DP2014-15

Accounting for Dissolution:
The Case of Japanese Mining
Corporations 1946-1950*
Masay oshi NOGUCHI
Yasuhiro SHIMIZU
Tsunehiko NAKAMURA
March 25, 2014

* The Discussion Papers are a series of research papers in their draft form, circulated to encourage
discussion and comment. Citation and use of such a paper should take account of its provisional character.
In some cases, a written consent of the author may be required.

Accounting for Dissolution: The Case of Japanese Mining
Corporations 1946-1950
byMasayoshi Noguchi
Research Institute for Economics and Business Administration
Kobe University
mynoguchi@rieb.kobe-u.ac.jp
Yasuhiro Shimizu
Graduate School of Business Administration
Kobe University
simizu@kobe-u.ac.jp
andTsunehiko Nakamura
Faculty of Business Administration
Momoyama Gukuin University
tunehiko@andrew.ac.jp

very preliminary draft: please do not quote or cite without permission from the authors.

Acknowledgements
We wish to express our sincere gratitude and appreciation to John Richard Edwards (Cardiff), Trevor
Boyns (Cardiff), Bernardo Bátiz-Lazo (Bangor), Mark Billings (Nottingham), Roy A. Chandler (Cardiff),
Malcolm Anderson (Cardiff) and anonymous referees for their sound and constructive comments made ata draft stage of this paper.

1

Accounting for Dissolution: The Case of Japanese Mining Corporations 1946-1950
Abstract
The study, which makes extensive use of official Holding Company Liquidation Commission (HCLC)
documents possessed by the National Archives of Japan, examines accounting practices adopted by three
Japanese mining corporations in their dissolution in the immediate postwar period from 1946 to 1950.
The study finds that (1) the conventional accounting practices adopted by the zaibatsu companies wereadequate to enable them to implement their own dissolution and that (2) forecast balance sheets preparedby the companies, produced after the HCLC decided to split them up, provided an important basis for thedevelopment of the postwar corporate accounting system. This was because they supplied a practicalprecedent, in which features of the new system materialized before it was formally instituted, as theforecast balance sheets make use of provisions in the ‘Instruction for the Preparation of Financial
Statements of Manufacturing and Trading Companies’, issued by the General Headquarters (GHQ) in
July 1947. The study’s results contribute to the literature on the quality of accounting information
provided by the Japanese zaibatsu organizations. Early research generally assessed the financial
statements submitted to the HCLC as having many defects, while more recent research indicates that theaccounting practices adopted by these companies were not deficient in their own domestic environment.
Since neither assertion is founded on empirical data, the examination conducted in this study provides
important evidence to support the latter view.
Keywords: Holding Company Liquidation Commission, zaibatsu, dissolution, excessive concentration of
economic power, mining corporations, coal, metal.

1.

Introduction

In research on Japanese accounting history, the formation of ‘the Investigation
Committee for Measures of the Corporate Accounting System’ (Kigyo Kaikei Seido
Taisaku Chosakai) in June 1948 within the Economic Stabilization Board (Keizai Antei
Honbu) and its issuance of ‘Business Accounting Principles’ (Kigyo Kaikei Gensoku),
including the ‘Working Rules for Financial Statements’ (Zaimu Shohyo Junsoku) in July
1949 are normally regarded as the origin of Japan’s postwar corporate accounting
system (Chiba 1998, pp. 105-106; Kubota 2008, p. 238). However, influences fromprewar days and Japan’s controlled economy during World War II did not immediately
disappear when the war ended in August 1945. They were covertly passed on to postwar
institutions through practical problems such as the issues of postwar compensation anddemobilization. The accounting system was no exception. Accounting practices before
and during the war seriously impacted the formation of postwar institutions, again
through practical problems such as the liquidation of colonial and/or special companies
specified in the immediate postwar period as ‘closedown institutions’ and compensation
offered to those specifically designated as special accounting companies. 1 The same
applies to the issue of dissolving the zaibatsu, which determined the competitive
framework for the entire postwar Japanese economy.
Immediately after World War II, the General Headquarters (GHQ), the Supreme
Commander of the Allied Powers, ordered those companies designated as ‘holding
companies’ to submit financial information as part of the data required to dissolve the1

In exchange for breaking off wartime compensation, a company designated as a special accounting
company was permitted to retain property necessary to continue its business in a new account after
having revalued its assets, separating it from its other property in its old account.
2

zaibatsu. However, the GHQ saw many problems with these companies’ accounting
practices so it issued a set of guidelines for rectifying the defects, called the ‘Instruction
for the Preparation of Financial Statements of Manufacturing and Trading Companies’(hereafter ‘Instruction’) (Uchikawa 1983, pp. 10-12). It is generally understood that the
publication of the Instruction in July 1947 (Chiba 1998, p. 104), after twists and turns,
led to the formation of the Investigation Committee for Corporate Accounting System
Measures (Chiba 2010). Although the Instructions vary somewhat by year of issue,
every version directs current-first order practices and includes extensively recognizedaccounting accruals. The version released in July 1947 is the most famous, being
circulated widely among business enterprises (Chiba 1998, pp. 104-105).
In contrast to the recognition of the important role zaibatsu companies played informing corporate systems in prewar days, the significance of the accounting practices
they adopted in the dissolution process has been overlooked in relation to postwar
establishment of Japanese accounting systems. As a result, the zaibatsu’s loss ofinfluence, compared to the prewar period, has been stressed and only the formation of
new corporate accounting systems, as part of the economic democratization promoted
under the GHQ’s instructions in the postwar period has been emphasized.
It is not yet totally clear what role the accounting practices adopted by the zaibatsu
organizations in prewar days, including those needed for their breakup in the immediate
postwar period, played in forming institutional accounting systems in Japan after WorldWar II. More recent work, as represented by, for example, Miyajima (2004), indicatesthat the conventional accounting practices of zaibatsu institutions included many
outstanding innovations such as the treatment of depreciation. The research question to
be examined in this study is thus whether the accounting practices adopted by thezaibatsu organizations when they faced their own dissolution were indeed so defectivethat they were totally discontinued and are clearly distinguishable from the new
accounting system established after the war, as stressed by the conventional historicalview. In contrast to the traditional view, we use official documents of the Holding
Company Liquidation Commission (HCLC) (Mochikabu Kaisha Seiri I-inkai), locatedin the National Archives of Japan, to clarify that (1) the conventional accounting
practices adopted by zaibatsu companies were adequate for carrying out their own
dissolution and that (2) forecast balance sheets prepared by the companies, after the
HCLC decided to split them up, provided an important basis for postwar accounting
system development as exemplars of the practical execution of the provisions prescribedin the Instruction, even before the Business Accounting Principles and attached Working
Rules for Financial Statements became legally binding when SEC Rule 18 took effect in
September 1950. In this study, we see the common features of the Instruction and thepostwar accounting system in Japan as the following: (a) introduction of new styles offinancial statements that included current/fixed classifications and presented data incurrent-first order and (b) extensive use of accounting accruals such as deferred charges
and prepaid expenses (see Table 1).
[insert Table 1 around here]
The research method adopted for this study is an explained historical narrative. The
official archived HCLC documents deal with the commission’s operation. They include,in addition to the dissolution of the zaibatsu, the democratization of security possession
3and the decentralization of excessive economic power. The archives cover a broad rangeof documents, from the designation of organizations as holding companies through totheir liquidation or breakup. From among these archives, we examine the case of mining
enterprises for which the process of dissolution became complicated enough that theyrequired more detailed financial and accounting information. The zaibatsu mining
companies examined in this study are the Mitsui, Mitsubishi and Seika Mining
Corporations.
This study is constructed as follows: we review the prior literature on accounting
practices adopted by zaibatsu organizations when they were about to be dissolved in thenext section, contrasting traditional assessments and current research findings.
Background information on the HCLC and an explanation of its operation are presented
in section 3. Section 4 provides profiles of the three mining companies, emphasizing
factors that led to them being specified as holding companies and as having an
excessive concentration of economic power. Section 5 examines the process of theirdissolution, extending from their designation as holding companies to their final
breakup. The focus in this section is an analysis of what accounting information wasprovided to the HCLC, and what was used by the three mining enterprises to support
arguments against HCLC policies that dictated their dissolution. Section 6 considers theimpact of the Instruction on accounting practices adopted in the process of zaibatsu
dissolution. Concluding remarks are provided in the final section.
2. Zaibatsu companies’ practices as assessed in prior literature
Zaibatsu is the generic term for financial combines closely connected with theeconomic and political interests of the Japanese government, such as Mitsui, Mitsubishi,
Sumitomo and Yasuda. The zaibatsu’s influence was undoubtedly important in Japanesesociety, though it comprised only a few hundred firms (Okazaki 1994, p. 62). The
zaibatsu organizations grew under the protection of national power as they worked tosatisfy the country’s demand for the materials and funds required to execute a series ofwars, including the First Sino-Japanese War (1894), the Russo-Japanese War (1904) andWorld War I (1914). In the 1920s and 1930s, they expanded the scale of their operations
and strengthened their market power through business combinations during the period
of industrial rationalization (HCLC 1973, pp. 2, 5).
Before World War II, there was no effective legislative control of financial reporting inJapan (Yamaguchi 1998, p. 3; Miyajima 2004, pp. 169-170)2. The Commercial Code(originally enacted in 1890 and re-enacted in 1899) required publication of balance
sheets and presentation of balance sheets and profit and loss accounts to shareholders asa means for them to monitor and check, if necessary, their managers’ activities.
However, there was no rule dictating what should be disclosed in these statements. This
allowed for significant gaps in levels of disclosure (Ministry of Commerce and Industry
1934, p. 1; Kurosawa 1987, p. 10; Chiba 1992, p. 6; 1998, p. 31). In response, the‘Working Rules for Financial Statements’ were published by the ‘Financial
Management Committee’ (Zaimu Kanri I-inkai) of the ‘Temporal Bureau for the2

Annual audits of financial statements were required by the Commercial Code, but no qualifications
were required for the auditors.
4

Rationalization of Industry’ (Rinji Sangyo Gouri Kyoku) of the Ministry of Commerceand Industry (Syo-ko Sho). These rules purported to (1) protect the interests of investors
by providing standardized financial information on business enterprises (Ministry ofCommerce and Industry 1934, p. 1) and (2) provide firms with the means to rationalize
their operations.
The ‘Working Rules for Financial Statements’ issued in 1934 included models ofstandardized balance sheets, profit and loss accounts and property inventories. The
practical impact of these rules, however, is viewed as predominantly negative (Hisano
1987, p. 353; Kawano 1987, p. 27; Chiba 1998, p. 35). 3 The dominant view of theexisting literature attributes the rules’ lack of impact to their lack of enforceability.
Similarly, in 1941, the Planning Bureau (Kikakuin) 4 of the wartime regime released‘Draft Working Rules for Financial Statements’, intending their application to becompulsory, but again without legal enforcement authority in the end (Kubota 2005, p.
i).
When the economy came under the control of the state with the passage of the National
Mobilization Act (1938) after the outbreak of the Second Sino-Japanese War in July
1937, industries became even more concentrated and each zaibatsu company
strengthened its ties to the ammunition industry (HCLC 1973, pp. 156-157). Thisconnection with the military later became an important justification for the AlliedPowers’ demand for dissolving zaibatsu organizations.
Japanese enterprises’ profitability had declined late in World War II due to material
shortages and production stagnation caused by air raids on the mainland (Cohen 1949, p.
28; Okazaki 1993, pp. 191, 196). They then recorded huge immediate postwar losses.
Many firms were rendered insolvent by the termination of war reparations. According toMiyajima (2004, p. 256), the total losses amounted to 91.8 billion yen, corresponding toabout 20% of Japan’s GNP (474 billion yen) in 1946. Disposing of the heavy losses andrebuilding a business foundation became important in the government’s agenda,
particularly for the Ministry of Finance. To this end, it enacted the ‘Laws of Temporal
Measures for Corporate Accounting’ (Kaisha Keiri Okyusochi Ho) and the ‘Enterprise
Reconstruction and Reorganization’ act (Kigyo Saiken Seibi Ho) in October 1946.
First, enterprises expected to be bankrupted by the termination of war reparations were
designated as ‘special accounting companies’, whereby they could segregate irrecoverable orlost assets into their ‘old accounts’ and restart on ‘new accounts’ comprising only healthy assets
necessary to carry out ordinary operation. Second, debts and credits [in the old accounts] wereabandoned, the resulting net extraordinary losses were charged to paid-up capital, and the5remaining balance was finally integrated into the new accounts. The enterprises were forced, in
3

For an empirical examination of the effect of the rules, see Noguchi and Nakajima (2008).

4

The Planning Bureau was an organization launched on 25 October 1937, when the Planning
Agency was unified with the Cabinet’s Resource Bureau. The drafting of important policy plans wasborne by the bureau and it also took charge of drafting the plan for materials mobilization after the
National Mobilization Act was promulgated in 1938. The bureau thus unified various measures
undertaken during the controlled wartime economy and functioned as an integrative organization
under which each ministry agency was required to carry out plans it established.
5

Dividing balance sheet items into the two (old and new) accounts in the way mentioned above
made it possible to show ordinary business performance without the influence of the disposal ofwartime losses in the new account (Ministry of Finance 1957, p. 390).
5this process, to draw up restructuring plans (concerning continuance, dissolution, increases ordecreases in capital and maintenance of debts and equipment) and to have them approved by thegovernment. There were 5,114 firms concerned, and almost all the businesses in Japan wereinvolved in this process. (Miyajima 2004, pp. 256-257)

More importantly, in the case of mining industry, the introduction of a priority
production system and the related enforcement of a price support subsidy systemworsened the firms’ positions. 6 Japanese companies’ economic performance began torecover around August 1946 as these systems took effect, but the GHQ announced threebusiness rationalization principles in November 1948. These (1) prohibited increasing
wages to influence prices, (2) disallowed deficit finance loans, and (3) banned the pricesupport subsidy system. By so doing the GHQ pushed Japan to abandon its emergency
economic reconstruction systems and make its economy independent of government
support. The GHQ finally carried out tightened financial and monetary policies, theso-called Dodge Line, on 7 March 1949. Abolishing the price support subsidy system inparticular caused serious damage, with the economic deterioration, and significantly
expanded mining enterprises’ losses (Sumitomo Metal Mining, Co., Ltd. 1991, vol. 2,
pp. 244-245).
On 22 September 1945, after Japan’s surrender in August, the ‘United States Initial
Post-Surrender Policy for Japan’ was issued. Under heading ‘2. Promotion of
Democratic Forces’, the document stated that ‘[e]ncouragement shall be given and favor
shown to the development of organizations in labor, industry, and agriculture, organizedon a democratic basis’ (SWNCC, 150/4). The US government then purported topromote widely distributed income and ownership of production and trade means. The
Allied Supreme Commander was thus expected ‘[t]o favor a program for dissolving
large industrial and banking combinations that have exercised control of a great part ofJapan’s trade and industry’ (SWNCC150/4).
Taking the US government’s intentions into consideration, and under pressure from theGHQ, the Japanese government first proclaimed Imperial Edict No. 657 ‘Mattersconcerning Restrictions on Dismissal of Companies’, on 23 November 1945, which
granted the Minister of Finance the right of approval to (1) dissolve or make business
transfers in companies with capital of 5 million yen or more and those specified by the
Minister of Finance and (2) dispose of property possessed by the headquarters of the
Mitsui, Mitsubishi, Sumitomo and Yasuda families and others designated by the
Minister of Finance. Any company specified under the Imperial Edict was called a
restricted company. They were required to submit financial statements for the prior ten
years and periodically report to the Research and Statistics Department of the GHQ’s
Economic and Scientific Section.
The Japanese government, after negotiations with representatives of the four major
6

The price support subsidy system set up double prices, a producer price and a consumer price, forimportant materials such as coal and steel, and supplied the materials to consumers at a cheaper pricethan the producer price. The difference was covered by treasury funds (Sumitomo Metal Mining, Co.,
Ltd. 1991, vol. 2, pp. 178, 194, 243-244). Although the producer's deficit was made up in part by thesubsidy, unrestricted assistance could not be provided since the government needed to control
inflation. The result was that each mining company was obliged to suffer losses from coaltransactions (Mitsubishi Mining and Cement Co., Ltd. 1976, p. 491).
6

zaibatsu companies and the occupation forces’ authorities, also submitted a dissolution
plan on 4 November 1945. It proposed that all securities and proof of ownership of thecorporations and other types of companies each holding company possessed should betransferred to a Holding Company Liquidation Commission that the Japanese
government would establish. In this way, each holding company network would be
disassembled. Their shareholders would be repaid by issuing Japanese government
public loans that restrained their realization or transfer for ten years in consideration for
the transferred property. The GHQ basically approved this proposal on 6 November
1945 and the Japanese government enacted a ‘Law for the Holding Company
Liquidation Commission’ on 20 April 1946. In order to identify holding companies andresolve how to dissolve zaibatsu organizations, the designated companies were required
to submit various reports, including financial data. Early research generally assessed thefinancial statements they submitted as being defective. For example, Kurosawa, who
strived to establish a new postwar corporate accounting system in Japan, asserted that:
The history of the business accounting movement of our country goes back to the end of 1946.
In those days, the GHQ ordered special accounting companies and zaibatsu companies to submit
their financial statements. However, what came out was nonsense. Now, I heard that it wasuseless and Mr. Hessler 7 took the lead, and created the ‘Instruction’. (Zadankai (RoundtableTalk) 1951, pp. 101-102)

Moreover, according to Uchikawa (1983, p. 12),The General Headquarters, in executing the occupation policy toward Japan, i.e.,
implementation of the dissolution of zaibatsu, ordered each company to submit financial
statements as part of the data required for the work to be executed. But the accounting practice[conducted by the companies] had many defects and, in order to do that work effectively, thisInstruction was drawn up.

Murase, who took charge of translating the Instruction into Japanese in November 1947,
described the quality of the submitted financial statements as follows:
The most unsatisfactory regrettable national trait is that the Japanese do not undertake any
action unless they are forced by law. Company practices, except for some banks and others thatwere regulated by special laws, did not follow the Working Rules at all…Some performed
window-dressing; some financial statements were oversimplified; classifications of accounts
were random and divergent between companies; and the English translation was hardly
intelligible. As a result, submitted financial statements and other documents to the GHQ weretotally unreliable (Murase, 1958; Suzuki’s translation)’ (Suzuki 2007a, p. 284; see also Murase
1954, pp. 111-112).

