Debate: Topic and Outline
To reinforce the discussions for YY club, I want to use the desperate struggle of the shipping industry that started between Mitsui Corporation, which was led by Eiichi Shibusawa, and
the Mitsubishi Corporation, which was led by Iwasaki at the beginning of the Meiji period as an example for predicting the development of globalization.
Akiko: First, what is Iwasaki’s impression regarding the stage of Japanese economy?
Benjamin: Iwasaki’s management principles are said to be based on Mitsubishi Company’s regulation of the Meiji 11. In short it says, “It is said that this company is a corporation, but in reality, it is an independent store that has been monopolized by Yatarou Iwasaki”.
Akiko: On the other hand, what are Shibusawa’s management principles?
Benjamin: It is capitalism where, “Japan’s feudal system changes”; similar to Saint-Simon’s principles, which he studied in France.
Akiko: If it were companies, much more than simply independent stores, it would be unavoidable to say that the overall principle is that of “Mitsubishi First”. On the other hand, Shibusawa thinks that it is important to change Japan’s economic system and establish a good capitalism.
Benjamin: When did the confrontation begin?
Akiko: Meiji 11: At that time, Iwasaki Mitsubishi was reaching a peak period. Iwasaki sent an invitation to Shibusawa to come to a banquet in Mukoujima, Sumida River. Shibusawa was cautious about this invite, but eventually accepted it and the party was held. When the banquet was in full swing, Iwasaki invited Shibusawa to come aborad a houseboat and after rowing the boat out to the Sumida River, he started a conversation. Iwasaki said, “How should we manage the company from now on?”
Benjamin: What was Shibusawa’s answer to his question?
Akiko: He replied, “As the Westerners did, the only way is to largely spread the “binding method.” The binding method is the very thing that makes the country and the citizen’s pockets wealthy.”
Benjamin: That is something that Shibusawa would say, but what was Iwasaki’s reply?
Akiko: He opposed, “However, from the binding method, many boatmen might climb the mountains.” He continued by saying, “Business means that only one intelligent person should take the lead and do the management, including that of the capital.” That is something that a Mitsubishi entrepreneur would say.
Benjamin: It seems that the opinions didn’t match with Shibusawa’s, but what did he reply?
Akiko: Shibusawa said, “I agree that you should have an intelligent person as a director, but for the binding method, collecting the funds and restoring the profit to the investor is also suitable.” Indeed, it is suitable to restore the profit from the fund that was collected from investors.
Benjamin: What did Iwasaki say about this?
Akiko: He answered, “Mr. Shibusawa, you say binding method, binding method, but that is just idealism.” “In fact, people who do business work hard, because they can manage their companies well and monopolize them for profit.” “Mr. Shibusawa, you should stop caring about the binding method and think about working with me? That way, the Japanese business world would be in our hands. Let’s work together!” This is exactly the idea of “Mitsubishi First.”
Benjamin: The last words were Iwasaki’s real intension and also the reason why he invited Shibusawa. How did Shibusawa correspond to that?
Akiko: From this, Shibusawa confirmed that Iwasaki and his ideology of capitalism was completely opposite to his. Therefore, he pretended going to the bathroom and quietly walked away from the party.
Benjamin: What was Iwasaki’s reaction?
Akiko: Iwasaki was furious and swore that he would think of some kind of revenge for that. He thought that since they were on a houseboat, Shibusawa would not be able to run away. He must have thought that Shibusawa had got him. That was the later festival. From then on, would there be a start of conflict between the two of them?
Benjamin: How did round 2 start?
Akiko: It was a confrontation between the Mitsubishi/Ookuma union and the Mitsui/Shibusawa union. The background information is that, Shibusawa, taking the lead to stop inflation, was apathetic towards Iwasaki, because the inflation rate became large as a result of Ookuma’s aggressive financing, because it was Iwasaki who had taken control behind Ookuma’s back. (I don’t like to explain this further but, at the beginning of the Meiji period, the new government made the shipping industry an experimental model of the corporation, from the capital of wealthy merchants: the direct management company, “Mail Steamer Company’s” service was poor and it lost private business against Mitsubishi. It is just like learning from the Showa period’s old national railway.)
Benjamin: How did they fight?
Akiko: To fight against Mitsubishi who monopolized the shipping industry, the Mitsui/Shibusawa union was created and established the “Tokyo Wind Sail Company.” Mitsubishi, however, tried to crush that move. The following describes the battle between the two.
