FOREIGN OFFICE FILES FOR JAPAN AND THE FAR EAST

Series Two: British Foreign Office Files for Post-War Japan, 1952-1980

(Public Record Office Classes FO 371 and FCO 21)

Part 8: Complete Files for 1972-1974

(PRO Class FCO 21/959-960, 1026-1054, 1082-1085, 1144-1172, 1212-1217 and 1275-1306)

Publisher's Note

“These British Archives provide invaluable analyses of Japan’s social, economic and political development, and fully document her changing relations with Britain and the Commonwealth.”

Dr Gordon Daniels

Reader in Modern Far Eastern History, University of Sheffield
and President of the European Association of Japanese Resource Specialists

Part 8 of this microfilm project covers the years 1972-1974 and comprises files only recently opened for research, focusing on the administration of Tanaka Kakuei. There is a strong emphasis on economic, trade and financial policy issues as well as on relations with the United States, China, Taiwan, Britain and Europe. Drawing on reports, memoranda, despatches, official instructions and regular communications between the Foreign Office and the British Embassy and Consulates in Japan, many of the most pressing issues of the day are discussed and appraised. Subjects covered range in scope from Annual Reports and fortnightly summaries of events in Japan (for each year covered in the series), Japanese political, social and economic issues, to foreign relations and the rapprochement with Communist China, assessments on the future of Japan, the attitudes towards Japan of other Asian countries, defence issues, education, pollution and the environment, living standards, culture, international visits by leading politicians and the resolution of various territorial disputes.

The wide range of subject files has significant material on the following topics:

Relations with Communist China

Following Nixon’s visit to Peking in 1971, US relations with China were re-established on a proper footing. The Japanese were impressed with America’s rapprochement with Communist China once they had recovered from the shock of the reversal in US policy. Japan received no warning of the change in America’s position on China. Tanaka Kakuei, who became Prime Minister of Japan in July 1972, hastened to follow the American initiative. Tanaka visited Peking and Japan quickly moved to recognise the People’s Republic of China. This meant a formal break with the Nationalist Republic of China on Taiwan. Although there was still much sympathy with Taiwan, the Japanese as a nation were much relieved by this turn in events. These foreign policy initiatives were a major reason for Tanaka’s success in the General Election held at the end of 1972. Despite the victory of the Liberal Democrats, the Communist Party in Japan made some significant gains. All the foreign policy moves in this process as well as the outcome of the General Election are assessed in the papers reproduced here. Policy on China was of supreme interest to the British and British firms seeking to trade with China. British officials provided detailed analysis of developments.

As a result of Tanaka’s visit to Peking and Japan’s recognition of the People’s Republic of China, relations between Japan and China steadily improved in this period. The Japan-China Joint Communiqué of September 1972 provided a framework for agreements on trade, aviation, shipping and fisheries.

The economy

There are a good number of important files on the Japanese economy. On 16 August 1971, the US had announced its suspension of the dollar’s convertibility into gold, which, in effect, brought an end to the Bretton Woods international currency system. Nixon also introduced a 10% surcharge on imports to the United States and other countries also moved towards protectionism and import restrictions to counter the rapid increase in Japan’s exports and growing surplus in its balance of payments (nearly $9 billion in 1972).

In February 1973, the world’s major countries switched to the floating exchange rate system and Japan also revalued the yen. These drastic changes in the international currency system resulted in the trial-and-error adjustment of the world’s currencies in relation to one another culminating in serious inflationary pressures.

Various reports identify emerging imbalances which stemmed from fast growth. There was a relative delay in modernising sectors of the economy such as agriculture and smaller businesses. There was a sustained upward trend in consumer prices, a shortage of capital investment for housing, roads and other infrastructure facilities, environmental pollution and the destruction of nature, overcrowding in the cities and a depopulation of many rural areas.

Japan’s volume of exports rose at an annual average of 16.8% during the nine year period from 1968 to 1977. In terms of total exports, Japan ranked third in the world after the United States and the Federal Republic of Germany. Total imports also increased massively and Japan ranked fourth in the world after the United States, the Federal Republic of Germany and Great Britain.

