen, regarding both licensed and unlicensed seamen thecontinuous employees shared a higher ratio among the crew.
In addition, there is no meaningful difference in the ratio of continuous

employees amofig the crew between companies which answered having measures
to encourage continuous employment and companies which denied the existenceof such measures, though we do not show the results here. This result may bepartly due to the fact that as measures to encourage continuous employment

l32 HIROMASA YAMAMOTO
many companies pointed out welfare and pension plans which are administrated
on a coastwide or industry-wide basis according to trade agreements, and which

are also applied to the employees of companies that denied the existence ofmeasures to encourage continuous employment.
In treating the results of the ratio of continuous employees among seamen
employed by individual companies, it should be kept in mind they show considerable difference with findings of the survey enforced by the Department of Labor.

According to the survey, in relation to the employment pattern of seamen during

the period from July 1956 to June 1957, with the exception of some licensed
personnel and a few unlicensed seamen on passenger ships, seamen typically work-

ed on two or more ships, and when a seamen changed ships, he generally alsochanged employers. During the one year of the survey all licensed seamenchanged employer on the average 1.6 times and all unlicensed seamen averaged
2.2 employers.('e) This finding suggests that the ratio of continuous employees

among the crew during 1956 to 1957 was much lower than our result for the last

two years. But we should reserve concluding that continuous employees haveincreased during the last several years. For our findings depend solely upon
the answers of shipowners and the answers were obtained from only a part ofall shipping companies.

If we compare the answers of the questionnaire with the employment system of the Japanese shipping industry, the following points can be mentioned
as characteristics of personnel administration and labor-management relationsin American shipping companies. All Japanese shipping companies feel thatthe continuous employment of seamen is necessary so as to increase their loyalty

to the company, and employ not only licensed seamen but unlicensed seamen
as permanent employees. In contrast, though all American shipping companies
admit the necessity of the continuous employment of licensed personnel of supervisory positions, a third do not admit the necessity for other licensed personnel

and two thirds deny the necessity of continuous employment for unlicensed
seamen. Especially, most shipping companies concluding trade agreementswith other than independent unions of unlicensed seamen do not find the neces-sity of continuous employment for them.
Moreover, with the exception of private carriers who conclude trade agree-ments with independent seamen's unions, most American ship operators who
admit the necessity of continuous employment provide for continuous employeeswith no special benefit other than promotion, though a few provide for eontinuous(10) U. S. Dept. of Labor, The Earnings and Employment of Seamen on U. S. Flag Ships.
1958. pp. 30-32. and p. 7S,

THE CONTINUOUS EMPLOYMENT OF SEAMEN 133
IN AMERICAN SHIPPING INDUSTRY

employees of licensed personnel with their own company fringe benefits. For

most of the American shipping companies measures to encourage continuous
employrpent are to observe union contracts, in which suthcient measures are,from their point of view, provided so as to make it possible for seamen to remainin the same vessel or company. At least there is no marked tendency among
American shipping companies to hire seamen as permanent employees. In theopinion of most American shipping companies it is considered that in order tosecure necessary seamen for their fleet wages and workings conditions should
be determined in detail by trade agreements with unions and the company shouldobserve union contracts strictly.

III
As mentioned above, many American shipping companies do not need thecontinuous employment of unlicensed seamen and also in the case of some shipp-ing companies which admit the necessity of continuous employment many ofthem have no special measures to encourage continuous employment of unlicens-

ed seamen. In relation to the continuous employment of licensed seamen otherthan men of supervisory positions they show a more or less similar attitude withthe exception that they may use promotion as a stimulus for seamen to remainin their fleet. In addition, though American shipping companies are allowed
to employ seamen continuously by union contracts for unlicensed seamen, they
have only a passive chance to select their employees. In other words, they can

not select the most desirable seamen among the applicants and employ themcontinuously, but they have to hire union members who are dispatched in rotation from union hiring halls. Of course it is widely admitted that the selectionof employees and increase in their morale are very important phases of person-nel management. However, American shipping companies do not show any
wish to change their hiring method of seamen and they seem to be satisfied withthe present employment conditions.
In the past American shipping companies were against union hiring halls.
As is well known, in the thirties the greatest problem to be settled in collective

bargaining of the American shipping industry was the union hiring hall system.
In the hearings of 1947 the representative of the Pacific coast shipping companies

expressed their objection to union hiring halls. "We should have the right toemploy and select our employees and use them continually under the same operation and develop their skills, ... (however) we do not get that under the hiringhall system".oi)(11) Senate Committee on Labor and Public Welfare, 80th Cong., lst sess., Hearings. Labor
Relations Program, 1947. pp. 606-607. cited by Goldberg, Maritime Story. 1958 p. 242.

134 HIROMASA YAMAMOTO
Why did the attitude of shipping companies change from a position which
demanded absolute right to s'elect and employ seamen continuously to a position which admits the necessity of continuous employment only for supervisoryor highly skilledjobs? Why did the attitude of shipping companies change fromanti to pro union hiring halls?

Generally speaking, there are no great differences in the mechanics of ves-

sels and technics needed for vessel operation among shipping companies ortheir fleet. Consequently qualified seamen for some job in one vessel may workon a similiar job in another vessel without any training with the exception ofcertain supervisory, highly skil!ed or key ratings, such as captains, chief mates,
chief engineers for licensed personnel, and chief stewards, electricians and opera-

tors of self unloaders in collier or pumpmen of tankers for unlicensed personnel.
Therefore if shipping companies neglect or put little stress on the effect of con-tinuous employment of seamen upon their loyalty to the company, the company
need not employ most of the seamen continuously so long as enough membersof qualified personnel can be hired to operate their vessels without stoppage.

With the development of unionism among seamen, especially among unlicensed
seamen, after the thirties and by the enforcement of the Merchant Shipping
Act of 1936 which included provisions for the qualification of seamen, the labormarket of American shipping industry has gradually been fi11ed with a stableand qualified labor force. The growth of a stable and reliable workforce in theAmerican merchant marine may be indicated by several facts. During the
twcnties alien seamen filled 40 to SO per cent of the jobs on American-flag
vessels.(i2) The report of the Maritime Commission of 1937 pointed out thatduring the early thinies almost all seamen did not regard their jobs as worth
remaining with for a long time and they often changed their jobs.(i3) But thecitizenship restrictions and the increased requirements for specialist ratings had

an impact upon the composition of seamen, and alien seamen have been displacedby American citizens. Improved wages and working conditions gained byseamen's unions during the past twenty years have attracted a new and reliable
work force into the American merchant marine, resulting in the increase in thenumber of industry-connected seamen and also of married seamen.(i`) Therefore, American shipowners have found less necessity than before to select qualified

personnel among applicants and employ them continuously.

(12) R. W. Wissmann, The Maritime Industry: Federal Regulation in Establishing Labor and
Safety Standard, 1942. p. 368.
(13) U. S. Maritime Comission, Economic Survey of the American Merchant Marine, No'v.

1937.
(14) Goldberg, op. cit. p. 293.

THE CONTINUOUS EMPLOYMENT OF SEAMEN 135
IN AMERICAN SHIPPING INDUSTRY

It is quite important for shipping companies to operate vessels, their largest

capital assets, without disturbances as far as possible, and from that point ofview they are required to have a labor pool of qualified seamen and adequate
facilities forjob exchange services in order to fi11 with qualified seamen the postsof seamen who leave the vessels due to vacations or pay offs. Union hiringhalls have provided ship operators with an adequate and constant labor poolfrom which they may draw necessary replacements at no expense.
So long as the union hiring hall system has been useful in maintaining anadequate labor pool of qualified seamen, from the viewpoint of eMcient vessel

operation ship operators do not necessarily need to select and employ seamen
continuously except in the case of supervisory personnel or in some highly skill-

ed jobs. However, from another viewpoint ship operators may be required to

select and employ seamen continuously. Attention should be paid to themeaning of the union hiring hall systern in relation to the labor-management
relation. The success of seamen's unions to obtain union hiring halls in the later

thirties has been effective for the unions in controlling the labor market andstrengthening their position in collective bargaining. That has resulted for ship
operators in high labor costs. In contrast, if ship operators had absolute rights

in selecting seamen and in employing them continuously, it would be useful inincreasing their loyalty to the company on the one hand and also useful in streng-thening the ship operators' position in collective bargaining. When ship operators had an anti-union attitude, their proposition for absolute right to selectand employ seamen continuously might be considered to be based on their intention to weaken unions. From the later thirties to the immediate end of thewar ship operators took a clearly anti-union position.
But after the strike of 1948, American ship operators changed their attitude

from that of anti-union to co-operation with unions so as to maintain stable

labor-management relations and to prevent work stoppage. Seamen's unions
also corresponded with co-operation.('5) Then ship operators were led torequire the right to select and employ seamen continuously only from the viewpoint of eMcient ship operation, without any consideration for labor-management
relations. With the maturity of collective bargaining shipping companies rather
chose to develop a grievance machinery and to determine desirable rules in trade

agreements for the operation of union hiring halls rather than to take a severe
stand against the union hiring hall system. Thus, with regard to certain supervisory, highly skilled or key ratings to which shipowners need to select qualified(15)

Goldberg, op. cit., p. 241 ff. See also W. Gorter and G. H. Hildebrand, The Pactific Coast
Maritime Shipping Industry, 1930-1948, Vol, II. 1954. pp. 215-19,

136 HIROMASA YAMAMOTO
personnel and to employ them continuously trade agreements include reservation to union hiring halls as the sole source of seamen. For example, masters,
chief mates, chief engineers and first assistant engineers are excluded from thehall provisionsi and all licensed oficers may be employed continuously by thecompany. Unlicensed seamen's union agreements also permit the companies
to obtain chief stewards, electricians and plumbers from within or without theunion if qualified personnel can not be found in the hall, and they allow indivi-

dual employees to remain in continuous emp!oyment if both employer and employee agree mutually.