(1) First there was the information war. Mitsubishi utilized the newspaper publishing company and created in a rumor article and developed a campaign as an opposition to the establishment.
(2) Also, they directly went to those wealthy merchants who participated in public subscriptions for the same company and destroyed them. Thus, round 2 led to Mitsubishi’s victory.
The Battle of Round 3: Problem with the Disposal of Government Property (Proxy War between Shibusawa and Iwasaki)
This round was about domestic political affairs and an emerging factional dispute, but I will talk about it rather briefly, because there is almost no relationship with the recent disputes between Trump and Macron.
Benjamin: How did Round 3 start?
Akiko: January, Meiji 14: The heads of the government, Ookuma, Itou, and Inoue consulted one another about the problem with the abolition of the post of Hokkaido Development Commissioner. This was about how they invested about 1 million yen per year for about 10 years and did not really achieve anything, so they decided to abolish the post of Hokkaido Development Commissioner.
- The problem was the deal with Kiyotaka Kuroda, the head of the development commissioner.
- It was a dispute over whether or not to dispose of the equipment to Tomoatsu Godai, the business man in the Satsuma clan, which the government invested 14 million yen on.
Benjamin: What was the result of the discussion?
Akiko: The decision was to dispose of Hokkaido’s government property for 3.2 million yen by annual installments, because Itou and Inoue agreed to the disposal, even though Ookuma was against it. However, even though the disposal was decided, Ookuma opposed it through publishing his series of government newspapers, “The irregular disposal is the Satsuma clan’s conspiracy!” This happened because, Iwasaki, who envisioned building a bridgehead in Hokkaido approached Ookuma about the cancellation of the decision. This eventually developed into a dispute between Ookuma/ Iwasaki versus Kuroda/ Godai Union.
Benjamin: What was the final outcome of it all?
After that, there an imperial council was held and the disposal to Godai was cancelled due to the public’s opposition to it. At the same time, the relationship with Ookuma and Mitsubishi was also criticized. Thus, it finally ended up in a tie between Ookuma and Kuroda and they both got fired from their positions. Ookuma retired and Iwasaki also lost support and they both lost their chance to be even involved in the government again as business men.
Akiko: A few days later, there was a meeting, but what was it like?
Benjamin: July, Meiji 15: Established a shipping company cooperation by having Shibusawa as the promoter and in addition, having the Tokyo Wind Sail Company as the core, 2 other companies joined. Yajiro Shinagawa, who became the Minister of Agriculture and Commerce, invested 2 million yen out of the capital fund of 6 million yen and guaranteed an annuity so he could back up the shipping cooperation. In contrast, Ookuma who resigned with Iwasaki and Mitsubishi created the Constitutional Reform Party and stressed the impossibility to establish the shipping cooperation, by mobilizing newspapers. However, the liberal party which Tooru Hoshi who was originally in the same opposition party, joined, filled its pockets through the shipping industry, and developed an anti-Mitsubishi campaign, stating “Iwasaki’s a sea goblin!” and the “Constitutional Reform Party which has a sea goblin as a financial backer is a money-powered hypocrite.” Because of this, Mitsubishi and the Constitutional Reform Party were forced to be defensive.
The fourth round: the deadly battel between Iwasaki/Mitsubishi and Shibusawa/Mitsui (dumping attack)
Akiko: How was this battle being fought?
Benjamin: In Meiji 16, a joint transportation company was established as a marine transportation industry of Mitsui and Shibusawa, while Iwasaki backed up by Mitsui was describes as a sea devil by a politician at that time named Toru Hoshi. Mitsui tried to eliminate him by dumping.
Akiko: Then why did he, being the one who attempted introducing capitalism to the Japanese economy, even try to fight against Mitsubishi by going through the trouble of dumping here?
Benjamin: Shibusawa thought the conformity doctrine was the best way of introducing capitalism to Japan. However, Iwasaki, on the contrary, thought monopoly was the best, which didn’t fit with the conformity doctrine. Because this was not only about prosperity of one company alone, but about the entire Japanese economy, he then had that deadly fight with Mitsubishi.
Akiko: So, what did “battle l” look like?
Benjamin: According to newspapers at that time, it drove mass communication so noisy and attracted much attention from the world. And the battle was taking place as follows; the shared route between Kobe and Yokohama turned into a bloody noise and mess. At first, the passenger fee was 75 yen, but it was free with a free-bee little towel caused by a crazy between. Besides, once either ship of those two started sailing, it turned into a race to reach the destination ahead of the other one. For this stupid sea race, the energy efficiency was neglected because they mainly focused on burning wood just to move their ships as fast as possible.”
