2201-1/1

STRATEGY OF IG FARBEN TOWARD JAPAN

--CASE OF SYNTHETIC OIL--

Akira Kudo

The University of Tokyo

This paper aims at clarifying reasons why IG Farben failed in selling the license of the IG method for synthetic oil through an analysis of documents held BASF Archive and other documents.

In the middle of 1930 es IG Farben changed its strategy and decided to sell the license of the IG method for synthetic oil abroad as well as in Germany. Its first target was Japanese market. In those years it dominated in Japan a boom for synthetic oil industry. IG Farben made every effort and approached to South Manchurian Railway Company, Mitsubishi Mining Co., Ogura petroleum Co. and other 10 companies or projects. It could not, however, succeed in concluding any contract with them.

There can be three hypotheses to explain IG’s failure: (1)The International Hydrogeneration Engineering and Chemical Co., which was established by four big enterprises including IG and held the hydrogenation patent, restrained IG’s effort; (2) Strict conditions presented by IG Farben discouraged Japanese companies which intended to introduce the IG method; (3) Japanese Navy, which was trying to develop so-called Navy method for itself, opposed against introducing the IG method strongly.

My analysis reveals: (1) In spite of IHEC’s negative attitude IG had chances to conclude contracts with some Japanese companies till 1939; (2) There were some cases where Japanese side did not take presented conditions too strict; and (3) The’ Navy hindered effectively projects of some companies such as South Manchurian Railway Company and Ogura Petroleum Co. Results of my analysis abandon former two hypotheses, but do not abandon the last One.

2202-1/2

OGURA OIL CO. AND NOBUHEI NAKAHARA

--A Case for the Development of Managerial Enterprise in Prewar Japan--

Hidemasa Morikawa

Yokohama National University

Ogura Oil had long been dominated by Tsunekichi Ogura, the founder and dictatorial leader before he died in 1934, so that no salaried managers could be promoted to the top management post. Nobuhei Nakahara, a chemical engineer of that company graduated from the Tokyo Imperial University, played a major role in solving conflicts within Ogura family and Ogura Oil immediately after Tsunekichi’s death and opened his way to the top management. In this process he cooperated with Tamaki Makita, the former senior executive director of Mitsui Mining and a brother in law of Fusazo Ogura, who could become the president of Ogura Oil by the help of Makita and Nakahara. Fusazo, Makita and Nakahara formed the top management of new Ogura. In 1939, Nakahara shifted to the new oil refining company, Toa Nenryo Kogyo which was established by the joint-share holdings of eight oil refining companies including Ogura Oil. This new company was born from the strong desire of the military to guarantee the supply of the high quality gasoline for the wartime purpose. Nakahara’s move to the new company was also the product of military.

But while working as the top executive of Toa Nenryo, Nakahara continued to have interest in Ogura Oil. When Ogura Oil met the management crisis in 1941 because of the failure of president Fusazo, Nakahara cooperated with Makita to rescue Fusazo and Ogura Oil by merging it with Nippon Oil.

2202-2/2

THE NATIONALIZATION OF ALCAN’S SUBSIDIA IN GUYANA

Naotoshi Umeno

In 1971, the government of Guyana nationalized the Demerara Bauxite Co. (Demba), a subsidiary of Alcan Aluminium Ltd., which had been in operation since 1916. This paper aims at clarifying the interaction between Alcan and Guyana until nationalization from the viewpoint of the balance and shift of bargaining power between them.

The major findings of this paper are as follows:

(1) Unlike the cases of other extractive industries such as copper in Chile and oil in Venezuela, the Guyanese government intervention into Alcan occurred much later. Guyana was a colony of England until 1966, and England depended heavily on Alcan for its supply of bauxite ore and aluminum products especially during the two World Wars. These reasons weakened the bargaining power of Guyana and explain why intervention occurred much later.

(2) Alcan was able to maintain its strong bargaining power which was derived from its mainstream bauxite-aluminum operations through the existence of alternative supply sources of bauxite and high entry barriers to the industry.

On the other hand, calcined bauxite, which can only be produced in Guyana as it is not found in any other country, gave it ‘bargaining power over Alcan.

In conclusion, the interaction of these two forces formed a double bargaining power structure. The nationalization of Alcan by Guyana can be said to be brought about by the latter force.