It seems that these assessments relied disproportionately on the following description of
the purpose for issuing the Instruction, which was drafted by Hessler. He assumed thatJapanese companies’ accounting practices had so far been left to the idiosyncrasies ofeach company, which seriously handicapped the implementation of the occupation
policy to dissolve zaibatsu organizations:
The primary purpose of this manual of instruction is to assist Japanese companies in the
preparation of the type of clear, intelligible financial reports required by SCAP authorities fromtime to time in connection with SCAP’s efforts to establish in Japan a sound, democratic,
industrial economy. The second purpose is to lay the foundation for improving andstandardizing Japanese commercial and industrial accounting practices. Statements furnished to7

William G. Hessler was Chief of the Research and Statistics Division of GHQ and formerly an
Illinois CPA.
7

the SCAP (Supreme Commander for the Allied Powers) in the past have disclosed deplorable
shortcomings in accounting practices and procedures. (GHQ of Allied Powers 1947, p. 188,
Suzuki 2007a, p. 285) (Emphasis added)8

The Instruction, referring to differing charges and prepaid expenses, stated that:Japanese practice has also been loose with respect to capitalizing items which in fact are
ordinary operating expenses, and vice versa. Such practices result in rendering the company’s
financial statements incorrect, deceptive, and meaningless. Expenditures made which constitutea part of the costs of operation to be absorbed in the current period are ordinary operating
expenses and must not be set up as assets, and must not appear as assets on the balance sheet.
Any expenditure which gives rise to something of asset value on hand at the balance sheet date,or any expenditure the burden of which should properly be borne by a future period, are proper
items to show among assets. (GHQ of Allied Powers 1947, p. 191)

In contrast, more recent research on the accounting practices zaibatsu companies
employed in those days takes a more balanced view. For example, Suzuki (2007a, p.
283), referring to an accusation made by Michel Sapir, a member of the First Statistical
Mission led by Stuart A. Rice, that ‘standards of accounting are notably lax in Japan’(Suzuki 2007a, p. 264), indicates that:
This does not necessarily mean, however, that original Japanese accounting was wrong or
deficient in its own domestic environment and context. The [Rice] Mission found that there wasno tradition of ‘accountability of Japanese corporations to the stockholders or the government’(Sapir, July 1947, p. 14), which was stated perhaps with a little exaggeration…Therefore, the‘deficiencies’ of Japanese accounting should be understood to mean that existing accounting, orlack of it, was not suited to providing the macroeconomic data that the Mission required to
manage the economy in their preferred manner. (Emphasis added)

Kubota (2002, p. 30) responded to the criticism made by the Mission led by Carl S.
Shoup 9 that ‘accounting standards [in Japan] have suffered a severe deterioration, partly
as a consequence of the war period and the lack of access to current developments andprogress in other countries’ (Shoup Mission 1949, p. 50) in the following way:
The ‘deterioration’ the Shoup Recommendations pointed out was based on the viewpoint of themarket-oriented type of financial disclosure requirement pervasive in the United States having
already been incorporated into the audit system undertaken by professional accountants.
Therefore, it cannot necessarily be said that accounting standards in Japan had ‘deteriorated’. It
is also possible to evaluate them as the ‘Japanese type’ of accounting system…reflecting thesituation of the country.

In this recent research, the Instruction is interpreted differently. It is positioned ashaving been an important political tool for ‘transforming’ the conventional accounting
practices of the zaibatsu organizations into a US-type standardized system under the
influence of the GHQ in the immediate postwar period, 10 rather than simply ‘rectifying’
the defects traditionally inherent in the idiosyncratic practices of zaibatsu companies.
According to Kubota (2002, pp. 41-42),
The ‘Instruction’ itself was the special accounting standards that applied only to ‘restricted
8
9

The Shoup mission, by request of the GHQ, recommended reforms in Japan’s tax system ingeneral and the expansion of direct taxes and the introduction of a self-assessment system inparticular.

10

For a similar interpretation, see Asaba (1956, pp. 42-43) and Shima (2000, p. 64). For a different
interpretation, see Kurosawa (1979).
8

companies’ as part of the General Headquarters’ occupation policy. However, it brought suchcompanies prior experience through which conventional Japanese and non-US types of financial
statements were [subsequently] transformed into US-style ones through the realization of theregulations in the ‘Instruction’ and then through the establishment of unified forms of financial
statements [in September 1950] under Rule 18 of the Securities and Exchange Commission
modeled after the US System. In that sense the ‘Instruction’ can be positioned in the unificationof the forms of financial statements in postwar Japan at least as having contributed to laying afoundation for the process.

Nevertheless, these recent assertions are not founded on sufficient empirical evidence
and simply suggest a possible re-interpretation. This study, utilizing official documentsof the HCLC not previously examined in detail in the context of Japanese accounting
history, reinforces the recent view by providing tangible evidence that the conventional
accounting practices of the three zaibatsu mining companies were adequate for them to
implement their own dissolution, and that forecast balance sheets prepared by thecompanies after the HCLC had decided to split them up embodied characteristics
prescribed in the Instruction. The results suggest a need to reexamine the level andquality of Japanese zaibatsu organizations’ accounting practices before and after theirdissolution.
3. Holding Company Liquidation Commission (HCLC)
In order to secure democratic ownership and management of business organizations, theHCLC was established to (1) inherit negotiable securities and other properties owned bycompanies designated as holding companies, (2) carry out custody and disposal of theproperties, (3) promote dissolution of the holding companies, (4) distribute the power ofcorporate governance and (5) eliminate excessive concentration of economic power. By
so doing, it purported to provide a foundation for the democratic reconstruction ofJapan’s national economy (HCLC 1973, p. 159).11 At the beginning, five companies
were targeted for demolition. These were the head offices of four major zaibatsu groups
and Fuji Industries, which originated as Nakajima Aircraft, a military firm. 78
companies were further specified as holding companies by subsequent orders of thecommission over the period from December 1946 to September 1947 (Okazaki 1998).
The first five were specified on 6 September 1946. The second group of 40 companies
was specified on 7 December 1946. They were mainly companies that not only had
invested heavily in the affiliated companies but also had important production sections.
A third group of 20 companies was specified on 28 December 1946. They were mostly
leading subsidiaries of previously specified companies, but also had characteristics ofholding companies. The three mining enterprises examined in this study were includedin this group. The final 18 companies, including ‘local’ zaibatsu, were designated in the
fourth and fifth rounds of specification on 25 March 1947 and 26 September 1947.
11

At the time of its establishment, the business of the commission was restricted to the inheritance,
custody and disposal of negotiable securities possessed by holding companies and the instruction
and supervision of normal operations and liquidation until the holding companies were dismissed.
However, several revisions of the commission’s law added the distribution of corporate governancepower, the use of voting right to the subsidiary and affiliated companies, and the approval of a plan
to dispose of the shares and the implementation of the Law for Elimination of Excessive
Concentration of Economic Power (HCLC 1973, pp. 159-160).
9

Until the proposal for organizational rearrangement that would order liquidation or
breakup was finalized, the holding companies had to follow the HCLC’s instructions
and supervision not only for any actions that would bring about significant changes totheir asset position but also for normal operations. Therefore, holding companies had to
apply to the commission in advance and obtain approval for the following matters: (1)holding a general shareholders’ meeting to discuss issues that would lead to a change in
the amount of capital, besides issuing corporate debentures and dismissing, merging,transferring or inheriting businesses; 12 (2) officers’ inauguration and retirement; (3)making important changes to a company’s bylaws; (4) borrowing funds from, oroffering security for a debt to, financial institutions; (5) undertaking and/or guaranteeing
debts; (6) all judicial acts (HCLC 1973, p. 260).
In addition, specified companies were required to submit budgets to the HCLC for
operating income and expenditures, and funding plans for normal operations for eachmonth. Enforcement of the regulation was monitored by comparing the budgets with
reported performance, specifically to prevent the shareholders and creditors of thespecified companies from suffering due to misappropriation of funds obtained from
disposing of assets or collecting loans. The formats for budgets and performance reports
were generally unified in the following manner: (1) normal income and expenses werearranged into normal operation and ‘other’ categorizations; (2) operating expenses were
subdivided into costs for materials, labour and expenses; (3) lists of particulars
specifying the details of each cost item were attached; (4) income and expenses outside
normal operations were adjusted; (5) total monthly excesses and deficiencies were
calculated; (6) a cash flow statement showing how the excess or deficiency was
financially used or provided was attached (HCLC, Mitsui Mining, BOIE; HCLC,
Mitsubishi Mining, BOIE; BS; HCLC, Seika Mining, UT; DNO). It is interesting tonote that not only was the same form used for each business specified as a holding
company, the enterprises in the mining industry voluntarily classified items listed inthese statements by section, location and product line where possible.
More importantly in the context of this study, the three mining companies were placed
under the jurisdiction of the ‘Law for Elimination of Excessive Concentration of
Economic Power’ (LEECEP), which was promulgated as a part of the policy to ‘provide
a foundation for reconstruction of a sound, democratic national economy’ (HCLC 1973,
p. 310; Hosoya 1998). 13 Under the LEECEP, it was considered necessary to eliminate
excessive individual concentration of economic power in a forceful manner and split itup into separate business units. All individual companies or combinations that had thefollowing general traits were regarded as having excessively concentrated power: (a) alarge scale as represented by (1) production amounts, production capacity, gross sales or
total assets, (2) a large number of work sites (including locations of mines) andemployees or (3) business expansion through mergers and acquisitions; (b) engagement
12

In addition to these matters, debts for business extension and improvement of equipment were
included in matters that should be brought up in general shareholders’ meetings.

13

The LEECEP was, however, criticized as it was doubtful whether the elimination of economic
concentration was useful for the Japanese economy needing revival first of all because, in the immediate
postwar period, most means of production had been destroyed by the war and the economy was troubled
with a fall of productive capacity. It was thought that if concentration of economic power was eliminated,
productive capacity would stagnate and decline (HCLC 1973, p. 311).

10

in a number of related (or combined) or unrelated industries, (c) control over otherorganizations and (d) monopolistic restriction of the supply of important products andmaterials (HCLC 1973, pp. 316, 342-343).
On 8 February 1948, the HCLC publicly announced its ‘standards for the excessive
concentration of economic power in industrial fields’ and simultaneously designated257 companies as falling under its authority. This was followed by the announcement of‘standards for the excessive concentration of economic power in distribution and service
sections’ on 22 February 1948 and the specification of 68 more companies.
However, the US occupation policy for Japan was transformed as the US-Soviet
confrontation came to the fore. The US government now needed to promote and assist
the independence of the Japanese economy and ‘to make Japan a barrier to the threat of
intrusive and undemocratic totalitarianism’ (HCLC 1973, p. 317). Under these
conditions, the strict enforcement of the zaibatsu dissolution initially envisaged in the
LEECEP had to be dropped (Muto 1952, p. 247; Shima 2000, pp. 55-56). 14 In
September 1948, the five-person commission presided over by Roy S. Campbell, who
visited Japan to reexamine the administration of the LEECEP, clarified the principlethat unless there was clear proof that a company restricted competition and barred theopportunity for others to engage in a business, the HCLC must cancel its specificationof the firm (HCLC, Mitsui Mining, DNO, part 2).
In the end, there were only 18 companies who were recognized as having excessive
concentrations of economic power by the end of March 1950 and who received
instructions to rearrange their organizations. These included Mitsui, Mitsubishi and
Seika Mining. Mining in particular, along with chemistry and machinery, aircraft andspinning, was an industry for which the HCLC stressed the necessity of separating
business units. Specifically, the basic stance of the HCLC was that the coal and metal
sections of the zaibatsu needed to be separated and geographically dissociated, at least if
there were excessive concentrations in the same area (HCLC 1973, p. 318).
4. Three mining companies
Mitsui Mining
Mitsui Mining Co., Ltd. had been established in 1911 with 20 million yen of equity
capital by splitting off the mining section of the Mitsui unlimited partnership. Afterbeing established as an incorporated company, World War I brought prosperity like
Mitsui Mining had never before seen. Gross assets increased from 74 million yen to 286
million yen during the period from 1912 to 1920 and possession of negotiable securities
grew from 49 million yen to 265 million yen during the same period (Mitsui Mining
1990, p. 75). The level of net income also grew from 2.5 million yen per year to 87
million yen (Mitsui Mining 1990, p. 77). It was during this time that the company
14

Of the 325 designated companies, the specifications of 50, including Chugai Mining, werecancelled in May 1948 (HCLC 1973, p. 315). Minor measures such as the disposal of shareholdings
without any reorganization, were ordered for another 144 companies, including Ajinomoto Co. Inc.
This was followed by another 31 companies in July (HCLC 1973, p. 315). For the specification
process and the cancellation of Toyota Motor Co., see Kasai (2010). For the case of Nissan, see
Yoshida (2012).
11

expanded to overseas mining enterprises (Mitsui Mining 1990, p. 77).
However, a deep postwar slump began with the sudden fall of stock prices listed on theTokyo Stock Exchange in 1920. The Great Kanto Earthquake in 1923 aggravated thedepression. The Japanese economy was further confused by the financial crisis of 1927
and then burdened by the Great Depression that started in 1929. During that period, theperformance of the metal section of Mitsui Mining stagnated, while the coal section
managed to secure a minimum level of profit, preventing sudden price drops bycontrolling production via reorganization and consolidation of operating zones and byincreasingly rationalizing their operations by mechanizing labour and enlarging theirequipment (Mitsui Mining 1990, pp. 105-106).
On the other hand, there was a war boom after the Manchurian Incident in 1931. When
the State of Manchuria, called Manchukuo, was founded in 1932, investment and export
to the new country increased significantly, focusing on heavy and chemical industries.
This resulted in rapidly increasing coal demand (Mitsui Mining 1990, p. 144). When theSecond Sino-Japanese War broke out in 1937, increased production, especially in themetal section, was needed to respond to increased demand for munitions (Mitsui Mining
1990, pp. 149-150, 155-156). Then, the start of the Pacific War in December 1941
brought more production increases, price controls and distribution controls overimportant mineral products including coal (Mitsui Mining 1990, pp. 150-151, 157-158).
An original price support subsidy system was formulated as part of this strengthened
control (Mitsui Mining 1990, pp. 193-194). Although the level of net income of thecompany never dropped below 10 million yen (for an accounting period of half a year)
under this government control, its performance plummeted after the war, when thecompany recorded huge deficits (Mitsui Mining, Business Report, vols. 62-70).
On the date it was specified as a holding company (28 December 1946), the Mitsui
headquarters held 59.8% of the company’s shares, with the Mitsui family and otherrelated companies holding 7.4% (HCLC 1973, p. 322). At that time, Mitsui Mining
owned shares in 42 domestic and 23 overseas companies, possessing more than 10% of
the total equities of 15 domestic and 11 overseas companies (HCLC 1973, p. 322). Of
its total of 225,953,000 yen in negotiable securities held at the time Mitsui was
specified, the HCLC inherited 164,278,000 yen from the company by the end of March
1950, 72.7% of the inheritance being in shares (HCLC 1973, p. 322).
Mitsui had 400 million yen in equity capital when it was specified under the LEECEP
on 8 February 1948, while total assets were 12 billion yen and gross sales amounted tomore than 5,500 million yen for the year ending on 31 March 1948 (HCLC 1973, p.
322). Besides 7 coal mines (3 in Kyushu and 4 in Hokkaido), the company had 14 metal
mines, including lead and zinc. Its production capacity was ranked first in the country,
having 16.4% of the nation’s coal production, (26.8% if production by subsidiaries was
included), 40.8% of crude lead output and 52.6% of crude zinc (HCLC 1973, p. 322).
Mitsui Mining had been performing asset management and profit calculations for eachof these product lines and locations since soon after its establishment. In fact, the originof the practice of sectional profit calculation for both coal and metal dated at least backto Mitsui Mining’s adoption of a divisional system in 1918 and the establishment of its
related independent accountability system (Mitsui Mining 1990, p. 102). The costcalculation practices of the Kawakami and Kushiro coal mines Mitsui Mining owned in
12Sakhalin and in the Hokkaido area dated back to 1917, when Mitsui Mining adopted acommon form for all its coal mines. This form had a list of 47 operating expense items,
which were further classified by operating functions such as mining, delivering and soon (COAL@C@2757; COAL@C@2758). 15
Mitsubishi Mining
Mitsubishi Mining was established in 1918 with an equity capital of 50 million yen. It
initially took over the assets of the mining business of the Mitsubishi limited partnership.
Its coal section performed extremely well, especially at the commencement of thebusiness, reflecting the boom during World War I. But it underwent a sudden downturn
after the war, and performance remained depresses for a period of years (Mitsubishi
Mining and Cement Co., Ltd. 1976, p. 455). Profits gradually recovered as the company
changed its method of selling coal from having arrangements through its affiliatedtrading company, Mitsubishi Trading, to direct sales by the company itself, but
performance was again affected when the Great Depression struck in 1929 and when thegold export ban was lifted in 1930 (Mitsubishi Mining and Cement Co., Ltd. 1976, p.
456).
Mitsubishi Mining’s performance recovered remarkably when metal prices jumped anddemand for coal rose in response to the outbreak of the Manchurian Incident and there-imposition of the gold embargo in 1931 (Mitsubishi Mining and Cement Co., Ltd.
1976, p. 456). When the Second Sino-Japanese War broke out in July 1937, the coalindustry occupied an important position as an energy source for munitions industries,
which also galvanized the metal mining industry with increased demand for materials
needed for munitions production (Mitsubishi Mining and Cement Co., Ltd. 1976, p.
457). On the other hand, when the Pacific War started in December 1941, governmental
control over the production, distribution and prices of coal and metal was strengthened
and the company’s performance began to fall (Mitsubishi Mining and Cement Co., Ltd.
1976, p. 457). Finally, immediately after the war ended in August 1945, it fell steeply,
recording large deficits (Mitsubishi Mining, Business Report, vols. 56-58).
Mitsubishi Mining, during the entire period described above, was a direct subsidiary of
the Mitsubishi zaibatsu. The Mitsubishi head office held 42.6% of its shares by the endof the war, while the company continued to maintain close affiliations with Mitsubishi
Bank, Mitsubishi Electric, Mitsubishi Heavy Industries and the Mitsubishi trading
company (HCLC 1973, p. 323).
Mitsubishi Mining was deemed as having actively performed the role of a holding
company since it owned shares in 68 domestic and 8 overseas companies when it waslisted as such on 28 December 1946. It owned more than 10% of the total equities of 17
domestic and 4 overseas companies (HCLC 1973, p. 323). Of the total 193,535,000 yen
in negotiable securities held when the company was listed as a holding company, thecompany transferred 142,468,000 yen to the HCLC by the end of March 1950 (HCLC
15