Oil Crisis of 1973

The Oil Crisis following the Arab-Israeli war of October 1973 fuelled further global inflation. The sharp rise in oil prices also undermined confidence in Japanese big business, already under popular attack for the heavy water and air pollution created by headlong economic growth. Japan suffered less economic dislocation from the Oil Crisis than most other nations and managed to keep inflation at a lower rate than expected. However, the threat to its oil supplies was a factor that the Japanese Government took very seriously. Older people remembered the oil embargo imposed by America, Britain and the Netherlands in 1941. The impact of the higher oil prices did significantly reverse the upwards trend in Japan’s balance of payments which actually fell into deficit and brought some advantages in trade negotiations with the US, Britain and Europe.

This trend was short-lived. As exports increased again after the Oil Crisis, imports remained sluggish as a result of the prolonged recession at home, causing the balance of payments to move back to a position of significant surplus.

Inflation

The heightened demand for labour encouraged by the continuing economic upsurge led to sustained large-scale wage increases. Unemployment fell to under 1.4%.

The Oil Crisis and changes in the international currency system described above were further inflationary factors. Japan’s inflation figures for the period 1970-1975 averaged at a rate of 11.4%. The early 1970s saw a rate of between 5% and 7%. With the Oil Crisis and the Recession of 1974 the rate went up to over 20%, but by 1976 it was down to 5% again.

The Environment and Problems of Pollution

These were problems caused by aggressive industrial expansion. During this period both Japanese politicians and pressure groups started to engage in a more comprehensive fashion with some of the issues. However, public corporations such as the Pollution Prevention Corporation (Kogai Boshi Jigyodan) were not particularly responsive to real needs and were dominated by government bureaucrats. The Ministry of Construction was indifferent to the problems of urban housing and river pollution, devoting most of its funds to highway construction, regional development and industrial support facilities.

Tanaka Kakuei

The Tanaka faction within the Liberal Democratic Party came into being as an offshoot of the Sato faction during 1970. It was only formalised in May 1972, two months before the election for the Party Presidency leading to Tanaka becoming Prime Minister. Tanaka exploited the shock all Japanese people experienced over Nixon’s visit to Peking. He aligned his own faction with those of Ohira and Miki; he bought the support of the Nakasone faction and he left Fukuda Takeo, Sato’s intended successor, out in the cold.

When the Tanaka Cabinet took over, it was the most popular government in Japan’s post-war history. He set about creating a very effective type of administration, often working outside the parameters of the normal democratic process.

Tanaka represented the Niigata Third Electoral District from April 1947 to July 1993. Nagaoka is the main city. It was typical of the ura Nippon or ‘hidden Japan’, the part of the country that supplied workers, electricity and rice for omote Nippon, the Pacific Coast typified by the Tokyo megalopolis. The regions of ura Nippon received little in return for their efforts until Tanaka came along. He was determined to invest in these regions and especially Niigata prefecture. Back in 1900 it was the most densely populated prefecture in the whole of Japan. In 1972, when Tanaka published his ‘Plan for the Remodeling of the Japanese Archipelago’, it was considerably depopulated. Tanaka reversed this trend. By 1983 Niigata was first among Japan’s 47 prefectures in terms of per capita government expenditure on public works. The bullet train line was extended to Niigata city providing a link to Tokyo in under two hours, a new railroad station and sub-development at Nagoaka was established, an atomic power plant was laid down at Kashiwazaki and plans were made for the Kan’etsu and Hokuriku superhighways. Between 1970 and 1976 all seven Ministers of Construction came from the Tanaka faction, as did the Ministers of Posts and Telecommunications.

Controversy surrounds the arguments about where Tanaka got the money to finance his faction and all its endeavours. After his first two years in government, Tanaka’s popularity declined. In 1974 he came under strong criticism for having allegedly amassed his private fortune by irregular means. A team of investigative journalists associated with the major Japanese magazine, Bungei shunju, produced two long exposés of Tanaka’s “money-power politics”. In the political storm that followed nobody was prosecuted initially. Tanaka, claiming ill-health decided to resign in December 1974. However, this was not an end to the influence of his faction.