' In conclusion, the continuous employment of seamen may be adopted byship operators from two different intentions; one is to improve the eMciency
of vessel operations, and another is to weaken the union's position in collective

bargaining. In the United States ship operators seem to deal with continuous

emp!oyment mainly from the former viewpoint.

l37

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC
DEVELOPMENT PLAN (1963-1965)
Yoshiaki NIsHIMuKAII
The background of the triennialplan of economic development

In January 1963, the Brazilian Government published a synthesis of thetriennial plan of economic development (O PIan Trienal de Desenvolvimento
Econ6mico e Social). The concrete economic policies based on the fundamental
principles of this synthesis are to be carried out during the three years, 1963-

65. As a systematic development plan, President Kubitschek's economic development plan (Programa de Metas), which had already been put into practicefrom 1956 to 1960 can be mentioned, but this triennial plan is noteworthy inrespect to its new fundamental principles which differ from those of the former.

The most important point is that this Plan aims to accomplish the developmentwith stabilization as its fundamental object, that is, to maintain the high rate of

economic development, recently registered in Brazil, obtaining concomitantly
control of their inflation.

In Latin America, the so-called "structuralist" theory on inflation, which
originated from Chilean Osvaldo Sunkel's thesis published in 1958, was unfold-ed,{i) and a public debate has been carried on in regard to the relations between

inflation and economic development. In Brazil, too, we can remember that in
the acrimonious debate between the "ECLA (CEPAL)" school and the "orthodox" school headed by Eugenio Gudin, which was concerned, above all, with the"Prograrn of Monetary Stabilization" (Programa de Estabili2aFa""o Monetdria) in
1958, the problems concerning the compatibility of stabilization with development, were discussed, and that in this respect, Joao Paulo de Almeida Magalh5es
published some noteworthy studies.e) But according to the "structuralist" viewof the ECLA which had played an important role in Brazilian economic policies,

they could not but conclude that infiation would be inevitable in the processof economic development, and there remain various questions concerning( 1 ) Osvaldo Sunkel, "La Infiaci6n Chilena: Un Enfoque Heterodoxo", El Trimestre Economico, vol. XXV, ntim. 4, 1958, pp. 570-S99(2) One of his representative works is Uma Nova Formulaga-"o Teo'rica para o Desenvolvimento Econ6mico Brasileiro, Rio de Janeiro, 1961.

138

YOSHIAI<I NISHIMUKAI

Magalhaes's model in which he intended to manifest the possibility of economic

stabilization with development.(3) Therefore, in spite of the still remaining
many theoretical problems in regard to the possibility of economic stabilization

with development in Latin America, the fact that the Brazilian Government aims

to achieve simultaneously price stability and economic development, seems toshow us that Brazil has impending reasons to take up such a policy. Such being
the ease, this triennial plan offers us significant material to study the recent
Brazilian economic situation, while it is itself theoretically an interesting problem,

too. We shall begin by considering the background of this Plan.

From the macro-economic point of view, post-war Brazilian economy canbe characterized by its rapid development and chronic inflation, During thepost-war period, Brazilian economy maintained a high rate of growth, and thegross domestic product increased, between 1947 and 1961, at the annual rate of
5.80/o, which was equivalent, in per capita terms, to30/. per annum. For these
five years, it is estimated as 3.90/., Taking into consideration the fact that the

per capita rate of growth of the countries, which constitute the EEC, during theperiod 1950-61, was 40/. and that of other Latin American countries 10/., we caneasily understand the rapid economic development of Brazil. But, on the other
hand, the general level of prices has risen at the average rate per annum of 16.50/o

during the 1947-61 period, which corresponds to a rate three times as high asthat of the real income. For these five years it has been accelerated to about
240/.•

These tendencies have changed and s'how unfavorable signs since the second
half of 1961. The triennial plan confirms that the rate of growth declined from7.70/. in 1961 to 6.00/. in 1962 and that of the per capita rate from 4.60/. to 2.90/o.

These are the lowest rates that Brazilian economy has experienced since 1956.
It is estimated that the increase of the Gross National Product fell from 7.60/.

in 1961 to 3.020/. in 1962.(`) On the other hand, the wholesale prices showedarise of 500/. in 1962, while in 1961, it was by 43.10/.. Moreover, in 1962 theindex of the cost of living rose to 460/. in Rio de laneiro and 550/. in Sa""o Paulo,

while in 1961 they were 38.50/, and 40.20/, respectively.(5) These data meanthat in the past, in spite of the rapid inflation, Brazilian economy had been keep-

ing its high rate of growth to a suMcient extent, but since last year it has cometo experience a decline in its growth rate and the acceleration of inflation. It( 3 ) In regard to the debate on the inflation in Latin America and its examination, see Yoshiaki Nishimukai, "Brazilian Economy and Inflation ( I ) ", Annual Report on Economics and Business Administration, 14( I ), 1963.
(4) "Crescimento Econ6mico em 1962", Desen•volvimento CSir Coniuntura, fevereiro de 1963,

p. 3.
(5) Ibid., p. 83.

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 139
DEVELOPMENT PLAN (1963-1965)

is often said that these economic trends are the results of the unfavorable effectsof the recent political instability which was caused by the collapse of Janio Qua-

dros's Government, which took place only seven months after its birth in 1961,
and continued to the restoration of presidentialism (presidencialismo) which wasestablished at the beginning of this year through the efforts of Goulart's Govern-

ment since the end of August of last year. Indeed this view is reasonable fora short term, but it is diMcult to explain the recent tendencies of Brazilian eco-nomy merely by its political instability. We can not neglect the importanteconomic aspects lying in the background, among which we can mention thegradually accelerated increase of domestic prices and the accumulation of deficits

in the balance of payments which have been followed by rapid industrialization.
The inflation is putting greater and greater pressure upon the life of the people,

and the dificulties of the balance of payments tend to aggravate it. The triennial plan judges the rate of economic growth as suMcient, but on the other hand
it recognizes regional and sectional inequality in respect to the distribution ofof the fruits of development. Therefore, to adjust these inequalities, the Planbrings out such fundamental principles as the control of inflation, the intensifica-tion of governmental activities in the fields of education, public sanitation, andthe elevation of productivity in agriculture. As we can easily understand by
the facts mentioned above, the triennial plan is a logical one, which would havebeen naturally needed sooner or later in order to remove the barriers which
Brazilian economy faced, even if there had not been political instability. The

industrialization of Brazil had been pfomoted under the support of a planned
policy by Kubitschek's Government for the first time, but one of its important
defects was the acceleration of inflation. It is, therefore, reasonable that as thesecond plan following the former by Kubitschek, this triennial plan should takeup the stabilization of their economy as one of its important objects. }Ience,
it is more adequate to conclude that the distortion caused by the rapid industrialization policy in the past, is one of the factors of the recent social and political instability, rather than to think that the political instability itself is a factorof the recent economic stagnation.
This triennial plan handed to the President under the date of the end of lastyear by Celso Furtado, Mini$ter of Planning and Development, was made public
as the political principles of Goulart's Government for the coming three years
before the plebiscite, which took place on the 6th of January of this year, tochoose either presidentialism or parliamentarism. The fact that the plebiscite
was to restore presidentialism signifies at the same time that the people support-

ed the triennial plan. But, because only a synthesis of the Plan had been published as described above, it is another problem as to what attitude the Brazilian

140 YOSHIAKI NISHIMUKAI
people will assume toward each concrete economic policy in the future. Unfortunately we are not suMciently informed of the subsequent progress of the Plan,
but we consider it significant to point out the basic objectives of the Plan andsome problems. •II
Outline of the triennial Plan

' For convenience of description, the contents of the triennial plan can bedivided roughly into four parts such as the general plan, sectional plan, regionalplan, and administrative reform. In the first place, we shall refer to the objects

and the means of the general plan.
The fundamental principle of the general Plan is to maintain the growthrate of 70/, per capita for the next three years, and to increase the per capita
income from the 323 dollars in 1962 to 363 dollars in 1965, that is, to elevate itby 3.90/. per annum on the average. To maintain the rate of 70/. which is equal
to the average of the 1957-61 period, it is enough to keep the previous rate ofinvestment which the Plan estimates as 18.250/. of the GNP, which amounts
to 3,500 billion cruzeiros (at the 1962 price) or 7,600 million dollars for three
years.

