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Since the Teijin scandal and subsequent prosecution arose from a stock sale, a brief look at customary business practices, economic conditions , joint-stock companies, and “artificial silk” is called for. Furthermore, the state of business ethics, as judged by scholars and businessmen, is presented below in order to explain the press and public willingness to believe accusations of illegal acts by the purchasers of Teijin Company stocks. Japanese capitalism was plagued with contradictions. Businessmen found it difficult to discuss profit incentives, as they claimed to work for the nation’s advancement. Yet they praised private competition while eagerly taking state aid. After the end of the nineteenth century, the ideology of the managerial elite remained about the same as that of business pioneers, as business leaders asserted that national interests came before private ones. A new element, however, entered the picture in the late Meiji era: capitalists’ concern over growing labor unrest. By the end of World War I, this concern was met by emphasizing cooperation between labor and business leaders. Some business leaders stressed harmony, and others claimed that managers, like workers, were in fact salaried employees. Business ideology of the 1920s laid stress on cooperation and contribution to national goals; almost always successful businessmen lectured against selfish striving for material gains.1 Dan Takuma, president of the Industrial Club, urged a group of young men, in 1924, to do their best no matter what their position was in an enterprise. “If you are successful in this and make some contribution to the Nation and your fellow countrymen, the sense of having contributed is your compensation. If you are fortunate, fame and wealth will be perhaps granted to you, but these compensations should come as natural by-products. They are not the ultimate aim.”2 After Dan Takuma was assassinated in 1932, his replacement as head of the National Federation of Industrial Organizations, Gò Seinosuke, noted that Chapter 2 Background of the Scandal 21 Dan “loved his business as he did his children, and he devoted his life to it. Profit-making was of secondary importance to him.”3 Makino Motojirò, president of a bank and author of several books on business practices, also stressed the difference between Japanese and Western businessmen: “Those who will do nothing except for profit do not have the true spirit of a Japanese. They have the head of a foreigner. They are detestable.”4 Although business leaders were criticized during the 1920s, widespread hostility first appeared during the world depression. In the early 1930s, civilian and military rightists targeted the zaibatsu together with the political parties; businessmen and politicians in a corrupt deal, they insisted, were subverting traditional morality and oppressing the people.5 For example, during the investigation of the Blood Pact Group (Ketsumeidan), procurators reported this view of the defendants who killed Prime Minister Inukai Tsuyoshi (May 15, 1932): “Political parties, the zaibatsu and a small privileged group attached to the ruling class . . . [are] sunk in corruption. They conspire in parties to pursue their own egoistic interests and desires, to the neglect of national defense and to the confusion of government .” Overseas national prestige is lost, “while at home the morale of the people collapses.”6 In this hostile climate, business leaders avoided explicit discussion of the profit motive more than ever.7 Newspapers and magazines, seeking to expand circulation, seldom missed opportunities to illustrate the harsh realities of capitalism or to illustrate the greedofcapitalists.Bigbusiness,forinstance,presentedthemediawithaperfect example of greed in the dollar-buying scandal of 1931. After England left the gold standard, in late September 1931, the Japanese government delayed reimposing a gold embargo for about three months. Zaibatsu banks used the interim to purchase dollars with soon-to-be-devalued yen. It is estimated that Mitsui made fifty million dollars in this manner. Public opinion was outraged.8 Economic Conditions During World War I, the economy enjoyed boom conditions accompanied by great structural changes. Nakamura Takafusa sums up this new situation concisely: “With the disappearance of European and American products from Asian and African trade, these extensive markets suddenly became wide open to Japanese products. Export volume and prices shot up. . . . A spate of new firms appeared in rapid succession; stock prices soared. . . . From its status as a debtor nation to the tune of ¥1.1 billion on Background of the Scandal 22 the eve of war . . . [Japan] transformed itself into a creditor nation with a surplus exceeding ¥2 billion.”9 Outstanding among the firms riding the economic...


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