1201-1/1

HISTORY OF BUSINESS FINANCE

Kazuo Yamaguchi

Meiji University

The twelfth annual meeting of the Business History Society of Japan was held on October 23rd and 24th, 1976, at Senshu University in Tokyo. The meeting was organized by Professor S. Yonekawa, Professor K. Sugiyama, and myself on the common subject of “Comparative Studies in ‘the History of Business Finance.”

The meeting was arranged to compare and discuss business finance in English and Japanese cotton spinning firms and American and Japanese iron and Steel mills. The period before World War I was selected for the study of the cotton industry and the inter-war period for the iron and steel industries. The objective of this common-topic session was to investigate how each firm raised long-term and short-term capital and how it used the capital resources thus obtained.

Professor Naosuke Takamura of University of Tokyo examined the financing of the five leading companies in the Japanese cotton spinning industry; Professor Masaji Arai of Kansai University, Oldham Limited in the Lancashire cotton industry; Professor Yoshimitsu Imuta of Hosei University, the Japan Steel Tube (Nihon Kokan), the Kobe Steel Works (Kobe Seikosho), and other steel mills; and Professor Junko Nishikawa’ of Tokyo Commercial College, the electric-power and the iron and steel industries in the United States.

The major conclusions of this common-topic session were as follows: (1) Fixed capital in the cotton spinning firms was raised in Japan by issuing new stocks and bonds whereas in England it was supplied by loan capital borrowed from the working class living in the neighborhood of the mills. A considerable part of the working capital in the Japanese cotton mills was supplied by the Bank of Japan by discounting the promissory notes issued by the mills. (2) The nature of a holding company in Japan and the United States was notably different, and in addition the kind of financial institutions that supplied resources directly to manufacturing firms were also different in the two countries: in Japan it was mainly banks, whereas in the United States it was mostly investment trust companies. The nature and the method of raising working capital in iron and steel mills both in Japan and the United States were left for future examination.

1202-1/3

THE MANAGERIAL CHARACTERISTICS OF THE ‘OLDHAM LIMITEDS’

Shin-ichi Yonekawa

Hitotsubashi University

In the boom years of 1873-75 the Oldham people registered 76 cotton-spinning companies, many of whose initiators were co-operaters in the local district. In this paper the author finds the basic facts of the companies in the formative period with special reference to their managerial aspects. Main sources are the documents preserved in the Public Record Office and Company Registration Office as well as the local newspapers published in ‘the district.

It seems significant that these so-called ‘co-operative’ companies had a distinct management ideology different from that of private companies. It was democracy. Stockholders of the companies were mostly the People associated with the cotton industry, especially the cotton spinners according to their occupation in the stockholders’ list, many of whom were operative cotton spinners. Even the largest stockholders had two to three hundred stocks at most. Almost of all directors with twenty to fifty stocks had other jobs Connected with cotton industry and in those days the articles of association strictly prohibited a company officer from taking a seat in the board. Strategic decisions were usually made at the general meeting of stockholders after heated debates. In consequence,’ the meetings of the board tended to turn into a mere formality.

Many of the managerial features of the companies seem to have stemmed from the experiences of the management of co-operative societies. One of the best examples is ‘loans’ in cotton-spinning companies. An Act for Industrial and Provident Societies (1852) allowed the societies to have loan account with the interest rate less than six percent. The Sun Mill modelled upon the Rochdale Co-operative Cotton Manufacturing Society decided to have such loan accounts through the debates of the general meeting in the year of its foundation. The companies born in the following boom period followed the Sun Mill.

1202-2/3

TAYLOR SYSTEM AND FRENCH INDUSTRY

Terushi Hara

Waseda University

Shop Management, one of the most important works of F. W. Taylor, was translated into French by Henry Le Chatelier in 1907. The Principles of Scientific Management was also translated into French in 1912.