If only coal mines in the Kyushu area are considered, the same cost calculation practice could
possibly date back to the 1905 establishment of the Kyushu Coal Section of the Mitsui Mining
unlimited partnership, which was the antecedent of the company (Mitsui Mining 1990, pp. 40-41,
101).
13

1973, p. 323), 73.6% of the inheritance being shares.
Mitsubishi Mining had 407,400,000 yen of equity capital when it was listed under the
LEECEP on 8 February 1948. It had 8,493,861,000 yen of total assets, including 20
metal and 17 coal mines and 9 refining factories, and 4,419,168,000 yen of annual
turnover in the year ending March 1948 (HCLC 1973, p. 323). The company’s capacity
made up 11.8% of national coal production (13.9% if subsidiaries are included) andranked second next to Mitsui Mining. It produced 28.6% of Japan’s lead and had 91.9%of the country’s tin-smelting capacity (HCLC 1973, p. 323).
Sectional profit calculations for both coal and metal, subdivided by location, had been
carried out since the time the company was still part of the Mitsubishi partnership. The
earliest of such records date to 1894 (Mitsubishi Mining and Cement Co., Ltd. 1976, pp.
188-189, 206-207, 208-209, 210-211), and the 1894 balance sheet and income statement
for each coal and metal mine, classified by function, still exist (COAL@C@6379;
COAL@C@6380; COAL@C@6381; COAL@C@6382). A list of particulars was
attached to the documents with a half-year cost calculation, classified by function. This
practice was established more firmly when the accounting systems of Mitsubishi’s head
office and its local section operations were unified in 1911 (Mitsubishi Mining andCement Co., Ltd. 1976, pp. 198-199). The sectional calculations succeeded to
Mitsubishi Mining when it became independent in 1918.
Mitsubishi Mining further refined its original procedures to carry out monthly costcalculations classified by section (coal or metal) and by location starting in March 1918
(MM-00147). The cost classification was further elaborated starting in June 1922 todistinguish between expenses for work site-operations and general costs (MM-00148).
From May 1924, the calculations were extended to cover profits by making links withmonthly sales information (MM-00150). From April 1926, cost calculations were
elaborated further when items were classified in more detail by function including items
such as mining pits, coal handling, machine tooling and personnel management(MM-00152). This final form of practice continued up until 1943, as far as can be
confirmed (MM-00153; 00154; 00155; 00156; 00157; 00158; 00159; 00160; 00161;
00162; 00163; 00164; 00165; 00756; 00757).
Seika Mining
Seika Mining was established as Sumitomo Besshi Mining with 15 million yen of
equity capital in 1927. It specialized in metal mining in general and copper mining inparticular. The coal business was performed by another company, the Sumitomo Coal
Mine, which itself had been created through a merger between the Sumitomo Kyushu
Coal Mine and the Sumitomo Ban Coal Mine in 1930. During the Great Depression, theperformance of both companies initially slumped, but improved after 1932 with therecovery of the Japanese economy overall, especially with growing demand for coal.
The companies merged in June 1937 and Sumitomo Mining Corporation was created.
The company name changed to Seika Mining in 1945, after its management was
integrated with affiliated enterprises specializing in gold mining, for example. Although
the government requested production increases in wartime and the company performed
favourably during that period, performance suffered after the war, and the company
14

recorded large deficits due to wartime over-mining and resultant halts in production(Seika Mining, Business Report, vols. 37-40).
At the conclusion of World War II in 1945, the Sumitomo headquarters possessed
26.5% of the company’s shares, while the Sumitomo family and affiliated companies
owned 72.9% (HCLC 1973, p. 324). Besides being a direct subsidiary of the Sumitomozaibatsu, the company owned shares in 47 companies as of 28 December 1946. It held
more than 10% of the total equity of 17 companies, including 2 overseas firms (HCLC
1973, p. 325). Of the total 43,072,000 yen in negotiable securities held at the time of thespecification, the HCLC inherited 33,453,000 yen from the company by the end of
March 1950 (a much smaller total than the other two mining corporations), 75.3% being
shares (HCLC 1973, p. 325).
It had 80 million yen of capital registered when it was specified under the LEECEP on 8
February 1948. On 31 March 1948, it had total assets of 3,800 million yen and annual
turnover of 2,145,412,000 yen. It operated 13 coal mines (4 in Kyushu, 8 in Hokkaido
and 1 in Hyogo prefecture), 9 metal mines (1 in Shikoku, 4 in the Tohoku area and 4 in
Hokkaido), 2 refineries (1 in Shikoku and 1 in Hokkaido) and 1 electronic refinement
factory (in Shikoku) (HCLC 1973, p. 325). The company’s capacity was about 4.1%
(ranked fourth) of national coal production, while it had 17.8% of the refining capacity
for crude copper and 20.9% for electrolytic copper (HCLC 1973, p. 325).
It is clear that Sumitomo had carried out sectional profit calculations before theoutbreak of World War II because, as seen above, Seika Mining and its antecedent,
Sumitomo Mining, were originally founded in 1937 as an integration of the Sumitomo
Coal Mine and the Sumitomo Besshi Mine (Sumitomo Metal Mining, Co., Ltd. 1991,
vol. 2, pp. 178, 194, 235). Prior to that, each had performed its own separate accounting
calculations. In particular, cost calculations for copper refining using direct costs(subdivided into mining, refinement and other expenses) and overheads had been done
since at least 1902 at Sumitomo Besshi Mining (Sumitomo Metal Mining, Co., Ltd.
1991, vol. 2, p. 39). Moreover, cost calculation practices with functional classifications
can be traced back to 1918 at the Ban coal mine, which was one of Sumitomo’s original
coal mining operations in Hokkaido (Ban Coal Mining, Business Reports, vols. 2-16;
Sumitomo Ban Coal Mining, Business Reports, vols. 17-25).
5. Accounting information submitted by the mining companies
Mitsui Mining
In August 1946, Mitsui Mining submitted a document to the HCLC summarizing thecompany’s profile, including information on its locations, officers, shareholders and thenumber of employees. Attachments submitted with this document detailed its work
places, sales for the most recent month classified by product line and location, tangible
assets classified by location and long-term investments. The attachments also included abalance sheet as of 10 August 1946 that listed 17 assets and 17 equity items with noaccounting accruals, ordered with fixed items listed first, as shown in Table 2 (HCLC,
Mitsui Mining, DNO, part 1). Under long-term investments, the details of shares andequities it held in affiliated firms were indicated by company, listing book values,
paid-up amounts and the number of shares specified (HCLC, Mitsui Mining, DNO, part15

1). The HCLC analysed this information and specified Mitsui Mining as a holding
company, subject to its instruction and supervision. The company thus had to hand overmost of its negotiable securities to the HCLC.
[Insert Table 2 around here]
For pure holding companies such as the headquarters of the four major zaibatsu groups,delivering their negotiable securities to the HCLC eliminated their principal function. It
was a more complicated issue for organizations like Mitsui Mining that acted not only
as holding companies but also had important production arms. How should theirorganizational structure be rearranged when the country needed to produce more
important resources, such as coal, than ever to reconstruct its economy in the immediate
postwar period? The initial plan was to transfer the production sections to separate
companies to be established under the Enterprise Reconstruction and Reorganization
Law and dissolve the holding companies. For Mitsui Mining, whose size brought it
under the LEECEP’s jurisdiction, it was thought that the production sections should be
split, possibly into three parts: coal, metal and whetstone. The coal section could befurther subdivided geographically into at least the Kyushu and Hokkaido areas.
In opposing this kind of proposal, Mitsui Mining first emphasized that the company
actually suffered a net loss of about 6.5 million yen in the first half of 1946. The coaland factory sections had net incomes of about 19.5 million and 2 million yen, but themetal section and headquarters recorded net losses of about 9 million and 19 million
yen. In addition, the company stressed the close connection between the coal mines inthe two areas, citing human, technical, machine and material availability issues in adocument submitted to the HCLC dated 30 May 1947 (HCLC, Mitsui Mining, DNO,
part 1). It made the following counterargument, based on a managerial viewpoint of theenterprise, with a detailed income statement for the first half (April to September) of1946, classified by both product line and location (see Table 3):
The coal mines located in Hokkaido are younger than those in Kyushu. They are shallow,
having few floods and low costs, resulting in easy operation. The coal mines in the Tagawa andYamano areas in Kyushu are in their twilight years. Pit conditions are bad and they are difficult
to operate. Therefore, it seems that managing both areas as a single unit is necessary [tomaintain the management stability of the enterprise]. (HCLC, Mitsui Mining, DNO, part 1)[Insert Table 3 around here]
Mitsui vehemently opposed subdividing its Kyushu coal section, arguing that:
In Miike, the coal field has already reached the seabed level, so there is danger of unexpectedfloods, while the coal fields at Tagawa and Yamano have also been deepened gradually andthere is fear of gas explosions. Moreover, there is a risk that flooding will increase greatly in the
Yamano area as mining operations in adjoining coal mines end. From these special conditions, it
seems that independent operation is quite dangerous and we think that it is appropriate to
manage the three mountains [in the Kyushu area] as one integrated unit…Due to restraints
imposed by natural conditions, production costs at Tagawa and Yamano, compared with those at
Miike, tend to be remarkably high. They are also comparatively higher than the national
average…If Tagawa and Yamano, suffering such high operating costs, are separated, their
management will become impossible in the future. (HCLC, Mitsui Mining, DNO, part 1)

In spite of this, on 6 October 1947 the HCLC temporarily agreed to the proposal not
only to split Mitsui Mining into three parts but also to subdivide the coal operations atleast into two companies, one in Kyushu and the other in Hokkaido. The company was16not in a position to oppose the plan (HCLC, Mitsui Mining, DNO, parts 1 and 2).
After being specified as having an excessive concentration of economic power on 8
February 1948, Mitsui Mining was required to submit a detailed balance sheet andincome statement for the first half of 1948 (see Table 4). Itemized details of sales ofprincipal products and fixed assets by location were also attached to the documents(HCLC, Mitsui Mining, DNO, part 2). Despite the fact that the Instruction had alreadybeen issued, balance sheets for this submission followed the company’s conventional
style, rather than current-first order, and no accrual was recognized. This, however, did
not seem to present an obstacle to the HCLC and GHQ’s plan for Mitsui’s
reorganization. In fact both concepts of current-first order and accounting accruals
assumed business continuity, which was inconsistent with the idea of businessseparation.
[Insert Table 4 around here]
Based on information that Mitsui Mining obtained from HCLC and GHQ authorities, it
had to prepare for a worst case scenario where separation of its coal and metalbusinesses was unavoidable (Mitsui Mining 1990, p. 211). Aiming to eliminate
excessive concentrations of economic power, the HCLC stressed Mitsui’s size. In
particular, the commission judged that ‘the company concerned is the largest producerof coal, zinc and lead’ and that it ‘had a business scale and production capacity that
restricted competition in the mining industry in Japan and that could eliminate theopportunity for other persons to independently engage in the business’ (HCLC 1973, p.
356). Given the company’s market position, the HCLC also paid close attention to thenumber, scale and deposits in the mines it possessed as sources of production.
However, as the US government’s occupation policy towards Japan changed, especiallywhen application of the LEECEP regulations were relaxed in May 1948, the company’s
stance changed, and it began to oppose any separation of its business. In fact, incontesting the HCLC’s assessment, Mitsui Mining argued in a document dated 10
February 1949 that its coal production capacity was only 16.4% of national production
and it could not restrict competition with this proportion (HCLC, Mitsui Mining, DNO,
part 2). The company also argued that there was no restrictive power for zinc and leadsince they were international commodities (HCLC, Mitsui Mining, DNO, part 2). On
the other hand, stressing the mutual relationship and technological exchange between
the coal and metal sections by pointing out that coal was used as fuel in refining metals,
the company, again with detailed income statement information for the first half of 1948
showing that the metal section lost more than 9 million yen during this period (seeTable 5), claimed that dividing the sections as proposed would not be the best policy interms of cost efficiency (HCLC, Mitsui Mining, DNO, part 2).
[Insert Table 5 around here]
In the same submitted document, Mitsui Mining argued that ‘for the revival andindependence of the Japanese economy, raising efficiency and reducing operating costsin the mining section are imperative. From this point of view, no matter how thecompany may be divided, the division would be contrary to these purposes’ (HCLC,
Mitsui Mining, DNO, part 2). The company specifically stressed the financial stability
and risk diversification created by operating both the coal and metal sections. For
example, since coal storage was difficult with contemporary technology due to17oxidization and spontaneous combustion, coal prices tended to fluctuate in unstable
market conditions. Metal, on the other hand, was suitable for storage. This created apattern between the two sections, in which the metal section covered losses of the coalsection when it was in a slump. The company, with information on the percentage of net
income each section had produced since 1921, claimed that it was desirable tosimultaneously operate different types of mines to disperse the risks inherent in themining business (HCLC, Mitsui Mining, DNO, part 2).
The HCLC, however, viewed production shares as important indications of excessive
concentration of economic power (HCLC 1973, pp. 472, 474). Mitsui’s domestic coalproduction share grew from 14.2% in 1931 to 24.0% in 1945, and it produced 39.4% ofJapan’s lead and 61.9% of its zinc in 1940. On 23 February 1949, the HCLC was stillseeking not only to split up its coal and metal sections but to subdivide the coal section
into the Kyushu and Hokkaido areas. It planned (as indicated in Table 6) for assets andincome (including itemized details) to devolve to the separate companies based on data
available at the end of September 1948 (HCLC, Mitsui Mining, DNO, part 2).
[Insert Table 6 around here]
Opposing the HCLC’s plan, Mitsui Mining pointed to the losses both coal sections had
suffered from 11 August 1946 to 31 December 1948 because of the 1946 adoption of
the priority production system, which increased coal production and required, as anational policy, that it be sold cheaply to the steel industry. Mitsui provided itemized
details by location (1,865 million yen (255 yen per ton) for the Kyushu area and 1,324
million yen (420 yen per ton) for the Hokkaido area) (HCLC, Mitsui Mining, DNO, part3) and claimed that, if the fields were separated, operating Hokkaido would become
very difficult (HCLC, Mitsui Mining, DNO, part 3). Cost data for every product line
was attached, with total production costs classified on the forms. Even efficiency
calculations using standard wages were incorporated in totaling labor costs. In the costaccounting for lead, zinc and copper, a departmental calculation was implemented andhow common costs were allocated was specified (see Table 7). The same cost data were
provided for each location (HCLC, Mitsui Mining, DNO, part 3).
[Insert Table 7 around here]
In addition, a five-year plan was provided, with detailed cost information such as
estimated expenditures for restoring wartime devastation 16 and exploiting new pits toincrease production. This showed that it would be difficult for Mitsui Mining’s
Hokkaido area to raise the funds necessary for investment on its own, despite its
needing more funds for developing new pits in the near future (HCLC, Mitsui Mining,
DNO, part 3).
In spite of its vehement counterarguments, Mitsui Mining finally admitted defeat in adocument dated 9 July 1949, stating that if it was still supposed, for a variety of reasons,that splitting the company up into coal and metal sections was unavoidable, it was
desirable, not only from an economic point of view, but also for administrative purposes,that the company be retained as a coal producer and a secondary company be
16