Another fundamental object is to limit the price increases within 250/. in
1963, 180/. (estimated) in 1964, and 100/, in 1965. To obtain this result for
1963, the Plan presumes to limit the increase of the means of payment to 340/..

As this increase results from an excess of emission, and has its origin in thegreat deficits of the budget, principal efforts must be concentrated in the reduc-tion of the budgetary deficit. The potential deficit for 1963 is estimated as774.9 billion cruzeiros, and to reduce it, the Plan proposes a plan of curtailment

to the amount of 260 billion cruzeiros, based on the budget law which permits
a reduction of variable expenditures up to 450/.. Adding to this the carryingover of expenses, the budgetary curtailment will be about 475 billion cruzeiros,and consequently the budgetary deficits will be within 300 billion cruzeiros.
To reduce the deficit, the abolition of the subsidies for wheat and oil products

was put into practice and the adjustment of the prices of public works are also
under consideration. The deficit will be partly financed by 140 bMion cruzeiros
supplied by the compulsory deposit system in case of the selling of bills andpartly by other financial resources, restraining additional emission to about 110
billion cruzeiros. This is the reason why the Plan estimates the price increases
in 1963 as about 250/..

In regard to the credit policy, the Plan is aiming at not putting pressure

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 141
DEVELOPMENT PLAN (1963-1965)

upon the private section in otder to achieve the planned rate of growth. Loansby monetary authorities to this section are expected to increase from 363 billion

cruzeiros in 1962 to 479 billion cruzeiros in 1963, and those by commercial
banks from 830 billion cruzeiros to 1,108.4 billion cruzeiros, that is, increasesof 320/. and 330/. respectively. These are the rates capable of covering an increase of 70/. of the real product and price increases of 250/,.

One of the main motives which stimulated this triennial plan consisted in
diMculties of foreign trade and the balance of payments. In fact, Brazil must
resolve the problem caused by the necessity of repaylng 1,285 million dollars
and 500 million dollars in interests, profits, and dividends in the near future.

As seen in Table 2-1, the deficits in the balance of payments during the next
three years is estimated as 1,830 million dollars, and to meet them, the inflow

of foreign capital to the amount of 1,270 million dollars and the "refinancia-

mentos" of 116 million dollars are being planned. Nevertheless, deficits of
444 million dollars still remain in balance and the Government has to find supplementary resources to fi11 them.
Table 2-1. Projections of the Balance of Payments. (million dollars)
1963

1964

1965

total

-203
-465

-183
-465

-159
-355

-1,285

-668

-648

-514

-1,830loans and financing

305

320

335

960

direct investment

100

1OO

110

310

refinanciamentos

63

33

not covered

200

195

20
49

444

total

668

648

514

1,830

current transactlons
debts of capital
total(Source)O PIano Trienal,

Quadro XIX.

Table 2-2.

Projections

-54S

116

of Exports

during 1963-65.

1963

1964

1965

coffee

702

713

723

2,138

cotton

100

100

1OO

cocoa

70
60
50

75

lron oreothers

6S
60
50
120
300

100
2tO
180
145
432
960

total

1,397

(milliondollars)

d

sugar

wood

(Source)O PIano Trienal,

Quadro XXII.

144
320
1,457

60
45
168
340
1,Sll

total

4,365

YOSHIAKI NISHIMUKAI142

In regard to foreign trade, it is proposed to increase exports from 1,397
million dollars in 1963 to 1,511 million dollars in 1965 (Table 2-2). On theother hand, there is no notable increase in importas (Table 2-3)
Table 2-3. Projeetions of Imports during 1963-65. (million dollars)
1963

l

1964

1965

total

petroleum and derivatives

180

193

207

wheat
machine and equipment

155

16S

376

160
372

manufactures

148

135

chemical products and medicines

136

136

metal used in metallurgy

67

others

138

72
152

181

221
471

1,200

1,220

1,250

3,670

total

354
124
137
82

'

(Source) O PIano Trienal, Quadro XXIV.

Secondly, we refer to the sectional plan. The development of industry
continues to maintain its predominance, occupying 18.60/. of the total amountof investment. This predominance is necessary, particularly in the industry ofcapital goods. For the coming three years the increase of industriai production
is expected to reach 370/o, that is, an increase of 110/o per annum. And about
700/, of the equipment required for this purpose is to be supplied by domestic
production. In the mining industry, too, exploitation of iron ore is projected

in order to promote exports.
In the agricultural section, the increase of production is estimated as 70/.
and principal efforts are to be made in the direction of increasing food production, which is expected to rise 2.60/, per capita annually. There is no plan for

the expansion of production in agriculture for export, but there is considera-tion of correcting the overproduction of coffee by such means as cutting down
2 billion old coffee trees with low productivity, the planting of 500 million newtrees during 1963, and establishing an individual quota system in production
and transplantation for the remaining coffee plantations.
As seen in table 2-4, investments in basic industries like electric power andtransportation are strongly stressed. The backwardness in the basic industries
becomes notable with the progress of industrialization, and the Plan points out

necessary measures by which the progress of basic industries will be able tomeet the development of other industries. Referring to electric powelr, thenecessity for the integration of the systems of transmission lines is proposed.

Financial resources for education and sanitation are greatly increased. With
respect to education, it is planned to carry out National Plan of Education

580
580
1,102

407
409

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 143
DEVELOPMENT PLAN (1963-1965)

Table 24. Projections of Sectional Investments (billion cruzeiros)

equlpment

constructlon

total

Fixed Capital

1,636

1,367

3,O03

agriculture

168
419
206
138
578

84
140
20S
92
289
373

127

184

Increase of Stocks

2S2
559
411
230
867
373
311
499

total

3,502

industryelectric power

petroleumtransports
construction of residence
others (services)

o/o

100.0

8.4
18.6
13.7

7.6
29.0

12.4
10.3

(Source) O PIano Trienal, Quadro XIII.

(Plano Nacional de Educafa""o) which aims at promoting the progress of middle

and high school education as well as expanding the term of compulsory education to six years in the cities and four in rural regions.

Thirdly, in regard to the regional plan, the most important projects areconcerned with Northeast (Nordeste), which still remains the greatest regional
problem in Brazil. The triennial plan shows that the relative position of Nor-

deste, in terms of participation in the GNP, has been improved between 1955

and 1960. The investments of Petrobra's and the impact given by SUDENE,
are the causes for this phenomenon. The observations of the Plan on Nordeste
problems are optimistic. The general projects to correct regional disparities are,(1) to increase investments in order to investigate and develop the natural resources in the regions with particularly little productivity, (2) to intensify invest-

ments to improve the human factor especially for the benefit of under-developed
regions, and (3) to continue the preferential policy to stimulate private invest-

ments directed to the under-developed regions.
Finally, regarding the basic reforms, we can take up the reform of the ad-ministration before everything. Along these lines, the former Ministry of
TraMc has already been divided into the Ministry of Transports and the Ministryof Communication, while the Ministry of Planning and Development has beencreated to control the various organizations for development. Moreover, reforms
in the banking system are proposed, the most notable one being that of establish-

ing a central bank by means of the incorporation of the present SUMOC (Super-intende"ncia da Moeda e do Cre'dito) with the Re-discount Bureau of the Bankof Brazil and the Bureau of Mobilization, giving the future central bank thefunction of controlling foreign exchange. Besides, the necessity for fiscal andagrarian reforms is indicated, and practical bills are now under deliberation.

