fee cee 348 DASA 2019-2 WARREN: There was a plan to reorganize the Japanese Government with the introduction of new governmental policies, the setting up of voting and its procedures, and then advice to the new Japanese Government on what they might do during the time their financial policies had to be rearranged. Wasn't there some kind of a struggle between Mitsubishi and other cartels for dominance? AYRES: See the prewar Japanese ''Zaibatsu.'' and so forth, were broken up. Mitsubishi, Mitsui WARREN: Yes, but somewhat later. This shook their whole structure to the bottom because then they had to start over and there was no machinery for setting up a large business, although the Japanese traditionally had done a lot of manufacturing in their own homes and did this very intensively during the war. AYRES: 1950 was about the beginning of the real upsurge. WARREN: Yes. It must have been delayed that long. EISENBUD: That, of course, coincides with the Korean War when we had put in about $700 million a month there for a few years. SCHULL: There are some unusual features about the Japanese situation which must be borne in mind. Much of Japan's steel-making industry was still intact at the end of World War II; Yawata, for ex- ample, which accounted for about fifty percent of the pig iron and steel was quite limited in the immediate post-war period; Yawata was operating at less tan a quarter of its 1940 output. Many factors contributed to this diminished productivity, and not the least of these was the proposed dismantling of the mills as part of the reparations to be paid to Russia, China, and the like. The inventory of Yawata, a tre- mendous installation, was not completed until 1949 or thereabouts, but shortly before MacArthur announced there would be no further dismantling of industry for reparations. Thus, there was a hiatus of four years or so when, I assume, the Yawata complex could have been more fully utilized to support the Japanese economy than it was. HEMLER: Suppose an opposing force had not been in there? SCHULL: As far as I know there was no reason why they couldr.'t utilize this plant again. Japan, of course, in this context is vulnerable