The need to repair pits due to excessive mining in wartime and large future expenditures werealso indicated by Mitsubishi Mining (HCLC, Mitsubishi Mining, MSM).
18

established to succeed to the metal business (HCLC, Mitsui Mining, DNO, part 3).
Through its determined opposition, the company nevertheless managed to avoid
adopting the original plan to subdivide the coal section geographically (HCLC, Mitsui
Mining, DNO, part 3). Acknowledging this concession, the HCLC, on 30 July 1949,
formally released an instruction to split up Mitsui Mining into two sections anddetermined to hold a public hearing for the proposal on 24 August 1949. Although theofficers of Mitsui Mining, who were invited to attend the public hearing, were still
opposed to dividing the company, the HCLC stated that ‘[s]ince it [the result of thehearing] confirmed what the commission had already examined when this proposed
instruction was issued and no new exceptional facts were discovered, no change in the
instruction is necessary’ (HCLC, Mitsui Mining, DNO, part 3).
Mitsubishi Mining
When Mitsubishi mining was specified as a holding company, the company planned tovoluntarily propose splitting its business into coal and metal enterprises. The GHQ’s
original plan, however, went beyond the company’s expectation: the commission’s plan
was to divide the company’s business into three parts, coal, mining and metalworking,and, more importantly, further subdivide these three enterprises geographically(Mitsubishi Mining and Cement Co., Ltd. 1976, pp. 468-469). In July 1946, Mitsubishi
Mining submitted the exact same information as Mitsui Mining did in August 1946, i.e.
the company profile and sales details, tangible assets classified by product line andlocation (see Table 8) and long-term investments, in addition to the balance sheet as ofAugust 10, again with no accounting accruals and ordered with fixed items first (HCLC,
Mitsubishi Mining, MSM). Then, the company was specified as a holding company on
28 December 1946 and as one that could restrict competition under the LEECEP for its
large business scale and production capacity (HCLC, Mitsubishi Mining, MSM; part 2).
[Insert Table 8 around here]
Being subject to the LEECEP, Mitsubishi Mining judged that dividing the company’sbusiness into coal, mine and metalworking sections was unavoidable, and started
planning an organizational rearrangement (Mitsubishi Mining and Cement Co., Ltd.
1976, p. 472). But when the US government’s Japanese occupation policy shifted andsome relief from the LEECEP’s regulations began to emerge in May 1948, the company
abandoned its original plan and developed a strategy to resist any separation of its
operating sections (Mitsubishi Mining and Cement Co., Ltd. 1976, p. 473).
Mitsubishi Mining, however, still faced a proposal by the GHQ, through the HCLC, tosplit up the company into two sections, coal and metal, each subdivided geographicallyinto separate enterprises. The HCLC was concerned about Mitsubishi Mining’s share ofdomestic coal production, which had increased from 11.1% in 1931 to 16.9% in 1945,
and its shares of the production of copper (18.4%), silver (16.3%), lead (38.7%) andzinc (22.1%) in 1940 (HCLC 1973, pp. 472-474).
Nevertheless, responding to this proposal by the HCLC in a document dated 9 February
1949, the company stressed that its sections needed to be operated together for the sakeof reconstructing the Japanese economy and increasing the production of importantmaterials. It is interesting that, as with Mitsui Mining, Mitsubishi Mining based its
argument on factors such as financial stability, diffusion of disaster risks, cost efficiency
19

created through the mutual supply of products, joint use of facilities, technologicalexchange and joint purchase of materials (HCLC, Mitsubishi Mining, part 2). To provethat the coal and metal sections’ profitability was complementary, the company also
submitted details of their financial performance since the company’s formation in 1918,
as indicated in Table 9 and Figure 1 (HCLC, Mitsubishi Mining, part 2).
[Insert Table 9 and Figure 1 around here]
Based on the data in Table 9, we calculated period-to-period variations in both sections’net income for the period from 1918 to 1943. Figure 2 displays (1) the extent to which
the variations cancel each other when their changes in net income were in opposite
directions and (2) the extent of duplication when they moved the same direction. By
comparing the frequency and magnitude of cancellation and duplication in these net
income variations, Fig. 2 attempts to confirm that the sections offered a degree of net
income complementarity that would act as a buffer against volatility risk for the entire
company. Figure 2 indicates that there are 30 cases where variations in the two sections’net income cancelled each other out, while there were 21 times when they moved in thesame direction, though there is no important difference in magnitude. The result of
frequency is not supported as statistically significant in Pearson’s chi-square test, but
the result at least indicates that variations in both sections’ net income were independent
each other. In this sense, the simultaneous operation of both sections contributed to risk
dispersion of the entire mining enterprise.
[Insert Figure 2 around here]
In spite of the company’s efforts, however, the HCLC issued instructions to Mitsubishi
Mining on 30 July 1949 requiring it to establish a separate firm to handle its metals
section (HCLC, Mitsubishi Mining, part 2). A public hearing was held on 24 August
1949, but it did not change the HCLC’s view (HCLC, Mitsubishi Mining, part 2).
Seika Mining
The GHQ initially urged Seika Mining to split its business into coal and metal firms and,further, to subdivide each geographically (Sumitomo Metal Mining, Co., Ltd. 1991, vol.
2, p. 268). The company intended to oppose the geographic segmentation due toconcerns that segmentation would risk its managerial foundation, though it saw the
separation of the coal and metal sections itself as tolerable, if the GHQ’s plan could not
be avoided (Sumitomo Metal Mining, Co., Ltd. 1991, vol. 2, p. 269).
With that strategy in mind, Seika Mining presented the same information to the HCLC
that all the other mining companies were required to submit: balance sheet information
classified into coal and metal sections, details of operating sites, with no accounting
accruals, presented in order with fixed items first as in the company’s traditional forms,
and income statement information classified by principal product line and businesslocation (see Table 10) (HCLC, Seika Mining, DHD). However, when the US
government’s occupation policy toward Japan was altered and application of the
LEECEP was relaxed starting in May 1948, Seika Mining came to expect that the eventhe separation of the coal and metal sections might be avoidable (Sumitomo Metal
Mining, Co., Ltd. 1991, vol. 2, pp. 270-271). From that point on, Seika Mining actively
compared itself with other companies and tried to establish that its scale was small,20

making it unnecessary to separate the sections. For example, the company compareditself to Mitsubishi Mining in communications with the HCLC, claiming to be muchsmaller, having only 44.7% of Mitsubishi’s total assets, 38.2% of its fixed assets and48.5% of its gross sales (HCLC, Seika Mining, DHD).
[Insert Table 10 around here]
The HCLC stressed Seika Mining’s domestic shares of production of copper, gold andsilver, which were 18.3%, 19.3% and 23.8%, respectively, in 1940 (HCLC 1973, pp.
473). Seika Mining, like the other mining companies examined in this study, argued in adocument dated 7 February 1949 that it had less than 20% of national production
capacity and thus could not restrict competition (HCLC, Seika Mining, DHD). The
company added that its soundness and financial stability had been maintained byoperating the two sections simultaneously (HCLC, Seika Mining, DHD). To provide
evidence, the company submitted balance sheet information for both sections (further
classified by location) on 28 February 1949, based on data for the first half (April to
September) of 1948, though the form still followed the company’s traditional style,rather than the one prescribed in the Instruction (see Table 11). Detailed cost andincome statement information for every product line and location was attached and thetotal production cost was classified by form. Process cost calculations were alsopresented for metals such as gold, copper, sulfide ore and lead.
[Insert Table 11 around here]
In spite of the counterargument made by the company, the HCLC proposed
reorganizing the organization to separate the coal and metal sections. A public hearing
for Seika Mining was held on 20 July 1949, at which the officers of the company
pointed out that the specification under the LEECEP of other companies with larger
production capacities or production records, such as Nihon Mining and Furukawa
Mining, 17 had had been cancelled. But the HCLC viewed this as ‘akin to concealing
unfavorable facts and is unjustifiable...it does not have any basis for suggesting a needto change the original proposal’ (HCLC, Seika Mining, DHD).18
17

For the specification and cancellation processes followed in the Nihon and Furukawa Miningcases and the accounting practices they followed see HCLC, Nihon Mining, RD, Part 1; RD, Part 2;
DNO, BOIE; DCBOIE, Part 1; DCBOIE, Part 2; HCLC, Furukawa Mining, DSO; DNO, Part 2;
BOIE.
18

Furukawa Mining’s rates of domestic production of coal and metals occupied were indeed small
except for copper, which was declining, having reached 13.0% by 1940 (HCLC 1973, pp. 472-474).
Nihon Mining had already handed the HCLC the shares of Nihon Coal Mine, its wholly owned
subsidiary that separately operated its coal mining business (HCLC 1973, p. 484). Moreover, in thecases of Mitsui, Mitsubishi and Seika, shareholding was concentrated in the zaibatsu organizations,with 70.4% for Mitsui, 48.6% for Mitsubishi and an extreme 99.5% for Seika at the end of WorldWar II (HCLC 1973, pp. 482-483), while it was only 37.6% in the case of Nihon Mining. More
importantly, it had 66,592 stockholders (HCLC 1973, pp. 482-483), which indicates it had alreadyachieved one objective of zaibatsu dissolution, to establish democratic ownership of businessorganizations. However, it is still possible to view the instruction to split up the Seika Mining
business as being based on the political view that the company was a core company representing one
of Japan’s zaibatsu groups, rather than its actual concentration of economic power (Mitsubishi
Mining and Cement Co., Ltd. 1976, p. 474).
21

The final directions were issued on 3 August 1949, ordering the company to submit a
concrete plan to the HCLC to implement its instructions. Accordingly, Seika Mining
forwarded a plan to establish another company called Besshi Mining to take over its
metal business. The HCLC approved the proposal on 9 December 1949.
6. Significance of the Instruction
As already noted, the Shoup recommendation indicated that Japanese companies’
accounting practices were generally ‘in a deplorable state’ (Shoup Mission 1949, p. 50).
But the same report predicted that in remedying the practices of large enterprises ‘[t]heproblem should not be too difficult’ (Shoup Mission 1949, p. 50). It continued that‘[t]hey generally have staffs adequate to the keeping of proper books and accounts’,
adding that ‘[t]he recommendations previously made with respect to accounting
standards and independent audits should produce accuracy and overall standardization’(Shoup Mission 1949, p. 50). However, as demonstrated in the previous section, theforms prescribed in the Instruction were not utilized at all in the financial statements ofthe three mining enterprises studied here submitted to the HCLC when they wererequired to rearrange their organizations. Nevertheless, the content of accounting
information submitted by the three companies to the HCLC before the decision todissolve was made was very similar, as were the reasons they used to argue against thedivision. This is rather assessed as the result of the mining companies’ projected effort
since February 1949 to jointly resist the HCLC’s continued push to separate the coaland metal sections even after the strict application of the LEECEP’s regulations was
eased (Mitsubishi Mining and Cement Co., Ltd. 1976, p. 474).
In fact, it appears that the purpose of the Instruction was transformed with the evolutionof the US government’s occupation policy towards Japan starting in May 1948.
According to recent research by Yamada (2012, pp. 207, 212), the new version of theInstruction released by the GHQ in 1949 differed from the previous version issued inJuly 1947. It specifically directed that ‘[t]hese reports [submitted by each enterprise]
will not be used by the [Japanese] Finance Ministry, but will be delivered to SCAP for
statistical and analytical purposes’. In particular, the phrase ‘for statistical and analytical
purposes’ was stressed in the 1949 version, while it was not mentioned at all in versions
published before June 1948. This implies that the aim of the Instruction changed from ameans to promote dissolution of the zaibatsu organizations to standardize financial
statistics provided by private enterprises for analyzing and managing the Japanese
economy as part of its anti-communism policy against the Soviet Union.
Interestingly, a change in the use of the Instruction also arose among the mining
enterprises obliged to rearrange their organizations under the HCLC’s supervision. The
proposal to split up Mitsui Mining into two companies, coal and metal, was finalized by
the HCLC and instructions were issued on 28 August 1949 that ordered the company toprepare and submit a tangible plan to the HCLC on how to execute the reorganization(HCLC, Mitsui Mining, DNO, part 3). Accordingly, Mitsui Mining submitted adocument to the HCLC on 21 February 1950 in which the establishment of a newcompany to undertake the metal business, called Kamioka Mining, was proposed. The
plan included a forecast balance sheet for each separate company, as indicated in Table
12, for the time of the proposed separation, 1 May 1950.
22

[Insert Table 12 around here]
The plan submitted by Mitsui Mining was approved by the HCLC on 2 March 1950 and,as planned, Kamioka Mining was established on 1 May 1950. There were some featuresin its forecast balance sheet that were not identified in those the company had eversubmitted to the HCLC or to a general shareholders meeting. They included (1)presentation of assets and liabilities classified into current/fixed items, (2) adoption of acurrent-first order, (3) positioning of investment items between current and fixed assets,(4) recognition of deferred charges and (5) independent presentation of deferredincomes (HCLC, Mitsui Mining, BOIE). On the other hand, these features were clearlyrecognized in the Instruction as indicated in Table 1.
Mitsubishi Mining was in the same position. Following the HCLC’s final instructions
issued on 28 August 1949 ordering the business to be split into two units, the company,
in a document dated 24 December 1949, laid out a plan to form a new company called
Taihei Mining to take over the metal business. As with Mitsui Mining, the document
contained a forecast balance sheet listing assets and liabilities each separate company
would hold as of 31 December 1949 (see Table 13) (HCLC, Mitsubishi Mining, part 2).
[Insert Table 13 around here]
The exact same features identified in Mitsui Mining’s forecast balance sheet arerecognizable in Mitsubishi Mining’s forecast balance sheet (HCLC, Mitsubishi Mining,
BOIE; BS; HCLC, DCDNS 2, Mitsubishi Mining). Again, these were not included inbalance sheets the company had so far drawn up and submitted to the HCLC or to theirshareholders. 19 This offers more evidence of the impact of the Instruction on accounting
practices adopted by the mining enterprises. The proposal submitted by Mitsubishi
Mining was finally approved by the HCLC on 31 January 1950 and, as planned, Taihei
Mining was established on 1 April 1950. The financial basis of each company after
division was formed using the forecast balance sheets and the features recognized above,
except for part of deferred income, were all utilized in the financial statements of eachcompany when they were established (see Tables 14 and 15).
[Insert Tables 14 and 15 around here]
Significant differences between balance sheets created before and after the decisions to
break up the Mitsui and Mitsubishi Mining companies were made was not restricted toform, such as the current/fixed classification and current-first order, but also substance,
as represented by the introduction of deferred charges, though the Instruction itself wasmodel form of financial statements.
The three mining enterprises examined in this study, in the process of planning to split
up the coal and metal sections, had planned to increase the amount of capital of the
19

Although it was not a forecast balance sheet, Seika Mining, on 4 October 1950 after theestablishment of the separate metal mining company, Besshi Mining, on 1 March 1950, submitted to
HCLC a balance sheet in order to acquire permission for the issue of new corporate bonds, in which
the company transformed the original balance sheet provided to the shareholders dated 31 January
1950, clearly distinguishing the metal section and coal sections. More importantly, in the revisedbalance sheet, the same features as the forecast balance sheets which Mitsui Mining and the
Mitsubishi Mining submitted to the HCLC, i.e. pattern of current-first order and recognition ofdeferred charges and prepaid expenses, were identified (HCLC, Seika Mining, DHD).
23

surviving companies. Mitsui Mining increased its amount of capital by 800 million yen
in December 1949, making a total of 1.2 billion yen (Mitsui Mining, Business Report,
vol. 71). Mitsubishi raised about 500 million yen in September 1949, making its total
900 million yen (Mitsubishi Mining, Business Report, vol. 58), and Seika Mining
increased its capital by 210 million yen in November 1949, making its total 290 million
yen (Seika Mining, Business Report, vol. 40). In the mining industry in general, and in
the case of Mitsui Mining in particular, the purpose of the capital increase in the processof organizational rearrangement was, unlike other industries and enterprises, more forcorrecting its capital composition, which had come to rely much too heavily on debt
provided by financial institutions arranged under the special war conditions. For
example, Mitsui’s debt/equity ratio was 2.27, Mitsubishi’s was 1.42 and Seika’s was
4.49 in August 1946. (See Table 2, Mitsubishi Mining, Business Report, vol. 57; Seika
Mining, Business Report, vol. 39) They were also providing funds needed forequipment renewal and expansion, rather than for compensating losses suffered in theimmediate postwar period, because they could compensate the losses sufficiently using
profit that arose from disposing negotiable securities through the HCLC (HCLC, Mitsui
Mining, DNO, part 3; Mitsubishi Mining, part 2; Seika Mining, DHD). 20
Regardless, dividends had to be paid by the surviving companies for new equities theyissued. In order to secure net income that could be used as the financial source fornecessary dividend payments, it became necessary to recognize an important amount ofdeferred charges and prepaid expenses. That is, conformance to the provisions of theInstruction was used to justify the recognition of deferred charges and prepaid expenses
in the new accounts to help rebuild their financial position and pay dividends. In fact, inthe financial statements issued for the shareholders of Mitsui Mining dated 30
September 1950 (illustrated in Table 14), deferred charges (development costs) of morethan 50 million yen and prepaid expenses of 447 million were added up, as originallyplanned in the forecast balance sheet issued earlier (Mitsui Mining, Business Report,
vol. 72). In the half-year accounting period ending on 30 September 1950, Mitsui
Mining recorded a net income of 214 million yen and paid dividends of 90 million yen(7.5% for the half-year) therefrom (Mitsui Mining, Business Report, vol. 72). If there
had been no recognition of deferred charges or prepaid expenses, it would not have beenpossible to secure both net income and dividends of this scale.
In the financial statements released for shareholders dated 30 September 1950 (seeTable 15), Mitsubishi Mining, as originally planned in its forecast balance sheet,recognized a total of about 147 million yen of deferred charges, consisting ofdevelopment costs, initial expenses and initial interest expenses, and about 190 million
yen of prepaid expenses (Mitsubishi Mining, Business Report, vol. 59). The net incomeof this accounting period from 1 February to 30 September 1950 was 398 million yen,while dividends were 90 million yen (Mitsubishi Mining, Business Report, vol. 59). In
this case as well, if there had been no recognition of deferred charges or prepaid
expenses, the required amount of net income would not have been securable.
Although the statements did not yet use the current-first order, Seika Mining’s financial
20