144 YOSHIAKI NISHIMUKAI
In regard to the outline of the triennial plan so far mentioned, the mostremarkable point is that the Plan is aimed at controlling inflation while keeping
the rate of economic growth. As previously described, this is a discussible pro-blem to which we shall refer later. Here, it is suMcient to say that the Plan
is characterized by the abandoning of the "orthodox" concept of stabilization andonly intends to reduce gradually the rate of inflation during the next three years.
In other words, it does not intend to stabilize prices at any cost. We can deduce

this from the fact that the Plan foresees a rise in price by 100/. even in 1965.
In the sectional plan, there is no clear relation as verified in the case of thegeneral plan. For example, it is questionable whether the resources dedicatedto education and sanitation can be integrally maintained under the curtailment

plan in 1963, and whether the funds by National Bank of Economic Development (BAIDE) are suficient to sustain governmental responsibility in the develop-

ment of various basic industries. Moreover, many other problems will occur
in the future with progress in the realization of each sectional development plan.
It can, however, be pointed out that all the propositions in this part of the Planare in live with a concrete orientation, and there are no formal contradictions

among them. Another observation referred to in the sectional analysis is that
the Plan merely shows vague principles and means for each of the sections, andurgently requires more detailed projects. The group for planning itself recognized this fault and added the word "sintese" (syntheses) to the title of the Plan.

But as far as they use that word, there must be plans peculiar to each section.
If they do not exist, the sectional plan should be called "diretrixes" (fundamental

direction) rather than "sintese".{6} This is the reason why future projects must
be watched with keen interest.

Through out the triennial plan, the regional plan is the part most roughly
described. The geographic structure of Brazilian economy offers several parti-

cular problems with relation to its economic development, and these problems
are of great importance. So we are well convinced that this Plan should containthe regional plan. But the problematic point is that it is not clear whether or
not the Plan is based on not only the recovery of the level of development in

the under-developed regions but also on regionalization and specialization of

the means of development. The regional problems exist not only in AIordeste

but in the advanced regions. For example, there are many problems: what
influences the industries of capital goods concentrated in Sa""o Paulo will haveon industrial centers such as Guanabara and Rio Grande do Sul; what economic(6)"Plano Trienal e as Perspectivas para o Trienio
iantara, ano VII, no. 2, fevereiro de 1963, p. 9.

1963-1965", Desenvolvimento CSr Con-

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 145
DEVELOPMENT PLAN (1963-1965)

results will take place by the political separation between Guanabara and its
adjacent economic areas; and further, if the role of Brasilia in the Westward

Movement will be able to remove unfavorable consequences in the future, etc.
What Brazil needs is a policy of development combined with a spatial policy.
This can be coordinated by a series of regional organizations, such as SUDEAIE,

which are modified to meet the different levels of development and to othercharacteristics of each region.

III
Some problems of the triennial plan
To ally the control of inflation with the maintenance of the rate of growth,
it is necessary for the monetary policy not to diminish public and private invest-

ments. In regard to the former, it will be enough to totally preserve it in the
program of public expenditures, while, as to the latter, it is proposed that loans

to the private section by monetary authorities and commercial banks be increased, in proportion to the rate of growth and the price increase of 250/. estimatedfor 1963. 0n the other hand, the inflow of foreign capital is proposed in orderto make necessary imports possible. Thus, there is no divergence of opinions
in regard to the consistency and the steadiness of the Plan. But there arise
various problems with respect to the possibility of its execution.
Let us begin by studying some aspects of their public finance. As previously stated, including the curtailment plan of 260 billion cruzeiros, the total curtail-ment of expenditures by 475 billion cruzeiros is under plan for 1963, by which
the initial potential deficit of 775 billion cruzeiros wi!1 be decreased to 300 bil-lion cruzeiros. One third of the remaining deficit is to be covered by additional

issues of currency, and the rest by anti•-inflationary measures such as the in-crease of the rate of compulsory deposits for the realization of imports. On
the other hand, as a decrease in the coffee harvest for 1963-64 is expected, it

will be possible for the government to reduce the purchase of coffee and toobtain a substantial amount of the resources from the export section. This is
one of the most favorable aspects for the execution of an anti-inflationary policy.

But there are many opinions opposed to measures for the reduction of coffee
production and also to the establishment of an individual quota system,(7) so
it is worth noticing to what degree the deeply-rooted political influences of thecoffffee producers can be checked. Moreover, it is an important matter to be(7 ) Associagao Comercial de Sao Paulo, Ptano Trienal: Exposifa"'o Resumida e Comentarios,

5-2-1963.

146 YOSHIAKI NISHIMUKAI
considered in view of the experiences of Brazilian economy whether the Planis suMcient in controlling the social tensions which newly rise from the rapid
increase of prices in the initial stage of the anti-inflationary policy. For instance,

under the new exchange system established by Instruction 204 promulgated in
March 1961, which aimed to alleviate the financial burden caused both byimports at the cost of exchange (custo ae ca"mbio) under a unrealistic basis and by

the fixation of the auction price of exchange bills, the rapid price increases ofwheat, petroleum and fertilizer extended over the general level of prices, andthis became one of the causes for the resignation of President 9uadros. Subsequently, the preferential rate was again applied to imports of wheat and oil
products. But owing to this preferential rate, the subsidy for these commodities amounted to 60 billion cruzeiros for 1962, and if the rate is still effective
in 1963, it is estimated in the Plan that the expenditure of the national treasury
will amount to 70 billion cruzeiros for wheat, and the reduction of the tax leviedon oil products to 80 billion cruzeiros, and the decrease of the revenue ofPetrobrds to 40 billion cruzeiros. Based on the principal lines of the Plan, thesubsidy for consumption had already been abolished from January of this year,
and the rate of exchange for imports of these commodities was readjusted fromthe rate of one dollar to 318 cruzeiros which had been set in February 1962, tothat of one dollar to 475 cruzeiros which was based on the free market rate.
This, in principle, coincides with anti-inflationary measures adopted by Instruction 204. It had been expected that the price of oil products would consequently
rise to 700/., raising the cost of living from 5-100/., and that the rise in prices

resulting from these revisions could be controlled within four months. But,
confronted with social tensions owing to the rapid price increases caused by
the abolition of the subsidy, the government was obliged to offer the subsidy

again in May, and had to adopt the former rate of exchange of one dollar to475 cruzeiros, putting an end to the market rate of one dollar to 620 cruzeiros.
It is true that the abolition of the subsidy was enforced in line with the funda•-

mental principles of the triennial plan, differing from the case of Instruction

204 of the SUMOC, but we can see, as clearly shown in the former experience,that the government had not suthcient conditions to overcome the initial diMcul-ties which were caused by the anti-inflationary policy. Thus, the fundamental
principle of the triennial plan in this aspect was upset very quickly. This surely

has an important influence on the execution of the Plan.

Secondly, we must point out the problems in connection with the balanceof payments. As shown in Table 2-1, the increase of foreign debts during
1963-65 is estimated at 1,830 million dollars. During the same period, Brazil
has to repay about 1,662 million dollars, consisting of 1,285 million dollars for

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 147
DEVELOPMENT PLAN (l963-1965)

repayment and 377 million dollars for interests. Therefore, there will be no
significant change in the debtor position of Brazil. In other words, the Plan
only pretends to postpone the payment of foreign debts. The necessary procurement of foreign currency amounts to 1,714 million dollars, except for the 116

million dollars whose carrying--over payment has already been settled. Even
if its procurement is possible, only a little part of this amount will be able to be

used for the increase of their productive capacity. In other words, the increaseof Brazilian productive capacity which corresponded to the debts to be repayedin the next three years was already realized in the past, and it was one of thecauses which enabled the rate of growth of 70/, per annum. On the other hand,
if the postponement is a difficult process, Brazil will be compelled to hold backher imports, resulting in lowering the eMciency of national productive activities.
Therefore, the situation of the balance of payments is extraordinarily serious andforeign aids are important to keep the rate of growth of 70/,. However, thestandpoint of the triennial plan is fairly optimistic. In regard to the possibilityof procuring necessary foreign currency, the following observation is interesting:President Goulart had to be supported by the leftists elements in order to manipulate the National Congress and to attain the political objects he desired, creat-

ing a disposition which is now largely independent of his will and has condi-

tions of imposing on him certain decisions. Thus, to what extent necessary
foreign aids for the realization of the Plan can be gained from the free nations

depends on to what degree President Goulart can exclude the influences of theleftists. However, there is little possibility that the President in case of theexecution of the Plan would resolve on the fatal contradiction of excluding his
friends in the stage of planning, and of approaching his enemy of yesterday.(s)Adding to this political background, we must take account of the effect the lawof limitation of the remittance of profits will have on the induction of foreign

capital. The Brazilian policy in regard to foreign capital had hitherto allowed
it extremely free activity, but it is now sure that the restrictions imposed bythis law will have disadvantageous effects on the induction of foreign capital.