The Lockheed trials

It was not until much later – February 1976 – that the Senate Foreign Relations Committee in Washington DC released its bombshell. In Japan, the “Lockheed Incident” took centre stage as the biggest foreign-connected political bribery case since 1914. The allegations were that the Lockheed Company had smoothed the way for its sales of airplanes in Japan by financial inducements. The case seriously implicated officials at the Ministry of Transportation, plus one of Japan’s leading trading companies and the Prime Minister himself. It also involved Kodama Yoshio (one of Japan’s pre-war political strongmen) who had continued to exert influence as an intermediary between the world of politics and the unofficial world of gangsters, right-wing fanatics and those engaged in bullying tactics at stockholders’ meetings. Lockheed’s President, Carl Kotchian, implicated many Japanese politicians by declaring that Lockheed had paid $50,000 per airplane to the President of All Nippon Airways; had bribed the Prime Minister, the Secretary General of the LDP, the MITI minister, the Chief Cabinet Secretary, the Minister of Transportation, the Chairman of the LDP’s Special Committee on Aviation, and both the current and former Parliamentary Vice-Ministers of Transportation; had paid Shig Katayama in Hong Kong to forge receipts for Lockheed’s books; and had paid large commissions to Marubeni and Kodama for their strong arm tactics in Japan. Kotchian’s US Senate testimony caused the Japanese Diet to conduct its own investigation. This led, in due course, to the trials of Tanaka and other individuals involved. The ‘Lockheed Affair’ continued to reverberate through Japanese politics well into the 1980s.

The Liberal Democratic Party

There is lots of information on the various political parties in Japan. During this period the LDP continued in power. Despite changes in the leadership they were to dominate throughout the 1970s.

Relations with the Soviet Union

Various files document relations between Japan and the Soviet Union. Outstanding differences over the islands off the northeastern tip of Hokkaido, still occupied by the Soviet Union from the Second World War, remained as a major Territorial Question. There continued to be some gradual improvements in relations relating to trade, aviation and issues such as cultural interchange, but there was no peace treaty.

Visits

A number of files document important visits made by British politicians, such as Edward Heath, Sir Geoffrey Howe, Lord Carrington and Lord Jellicoe, to Japan; Tanaka’s visit to the United Kingdom in 1973, his travels in Europe and his discussions with the Americans; as well as Deputy Prime Minister Miki’s visit to the United Kingdom in May 1974 and the visit of Princess Chichibu in June 1974. During November 1974 President Ford was the first US President to visit Japan while in office.

Tanaka’s methods

Throughout the period, as the files in this microfilm edition demonstrate, Japan did everything possible to foster good relations with the United States, Communist China and Britain. Sometimes this was a difficult balancing act. Relations between Japan and the Soviet Union remained quite difficult.

The files show that Tanaka successfully developed strong relations with America and with American business contacts.

The administration of Tanaka Kakuei has attracted much interest because of his emphasis on public works investment and major improvements in the country’s infrastructure, the continued importance of the Tanaka faction long after his resignation in 1974, the Lockheed trials and, above all, his political methods of controlling the Diet through zoku, Diet members who became experts in managing the bureaucratic apparatus. Many commentators have concluded that this system amounted in the end to “structural corruption” which left Japanese citizens very disillusioned with the concept of parliamentary democracy itself. Tanaka’s supporters, and Tanaka himself, exerted powerful control over the bureaucrats. Through a process of bribes or commissions the bureaucracy became corrupt. Companies and multinationals who wanted a particular outcome could lobby the Tanaka faction to obtain the desired outcome. Economists, historians and political scientists continue to be very interested in the development of the political system during the Tanaka era, in the very unique brand of capitalism which developed in Japan at this time, and the implications for the future of Japanese politics and the Liberal Democratic Party.

It has been described by Chalmers Johnson in Japan: Who Governs? The Rise of the Development State (WW Norton & Company 1995) as “Machine Politics” - a process whereby the Tanaka faction by the early 1980s became a well organised machine with an adept staff with all the necessary expertise to extract policies or whatever favours it wanted from the bureaucracy. The roots of this system developed in the early 1970s and all those studying the Tanaka faction, the impact of the Lockheed trials and Japanese Government in the 1980s will be very interested in these files providing a British and Commonwealth perspective on events. More recently, economic commentators have challenged Johnson’s arguments. The debate continues.

<back