Although in hindsight, the large accumulated losses were largely covered later by the appraisal
surplus of depreciable assets implemented based on the Asset Revaluation Law enforced in April
1950.
24

statements as of 31 January 1950, released for its shareholders just before Besshi
Mining was established on 1 March 1950, show a total of about 67 million yen ofdeferred charges, comprising development costs, initial expenses and initial interest
expenses, and about 303 million yen of prepaid expenses (Seika Mining, Business
Report, vol. 40). With the price support subsidy system still exerting some influence,the coal section of Seika Mining recorded large losses of more than 350 million yen.
Recognizing the deferred charges and prepaid expenses of more than 370 million yen
was useful in compressing the losses to that extent (Seika Mining, Business Report, vol.
40). In the next accounting period over the 8 months ending on 30 September, byadding up about 75 million yen of deferred charges and about 193 million yen of
prepaid expenses, Seika Mining secured a net income of 107 million yen and paid
dividends of 29 million yen therefrom (Seika Mining, Business Report, vol. 41).
When the form of balance sheets created before and after the HCLC decided to split up
the mining companies were compared, it is recognizable that there were a few more
items disclosed in the balance sheets submitted after the decision. But the same
information was provided in the form of various schedules attached to the financial
statements that Mitsui and Mitsubishi Mining submitted to the HCLC in its process ofreaching the dissolution decisions. This supports the results of the most recent research,as represented by Kubota (2002, pp. 41-42), who argues that the function of theInstruction was to transform the accounting practice of the conventional zaibatsu
organizations into a US-style standardized system, rather than the conventional
interpretation that the Instruction was issued to rectify defects recognized in theaccounting information required for the dissolution of zaibatsu organizations.
Also as Kubota (2002, pp. 41-42) argued, the Instruction has been regarded as ‘special
accounting standards’ that applied only to specific companies that were subject toregulations in force under the GHQ’s occupation policy. The traditional view thus
recognized only a limited importance of the Instruction. Rather the issuance of the‘Business Accounting Principles’ and the attached ‘Working Rules for Financial
Statements’ in July 1949 by the Investigation Committee for Measures of the Corporate
Accounting System have been regarded as the origin of the postwar corporate
accounting system in Japan. However, they did not come into legal effect until theenactment of SEC Rule 18 in September 1950.
On the other hand, the forecast balance sheets Mitsui Mining and Mitsubishi Mining
submitted and the latest balance sheet Seika Mining included in an application
regarding the debenture issue were approved by the HCLC between 31 January and 2
March 1950. Therefore, new accounting practices of the large-scale important zaibatsu
mining enterprises that already embodied the provisions of the Instruction were
institutionally established before SEC Rule 18 was finalized, supplying an importantpractical precedent for the development of the postwar corporate accounting system.
7. Conclusion
Using official HCLC documents and analyzing accounting practices adopted in the
breakup of zaibatsu mining companies, we aimed to show that (1) zaibatsu companies’
conventional accounting practices were adequate to enable their own dissolution and (2)forecast balance sheets prepared by the mining companies after the HCLC decided to25split them up provided an important precedent for the development of the postwar
accounting system because they put the provisions contained in the Instruction into
practice.
Early research regarded the financial statements submitted by zaibatsu organizations to
the HCLC as deficient in many respects, whereas more recent research, such as Suzuki(2007a, p. 283), finds that the alleged deficiency ‘does not necessarily mean…that
original Japanese accounting was wrong or deficient in its own domestic environmentand context’. This study supports the latter view. In fact, the three mining companies
examined in this study were able to satisfactorily provide all the information required by
the HCLC. With the information they submitted, the HCLC was able to devise plans to
split up the companies. The expected dissatisfaction, based on allegedly poor quality or
insufficient information, was not apparent within the HCLC, though some data Seika
Mining submitted were criticized because of the company’s bias in providing
production statistics (rather than financial data) that supported its own interests.
Rather than exhibiting the alleged deficiencies, the mining companies examined in thisstudy, in their attempts to prevent their breakup, emphasized the risk diversion in theincome structures of their coal and metal sections and autonomously submitted detailed
information on each section with detailed cost calculations. The supply of this type of
information was not limited to the immediate postwar period but went back all the way
to the when these companies were established. Sectional and locational calculations
were also applied to the assets and liabilities of each section. Even after the division of
the companies’ organizations was finalized by the HCLC, this contributed to thecreation of forecast balance sheets listing assets and liabilities for each successor
company.
Moreover, this study’s analysis suggests that forms prescribed in the Instruction were
utilized in preparing the forecast balance sheets for each separate company only after
the HCLC decided to split up the original company, rather than being used to remedy
alleged defects in the financial statements submitted to the HCLC for its use indetermining how to dissolve the zaibatsu organizations. Specifically, (1) updated
presentation methods such as current/fixed classifications and current-first ordering of
information and (2) use of accounting accruals as represented by deferred charges andprepaid expenses were important features in the forecast balance sheets that had notbeen identified in those having been created by these companies before the division. In
particular, the recognition of deferred charges and prepaid expenses was utilized torebuild the companies’ financial position by increasing shareholders’ equity and tosecure sufficient net income to pay necessary dividends. The financial basis of eachcompany after the division was formed using these forecast balance sheets and thefeatures noted above were succeeded to the companies’ subsequent financial statements.
These were all implemented before the companies were finally de-listed as holding
companies with excessively concentrated economic power in May 1951. The HCLC’s
approval of the forecast balance sheets was also before the new corporate accounting
system, represented by the Investigation Committee for Measures of the Corporate
Accounting System’s ‘Business Accounting Principles’ and attached ‘Working Rules for
Financial Statements’, issued in July 1949, became enforceable when SEC Rule 18 was
issued in September 1950. In this sense, as Kubota (2002, pp. 41-42) suggests, theforecast balance sheets that already embodied the provisions of the Instruction
26

contributed to providing a basis for postwar development of the corporate accounting
system by supplying a leading practical case in which a feature of the new systemappeared before it came into effect.

27

References
Primary source
HCLC, Furukawa Mining, DSO: Gyomu Kantoku Kankei (The document of theHolding Company Liquidation Commission, Furukawa Mining, documents related
to the supervision of operations).
HCLC, Furukawa Mining, DNO, Part 2: Jomu Kantoku Sono 2 (The document of theHolding Company Liquidation Commission, Furukawa Mining, documents related
to normal operations, Part 2).
HCLC, Furukawa Mining, BOIE: Shushi Yosan Tsuzuri (The document of the Holding
Company Liquidation Commission, Furukawa Mining, budgets for operating
income and expenses).
HCLC, Mitsui Mining, DNO, Part 1: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsui
Kozan, Jomu Kankei Shorui Tsuzuri Sono 1 (The document of the Holding
Company Liquidation Commission, Mitsui Mining, documents related to normal
operations, Part 1).
HCLC, Mitsui Mining, DNO, Part 2: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsui
Kozan, Kankei Shorui Sono 2 (The document of the Holding Company Liquidation
Commission, Mitsui Mining, rerated documents, Part 2).
HCLC, Mitsui Mining, DNO, Part 3: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsui
Kozan, Jomu Kankei Shorui Tsuzuri Sono 3 (The document of the Holding
Company Liquidation Commission, Mitsui Mining, documents related to normal
operations, Part 3).
HCLC, Mitsui Mining, BOIE: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsui Kozan,
Shushi Yosan (The document of the Holding Company Liquidation Commission,
Mitsui Mining, budgets for operating income and expenses).
HCLC, Mitsubishi Mining, MSM: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsubishi
Kogyo, Kabunushi Sokai Gijiko (The document of the Holding Company
Liquidation Commission, Mitsubishi Mining, matters related to the shareholders’meeting).
HCLC, Mitsubishi Mining, 2: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsubishi
Kogyo 2 (The document of the Holding Company Liquidation Commission,
Mitsubishi Mining, part 2).
HCLC, Mitsubishi Mining, BOIE: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsubishi
Kogyo, Shushi Yosanhyo (The document of the Holding Company Liquidation
Commission, Mitsubishi Mining, budget sheets for operating income and expenses).
HCLC, Mitsubishi Mining, BS: Mochikabu Kaisha Seiri Iinkai to Bunsho, Mitsubishi
Kogyo, Yosanhyo Tsuzuri (The document of the Holding Company Liquidation
Commission, Mitsubishi Mining, budget sheets).
HCLC, DCDNS 2, Mitsubishi Mining: Mochikabu Kaisha Seiri Iinkai to Bunsho, Kanri
Yukashoken Shobun Kaigisho 2, Mitsubishi Kogyo Kabushiki Kaisha (Thedocument of the Holding Company Liquidation Commission, the documents ofconsultation concerning the disposal of negotiable securities under custody, part 2,
Mitsubishi Mining Co., Ltd.).
HCLC, Nihon Mining, RD, Part 1: Kankei Shorui Sono 1 (The document of the Holding
Company Liquidation Commission, Nihon Mining, related documents, Part 1).

28

HCLC, Nihon Mining, RD, Part 2: Kankei Shorui Sono 1 (The document of the Holding
Company Liquidation Commission, Nihon Mining, related documents, Part 2).
HCLC, Nihon Mining, DNO, BOIE: Jomu Kantoku Shushi Yosan (The document of theHolding Company Liquidation Commission, Nihon Mining, documents related tonormal operations, budgets for operating income and expenses).
HCLC, Nihon Mining, DCBOIE, Part 1: Shushi Yosan Kaigisho Sono 1 (The documentof the Holding Company Liquidation Commission, Nihon Mining, the documentsof consultation concerning budgets for operating income and expenses, Part 1)
HCLC, Nihon Mining, DCBOIE, Part 2: Shushi Yosan Kaigisho Sono 2 (The documentof the Holding Company Liquidation Commission, Nihon Mining, the documentsof consultation concerning budgets for operating income and expenses, Part 2)
HCLC, Seika Mining, DHD: Mochikabu Kaisha Seiri Iinkai to Bunsho, Seika Kogyo,
Bocho Shiryo Tsuzuri (The document of the Holding Company Liquidation
Commission, Seika Mining, documents concerning hearing data).
HCLC, Seika Mining, UT: Mochikabu Kaisha Seiri Iinkai to Bunsho, Seika Kogyo (Thedocument of the Holding Company Liquidation Commission, Seika Mining,
untitled).
HCLC, Seika Mining, DNO, Mochikabu Kaisha Seiri Iinkai to Bunsho, Seika Kogyo,
Jomu Kantoku Kankei (The document of the Holding Company Liquidation
Commission, Mitsui Mining, documents related to normal operations).
Mitsubishi Shiryo Kan (The Mitsubishi Archives), Mitsubishi Keizai Kenkyu Jo (The
Mitsubishi Economic Research Institute)
MM-00147: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1918.
MM-00148: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1922.
MM-00150: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1924.
MM-00152: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1926.
MM-00153: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1927.
MM-00154: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1928.
MM-00155: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1929.
MM-00156: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1930.
MM-00157: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1931.
MM-00158: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1932.
MM-00159: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1933.
MM-00160: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1934.
MM-00161: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1935.
MM-00162: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1936.
MM-00163: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1937.
MM-00164: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1938.
MM-00165: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1939.
MM-00756: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1940.
MM-00757: Mitsubishi Kogyo Geppo (Monthly Report of Mitsubishi Mining), 1942.
Nihon Sekitan Sangyo Korekusyon (The Japanese Coal Industry Collection), Keio
University
COAL@C@2757: Kaku San (Each Mine), Mitsui Mining Co., Ltd., 1917.
COAL@C@2758: Kaku San (Each Mine), Mitsui Mining Co., Ltd., 1918.

29

COAL@C@6379: Kaku Tanko Kessan Kanjo Sho (Accounts of Each Coal Mine),
Mitsubishi Goshi Kaisha Shiryoka (Documentation Section of Mitsubishi Limited
Partnership), 1894-1900.
COAL@C@6380: Kaku Kozan Kessan Kanjo Sho (Accounts of Each Mine),
Mitsubishi Goshi Kaisha Shiryoka (Documentation Section of Mitsubishi Limited
Partnership), 1899-1901.
COAL@C@6381: Kaku Kozan Kessan Kanjo Sho (Accounts of Each Mine),
Mitsubishi Goshi Kaisha Shiryoka (Documentation Section of Mitsubishi Limited
Partnership), 1906-1908.
COAL@C@6382: Kaku Kozan Kessan Kanjo Sho (Accounts of Each Mine),
Mitsubishi Goshi Kaisha Shiryoka (Documentation Section of Mitsubishi Limited
Partnership), 1909-1911.
Ban Coal Mining, Business Reports, vols. 2-16.
Mitsui Mining, Business Report, vols. 62-72.
Mitsubishi Mining, Business Report, vols. 56-59.
Seika Mining, Business Report, vols. 37-41.
Sumitomo Ban Coal Mining, Business Reports, vols. 17-25.
SWNCC, 150/4: The State-War-Navy Coordinating Committee, Memorandum for the
Secretary of State, Politico-Military Problems in the Far East: United States Initial
Post-Defeat Policy Relating to Japan.
Secondary source
Asaba, J. (1956) ‘Kigyo Kaikei Gensoku Settei ni itaru Genjitsuteki Katei (The realistic
process to establish the Business Accounting Principles’, Gendai Keiei Kaikei
Koza—Sengo Nihon no Keiei Kaikei Hihan— Dai 3 Kan (Contemporary Study on
Business Administration and Accounting: a Critic of the Business Administration
and Accounting in Postwar Japan, Vol. 3), Toyo Keizai Shimpo, Tokyo, Japan.
Chiba, J. (1992) ‘Shokosho Junsoku’ no Shakaiteki Rekishiteki Kino (The social andhistorical significance of the ‘Working Rules for Financial Statements’), Keizai to
Keizaigaku (Economy and Economics), Tokyo Metropolitan University, (71): 1-17.
Chiba, J. (1998) Nihon Kindai Kaikei Seido—Kigyo Kaikei Taisei no Hensen— (Japan’sModern Accounting System: The Development of Business Accounting System),
Chuo Keizai, Tokyo.
Chiba, J. (2010) ‘Sengo ‘Kigyo Kaikei Kijunho’ Koso no Keisei to Hokai (Thedesigning and collapse of Corporate Accounting Law in Japan after the Second
World War)’, Keizai Shirin (Collection of Articles issued by the Department of
Economics, Hosei University), 78(1): 113-141.
Cohen, J. B. (1949) Japan’s Economy in War and Reconstruction, University of
Minnesota Press, Minneapolis.
The GHQ of Allied Powers (1947) ‘Instructions for the Preparation of Financial
Statements of Manufacturing and Trading Companies’, in Arai, K. (ed.) (1989)
Nihon Kaikei Kansa Kihan Keisei Shiryo (Historical Materials on the Formation of
the Accounting and Auditing Institutions in Japan), Chuo Keizai, Tokyo, Japan:
188-219
The Holding Company Liquidation Commission (1973) Nihon Zaibatsu to sono Kaitai(The Japanese zaibatsu and its demolition), The Holding Company Liquidation
Commission, Hara, Tokyo.
30

Hisano, H. (1987) Wagakuni Zaimu Shohyo Seido Seiseishi no Kenkyu (Historical
Research on Practices and Regulations of the Accounts in Japan), Gakushuin
University, Tokyo.
Hosoya, M. (1998) GHQ Nihon Senryoshi 29 Keizairyoku no Shuchu Haijo (TheHistory of Japan Occupation by GHQ 29 Decentralization of Economic Power),
Nihon Tosho Center, Tokyo, Japan.
Kasai, M. (2010) ‘Kado Keizairyoku Shuchu Haijoho to Toyota Jidousha Kogyo ni
kansuru Shiryo (Law for the Elimination of Excessive Concentration of Economic
Power and archives concerning Toyota Motor Corporation)’, Nagoya Gakuin
Daigaku Ronshu (Collection of Articles issued by Nagoya Gakuin University),
Shakai Kagaku hen (Part of Social Science), 47(1): 157-168.
Kawano, M. (1987) Zaimu Shohyo Junsoku no Hyoka to Eikyo (The impact of theWorking Rules for Financial Statements: the evaluation), in Kurosawa, K. (ed.)
Wagakuni Zaimu Shohyo Seido no Ayumi (The Development of Financial Statement
System in Japan), Yushodo, Tokyo: 23-8.
Kubota, H. (2002) ‘So-shireibu ‘Shijisho’ (1947 nen) ni miru Senzen no Nihon-gata
Kaikei (the Japanese styled accounting in the prewar period as seen in the‘Instruction’ issued by the General Headquarters), Hikone Ronso (Collection of
Articles) (336): 29-52.
Kubota, H. (2005) Obei Seido no Ishoku to Nihon-gata Kaikei Seido (TheTransplantation of the Western Systems and the Japanese styled Accounting System),
Shiga University.
Kubota, H. (2008) ‘Nihon-gata’ Kaikei Kisei no Hensen (Development of the ‘Japanesestyled’ Accounting Regulation), Chuo-Keizai, Tokyo.
Kurosawa, K. (1979) ‘Shiryo—Nihon no Kaikei Seido—(3) (Historical documents:
accounting system in Japan (3))’, Kigyo Kaikei (Business Accounting), 31(3):98-101.
Kurosawa, K. (1987) Zaimu Shohyo Seido Hattenshi Josetsu (Introduction to thedevelopment of financial statement system in Japan), in Kurosawa, K. (ed.)
Wagakuni Zaimu Shohyo Seido no Ayumi (The Development of Financial Statement
System in Japan), Yushodo, Tokyo: 7-21.
The Ministry of Commerce and Industry (1934) Working Rules for Financial
Statements, Ministry of Commerce and Industry.
Ministry of Finance (Fiscal History Division) (ed.) (1957) Showa Zaisei Shi (Fiscal
History in Showa-Era), vol.11 Kinyu (Finance), Toyo Keizai, Tokyo.
Mitsui Mining Co., Ltd. (1990) Otokotachi no Seiki—Mitsui Kozan no Hyakunen (Men's
Century: A Hundred Year of Mitsui Mining), Mitsui Mining Co., Ltd.
Mitsubishi Mining and Cement Co., Ltd. （1976）Mitsubishi Kogyo Shashi (The Historyof Mitsubishi Mining Co., Ltd.), Mitsubishi Mining and Cement Co., Ltd.
Miyajima, H. (2004) Sangyo Seisaku to Kigyo Tochi no Keizaishi—Nihon Keizai Hatten
no Mikuro Bunseki— (Economic History from the Viewpoints of Industrial Policy
and Corporate Governance: The Micro-based Analysis of the Development ofJapanese Economy), Yuhikaku, Tokyo.
Murase, G. (1954) ‘Nichi Ei Bei Sangoku niokeru Kaikei Gensoku Seitei no Yurai (Theorigin of the establishment of accounting principles in three countries of Japan,
Britain and the US), Kigyo Kaikei (Business Accounting), 6(1): 111-113.