And we have information that symptoms have begun to appear actually.(9) Judging from the considerations as hitherto shown, we can not help concluding thatthe procurement of foreign capital required for the effective realization of thePlan is far from reassuring.
In regard to foreign trade, too, there remain many problems in the optimistic

attitude of the Plan. As shown in Tables 3-1 and 2-1, the Plan foresees an(8) Antonio Delfim Netto, "Apreciagao Preliminar do Plano Trienal", (mimeografado),
Associaglio Comercial de Slio Pauro, 1963. p. 9.
(9) Informacio'n Latino-Americana, 21-6-1963, p. 4 & p. 14.

148 YOSHIAKI NISHIMUKAI
increase of exports by 157 million dollars in the first year (1963), by 60 million
dollars in the second, and by 54 million dollars in the last. As to the reason why

such a notable increase of exports is projected in the first year, the Plan only

explains that the year 1962 was abnormal in whieh various pressures, including
repeated political crises, had influence on the system of foreign exchange. It
is true that in 1962 the export of coffee marked the lowest record since 1957,
but it is not reasonable to consider that 1962 was an abnormal year on the whole
and that the political crises were the main causes for the decrease of exports.
Carefully considering Table 3-1, we can say that it is more reasonable to judge

that the year 1961 was abnormal. The projects of the exports of coffee foreseea great increase in the first year and thereafter a successive steady increase. But

the Plan explains these increases only by the abnormal character of 1962. And
the Plan does not refer to the policy of prices for the overproduction of coffee.

Table 3-1. Brazilian Exports (million dollars)
1957

1958

1959

1960

1961

1962tscoffee

845.6

687.5

733.0

712.7

710.4

650.0

cotton

".2

24.8

35.5

45.6

109.7

95.0

cocoa

91.6

117.8

91.7

98.6

60.8

60.0

sugar

45.9

57.4

42.8

57.8

65.6

50.0

wood

63.8

51.5

37.8

42,1

46.8

45.0

mineral

89.8

73,9

77.5

87,9

95.3

95.0

others

210.8

230.1

263,7

224.1

314.4

245.0

total

1,391.6

1,243.0

1,282.0

1,268.8

1,403.0

1,240.0(Sourse) Desenvotvimento CIEr Coniunctura, ano VII, no 2, fevereiro de 1963, p. 101.

* provisory
Apart from the possibility of an international coffee agreement, including theimporting countries, which is thought to be necessary, a fall in the coffee pricewill be inevitable under the existing circumstances. The increase of exports
to new markets is necessary to cover this fall, but the Plan has no clear estimate
concerning it. Indeed, it is true that the increase of exports to new areas represents still too little a part to serve as a factor to equilibrate the balance of pay-ments. Nevertheless, we can not agree with the Plan in which an increase ofexports coffee and even that of total exports are expected without taking otherfactors into consideration. Analyzing each market for exports, the Plan con-cludes that the American market is the most promising, and with respect tocommodities, the export of iron ore is expected to increase. Relating to theAmerican market the Plan considers the diversification of exports and the grow-ing penetration of semimanufactured and of manufactured goods. We canSOME PROBLEMS OF THE BRAZILIAN ECONOMIC 149
DEVELOPMENT PLAN (1963-1965)

not deny that Brazil has the possibility to diversify their exports, above all, de-pending on manufactured goods on a long term basis. We can not, however,recognize that short term factors are able to contribute to the expectation of anincrease in exports. On the other hand, granted that the American market isthe most promising, exports to America are far from reassuring when the recent
situation of the balance of payments of the U. S. A. and the so-called dollar

defending policy are considered. Similarly, the reason is not ctear why thePlan counts America and West Europe as promising export markets of iron ore.
After all, what is required for the triennial plan is that it shows a policy for pro-moting exports in appropriate forms. For example, it is necessary for the Plan
to show a solution for the maintenance of the coffee price through an international coffee agreement and a way to correct its overproduction, and also a solution for the reciprocal trade agreement with socialist countries to which Brazil

records an export surplus.
The projects of imports are based on the average imports of 1,251 million
dollars during 1957-61, and so far there arises no problem. But the Plan does
not examine closely the relation of imports to domestic demands and the national

productive capacity, The Plan can not abandon such principal objects as theabsorption of the deficit and the repayment of foreign debts. As these are thebasic motives of the triennial plan, it is natural that the Brazilian Government

should require them. But the Plan should examine more closely whether the
proposed imports would be enough for the maintenance of the growth rate of70/. per annum. For instance, the import of 1,1 billion dollars worth of equipments is projected for the next three years, the sectional structure of which isshown in Table 3-2. The expected import of equipments worth 368 million
dollars per annum is approximately equal to the recent results and can be compatible with the expected capacity to import. But there appears a significant
tt

Table 3-2. Projects of the Imports of Equipments.
imports of equipments(million dollars)

1963-65

O/, of the supply of

1963-65

equlpments

1958

1949

agriculture

124

33

50.6

70.8

industry

375

52.2

68.4

electric power

180
180

40
39
co

13.2

24.5

204
40

16

24.4

42.8

1,103

27

32.8

S2.7

petroleumtransports
otherstotal(Source)O PIano Trienal,

Quadro XII e XIV.

15

150

YOSHIAKI NISHIMUKAI

change in the structure of imports. Especially in such sections as agriculture,industry, and transports, it is admitted that the participation of imports in the

total supply of equipments is reduced remarkably. This is based on the premisethat the process of substitution has considerably developed in this country.
It is, however, doubtful if the premise is valid to such an extent. We consider
that the problem of investments and of the substitution of imports is appreciat-

ed with excessive optimism which characterizes almost all aspects of the Plan.

We have pointed out that there were some problems in the possibility of
the conditions of stabilization in regard to public finance and the balance of
payments. Adding to this, we should notice the inelasticity of the food supply
which the "structuralist group" often takes up as a structural factor of inflation.
In such a country as Brazil where arable land is not still fully occupied and where
the alternatives of production are various, the elasticity of supply of agricultural

products may not be considered as low compared with that of other countries.
Even if the supply is inelastic, it is licit to suppose that this has a regional charac-ter, rather than a national one. For example, this aMrmation is valid to Nordeste

but not to the southern areas.(iO) Therefore, more detailed verifications arenecessary for examining the elasticity of the agricultural supply. Nevertheless,the Plan judges it as inelastic merely because the price increase of agricultural

products is much greater than that of industrial products. In any case, it isdoubtless that a shortage in the supply of agricultural products, above all, offood products, really exists compelling a wage rise in the cities and operating
as one of the inflationary pressures. The statistics in regard to these last eight

years show that only two years were rnarked by a suMcient increase in foodproduction. The eight years as a whole suffered from a striking shortage ofsupply. As the projected rate of growth is 70/. and the population grows at therate of 3.10/. per annum, it signifies that the per capita increase of production

is about 3.90/.. As the income elasticity of food products is estimated at O.66
according to the Plan, the increase of the demand of foods will be by 2.60/..
Thus, the agricultural production during the coming three years must be increased at the rate of5.70/. per annum. This rate is higher than the average registeredduring these last eight years. If this rate is achieved, the inflationary pressure

from this section can be avoided. But we must not be optimistic when we
consider tlie following factors which characterize the agriculture for food; (1)irregularity of production caused by natural conditions, (2) definiency of a dis•-tribution mechanism with greater risk of loss and accumulation of taxes which(10) According to the statistics given by the ConfederafaNo Nacional da lndabstria, the prices offoods increase more rapidly than the general level of prices in such cities as Rectfe,
Salvador and Belo Horixonte. But this relation is contrary in the southern cities.

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 15I
DEVELOPMENT PLAN (1963-1965)

are imposed, in the end, by the consumer, (3) shortage of warehouses, (4) insufficiency of agricultural credit, and (5) insuthciency of specialized farms for foodproduction. Though the Programa de Metas of the Kubitschek's Government
tried to solve the food problem, it could hardly bring about remarkable results.