Akiko: This was a completely stupid battle that had derived from being stubborn towards each other. Just as above, not only was the speed race stupid, but it was also too intensive to be held back and lasted to the very moment when either of them fell down.
Benjamin: Consequently, their deficits swelled up to thousands yen or maybe more serious.
Even during this battle, Iwasaki attempted to win the race by outperforming the opponent in finance status monopolizing the stock share of the joint transportation taking the advantage of Shibusawa’s conformity doctrine. However, he was not able to last his life as his capital fund. Meiji 18, February: He passed away at last. It was the exact “a deadly battle”.
Akiko: What did the second Iwasaki who took over from Iwasaki do then?
Benjamin: This battle didn’t come to its end yet. The successor, Yanosuke succeeded his father’ will and made it clear that he was going to continue the battle. For this, Kaoru Inoue, the minister of foreign affair finally intervened between to stop the battle. In the end, this battle ended with an even break.
Akiko: What happened to both of those two companies afterwards?
Benjamin: The government changed the president and secretary president of both and made them merge each other and attempted to make this bloody situation come to an end. The two companies merged changing its name to Japan NYK Corporation and restarted as one company.
Akiko: How big was the company?
Benjamin: The capital fund at this point: 11,000,000 yen: Mitsubishi 5,000,000 yen, Joint Transportation 6,000,000 yen.
This battle was a conflict between two types of capitalism and something they didn’t want to give in to the other. At last, the intervene by the government settled the battle.
Through the battle mentioned above, the common points with the debate between Trump and EU represented by Macron are following.
- The country first principle and the only company principle look very similar to one another.
- Free trade principle (EU) and the conformity doctrine (a fair capitalism in the entire Japan)
Akiko: President Trump gave a speech at the United Nations General Assembly in September. What was the content of his speech?
Benjamin: As we had expected, he emphasized the implementing “America First”, and in regards to his comment, the U.N. declared that the U.N. prioritizes a system of global bureaucracy and never will favorite one selected country over others.
Akiko: This remark of “America first” can be considered for the U.S. election upcoming in this November. However, does the U.S. really want to continue setting up the “U.S. first” principle by trying only to strengthen its military force (that is still at the top rank in the world) and boost the economy of itself? In lamest terms, the U.S. can do whatever it wants due there is no other opposing power that is strong enough in comparison to beat it. Blatantly ignoring the U.N., the U.S opposes the U.N. if it faces any kind of inconvenience. With this attitude towards other countries, how can the U.S. be regarded as a democracy? What is important is how we exercise “soft power.” This is what Dr. Nai, who was a consultant during a previous U.S. democratic period, used to say and what was a common perception among other experts.
Benjamin: The easy and simple example is its withdrawal from the Paris Agreement. Despite the fact that U.S. was a country that generated the biggest amount of CO2, it withdrew. It was nothing but a selfish action on the U.S’s part. As a result of this, there was a gained benefit. The U.S. just took the best advantage out of it.
Akiko: The result of the U.S. withdrawal from the Paris Agreement will likely cause global warming to get worse and worse and also lead to more serious natural disasters. In particular, there doesn’t seem to be any officials who at all are knowledgeable about science in the current government of U.S., and that is a huge concern. What did President Macron then mention at the U.N. General Assembly?
Benjamin: He, first, being aware of Trump, stated that we should stop making a trade agreement with a country that withdrew from the Parris Agreement. He then proceeded to say that the world is getting covered with the most terrible lawless areas that seek only to benefit for themselves. He obviously condemned Trump and has a great courage, which many people must feel sympathy with. At a lunch meeting at the U.N., Antonio Guterres, the ninth Secretary General of U.N. remarked that we all are citizens of the world, and this is an example of the sympathy.
We should stop condemning him because that is not our purpose here.
What we would like to discuss is that the shared policies between the company ran by Iwasaki (Mitsubishi) and the U.S’s and how they differ as well. This “idea” of the “company first” principle is quite natural in the capitalism economy. As he urged Shibusawa at Sumida-river to control the whole Japanese economy with only two of them by monopolizing all profits, he as well attempted to monopolize all the benefits, which are common elements compared with what Trump is doing. This is the issue that the “U.S. first” policy is clearly causing. Trump never behaves as a world citizen.