31

Muto, S. (1952) ‘Zaibatsu Kaitai Seisaku no Kiban to sono Hensen – Nihon Keizai no
Juzokuka to Gunjika heno Josetsu – (The foundation of the policy to dissolve thezaibatsu combination and its change: an introduction to the subordination andmilitarization of Japanese economy)’, Ritsumeikan Keizaigaku (Collection of
Articles issued by the Department of Economics, Ritsumeikan University), 1(5/6):
222-248.
Noguchi, M. and Nakajima, M. (2008) ‘Working rules for financial statements’ andpre-Second World War financial reporting of Japanese industrial firms: the case ofchemical firms’, Accounting History, 13(3): 281-311.
Okazaki, T. (1993) The Japanese firm under the wartime planned economy, Journal of
the Japanese and International Economies, 7: 175-203.
Okazaki, T. (1994) Nihon ni okeru Corporate Governance no Hatten—Rekishiteki
Perspective— (The development of corporate governance in Japan: a historicalperspective), Research on Finance (Kinyu Kenkyu), Research Institute of Finance,
13(3): 59-95.
Okazaki, T. (1998) Zaibatsu Kaitai, Shuchu Haijo Kankei Shiryo: Keizai Antei Hombu
Sengo Keizai Seisaku Shiryo (The Documents concerning Dissolution of Zaibatsu
and Elimination of Excessive Concentration: the Documents concerning the
Economic Stabilization Board’s Postwar Economic Policy), Nihon Keizai Hyoron,
Tokyo Japan.
The Shoup Misslon (1949) Report on Japanese Taxation by the Shoup Mission, vol. 4
Appendix D – Administration of Individual & Corporate Income Taxes, General
Headquarters, Supreme Commander for the Allied Powers, Tokyo Japan.
Editorial Department of Sangyo Keiri (Industrial Accounting) (1949) ‘“Kogyo Kaisha
oyobi Shoji Kaisha no Zaimu Shohyo Sakusei ni kansuru Shijisho” Kaisetsu (Anexplanation for the Instruction for the Preparation of Financial Statement of
Manufacturing and Trading Companies)’, Sangyo Keiri (Industrial Accounting),
9(6): 58-60.
Shima, K. (2000) ‘Sengo Keizai no Anteika to Kaikei no Seidoka – Sengo Nihon no
Kaikei Seido Keisei Katei – Sono 2 (Stabilization of postwar economy andinstitutionalization of accounting: The Formation Process of Japanese Accounting
Systems : After World War II, Part 2)’, Keiei Keiri Kenkyu (The Journal of theBusiness Research Institute, Takushoku University), (64): 47-77.
Sumitomo Metal Mining, Co., Ltd. (1991) Sumitomo Besshi Kozan Shi (The History of
Sumitomo Besshi Mine), vol. 2, Sumitomo Metal Mining, Co., Ltd.
Suzuki, T. (2007a) ‘Accountics: impacts of internationally standardized accounting on
the Japanese socio-economy’, Accounting, Organizations and Society, 32(3):263-301.
Suzuki, T. (2007b) ‘A history of Japanese accounting reforms as a microfoundation of
the democratic socio-economy: accountics Part II’, Accounting, Organizations andSociety, 32(6): 543-575.
Uchikawa, K. (1983) ‘Zaibatsu Kaitai Seisaku no Tenkan to Kigyo Kaikei Gensoku no
Setei (Conversion of the policy to dissolve the zaibatsu and the establishment of
Business Accounting Principles), Doshisha Shogaku (Collection of Articles issued
by the Department of Commerce, Doshisha University), 34(6): 657-690.
Yamada, H. (2012) GHQ/SCAP niyoru Kaisha Zaimu Hokoku ni kansuru ‘Shijisho’ no
Jikeiretsu Seiri—Keizai Kagakukyoku (ESS) Bunsho no Bunseki wo toshite (A32time-series analysis of the ‘Instruction’ for corporate financial reporting issued by the
GHQ/SCAP: focus on the documents by the Economic Scientific Section), Seigakuin
Daigaku Ronso (Bulletin of Seigakuin University), 25(1): 199-219.
Yamaguchi, F. (1998) Nihon Yusen Kaikeishi, Zaimu Kaikei Hen – Kobetsu Kigyo Kaikeishino Kenkyu – (Accounting History of Nihon Mail Steamer, Financial Accounting: Research of
the Accounting History of an Individual Firm), Hakuto Shobo, Tokyo.

Yoshida, M. (2012) ‘Sengo Shoki niokeru Nissan no Saiken Kiki to Haichi Tenkan (Thecrisis in reconstruction and personnel reshuffle of Nissan in the immediate postwar
period)’, Ritsumeikan Sangyo Shakai Ronshu (Collection of Articles issued by the
Department of Social Science, Ritsumeikan University), 48(2): 39-50.
Zadankai (Round table talk) (1951) ‘Kaikei Seido no evolution to revolution (Theevolution and revolution of accoungting system)’, Sangyo Keiri (Industrial
Accounting), 1(1): 101-102.

33

Table 1. Form of the balance sheet prescribed in the Instruction
AssetsI. Current assets in Japan

1. free cash on hand and in banks

II. Investments in Japan…
4. notes and bills receivable, customers
5. accounts receivable, customers
6. accounts receivable and notes receivable, officers andemployees
7. advances to vendors and affiliated companies…
12. manufacturing inventories
a. finished goods
b. partly finished goodsc. raw materials and supplies
d. work in progresse. by-product and waste
13. mercantile inventories
a. merchandise in in stockb. merchandise in transit
c. consignments-out
14. total inventories
15. other current assets
16. total current assets
1. Japanese national securities

Liabilities and net worth
VIII. Current liabilities inJapan

2. bank overdrafts
3. notes and acceptances
a. for money borrowedb. for merchandise purchased

IX. Long term liabilities inJapan

2. Japanese local government securities

III. Fixed assets in Japan

3. shares in Japanese companies
a. shares in companies where holdings exceed 10% of
total issue
b. shares in companies where holdings do not exceed 10%of total issue
c. total shares in Japanese companies…
7. mortgages and debentures
8. long term loans
a. to customers other than affiliated companies
b. to affiliated companies
9. other investments in Japan
10. total investments in Japan
1. land, at cost
2. less reserve for depletion

1. demand loans payablec. for other trade purposes
4. accounts payable, trade creditors…
8. advances from trade customers
9. employee deposits
10. dividends declared but unpaid
11. current accounts - officers and employees…
13. other taxes payable
14. accrued salaries and wages
ble15. accrued rent
16. accrued interest
17. other accrued expenses…
21 total current liabilities
1. long term bank loans
2. long term borrowing from suppliers other than affiliatedcustomers
3. long term borrowing from affiliated companies
4. mortgages and debentures outstanding
5. long term borrowing from officers and employees

X. Deferred income

XI.Liability reserves

6. other long term liabilities in Japan
7. total fixed or long term liabilities in Japan
1. rent received in advance
2. interest received in advance3. service fees received in advance
4. other deferred income…
7. total deferred income
1. reserve for taxes
2. reserve for workmen’s retirement allowance34

IV. Deferred charges and prepaid
expenses

3. land (net book values)
4. buildings, at cost
5. other structures, at cost
6. machinery, tools, and equipment, at cost
7. office furniture and fixtures, at cost
8. delivery equipment, at cost…
11. total depreciable assets, at cost
12. less reserves for depreciation
13. depreciable assets, net book value
14. construction in process, at cost
15. total fixed assets in Japan, net
1. unamortized discount on debentures

XII. Other liabilities in Japan

XIII. Overseas liabilities

Total liabilities
XIV. Net worth

V. Intangible assets

VI. Other assets in Japan

VII. Overseas assets

1. capital stock paid ina. capital stock authorized

2. unamortized interest during construction
3. unamortized organization expense
4. unamortized experimental and research expense
5. unamortized development expense
6. prepaid rent
7. prepaid insurance premiums
8. prepaid interest…
11. total deferred charges and prepaid expenses
1. patent rights and trademarks
2. surface rights
3. leaseholds
4. goodwill…
7. total intangible assets
1. long term loans to officers and employees
2. balance due company on war indemnities claims…
6. total other assets
1. foreign government securities
2. foreign corporation securities
3. fixed assets (cost less depreciation)
4. cash5. inventories
6. accounts and notes receivable
7. other operating assets
8. all other assets located outside Japan
9. total foreign assets

3. reserve for officers’ retirement allowance
4. other liability reserves…
7. total liability reserves
1. guaranty money…
4. total other liabilities in Japan
1. mortgages and debentures held by foreign creditors
2. other obligations to foreign creditors
3. total liabilitiesto foreign creditorsb. deduct uncalled capitalc. capital stock paid in
2. surplus reserves
a. reserves for expansion
b. reserved for equalizing
dividends
c. legal reserved. other surplus reserves…
f. total surplus reserves
3. accumulated undivided profits
Total net worth
Total liabilities and equity capital

35

Total assets

Source: GHQ of Allied Powers 1947, pp. 207-213.

36

Table 2. Balance sheet of Mitsui Mining dated 10 August 1946
100,000,000.00223,389,697.3
9Unpaid capital
Fixed assets

Shareholders'equity433,267,245.7
7
paid-in capital

400,000,000.
00
27,315,000.00Construction in progress

34,836,449.29

legal reserves

Long term investments

231,635,385.0
3

special reserves

34,912.80

pension reserves

341,714.16

negotiable securities andinvestments
long term loans

216,600,161.
42
15,035,223.6
1

employee welfare reserves
224,888,920.4
8

Inventories
raw materials
products

short term loans
cash in hand and deposits

484,041,368.6
2debentures
long term debts

388,466,890.8
8advances to affiliatedcompanies

Long term
liabilities

129,929,505.
44
94,959,415.0
4

Quick assets
82,063,689.2
2240,098,622.
74
66,304,578.9
2

5,575,618.81

99,200,000.00384,841,368.
62

Short term
liabilities

446,427,991.4
9loans from affiliated companies
short term debts

16,106,748.0
4430,321,243.
45

Provisions

54,734,922.07

Special assets

13,237,758.33

provisions for employee
pensions

29,895,197.4
5

Temporary advances

186,840,826.7
4

provisions for taxes

1,273,045.84

Losses brought forward from theprevious term

8,718,300.63

provisions for special purposes

21,721,208.4
8

Net loss for the current term

6,457,299.18

provisions for damage
compensation

1,845,470.30

Total

1,418,471,527.
95

Total

1,418,471,527.
95

Source: HCLC, Mitsui Mining, DNO, part 1.

37

Table 3. Detailed income statement information for the first half of 1946 of Mitsui Mining
Sales
Location

Product

ProductionSales for thecurrent term
volumeCoal

Coal sold in the
production place
unit
price

amount

251.6
39
89.81
9

125,665,622.75
1,678,905.20

volumecoal

525,589.9
3

499,388.50

Aso mining

limonite

20,512.00

18,692.00

total
coal

760,363.0
0216,530.00

charcoal

6,555.00

6,555.00

406.6
55
265.5
30

by-product
total
coal

89,632.00

71,035.00

coal

162,416.0
0

141,044.10

coke

2,179.10

2,500.10

483.9
18

total
Sunagawa
miningamountsales made from theprevious production

22,023.93

214.
872

4,732,3
35.90

10,952,298.57

141,350,257.22
1,678,9
05.20

366.8
40
688.9
59

127,344,527.95
88,052,931.15
1,740,3
52.50
814,187.48
90,607,471.1334,375,142.1334,375,142.1351,740,580.96
1,722,4
66.60

41,932.00

224.
998

17,327.00

211.
555

33,199.00

217.
000

4,732,335.90
9,434,650.50

9,434,650.50
3,665,608.50
3,665,608.50
7,204,1
83.00

10,952,298.57
3,524,409.44

3,524,409.44
1,494,066.76
1,494,066.76
983,680.77

143,029,162.42
101,011,991.091,740,3
52.50
814,187.48
103,566,531.07
39,534,817.3939,534,817.3959,928,444.73
1,722,4
66.60

iron orecoal

69,614.00

56,879.00

380.5
35

total
Shinbibai
mining704,610.48

104,176.97

104,303.76

142,159,044.671,678,947.76
13,921,
197.64
157,759,190.072,760.602,760.60104,042,400.79
39,604,377.2239,604,377.22

coal

20,784.00

22,939.00

227.2
05

total
Total ofcoal section
Mital

ton

Kamiokamining9,212.920(monme)3,002.795
(kin)

gold
silver

42.56
13,921,070.85
14,625,723.89

126.79475,869.72

475,869.72
66,799.23
66,799.23
1,612,833.
49

829.93318.50total
Ashibetsu
minig

Total
incomeTotal
production
cost

Total
expenses

Net
income134,210,748.92
1,588,1
17.01
11,684,661.98147,483,527.91

7,948,2
95.75
90,830.
75
2,236,5
35.66
10,275,662.16

411,423.
92
146,602.
27
146,602.
27
100,363.
07

100,682,869.06
37,301,
007.2137,301,
007.21

3,359,531.73
2,303,370.01
2,303,3
70.01

100,363.
07
29,576.8
129,576.8
161,950,255.32
24,113,086.94
24,113,086.94
5,452,2
19.90
5,452,2
19.90
376,982,966.34

1,314,6
37.93
1,917,180.80
1,917,180.80
305,691.13
305,691.13
19,476,073.76

Non-operati
ng expenses

Interest
payment

3,591,720.7
4868,681.
56

total
unit
price

Miike
miningYamanominingInterest
incometon

MiikeminingTagawaminingMiscellane
ous income

5,805.255

electric
lead756.170

737.484lead

849.900

1,192.000

310.0
00
5,977
.183
2,304
.252

53,463,047.56
21,644,450.27
21,644,450.27
5,211,855.50
5,211,855.50
332,646,494.54

13,234.75

964.00

226.
000

193.
000

7,204,1
83.00
2,991,053.50
2,991,0
53.50
186,052.00
186,052.00
28,213,883.40983,680.77
395,167.37
395,167.37
341,508.51
341,508.51
17,691,131.42

61,650,911.3325,030,671.1425,030,671.14
5,739,4
16.01
5,739,4
16.01
378,551,509.36

1,613,151.
99

829.93999,029.94

566.66

999,029.94

566.66

18,495.02
18,495.02
17,799,069.79

108,460.95

63,264,893.2526,030,267.74
26,030,267.74
5,757,9
11.03
5,757,911.03
396,459,040.10

129,750,3
46.62
1,586,995.
45
11,631,60
1.77
142,968,9
43.84
95,749,77
1.24
1,551,406.
74
1,095,290.
60
98,396,46
8.58
37,154,40
4.94
37,154,40
4.94
59,332,91
8.10
1,196,085.
05
125,756.7
560,654,75
9.90
23,926,36
8.65
23,926,36
8.65
5,360,682.
44
5,360,682.
44368,461,6
28.35

1,025.60

95.96

3,592,746.3
41,874,976.5
653,060.2
1921,837.
73
411,423.
92

1,874,976.5
6

1,195,132.3
5

1,195,132.3
5
157,141.48
157,141.48
87,749.92

3,787.54

87,749.92

3,787.54

6,907,746.6
51,613,59
1.34

70,758.
66
1,799,6
29.05
4,408,076.96
2,746,6
68.75

38

zinc

6,297.200

7,379.738

pure zinc

3,100.050

1,569.000

1,295
.970
43.47
5

7,067
.514
5,606
.498
2,675
.807
7,741
.988
5,775
.248

9,563,918.51
68,211.
92
996,827.77
19,654,091.62
9,991,2
03.01
8,783,6
04.72
951,945.00
10,433,343.03
233,320.00

otherstotal
Miikesmeltermoltenzinc
electrolyticzincelectric
leadgalvanizediron

1,076.740

1,413.680

898.640

1,566.683

340.800

355.760

946.566

1,347.631

other iron98%
sulfuricacid
phosphoricore

40.400819.605

2,019.064

480.9
03

970,974.11

609.346651.392

1,217
.076

738.366

137.574

1,169
.684

792,793.82
3,152,204.39
35,309,388.08160,918.04

4,417.421

4,780.672

501.3
84

2,396,951.80

790.659933.169

68.548362.549

3,502
.652
715.0
40

26.71
0
10,60
7.000
2,400
.000

3,268,5
66.50
259,236.90
5,140.006,090,8
13.24
21,225.
21
2,114,4
63.02
182,400
.00

494.0
00

228,675.56

otherstotal
Hikoshima
smelterdistillated
zinc
98%
sulfuricacid
zincsulfatebrickotherstotal
Hibi
smelterconsignme
ntelectrolytic
coppercoppersulfate98%
sulfuricacid
56%
sulfuricacid

794.654185.256199.345156.040

76.000462.906

silverelectrolytic
copper

618,989.21

35,309,388.08

340,777.48

6,090,8
13.24

787,464.03

2,558,998.87

136,366.44

10,241.
50

20,283,322.33

21,619,44
3.69

3,694,993.4
4

68,866.6
425,383,303.77-5,099,981.4435,650,165.5625,386,52
3.60

6,441,258.3
041,620.9
731,869,402.873,780,7
62.69

912.896,879,1
90.16

6,897,686.
36

698,145.89

20,073.1
87,615,905.43-736,715.27

1.02

2,695,366.33

7,303,085.
32

329,938.57

4,203.08

7,637,2
26.97-4,941,860.64

12,235.
08

total
Takehara
smelter

19,654,091.625009.385(kin)

7,930.810
794.654

309.0
01
78.00
0

2,558,998.87
2,450,6
32.36
61,983.
21

39

electric
lead185.256199.346

gunmetal

464.120

1,671.204

others

74.34641.950

588.0
00
65.00
0
7,500
.000

total
Total ofmetal
section117,215.45
112,201.31
314,625.00
3,056,6
57.33

3,056,657.33

36,440.45

66,669,949.14

66,669,949.14

1,920,037.
61

9,129,825.98
9,129,8
25.98
746,141.19
746,141.19

9,129,825.98
9,129,8
25.98
746,141.19
746,141.19

9,875,967.17

9,875,9
67.17

11,155.
41

3,093,097.78

2,345,983.
46

2,920,721.5
1

1,923.43

5,268,628.40-2,175,530.62

68,601,
142.1663,552,72
2.43

14,085,057.
71

136,687.
30

77,774,467.44-9,173,325.289,552,1
85.15
9,552,1
85.15
746,776.19
746,776.19

6,730,902.
98
6,730,902.
98
548,985.5
2548,985.5
2765,883.49

8,218.74

765,883.49

8,218.74

7,505,005.21
7,505,005.21
550,535.10
550,535.102,047,1
79.94
2,047,1
79.94
196,24
1.09
196,24
1.09

10,298,961.34

7,279,888.
50

8,055,540.31

2,243,4
21.03
275,95
6.67-6,824,449.23-12,454,976.13-19,003,468.69

Factory
Miikefactorymachineryfor mining

total
Hioki
factory

grindlingstone

27.66719.957

37,38
7.650

total
Total offactory
sectionHeadquarters

investment
relatedfinancerelated422,359.17
422,359.17
635.00635.00422,994.17

total

1,132,149.
72

746,406.34

345,997.76
664,338.10
868,220.20
1,878,5
56.06

Total ofheadquarters

1,132,149.
72

746,406.34

1,878,5
56.06

13,477,63
6.56

21,274,251.29

866,022.70

477,237,699.66

452,771,8
75.84

263,929.52

expenses

Grand Total

82,068.
24
664,338.10

868,220.20

409,192,410.85

28,213,883.4017,691,131.42

455,097,425.67

1,549.58
1,549.58
765,883.49

9,768.32

13,323,19
6.33
13,477,63
6.56

7,404,38
8.19

70,041.
09
7,488,787.33
13,323,
196.33
20,882,024.75

7,404,38
8.19

20,882,024.75-19,003,468.69

9,164,43
5.15

483,694,998.84-6,457,299.1870,041.09
7,404,38
8.19

84,399.14

21,758,687.
85

Source: HCLC, Mitsui Mining, DNO, part 1.