That is evident to show how diMcult the solution of the food problem is. This
triennial plan represents, indeed, a progress in the sense that it made more detail-ed analyses than the former and that it pointed out various measures to expand
food production. But the expansion of cultivated lands and the rise of produc-

tivity projected in the Plan depend upon the extent with which the control ofcoffee production can be successfully pushed forward, and on the other hand,
upon the control of the rapid rise in the prices of fertilizer that took place after

the promulgation of Instruction 204 of the SUMOC, and furthermore basicallyupon the prevalance of education in the rural areas.
So far we have listed some considerations in conformity with the fundamental
conditions for economic stabilization shown by the triennial plan. But, observ-

ing the Plan from the theoretical point of view, we have to point out anotherdefect, that there are no clear references to a wage policy. The wage policy
has close relations with the rate of saving which is necessary for the maintenanceof the rate of growth of 70/. per capita. The view of the Plan concerning thiscan be found in the following description: "A taxa de crescimento da economia

brasileira, no futuro pr6ximo, depender6 principalmente da intensidade comque se utilize a capacidade produtiva ja instalada no Pais e, em menor escala,da evolugSo da relagao de pregos do intercambio com o exterior e da entrada
liquida de recursos externos. A taxa de poupanga, fator importante na forma-•
gio da taxa de crescimento, dependera em boa medida do nivel geral de atividade

econ6mica, ou seja do grau de utilizagio da capacidade produtiva."{ii) Here,
we find the Keynesian view in respect to the formation of saving, the view inwhich the insuMciency of aggregate demand is predominant. This predominance is very natural in countries confronted with cyclical depressions, but

it does not fit totally the Brazilian economy in which violent inflationary

processes are going on. In regard to the wage problem which is one of
the important factors to determine the rate of saving of Brazilian economy,
the triennial plan merely athrms that wages must increase, supplementing theadjustments due to the rise of the cost of living, in proportion to the rate ofincrease in productivity of the economy as a whole. This aMrmation is veryvague under inflationary circumstances. It is necessary to make precise theintervals of adjustments and, before everything, to settle the bases of readjust-(11) O PIano Trienal, Texto, 2.1.1, primeiro paragrafo.

152

YOSHIAKINISHIMUKAI

ments. As real wages have Huctuated with the continuous rise of prices andthe intermittent revisions of nominal wages, those bases as implicit in the Plan

are not acceptable. From the Plan nothing can be deduced in regard to theparticipation proposed for laborers in the national product. In view of the factthat this participation is one of the determinants in the rate of saving, the omis-

sion must be considered as a grave defect in the scheme of development.
Fina!ly, we shall point out a problem with respect to the determination of
investments. The Plan, based on recent statistics, calculates the ratio of capital!

product as 2.61, and estimates the amount of necessary investments as 3,500
billion cruzeiros. First, it must be noticed that this relation is made exceptionallyfavorable by the recent economic conditions to whidh the Plan maker no reference. On the other hand, it is clear that the relation was fairly improved, inthe years anterior to 1960, by the policy of subsidy to imports of equipment
and by the development of various sections with a low ratio of capitallproduct.
It is doubtful if this relation can be maintained in the near future. The economic

sections do not develop in the same proportion, nor will the relation between
the price of consumer goods and that of capital goods be necessarily maintainedon the same level as that of the last several years. The conditions of external

economies are not necessarily identical. Therefore, we can not but conclude
that it is not reasonable to determine the necessary amount of investments by
estimating the ratio of capital/product at 2.61.

IV
Conclusion
Concluding, we must repeat that the various defects as mentioned above
are not fatal to the triennial plan, and that the significance of this Plan is notcompletely injured because of them. In regard to this point, let us observe
the following description in the introductory parts of the Plan. "A experiencia

de outros paises tem indicado que sio necessarios alguns anos para alcangar
uma razoivel eficacia na execugao de um plano bem concebido. Mas, exatamente
porque o planejamento 6 um processo continuo, que se introduz por etapas e
se aperfeigoa na dedida em que 6 implantado, o mais importante 6 inici5-lo.
Seria erro preparar um plano bem elaborado e completo para iniciar de uma
vez a sua execugao. Tamb6m seria erro pensar em introduzir todas as reformas
institucionais e administrativas, necessarias ti plena eficacia do planejamento,

pard somente entio tratar d6ste Qltimo. No planejamento, como na cartografia,
o mais prAtico 6 iniciar o trabalho com uma escala pequena, capaz de proporcionar
facilmente uma visao de conjunto. Esta visao 6 que permite relacionar os problemas

SOME PROBLEMS OF THE BRAZILIAN ECONOMIC 153
DEVELOPMENT PLAN (1963-1965)

em funedo de sua complexidade, de forma a que a solugao de um venha a facilitar a dos demais. O que se objetiva de imediato com o planejamento, no Brasil,
6 essa hierarquizagao de problemas, a fim de criar condigies para que, dentro
de uns poucos anos, posSam ser introduzidas tecnicas mais eficaxzes de coordena-

gio das decis6es. Trata-se, portanto, de um esforgo de transig5o, em buscade um conhecimento mais sistematico da realidade econ6mica e de uma maior
eficacia na capacidade de decisio. Alcangados esses objectivos, seri entao pos-

sivel dar maior profundida a agio de planejamento."(i2) These words of thePlan constitute a recognition that the Plan is the first vision of the problem whichis to be specialized and embodied afterwards. That is to say, a number of the

problems which we have pointed out will be possibly solved in the course of
the planning of practical policies in the future. But some of these problems areconnected with the possibility in realizing the fundamental objects of the Plan.
Therefore, the true test for the planning group is in its capacity to embody thePlan with respect to concrete objects and measures. It is, however, more impor-tant whether the government can put them into practice. As previously pointed
out, the abolition of the subsidy for consumption, which the Plan had taken up
as a measure for balancing public finance, met with frustration after less thanfour months. Moreover, it is remarked that the prices rose by 9.70/. only inMarch and when the rises in the previous two months were added to it, it alreadyreached 160/..{'3) The price increases expected during the first half of 1963 by

the Plan are about 150/. at the worst. Therefore, under the existing circumstances, it is diMcult to control the price increases to within about 250/. in 1963.

Indeed, the price increases till March of this year were caused by revisions ofrates of public utilities and by the riseS of controlled prices, but the inflationarypressure since last year must not be overlooked. Therefore, we can not conclude
that it is only because the policy to control the inflation based on the Plan was

weak. However, the present price increases have unfavorable effects on theanti•-inflation policy. For example, a groups of producers came to manifest astrong discontent with the restrictions of credit, earlier than expected.(i4) The
credit policy of the Plan in itself does not signify strict restrictions of credit, but

price increases higher than expected bring about, as a matter of course, pres--sure which requires expansion of credit. If monetary authorities do not permit
expansion, it will be diMcult to keep the rate of growth of70/. per annum. Thus,

the triennial plan whose fundamental object is the control of inflation with a(12) O PIano Trienal, Texto II-II, segundo e terceiro paragrafos.
(13) "O Risco de Uma Crise de Estabilizagio", Desenvolvimento Cigr Coniuntura, ano VII, no.

4, abril de 1963, p. 4.
(14) Ibid., p. 4.

154 YOSHIAKI NISHIMUKAI
maintenance of the the rate of growth, is suffering from grave diMculties, and ispresent to choose between stabilization or development alternatively. Recently

Carvalho Pinto task oMce as the Minister of Finance, and much is expected of
him in the light of his achievements in executing the development plan of SaNo

Paulo (Plano de AfaNo). But the solution of these problems does not consist
merely in the ability of the person who is in charge of the administration. We
desire to observe how the integration of the conquest of the structural factorsof inflation and of the policy of monetary stabilization will be realized in the
future.

Kobe
July 31, 1963.

KOBE ECONOMIC & BUSINESS REVIEWCONTENTS

NO. 1 (1953)
Present Day Significance of Free Ports ............,..........,........................CinJ'iro Shibata

Development of Deva}uation-Problem in Post-War Japan ........................Ki oio Mi ata
Japan's Trade with South and South-East Asian Countries ...........,.........Fuktto Kawata
The Exchange Control Policy in Post-War Japan ..................................ILttasahiro FuJ'ita

On the Official Statistics of Foreign Trade in the Post-War Japan ............Hikoji Katano
On Business Historv ........................................................................Tadakatsu Inoue

Problems of iRegional Industrialization in Japan ...............................,....Minoru Beika
A Research of Wage Income in Post-WarJapan .................,............,.....jVobuko JVosti
Revaluation in Japan.....................................................................Susttmu M'atanabe

Last-In, First-Out Inventory Method under the Japanese Tax Law ...Munehiro Masuzaki

NO. 2 (1954)
Movements for the Establishment of Free Ports in Japan ...........,........,...Ginjiro Shibata
Japan's Trade with Latin America in the Post-War Years....................,...Fukuo Kawata
The Maritime Competitions in the Early Melji Era....................................Sei'i Sasaki
Two Defiations in the Showa Era ......................................................Masahiro FuJ'ita

Estimation of the Effectiveness of Devaluation on
Balance of Payment Deficit in Japan ...............,.......................Hikoji Katano

The Recovery Method of the Japanese Shipping Industry
in Post-War Period .........................................................Hiromasa Yamamoto