The French business circles were so much interested in this new system of labour management that French scholars wrote many articles on this subject. Charles Fremont, for example, showed in his article of 1913 the origin of chronometry in France. According to him, it was in 1688 that the chronometry was already applied in the military work in France for the first time. He wanted to show French originality in chronometry.

On the other hand, trade union leaders protested violently against the application of this new system to French industries, so that the Taylor System was not easily accepted by French laborers.

According to H. Le Chatelier, the application of Taylor System failed in France because the French society lacked the common sense (Le Bons Sens) which prevailed in U.S.A.

1202-3/3

THE FINANCIAL HISTORY OF THE AMERICAN TELEPHONE AND TELEGRAPH COMPANY

Kazuomi Yamaguchi

Seijo University

Since the 1920s, AT & T followed virtually unchanging policies towards dividends and debt, that is, the company maintained a constant $9 per share dividend policy and an average debt ratio of about one third. This conservative financial policy was based on a belief that the best way for a regulated utility such as AT&T to attract and hold the goodwill and faith of a large number of small shareholders was through regular reasonable dividends and the long-run safety capital structure.

To understand this belief and the present ‘financial policies of AT&T, we must know its history. Then in this paper I tried to investigate the history of the AT&T’s financial policies, in relation to their strategy for the national telephone monopoly and the management thoughts of their leaders.

1203-1/2

CAPITAL ACCUMULATION BY SHOZO KAWASAKI

Yasuo Mishima

Konan University

S. Kawasaki, a famous ship-builder in Meiji era, founded the Tsukiji Shipyard (Tokyo) in 1827, for which he borrowed 30 thousands yen from the Ministry of finance. Masayoshi Matsukata, a chief officer in the Ministry of Finance, appointed Kawasaki to the privileged dealer of the sugar collected from Ryukyu Islands as tax. He could amass a great amount of commission in this sugar business and poured it to fill the deficit of his Tokyo and Kobe shipyards. He also managed to operate his business diversified into shipping, ships fittings, cotton spinning, machine-works and trading.

Kawasaki bought the government shipyard in Kobe, and founded the Kawasaki Shipyard in 1887. But he Suffered from heavy illness and retired from the presidency in 1896 when his company was reorganized into’ joint-stock company. After the retirement, Kawasaki bought a good deal of stocks of other companies, founded Kobe Kawasaki Bank in 1905, and also bought rice fields in Korea and forests in Miyazaki Pref., becoming-a great land-owner around 1910. When he died in 1912, he thus left his private properties of about 5 millions yen, on the basis of which Kawasaki Sohonten (a Stock-holding company) was founded in 1920, and the Kawasaki could developed as a modern zaibatsu fairly diversified into shipbuilding’ shipping and aircraft manufacturing.

1203-2/2

A CHANGE FROM AN IRONMASTER TO A "RENTIER" IN THE NINETEENTH CENTURY BRITAIN

Etsuo Abe

The Crawshays, a famous iron-maker family in South Wales, became inactive in the management of their iron-works in the middle of the 19th century. On the contrary, Crawshay (William II) rapidly increased his investment in securities such as Consols and domestic and foreign railway bonds, becoming in 1867 the greatest government stockholder in Great Britain. Why happened such a transition from industrial investment to investment in securities since 1850’s?

The general condition of Crawshay’s business was very sound in 1850’s. Some unfavourable factors, however, were forecast in the future of their business: first, the decline of production of iron ore in South Wales, a drastic change of the products from wrought iron to steel and the development of labour movement. In addition to these external factors, there was an unfavourable circumstance in Crawshay hay family itself: the lack of successor’s talent for management. The reasons above mentioned seem to have been the key factors for the change from an ironmaster to a rentier.

Crawshay thus suffered a great loss in iron-making in 1870’s and eventually closed the iron-works. On the other hand, Crawshay’s securities which amounted to over one million pounds brought the family tens of thousands pounds return a year. This article compares also Crawshay with the Dowlais Iron Company, and explains the difference in investment activity between the two rivals.