40

Table 4. Detailed form of balance sheet of Mitsui Mining dated 30 September 1948
100,000,000.
00
3,002,700,53
8.11
1,625,306,74
3.00

Unpaid capital
Fixed assets
Construction in progress
Long term investments

negotiable securities
investments
long term loans

4,933,070.7
06,358,000.003,370,000.00Claims to the HCLC
Inventories

ores
warehouses
mountain and forest
products
semi-finished goods
work in progressby-products

Quick assets

advances to affiliatedcompanies
short term loans
account receivables
prepaid expenses
note receivables
deposits
cash in hand

102,642,044.44
1,157,716,0
88.90
14,431,131.
74
379,006,881.90
113,573,314.84
254,864,921.13
20,574,743.
84726,643,214.29
202,868,160.48
2,546,767,1
87.98
49,945,551.
43
3,626,710.0
0433,090,815.95
13,859,135.
57

14,661,070.7
0137,256,456.
30

Shareholders' equity

paid-in capital
legal reserves
special reserves

Long term liabilities

341,714.16

employee welfare reserves

5,575,618.8
1debentures

short term debts
loans from affiliatedcompanies
note payables
bank overdrafts
deposits received

2,042,809,12
6.79

account payables
amounts in arrear
unpaid dividends

433,267,245.
77

7,710,268,94
0.54

843,737.29

provisions for employee
pensions
provisions for taxes

695,427.76

provisions for special
purposes

17,409,956.
20

suspenses received

3,976,800,77
5.70

99,200,000.
00
7,611,068,9
40.54
100,881,809.06
7,623,613.7
72,098,021,2
92.76
41,297,787.
45
89,844,498.
79
1,297,752,2
81.91
2,562,979,9
42.28

13,864,400.
02
333,456,151.42
41,712,543.
03

advances received

Provisions

34,912.80

pension reserves

long term debts
Short term liabilities

400,000,000.00
27,315,000.
00

6,546,565,51
4.75

41

Special assets
Overseas assets
Temporary advances
Losses brought forward from theprevious term
Losses brought forward from the
new accountNet loss in the new account for thecurrent term
Losses brought forward from thespecial accountNet loss in the special account forthe current term
Total

provisions for damage
compensation

779,739.71
197,637,543.
52
1,232,069,90
7.22
15,175,599.8
11,662,518,37
8.36
733,989,519.
94
131,651,476.
96
30,045,970.5
814,903,402,8
46.70

Income brought forward from thespecial accountNet income in the special account forthe current term

Total

1,843,190.3
061,661,117.2
9118,022,864.
72
33,617,163.6
314,903,402,8
46.70

Source: HCLC, Mitsui Mining, DNO, part 2.

42

Table 5. Detailed form of income statement of Mitsui Mining for the period from 1 April to 30 September 1948
New
Coal
Metal
Other factories
Headquarters
account
IncomeSales
4,618,167,504.90
951,656,523.38 194,357,808.95
0.00
Non-operating
297,611,672.37
115,490,460.44
104,431.44
3,127,029.95
incomeTotal
4,915,779,177.27 1,067,146,983.82 194,462,240.39
3,127,029.95
Expenses
Costs of goods sold5,771,589,334.98
983,055,465.39 178,156,588.53
0.00
Cost variances-119,368,679.20
42,709,585.62-2,039,072.27
0.00
Non-operating
36,644,151.35
22,027,511.44
7,968.06
1,722,097.47
expenses
Total
5,688,864,807.13 1,047,792,562.45 176,125,484.32
1,722,097.47
Net-773,085,629.86
19,354,421.37 18,336,756.07
1,404,932.48
incomeOldaccount
Income24,982,596.02
5,355,208.64
1,619,058.75
1,660,300.22
Expenses
2,815,092.33
842,389.47
5,386,901.44 21,001,587.34
Net
22,167,503.69
4,512,819.17-3,767,842.69 -19,341,287.12
incomeTotal
5,764,181,837.23
416,333,594.20
6,180,515,431.43
6,932,801,388.90-78,698,165.85
60,401,728.32
6,914,504,951.37-733,989,519.94

33,617,163.63
30,045,970.58
3,571,193.05

Source: HCLC, Mitsui Mining, DNO, part 2.

43

Table 6. HCLC’s plan to split off Mitsui Mining into three companies each undertaking the coal in the Kyushu area, coal in the Hokkaido area and metal business
respectively(1) assets attributable to each company based on the information at the end of September 1948
assets
A company
B company
C company
Headquarter and intersection old accounts
total
fixed assets
1294626391.55 1786081104.49
77716670.10
36562342.11
3194986508.25
construction in progress
803859094.83
850910278.79
53339332.89
5089059.51
1713197766.02
long-term investments
5342584.70
4600357.71
9942942.41
owes to the HCLC
86805476.04
86805476.04
inventories
807725671.58
672671772.05
657773922.13
12467923.95
2150639289.71
monetary assets
1291731847.65 1362102511.42
259635513.51
396968602.14
41799800.50
3352238275.22
specified assets
30208.29
454058.07
242692.76
13700.97
144290.80884950.89
temporary advances
490168114.76
559065285.83
115892117.54
137954306.86
9105484.97
1312185309.96
total
4688141328.66 5231285010.65 1164660248.93
594398520.24 142455410.02 11820880518.50
unpaid capital
100000000.00
overseas assets
197637543.52
extraordinary losses
2940829215.19
provisions for extraordinary losses
90444350.55
total
15149791627.76(2) income attributable to each coal company based on the information for the first half of the period ending on 30 September 1948
A company
B company
total
quantity of coal sales
117037413958892566263sales
2409934122.08 2290676986.79 4700611108.87
sales per ton
2059.121641.01
1831.69
volume of production
1172000
13451192517119
total production cost 2787975921.30 3269411903.18 6057307824.48
cost per ton
2378.822430.57
2406.48net loss
378041799.22
978734906.39 1356776705.61
net loss per ton
319.70789.56574.79Source: HCLC, Mitsui Mining, DNO, part 2.

44

Table 7. Sectional cost calculation executed at Mitsui Mining in October 1948
cost accounting table for the lead melting and working section
amount of lead wrought 612 ton
direct departmental
costs
unit
materials

unit
price

quantum

amount

coal

kg

4.40

57,750.00

coke

kg

6.13

225,980.00

kindling

ken (length)

limestone

369.248

7.00

12,600.00

0.0114kg

112,680.00

184.118

scrap iron

kg

1.85

130,810.00

slaked lime
steel material
metal

kg
kg
kg
koku
(volume)
kwh

3.60
44.55

4,920.00

37,184.40
241,998.5
017,712.00
2,183.00
16,376.40

12.20

17,037.05

0.0199131,231.00

65,615.50
159,883.2
02,209,924.
96
1,049,460.
00
17,055.00

214.43

electric power

1,396.480.50

otherstotal
workers

staff
miscellaneous
salaries

standard
wage
extra wage
standard
wage
extra wage

person239.284,385.90

person10,588.
30

9.00

amoun
t

94.3631,800.0
0
0.33

wood

labour costs

254,100.001,385,234.
91

quantum wrought
per tonquantum wrought
per ton213.742
8.039
0.08

0.00
3,610.
99

95,295.00
2,411.00

person160.29141.0022,600.00

45totalwelfare costs

legal welfare
expensessocial welfare
employee pension
total

expensesdepreciation
freight due
travel expenses
repair costs
other expenses
total

service department costs
apportioned
production costs

1,186,821.
00

1,939.
25

52,489.00
33,737.00
33,982.00
120,208.007,893.00
37,852.00
16,573.00
222,107.8
71,843.00
286,268.8
71,323,268.
00
5,126,490.
83

196.42467.76
2,162.
20
8,376.
62

Source: HCLC, Mitsui Mining, DNO, part 3.

46

Table 8. Details of balance sheet items (classified by locations) of Mitsubishi Mining dated 10 August 1946
Locations

Main pits

Land

Buildings

Structures

Machinery

Miike mining

9,617,516.
58

6,116,799.
50

2,543,509.
39
1,620,862.
36
2,095,427.
232,233,471.
15

648,406.2
01,370,445.
95
398,899.0
5495,940.0
93,316,823.
71

43,924.38

84,815.02

650,202.1
9

365,659.5
7
172,364.5
3200,000.001,221,291.
12
3,903,019.
90
843,769.2
5

9,032,851.
75
270,704.9
4451,644.7
25,671,299.
96
2,324,940.
11
5,321,693.
53
9,311,825.
82753,224.8
46,664,506.
24
2,559,258.
58

7,625,000.
26
491,025.0
31,380,327.
19
2,080,880.
61
576,270.3
42,061,371.
30
9,447,711.
87
229,722.9
33,760,938.
47
151,834.4
5

13,131,64
1.16
158,401.6
0397,860.2
88,767,717.
74
2,815,940.
78
3,630,645.
65
3,574,441.
19
203,137.6
413,334,62
3.70
3,631,577.
49

Aso mining

16,384.44

Miike mining
Tagawa mining
Yamano mining
Sunagawa
miningAshibetsu minig
Shinbibai
miningKamiokaminingMiike smelter
Totoro factory
Hikoshima
smelter
Hibi smelter
Takehara
smelter

77,458.54

21,244.46

Vessels

384,091.40

Vehicles
1,764,373.17
169,855.7
1594,505.7
2
1,027,194.58
369,403.8
01,567,132.15
1,382,488.90

Tools, appliances andfixtures
437,820.55
5,583.65
5,807.80
384,970.21
174,479.27
182,976.19
170,198.69

529.0016,432.77

850,434.1
5

230,629.89
59,807.65

19,526.54

2,447,440.
47
2,818,427.
25
2,070,184.
13

405,510.9
31,416,300.
10
186,176.2
63,906,390.
32
2,785,796.
72
3,826,352.
30

2,505,716.
83
140,331.9
6

191,613.8
74,751,035.
35
149,181.5
4

Total
47,726,002.
97
1,111,955.3
73,862,643.3
121,846,018.
44
8,280,795.7
115,355,186.
14
29,436,961.
33
1,331,786.5
825,856,994.
21
6,574,842.7
0Intangibl
es

1,278,377.45
17,637.89
1,083,989.01
524,556.2
5205,910.8
436,945.67
2,437,213.14
221,977.0
9473,425.7
4

102,701.27
357,642.6
0109,212.69
90,645.54

8,341,838.6
1
11,632,323.
72
7,017,127.4
8

16,237.00

233,902.8
3

Miike factory
Meguro factory

67,095.77

Kushinokimining8,233.60

7,636.00

548,394.6
147,597.00

3,007,704.
38
30,358.23

3,556,098.9
977,955.23

36,571.75

36,571.75

Fukuoka branch

1,699,548.04
49,604.00
1,059,825.18
2,312,823.42

130,406.62
275,648.49
108,996.04
360,864.52

646,732.6
7

Osaka branch

1,324,626.02

1,409.70

Osawa mining

Headquarters

967,266.51

305,085.46

240,771.00
258,504.50
164,465.92

Construction inprogress

45,362.82

11,586.80

23,286.00

135,253.19

8,253,637.9
132,434.80

14,418.99

448,825.88

32,635.60

581.0060,673.00

394,461.25
153,867.70

Grand
Total
49,004,380.
42
1,129,593.2
6
4,946,632.3
2
23,337,841.
20
9,811,332.5
7
17,091,679.
85
31,923,778.
47
2,613,588.8
528,643,243.
37
6,879,928.1
6242,180.70
8,472,245.2
3
11,924,209.
21
7,126,123.5
2360,864.52
8,882,001.99602,693.58
60,673.00

3,273,153.53

150,565.08

6,829,252.5
277,955.23
187,136.83

47

Sapporo branch

92,700.00

Total ofheadquarters

688,691.6
1
1,298,685.
61
21,864,05
7.59

Overseas assets
Grand total

18,882,37
1.82

485,023.7
03,559,658.
06
10,289,82
2.04
66,222,41
1.69

80,334.00
80,334.00

30,050,04
6.43

2,617,841.
37
67,713,69
8.17

124,699.18
931,761.00

717,080.2
28,888,996.40

349,880.52
2,551,733.87

658,057.70
4,328,683.6
7
15,398,008.
94
217,105,07
6.97

79,480.00
3,503,198.61
2,116,813.97
6,284,620.42

19,826,451.27
34,836,449.29

737,537.70
7,831,882.2
837,341,274.
18
258,226,14
6.68

Source: HCLC, Mitsubishi Mining, MSM.

48

Table 9. Amount and percentage of net income from both sections of coal and metal, Mitsubishi Mining 1918-1948
Period
1st half of 1918
2nd half of 1918
1st half of 1919
2nd half of 1919
1st half of 1920
2nd half of 1920
1st half of 1921
2nd half of 1921
1st half of 1922
2nd half of 1922
1st half of 1923
2nd half of 1923
1st half of 1924
2nd half of 1924
1st half of 1925
2nd half of 1925
1st half of 1926
2nd half of 1926
1st half of 1927
2nd half of 1927
1st half of 1928
2nd half of 1928
1st half of 1929
2nd half of 1929
1st half of 1930
2nd half of 1930
1st half of 1931
2nd half of 1931
1st half of 1932
2nd half of 1932
1st half of 1933
2nd half of 1933

Coal section (yen)6,641,000.00
7,048,000.00
6,011,000.00
4,618,000.00
6,950,000.00
5,249,000.00
1,748,000.00
799,000.00
1,306,000.00
1,197,000.00
1,356,000.00
813,000.00
306,000.00
422,000.00-191,000.00
715,000.00
1,516,000.00
2,200,000.00
2,680,000.00
2,705,000.00
1,780,000.00
2,130,000.00
1,658,000.00
1,953,000.00
1,662,000.00
1,245,000.00
864,000.00
1,130,000.00
883,000.00
1,542,000.00
2,720,000.00
3,734,000.00

Percent
90.87%
108.92%70.64%
66.42%
94.92%
109.26%112.20%121.61%128.42%95.76%
90.88%
102.14%26.06%
26.54%-10.71%42.46%
60.98%
74.98%
74.20%
66.23%
56.22%
52.78%
47.32%
66.79%
85.54%
77.76%
59.88%
44.95%
26.13%
23.93%
36.86%
45.19%

Metal section (yen)667,000.00-577,000.00
2,498,000.00
2,335,000.00
372,000.00-445,000.00-190,000.00-142,000.00-289,000.00
53,000.00
136,000.00-17,000.00
868,000.00
1,168,000.00
1,974,000.00
969,000.00
970,000.00
734,000.00
932,000.00
1,379,000.00
1,386,000.00
1,906,000.00
1,846,000.00
971,000.00
281,000.00
356,000.00
579,000.00
1,384,000.00
2,496,000.00
4,901,000.00
4,660,000.00
4,528,000.00

Percent
9.13%-8.92%
29.36%
33.58%
5.08%-9.26%-12.20%-21.61%-28.42%4.24%
9.12%-2.14%
73.94%
73.46%
110.71%57.54%
39.02%
25.02%
25.80%
33.77%
43.78%
47.22%
52.68%
33.21%
14.46%
22.24%
40.12%
55.05%
73.87%
76.07%
63.14%
54.81%

Period
1st half of 1934
2nd half of 1934
1st half of 1935
2nd half of 1935
1st half of 1936
2nd half of 1936
1st half of 1937
2nd half of 1937
1st half of 1938
2nd half of 1938
1st half of 1939
2nd half of 1939
1st half of 1940
2nd half of 1940
1st half of 1941
2nd half of 1941
1st half of 1942
2nd half of 1942
1st half of 1943
2nd half of 1943
1st half of 1944
2nd half of 1944
1st half of 1945
2nd half of 1945
1st half of 1946
2nd half of 1946
1st half of 1947
2nd half of 1947
1st half of 1948

Coal section (yen)3,884,000.00
4,322,000.00
5,082,000.00
5,233,000.00
5,019,000.00-635,000.00
5,364,000.00
7,747,000.00
11,163,000.00
10,258,000.00
8,072,000.00
7,289,000.00
3,427,000.00
7,904,000.00
5,205,000.00
9,268,000.00
7,402,000.00
8,643,000.00
7,056,000.00
9,020,000.00
356,000.00
6,977,000.00
13,072,000.00-23,170,000.00-21,458,000.00-346,400,000.00-239,556,000.00-800,364,000.00-1,182,903,000.00

Percent
47.37%
51.92%
44.59%
46.60%
44.22%-8.62%
34.39%
43.79%
51.76%
54.45%
48.77%
52.00%
32.67%
64.80%
50.62%
57.50%
48.39%
58.75%
46.65%
46.76%
2.28%
40.46%
69.48%
38.46%-441.25%94.82%
102.48%104.34%102.94%

Metal section (yen)4,315,000.00
4,002,000.00
6,314,000.00
5,996,000.00
6,331,000.00
7,998,000.00
10,234,000.00
9,945,000.00
10,403,000.00
8,583,000.00
8,479,000.00
6,729,000.00
7,064,000.00
4,293,000.00
5,078,000.00
6,850,000.00
7,895,000.00
6,069,000.00
8,070,000.00
10,270,000.00
15,226,000.00
10,267,000.00
5,742,000.00-37,077,000.00
26,321,000.00-18,920,000.00
5,789,000.00
33,302,000.00
33,735,000.00

Percent
52.63%
48.08%
55.41%
53.40%
55.78%
108.62%65.61%
56.21%
48.24%
45.55%
51.23%
48.00%
67.33%
35.20%
49.38%
42.50%
51.61%
41.25%
53.35%
53.24%
97.72%
59.54%
30.52%
61.54%
541.25%
5.18%-2.48%-4.34%-2.94%

Source: HCLC, Mitsubishi Mining, part 2.

49

-2,000,000.00
1st half of 1918
1st half of 1919
1st half of 1920
1st half of 1921
1st half of 1922
1st half of 1923
1st half of 1924
1st half of 1925
1st half of 1926
1st half of 1927
1st half of 1928
1st half of 1929
1st half of 1930
1st half of 1931
1st half of 1932
1st half of 1933
1st half of 1934
1st half of 1935
1st half of 1936
1st half of 1937
1st half of 1938
1st half of 1939
1st half of 1940
1st half of 1941
1st half of 1942
1st half of 1943
1st half of 1944
1st half of 1945

Figure 1. Amount of net income from both sections of coal and metal, Mitsubishi Mining 1918-1945
18,000,000.00
16,000,000.00

14,000,000.00

12,000,000.00

10,000,000.00

8,000,000.00

6,000,000.00
Coal section

4,000,000.00
Metal section

2,000,000.00

0.00

Source: HCLC, Mitsubishi Mining, part 2.