Business Accounting and Tax Accounting.....................................,.,..Susumu Watanabe
Spatial Characteristics of Industries Relative to Their
Business Features ........................,.........................................Minoru Beika
Stages in Factory Organization ..................................,....................,.7radakatsu Inoue

Accounting for Fixed Assets Revaluation; Recent Views in Japan ......Munehiro Masuzaki
On the Structure of the National Income Distribution in Japan ...............jVobuko JVosi

NO. 3 (1956)
Industrialization and International Trade ........................................,....Fukuo Kawata

Econometric Determination of Foreign Exchange Rate of Japanfor 1926-1953..............................,......................................HikoJ'i Katano
Present Status ofJapan's Shipping ......................................................GinLiiro Shibata

The Distinction between "Shasen" and "Shagaisen" as Historical
Concepts in Japanese Shipping ......,........................,...................Sei'i Sasaki

The Banking System in the Middle Meiji Era (1870-1910) ....,...,.........Masahiro Fujita
Disposition of Cost Variances in Japanese Tax Law .......................,...Sasumu Watanabe
Structure of Industrial Districts in Japan.....................,..........................Minoru Beika

Note on the ZAIBATSU Combines .................................,.................7radakatsu Inette
On the Model-Building for Social Accounting Design ...............................?Vobttko jVosg

NO. 4 (1957)
The Impact of Exchange Policy on the International Economy
of Japan During the Period 1930-1940.................................Laurence P. Dowd

A Note on the Recent Trends ofJapan's Foreign Trade ........................Fukuo Kawata

The Development of Overseas Banking System in Japanin the Meiji Era....,....,........,......,...................,....................Masahiro FuJ'ita

More on the Structure of National Income Distribution in Japan...............jV;obuko jVosti
Reconstruction of the Theory of Purchasing Power Parity ........................Hikoiji Katano
Tramp Shipping Freights and International Trade .................................Ginjiro Shibata

A Little Study on the Transition from the Sailing Vessel to
Steamer in Japan ............................,....................,.............,.....Seiji Sasaki

On the Regulating Policy ofJapan Against the Shipping
Conference-Especially in Relation to the Refusal of
the Entry to New Comers...................................,............Hiromasa Yamamoto
The Price Fluctuation Reserve System in Japan ............1....................Susumu Miratanabe

Locational Problem in the NTew Major Branches ofJapaneseIndustries from l954 to 1956 ...................................................Minoru Beiha
Business Problems in an International Situation....................................7radakatsu Inote

NO. 5 (1958)
History of Yen--• Its Developments in the Japanese Economy (1) .........Hireshi Shinjo
Fundamental Features of the Accumulation of Capital• in the Late Meiji Era ..........................................................Masahire FuJ'ita

Some Aspects ofJapan's Trade with South andSouth-East Asia, 1950-1957 ....................,..............................Fttrc'tto K'awata

Curves of Dirninishing Values ofJapanese Merchant Ships
in Proportion to Their Age ...................................................Ginjiro Shibata

The Modernization ofJapanese Shipping Based on theTransportation of Hokkaido Marine Products.................................Seijtl Sasaki

Development of the Marine Insurance Industry in Japanin the Meiji Period...................................,.....................Hiromasa Yamamoto
A Assimilag.ao do Imigrante Japones no Brasil .......................................Hiroshi Saito

Rate of Profit and International Specialization of Production ..................HikoJ'i Katano
Replacement Cost and,I.ifo Cost......................,..................,......,.....Susumu Watanabe
Spatial Problems of Business Activities...................................................Minoru Beika
The Nature of the Morgan Control ..................................,................Tadakatsu Inoue

On the Effect of Accelerated Amortization for Tax Purposes ...............,.....jVobuko jVosg

NO. 6 (1959)
History of Yen Its Developments in the Japanese Economy (2) .........Hiroshi Shinjo
The Central Banking Policy in the Meiji Era...,.......................,...........Ma.gahiro Fuj'ita

Economic Growth, Balance of Payment and Capital Movement ...............Hikoj'i Katano
VNrorld Trade and Japan's Export 1953-1957 ...........................Fukuo Kawata
AIguns Aspectos da Mobilidade de Japoneses no Brasil..............................Hiroshi Saito
Problems of Emigrant-Transportation in Japan ..............................Hiromasa Yamamoto
Port Labor Conditions in Japan .................................................,.......Cinjiro Shibata

The Development of the Concept "Operator" in Japan ..............................Seiji Sasaki
Single Industry Towns in Japan ..............,..........................................Minont Beika

On the Application of the Social Accounting
Principle to Business Accounting................................................Artobuko jVlosg
Valuation of NNrork in Process ..................................................,......Susumu M,Iatanabe

Developmental Stages Relating to Theories
of Stock-Equity Accounting .......................,..............................RJuj'i 7lrkeda

On the Rate of Interest in Business Administration .......................................Jiro Ono

Various Classes of Data Processing by Means of Electronic
Computer..............................................................................Hideo Kitani

Company Histories in Japan .................................Tadakatsu Inoue and Yoshiro Ikttshima

NO. 7 (1960) ,Japanese Emigration and Its Effect on' International Payments ...............Ginjiro Shibata
One-to-One Correspondence Between Goods and Factor Prices ..................IIikofi Katano

The Gold Standard and Banking Capital in Japan ..............................Masahiro FuJ'ita
World Trade and Economic Growth ...................................................Fukuo Kawata

Singularity in the Structure of the Seamen's Union ofJapan ............Hiromasa Yamamoto
Some ReHections on Inter-Comparability of Social Accounting ..................JVobttko ASose'
The Meaning of Inventories ............................................................Susum.u IVatanabe

Structure of Income Determination on the Ba]ance Sheet .......................•R.ytiji lrakeda
On the 'V'alue of Stock Rights and Its Significancein Corporate Finance ...................,..............................................Jire Ono

Business Features and Management Policies of Industrial
Enterprises in Local Districts ofJapan.......................................?L(Iinortt Beika

NO. 8 (1961)
The Industrial System and Industrial Education in Southeast Asia
Now on the Threshold of Reform; and Japan's Position therein...Ki ozo Mi ata
Industrial Structure and Educational System in India ........•...............Tadao Mi ashita
Industrial Education in India ....................,...........•........•••.............Tadao xVi ashita
Technical Education in India ....................,...,................................Tadao A(liiashita

Industrial Structure and Vocational Education in Thailand .....................Fukuo Katvata

The Industrial Structure and Industrial Educationin the Philippines .................,..........................................Tei-ichi Yamasaki

Industrial Structure and Xiocational Education in Indonesia ............Hiromasa Yamamoto

NO. 9 (1962)
Problems in Port Administration and Finance in Japan...........................Gi-njiro Shibata
Types of Early Modern Japanese Shipowners ...........,..............................Sei'i Sasaki

On the Employment System of Seamen in Japan ..............,............Hiromasa Yamamoto
A Study on Japan's Invisible Trade ...................................................Fukuo Kawata

Problems of Industrial Location relating to Regional Development inJapan .................................................................................Minoru Beika

The S)istem of Inside Contracting......................................................Tadakatsu Inoue

A Critique on Professor Mahalanobis Model of Economic
PIanning in India ..................................................................Hikoji Katano

National Income Concepts: Reconsidered .................................................Nobuko jVose'

Some Problems of the Installment Basis ......,...................................Susumu JVatanabe

On the Purposes of a Going-Concern Valuation and its Natures ....................,Jiro Ono
Die Betrachtungsweise der neueren betriebswirtschaftlichen
Kostentheorie ........................................•.........•...............Tetsuo Kobayashi

NO. 10 (1963)
Revised Accounting Provisions of the Commercial Code ofJapan
with Special Reference to the
Corporation Income Tax Law ....................................Susumu WatanabeSocial Accounting as an Instrument of Policy ........................................IVTobuko JVose'

Industrial Estates for Small Businesses in Japan ...............,..."...............Minoru Beika
Rise of the Mutual Financing Business in Japan ............,.................7radakatsu Inoue

The Introduction of European-Style Vessels in Japan:
A Historical Survey ....................•..........................................Sei'i Sasaki

On Industrial Relations in Japan's Shipping Industry

with Special Concern on ?ersonnel Management ......Hiromasa Yamamoto
Regional Disparities in the Brazilian Economy:
A Case Study on the Brazilian NTortheast ........................Yoshiaki .Arishimukai
The Basic Concepts of Going-Concern Valuation .......................................Ji.ro Ono
A Study on the Current Cost Theory of Fritz Schmidt ...........................Isao .7Vakano
Die Kostenbegriffe fUr die betriebliche Planung ...............,.................Tetsuo Kobayashi
Introducing Prof. Shinjo's "History of the Yen" ..............................Zentaro Matsumura