2203-1/2

OWNERSHIP AND MANAGEMENT OF INDIAN ZAIBATSU

Atsufumi Mikami

Fukuyama University

The purpose of this paper is to clarify the ownership patterns and management characteristics of the Indian zaibatsu. from the standpoint of the types of the zaibatsu families; a) the joint family type (the Walchands, the Singbahias, the Bajajs, b) the split type (the Goenkas, the Birlas), and c) other types (small family type; the Mahindras, alien type the Tatas).

Some of the concluding observations are as follows:

1) On the whole, inter-corporate investment and multiple directorships as the instrument of control play the significant role in all the zaibatsu, though the pattern varies widely among the groups. Generally it can be said that ‘the larger the joint family is, the stronger tends to be the zaibatsu families’ holds over both ownership and management.

2) In the case of the split type, both ownership and management are retained independently by each sub-group of the zaibatsu family. To be noted is the case of the ownership of the R. P. Goenkas, one of the three sub-groups of the Goenkas, where a number of investment companies that are subsidiaries of the four main companies of the group play the decisive role in the shareholdings of the group companies.

3) In the Mahindras, the Small family type, the main family members hold the ultimate decision making power of the nuclear (holding) company, thereby controlling quite a few of their group companies.

2203-2/2

THE CONSOLIDATION OF LOANS AND REORGANIZATION OF MITSUI BANK AROUND 1890

Makoto Kasuya

The amount of deposits of Mitsui Bank increased rapidly after 1886, leading to a corresponding increase in the amount of loans by the bank. In spite of these favorable circumstances, the bank had held a lot of bad loans because it lacked the ability to review requests effectively. T. Masuda, president of Mitsui Bussan Kaisha, was anxious about the state of Mitsui Bank. He asked K. Inoue, the former Minister of Finance, for help and advised T. Nishimura, vice-president of Mitsui Bank, to place more effort at loan collection. But Nishimura didn’t translate Masuda’s advice into action, as he was a man of indecision. Consequently, Mitsui Bank lost the confidence of bankers and the amount of nongovernmental deposits decreased from 17,117 thousand yen to 12,612 thousand yen in the first half of 1891. Masuda complained to Inoue that Nishimura could not cope with the crisis of Mitsui Bank. Then Inoue asked H. Nakamigawa, president of Sanyo Railway Company, to enter Mitsui Bank and institute reforms. Nakamigawa entered Mitsui Bank in August 1891. He collected outstanding loans to Higashi-Honganji and received collateral from other borrowers. But I think it must be emphasized that Mitsui Bank had already been receiving collateral prior to Nakamigawa’s entry and that he wrote off bad loans by reducing reserve fund which had been maintained since the bank’s establishment in 1876. (It had several kinds of voluntary reserve accounts because its financial status in 1876 was very bad. ) He was able to pay back the bank’s borrowings from the Bank of Japan by the end of 1892 because the bank’s deposits had increased and the amount of governmental bonds which it held decresed.

2204-1/1

PERSONNEL PRACTICES AT THE C. B. & Q., 1875-1885

Eisuke Daito

The University of Tokyo

In the early days of railroading, locomotive engineers were recruited from among mechanics. It was a great recommendation if they had worked for a locomotive manufacturer. They were paid by day, in the same way as mechanics were. Since mechanic turned engineers were skilled in the two trades, they tend to be too proud to be obedient to orders.

In the 1870s, however, many railroads including the C. B. & Q. introduced new methods of wage payment, such as the trip system and classification system. At the C. B. & Q., R. Harris introduced a new method by combining the two mentioned just above on Sept. 1, 1876 and reduced wage rates on June 10, 1877. Under the new method, engineers were graded into the four classes in terms of the length of the service which were paid accordingly. Judging from remaining company records, this was due partly to the financial pressure of the prolonged depression of the 1870s. The work can be done for less money than before, by replacing the first-class men with the second and the third-class men with lower wage rates.

However, we must not ignore the long-term significance of the new method, under which in order to climb up to the first class one has to be promoted step by step every year. In other words, the method was inseparably tied with the policy of promotion from within. On Nov. 20, 1884, Mr. Rhodes, the superintendent of the motive power, send a circular letter to all the master mechanics of the company instructing “Hereafter please do not employ engineers and firemen who had worked on other roads—“In doing otherwise, we are likely to import the bad elements of other roads.” And by the middle of 1880s, the company had developed well a designed employment practices, by which it had attained self-sufficiency in well-trained engineers. It goes without saying that this is a great achievement. At the same time, however, it bred discontent among engineers and their brotherhood and caused a bitter strike in 1888.