50

Figure 2. Comparisons on the frequency and magnitude of cancellation and duplication in the variations of net income from both sections of coal and metal,
1918-1943
3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00

cancellation
duplication

1,000,000.00

1st half…

2nd half…

1st half…

2nd half…

1st half…

2nd half…

1st half…

2nd half…

1st half…

2nd half…

1st half…

2nd half…

1st half…

2nd half…

1st half…

2nd half…

0.00

1st half…

500,000.00

Source: HCLC, Mitsubishi Mining, part 2.

51

Table 10. Detailed income information for both sections (classified by locations) of Seika Mining for the first half
Income information of the Metal Section
Location

Sales

Cost of goods
soldProfit on
sales

Tokyo
Osaka

Inaushi mine

copper concentrates, iron sulphide concentrates,
lead concentrates

991,511,000. 1,020,363,000
00.00
81,989,000.0
47,188,000.00
013,297,000.0
8,131,000.00
034,900,000.0
30,510,000.00
0Omiya mine

copper concentrates, iron sulphide concentrates

3,146,000.00

7,662,000.00

Tosawa minegold, silver, silicic acid

408,000.00

1,177,000.00

Yoichi mine

copper concentrates

1,907,000.00

3,151,000.00

wood works, public works

51,639,000.0
46,220,000.00
0sales of daily necessities and miscellaneous items

9,309,000.00 11,939,000.00

Besshi mining
Kunitomi
miningKonomaiminingBesshiconstruction
Besshifurnishing
Besshibatteries

copper, gold, silver, sulfuric acidcoppergold, silver, silicic acidbattery production

Total

919,000.00

2,304,000.00

1,189,030,00 1,178,649,000
0.00
.00

Operating income andIncome fromexpenses
operation-1,453,000.00-1,453,000.00
178,000.00
178,000.00-28,851,00
0.00
34,800,000.00
5,166,000.
00
4,389,000.
00-4,516,000.
00-769,000.00-1,244,000.
00
5,419,000.
00-2,629,000.
00-1,385,000.
00
10,380,000.00

6,615,000.00-22,235,000.00-584,000.00

34,216,000.00-457,000.00

4,709,000.00-8,150,000.00-3,760,000.00-705,000.00-5,221,000.00-1,218,000.00-1,988,000.00-23,000.00-1,267,000.00-3,652,000.00

1,766,000.00

1,786,000.00-843,000.00-2,121,000.00-3,506,000.00-9,785,000.00

595,000.00

Income information of the Coal Section
Tokyo
Osaka
Kyushu branch
Hokkaido branch-3,012,000.00
57,000.00-3,012,000.00
57,000.00

38,000.00

38,000.00

52

Tadakuma mining
Senryu mining
Karatsu minig
Akabira mining
Ponbetsu mining
Total

coal
coal
coal
coal
coal

167,195,000.00
237,621,000.00 -70,426,000.00 -64,372,000.00 -134,798,000.00
189,044,000.00
289,516,000.00 -100,473,000.00 -91,726,000.00 -192,199,000.00
45,291,000.00
84,960,000.00 -39,669,000.00 -36,385,000.00 -76,054,000.00
500,200,000.00
582,991,000.00 -82,790,000.00 -72,000,000.00 -154,790,000.00
265,390,000.00
406,610,000.00 -141,220,000.00 -150,217,000.00 -291,437,000.00
1,167,122,000.00 1,601,702,000.00 -434,579,000.00 -417,617,000.00 -852,196,000.00

Source: HCLC, Seika Mining, DHD.

53

Table 11. Detailed form of balance sheet of Seika Mining dated 30 September 1948 (new account)debit

Fixed assets
landstumpagebuildings
structures
main pits
machineryvessels
vehiclestools, appliances andfixtures
Intangibles
mining rights

creditmetal
40,997,437.
23
4,308,099.1
4
19,156.20
14,582,886.
57
5,062,870.1
21,002,703.1
911,549,331.
31
1,877,188.002,063,946.8
3531,255.87
3,702,906.4
53,702,906.4
5development costs
Initial expenses
initial expenses for metalbusiness
initial expenses for coalbusiness

47,017,264.
22
47,017,264.
22

23,689,648.
48

Long term investments

coal
617,244,92
3.96
8,663,865.2
6360,837,66
2.56
52,281,585.
15
101,979,31
8.39
58,945,506.
15

total
658,242,36
1.19
12,971,964.
40

Long term
liabilities

19,156.20

Short term
liabilities

436,240,31
6.98
7,121,673.5
2375,420,54
9.13
57,344,455.
27
102,982,02
1.58
70,494,837.
46
1,878,181.0031,053,877.
12
6,077,319.0
3
13,540,562.
66
10,802,974.
21
2,737,588.4
5483,257,58
1.20
47,017,264.
22
436,240,31
6.98
30,811,322.
00

1,695,362.8
05,426,310.7
2

1,949,233.2
828,862,088.
72

993.0028,989,930.
29
5,546,063.1
6
9,837,656.2
17,100,067.7
62,737,588.4
5436,240,31
6.98

capital participation

metal

long term debts

short term debts
account payables
note payables
note receivables discounted
advances received
deposits received
amounts in arrear
suspenses received
Provisions

253,870.48

long term loans

23,435,778.
00

41,000.00

41,000.00

1,057,934,8
26.34
418,399,92
7.03
79,040,967.
23
33,055,088.
50
28,053,850.
00
54,733,078.
49
22,119,440.
06
325,054,43
5.93
97,478,039.
10
45,360,633.
76

provisions for retirement
benefits

20,301,237.
18
25,058,088.
16-595,488.86

losses brought forward from theprevious term

0.00

long term investments

41,000.00

1,308.42

Profit and loss
account

net income for the current term
Suspense
account
Suspense accounts

total

41,000.00

provisions for facility repair

other provisions

coal-595,488.86
73,669,089.
37
73,669,089.
37

3,254,199,2
98.12
2,287,652,2
35.64
165,068,81
4.37
6,292,546.0
061,908.80
159,226,82
6.01
405,866,01
1.96
230,030,95
5.34
76,257,285.
63

4,312,134,1
24.46
2,706,052,1
62.67
244,109,78
1.60
39,347,634.
50
28,053,850.
00
54,794,987.
29
181,346,26
6.07
730,920,44
7.89
327,508,99
4.44
121,617,91
9.39
1,308.42

42,214,878.
39
34,042,407.
24
165,258,96
1.65
141,635,19
4.08
23,623,767.
57-173,144,59
7.50-173,144,59
7.50

62,516,115.
57
59,100,495.
40
164,663,47
2.79
141,635,19
4.08
23,028,278.
71-99,475,508.13-99,475,508.13

54

Inventories
supplies
work in progresssemi-finished goods
by-products
commodities
products
shipments
Quick assets

433,739,91
5.46
235,669,59
5.27
43,967,965.
60
11,944,655.
57
7,760,916.0
023,044,024.
04
95,889,400.
76
15,463,358.
22
537,474,66
9.72

negotiable securities
short term loans
advances
assets in process ofrecoinage
account receivables
note receivables
accounts due

5,288,298.6
5
128,980,60
3.94
5,519,639.4
7
142,819,32
2.61
58,887,700.
00
109,015,25
6.65

accrued income
prepaid expenses
deposits
cash in handassets provided for
retirement benefits
Business assets for
special purposes
Kasuga mining

4,431,801.7
977,674,777.
29
1,494,275.2
93,362,994.0
3

367,336,78
9.28
270,098,65
2.83

33,727.32
53,635,928.
73
43,568,480.
40

1,781,013,0
22.02
72,000.00
16,786,357.
45
141,614,74
9.20

183,222,55
1.02
84,020.00
466,774,41
8.07
828,176,00
0.00
16,330,659.
83
109,646,87
6.90
1,853,881.5
816,451,507.
97
1,835,132.7
81,835,132.7

801,076,70
4.74
505,768,24
8.10
43,967,965.
60
11,944,655.
57
7,794,643.3
276,679,952.
77
139,457,88
1.16
15,463,358.
22
2,318,487,6
91.74
72,000.00
22,074,656.
10
270,595,35
3.14
5,519,639.4
7
326,041,87
3.63
58,971,720.
00
575,789,67
4.72
828,176,00
0.00
20,762,461.
62
187,321,65
4.19
3,348,156.8
719,814,502.
00
1,835,132.7
81,835,132.7

55

Temporary accounts
temporary advances
Total

89,788,219.
05
89,788,219.
05
1,176,410,0
60.61

8

8

101,941,43
3.15
101,941,43
3.15
3,322,570,9
47.90

191,729,65
2.20
191,729,65
2.20
4,498,981,0
08.51

Total

1,176,410,0
60.61

3,322,570,9
47.90

4,498,981,0
08.51

Source: HCLC, Seika Mining, DHD.

56

Table 12. Forecast balance sheet at the time of the proposed separation, 1 May 1950, of Mitsui and Kamioka Mining
AssetsMitsuiKamioka
Liabilities and Equity
MiningMiningcapitalcurrent assets
cash in hand and bankshort term liabilities
624,459,680
70,731,657
deposits
advances on various
355,993,908
101,822,815
transactions
inventories
1,147,809,8
826,476,373
40
others3,153,698,2
long term liabilities
338,666,438
29
total
5,281,961,6 1,337,697,28 deferred income
57
3
investments
618,727,071
159,869 provisions
fixed assets
property,plant
and 5,812,236,8
other liabilities
163,800,011
equipment
76
machinery, vessels and 1,626,386,2
equity capital
191,799,905
vehicles45
construction in progress
1,314,096,8
202,483,747
44
others45,245,484
40,128,334
total
8,797,965,4
598,211,997
49
deferred charges and prepaid
120,635,305
3,929,733
expensesintangible assets
1,117,970
88,053other assets
88,969,436
4,700,866
total
14,909,376, 1,944,787,80 total
888
1
Source: HCLC, Mitsui Mining, DNO, part 3.

payableotherstotal

Mitsui
MiningKamioka
Mining604,815,790

584,705,175

5,190,831,7
59
5,795,647,5
49
7,601,246,3
46

536,737,791
1,121,442,96
6
165,135,000

26,341135,019,340

16,544,132

126,042,245

41,665,703

nominalcapitalreserves

1,200,000,000

60,000,000

net income
total

18,469,535
1,251,395,0
67

32,925,532

14,909,376,
888

60,000,000

1,944,787,80
1*＊Note: This total amount is not in agreement with the total of all the items listed on the liability and equity side of the balance sheet of Kamioka Mining by
540,000,000.00 yen. It becomes clear that the amount of deferred income was remarkably insufficient in comparison with the balance sheet of Kamioka Mining
released on 30 September 1950.

57

Table 13. Forecast balance sheet as of 31 December 1949 of Mitsubishi and Taihei Mining
AssetsMitsubishi
Taihei Mining
Miningcurrent assets
cash in hand and bank579022974.93
51698663.57
deposits
short term loans and note
126822338.87
50698767.65
receivables
advances on business
174673503.16
66284607.40
transactions
account receivables
1577751723.70
129114864.79
inventories
573830638.50
1338665210.22
others640534.49
7425.00
total
investments
fixed assets

property,plant
andequipmentmachinery, vessels andvehiclestools,
appliancesandfixturesconstruction in progress
total

deferredchargesandprepaid expenses
intangible assets
other assets
net loss
total
Source: HCLC, Mitsubishi Mining, part 2.

3032741713.65
714578155.31

1636469538.63
3708499.80

3283977575.52

167027627.63

1234250734.29

167087334.46

27336586.29

1792875.75

1319872059.33
5865436955.43
129315393.95

305371053.90
641278891.74
152529913.61

9365692.72
479500.00
876289634.69
10628207045.75

2881846.10
408851.24
2437277541.12

Liabilities andEquity capital
short
term
liabilities

long
term
liabilities

Mitsubishi
Mining2110168951.66

Taihei Mining

825043741.12

268719275.96962565149.37

409269878.93

3897777842.15
84100000.00
5278566950.00

1397659654.89

5362666950.00
232332.00

176646000.00

466639680.00

160744196.23

456241.60

2227690.00

nominal capital

900000000.00

700000000.00

reserves
total

434000.00
900434000.00

700000000.00

10628207045.75

2437277541.12

note payables
short term debts
account
payablesotherstotaldebenturesnote payables
long term debts
total

deferredincomeprovisions
otherliabilities
equity capital

total

719670500.00

176646000.00

58

Table 14. Balance sheet of Mitsui Mining dated 30 September 1950
debit

creditCurrent assets

8,655,640,972.55

Current liabilities

8,051,969,925.06

cash in hand and deposits

796,061,707.61

short term debts

3,850,403,286.3
1

negotiable securities

206,710,329.50

loaned securities

12,570,000.00

claims to the HCLC

150,550,206.30

claims from the HCLC

150,550,206.30

note receivables

651,963,614.82

note payables

11,500,000.00

account receivables

2,581,415,242.7
6bank overdraft

32,891,224.30

accounts due

650,821,544.96

deposits received

short term loans

91,098,743.52

account payables

351,080,797.68

amounts in arrear

194,021,060.88
1,667,487,199.1
82,037,887,649.0
2advance payments
coal
by-products

1,872,828,039.5
2
7,599,880.10

work in progress

287,991,579.72

supplies

820,813,742.56

goods in transit

138,803,552.59

stumpage

38,722,726.18

Special assets
deposits for damage
compensation

25,500,000.00

21,353,208.04

9,175,810,816.64
67,491,800.00
9,108,319,016.6
4

Provisions

117,436,625.82
provisions for retirement benefits

56,194,003.08

provisions for damage compensation

56,667,622.74

provisions for bad debts

4,575,000.00

Other liabilities
11,608,417,330.4
2

general purpose sites

94,051,041.61

long term debts

15,368.82

Fixed assets

advances received

debentures

25,515,368.82
deposits for retirement benefits

608,257.46

Long term
liabilities

9,179,264.73

rations

unpaid dividends

63,682,923.20
deposits accepted

63,682,923.20

Shareholders'equity3,448,748,990.48

mining sites

412,878,043.94

paid in capital(less depletion)-22,966,626.56

revaluation reserves

1,200,000,000.002,000,000,000.0059vessels

3,626,200,460.4
72,970,586,361.2
61,540,302,640.4
12,991,969,714.5
115,859,440.86

vehicles593,309,651.76

tools, appliances and fixtures

49,057,569.02-1,190,298,009.4
5
600,164,876.16

buildings
main pits
structuresmachinery(less depreciation)
construction in progress
Intangibles

legal reserves

28,715,000.00

voluntary reserves

5,952,245.77

income brought forward from the previous
term

10,180,890.35

net income for the current term

203,900,854.36

4,379,274.20
mining rights

4,379,274.20

Deferredcharges

50,377,734.12
development costs

50,377,734.12

Prepaid
expenses

446,973,833.74
prepaid expenses

446,973,833.74

Other assets

66,344,767.35
guarantee deposits

2,191,359.55

deposit money

13,874,877.80

guarantee deposited securities

50,278,530.00

Total

20,857,649,281.2
0

Total

20,857,649,281.2
0Source: Mitsui Mining, Business Report, vol. 72.

60

Table 15. Balance sheet of Mitsubishi Mining dated 30 September 1950
debit

credit
7,622,342,159.
38

Current assets
cash in handdeposits
negotiable securities
note receivables
claims arising from note receibables
discounted
account receivables
accounts due
short term loans
advance payments
coal
by-products
supplies
goods in transit

2,882,507.62
733,981,107.3
1702,790,454.1
1
242,656,998.001,287,115,026.43
2,509,366,957.77
200,834,721.4
0181,796,611.5
8
139,853,182.4
9968,561,284.2
44,760,714.70
481,246,599.3
824,223,059.38

7,373,935,391.
65

Current liabilities
short term debts

3,385,814,000.00

note payables

34,841,000.00

note receivables discounted
deposits received
deposits received for nation savings
associationaccount payables
amounts in arrear

1,287,115,026.43
226,385,681.7
977,788,733.38
1,033,009,806.09
1,225,326,154.03

advances received

78,041,517.30

suspenses received on commission

25,613,472.63

Long term
liabilities

6,825,676,000.
00
debentures
long term debts

57,000,000.00
6,768,676,000.00

Deferred income

2,084,380.89

work in progress

1,740,883.54

deferred income for coalstumpage

4,450,615.16
136,081,436.6
3

deferred income for by-products

273,840.00

other deferred income

12,696.70

claims to the HCLC
Special assets

89,754.17
assets provided for reserves

Miscellaneous
accounts

89,754.17

Fixed assets

77,717,315.00
deposits accepted

8,619,322,545.
92

1,797,844.19

77,717,315.00

Provisions

607,189,973.86

general purpose sites

21,528,174.02

provisions for retirement benefits

mining sites

28,150,740.53

provisions for facility repair

37,416,579.88
89,754.17

61

pits
buildings
structuresmachineryvessels
vehicles

1,180,986,217.92
2,869,310,283.83
1,324,680,137.72
1,719,884,195.79
104,930,350.4
0379,849,641.6
4provisions for depreciation

552,891,282.8
1

provisions for bad debts

16,000,000.00

provisions for vessel repair

792,357.00

Shareholders'equity1,810,624,517.
14
paid in capital

900,000,000.00legal reserves

281,400.00

tools, appliances and fixtures

49,156,579.77

revaluation reserves

construction in progress

940,846,224.3
0

net income for the current termmining rights

113,449,247.8
5Intangibles

512,170,704.2
1
398,172,412.9
3

113,449,247.85

Deferred charges

147,068,796.78
development costs
initial expenses

111,569,903.1
6
34,650,752.62

initial interests paid

848,141.00

prepaid expenses

189,713,659.9
7Prepaid expenses

189,713,659.97

Miscellaneous
accounts

5,241,414.47
guarantee deposits
deposit money

Total

4,912,425.30
328,989.17
16,697,227,578
.54

Total

16,697,227,578.54

Source: Mitsubishi Mining, Business Report, vol. 59.

62