KOBE UNIVERSITY ECONOMIC REVIEW 1963
Edited by Faculty of Economics,

Kobe University, Kobe, JapanCONTENTS
Characteristics and Modernization of Match Industry
A Study of Small Businesses in Japan ........................Shigeru Fujii
The Brief History ofJapan's Public Finance .......................................Kengo Matsuno
Klassenstruktur und kapitalistisches Wirtschaftssystem ........................Toshimasa Mukai
Exploration in Savings Behavior ......................................................Yasuo JVoritake

On the Effectiveness of Open Market Operations ..............................Kikunosuke Ohno
Public Finance and National Income Analysis .................................Kaiuo Atakamura

The Foreign Trade Multiplier, Devaluation, and Transfer Problem ......Ki oshi Ikemoto
Japan's Transition: A Socio-Economic Interpretation ........................Alvan J. Obelslp-ttildii"..1-.,"lvili-.tl'."dlltlb',.Jh..:iillth."t..1111S-/'.i-'.,/liltLIO.,tlh.ltllkb'.-1',.."111i'..t/-,,"IIII''..iJ'..,"11tlt-,.V.-,lrlttl".,dl'.-i-11"et'.,d-,.1111Id"

THE ANNALS OF THE SCHOOL OF
BUSINESS ADMINISTRATIONKOBE UNIVERSITY 1963
Edited by The School of Business Administration,

Kobe University, Kobe, JapanCONTENTS
Historical Development of Commodity Exchanges in Japan .........Masanori Kamibayashi
Histoire R6sumee des Affaires D'assurance Priv6e au Japon ..................Hiroshi Sugure

Einige Probleme der Preispolitik der Versicherungsunternehmen
im Wettbewerb ........,...................................................Kazaya MTizusLima

Kostenrechnung und UnternehmensfUhrung in Japan ........................Kazuo Mizoguchi
The Law of Wages in Capitalism ...................,..................................Susumu Kaido"Overloan" of Commercial Banks in Japan .......................................R]aichira Ishii..i-,..,--t"il-...ql'..,-ltL:1-'..,i-...-dllllli-..."'."ttlll-1,.,"-,,,dLltdl--..,-t,..--t:tlq'',..dL.,,,-dtl-lh..,dl.,.,11tlll-,,.J-..,1"ttrlt,...-1.,,dllltlb-,..dll..,-"llllil...dP,../"il!1/,,.J,...,":

KOBE UNIVERSITY LAW REVIEW
lnternational Edition 1963
Edited by Faculty of Law,
Kobe University, Kobe, JapanCONTENTS
Warum Stimmt 6sterreich der Vorlage des Problems SUdtirol
beirn Internationalen Gerichtshof nicht zu? .................................T6ru Kan6

Unterhaltspflicht in der 6ffentlichen Fursorge nachbritischem und japanischem Recht (1) ..............................Mitchio JVishihara
Agency in Japanese Private International Law .................................,..Masaru A'ishiTHE RESEARCH INSTITUTE FOR ECONOMICS AND
BUSINESS ADMINISTRATION, KOBE UNIVERSITY

pt ,pre

st

w ,"
lik e

HISTORICAL SKETCH
In 1919, a research organization named the Institute for Commerce wasfounded in Kobe Higher Commercial School, one of the chief predecessors ofKobe University, with a gift made by F. Kanematsu & Company, a leading
mercantile firm in Kobe. The organization was designed to carry on and facilitate integrated research on business and commerce and to formulate andpublish the results of these studies and investigations in such form as to makethem available to the business community.
With the founding of Kobe University of Commerce, successor of Kobe
Higher commercial School, in 1929, the Institute extended its research activities by adding several divisions. One was the famous Latin-American Library,which soon became the center of research in this field in Japan. A room
for statistics equipped with varieus computing machines was established andbegan publication of "Juyo Keizai Tokei" monthly and "Sekai Boeki Tokei"
annually. A filing room was prepared to deposit press clipping files systematically arranged by topics and dates. Another room was designed to become
the center of all possible original records and data having to do with the beginn-

ing and progress of Japanese business.

On the campus of Kobe University of Commerce, another organization
named the Institute for Business Mechanization was founded in 1941 utilizing business machines donated by the IBM Corporation and others. With
Professor Yasutaro Hirai as its head a broad and forward-looking plan for bu-

siness mechanization in Japan was developed.

In 1944, Kobe University of Commerce changed its name to Kobe University of Economics. After the war, however, the University was consolidatedwith three other colleges in Hyogo Prefecture to become Kobe University. With
this development, the two Institutes were also amalgamated into the ResearchInstitute for Economics and Business administration, Kobe University. At
present, the Institute, with its eighteen full-time professional staff members,
carries on studies and investigations in international economy, business administration, and business mechanization in Japan.

LOCATION AND BUILDINGSThe Research Institute for Economics and Business Administration is
located on the campus of Kobe University, Rokko, Kobe. It is a three-story
building named the Kanematsu Kinenkan and has a floor space of about 2,900
square meters, which includes a president's room, forty-one ofices, six rooms
used as a library, a room for statistics, three conference rooms, etc. Adjoining is a one-story building recently built to install business machines.

ORGANIZATION
Under the directorship of a president, the Institute operates with two research groups one of which consists of five sections while the other has four
sections. Each research group and its sections are as follows:

A Group of International Economy(1) International Trade(2) Economy of Latin-America(3) Marine Economy(4) International Finance( 5 ) International Law of Economy

B Group of Business Administration(1) Business Administration and Business Mechanization(2) Accounting(3) International Management(4) Labor Problems
Besides the regular work of the Institute organized in this manner, researchcommittees may be created to carry on any special work requiring the joint
study of academic and business circles. At present, there are three committees, that is, the Asian Economy Committee, Latin-America Committee, andAccounting Committee.
For convenience and greater eMciency in carrying out its research activities, the Institute has a general oMce which is responsible for, ( 1 ) the collec-

tion and preservation of a comprehensive collection of books, periodicals, pam-phlets, and original records and data of finance, trade, commerce, industry
and business generally; ( 2) the classification, cataloguing, indexing, arranging,annotation and compilation of these research materials; and ( 3 ) the formulation and publication of the results of the investigations and studies accompli-

shed by the professional staff members of the Institute.

;i
THE RESEARÅëH tNST{TUTE FORÅÄECONOMICS & BUSINESS ADMINISTRATION ii
KOBE UNIVERSITY
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Director: Sus"mu WATANABE
Secretary: Toshio HARAGROUP OF INTERNATIONALI GROUP
BUS}NESSl il ADMINtSTRATtON OFREsEARcH
ECONOMIC RESEARCH•l

I Fukuo KAwATA
Professor of International
i SuSUMU WATANABE
Trade Dr. ef Economicsl

ltlll' Hireshi sHINJO
Professor of Internationalii: Minoru BEIKA
FinanceDr.ofEconornics
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: Torasaburo
NoMuRA ProfeeBor ef Transpor-ll,tatien Dr. of CommerceE;
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i Taro KAwAKAMI

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l Jiro yAo;iiiInternational Law ;Dr. ef Lawil:professor of lnternatiOnal
Il Tadakateu INouElProfeeeer ofi Marine : Nobuke NosE

i Seiji sAsAKI

EconomiceIllt

Dr. of Economice

I, Jiro ONol:t Maeahiro FuJITA}li
Assistapt Professorof :Regional Study: On Latin i• Tetsuo KoBAyASHI

l Hikoji KATANoi
Ameriea:lInternational Trade ;l: Hiromasa:lDr. of Busines3 i

Administration ilProfessor of Business il/Location::iDr. of Business
Administration'.-,. 1I i

Assistant ProfeBSOr Of [1' Masaya OKADAlÅÄManagementDr.
ef Business i :Administration iiprofessor of Busineee I

HistoryllAssistant ?iofessor ef :I
Social AccountingiI

Assietant Professor of iBusiness Administration i;

Assistant ip. Aecounting I

sectionlI

Assi6tant in BuBiness l
Administration section I

ilAssietant Professor
Of I, Kihaehiro TsuDo
YAMAMOTe

Lecturcr of Business I

NisHIMUKAI AssietantinRegionalStudy l Masaru SuGIMuRA

Assistant in Business ill Yoehiaki

Professor of Accounting 1,:
BusinesslProfeeeor ef Private
i' YOShiMOtO KOBAyAsHI ProfessorofFinance Dr. of Economice l

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Marine EconomiÅës lion Latin America Section i,

OMce: T[he Kanemateu Memorial Hall,THE KOBE UNIVERSr rY
ROKKO, KOBE, JAPANMachinery section I

if
Machinery Section
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