3. Steel-making equipment
In the prewar period Japan had to rely heavily upon American, German, and British engineers and manufacturers of steel-making equipment if she wished to expand her industry. Coke ovens, blast furnaces, rolling mills and numerous important accessories were constructed or supplied, mainly by American concerns, right up to the embargo of 1940. Certain replacement parts, in turn, such as bearings and large rolls for rolling mills, had to be imported before the war from foreign sources. However, many Japanese engineers had journeyed to the United States and Germany ostensibly to purchase equipment, but at the same time to accumulate and absorb as much experience as possible. Thus by the time the war had started Japan had developed a capacity to supply much of her need in the field of heavy machinery and equipment.
4. Expansion plans for steel
As early as 1917, the Japanese government formulated far reaching policies aimed at creating a strong steel industry. Large scale expansion was encouraged through tax concessions, subsidies and tariff protection. Later the government promoted cartels and sponsored transportation important to the steel industry. These policies succeeded in increasing ingot steel production to 1,883,000 tons in 1931.
Following the 'Manchurian Incident' in 1931, Japan greatly accelerated the expansion of all heavy industry, admittedly to provide the backbone of national defense. All of the plans for expansion emphasized two goals: (1) over-all expansion of capacity and production and (2) self-sufficiency within the Japanese sphere of influence. First, specific action in the steel industry took place in the creation in 1934 by the government of the Japan Iron Manufacturing company by compelling the merger of the seven leading concerns. This new steel giant was originally 76 per cent owned by the government, and from its inception reflected the policy of the government and acted in its name.
Second, the Iron Manufacturing Industry Law (effective September 1937) provided for the licensing of iron and steel producers and for government direction of all expansion in the industry. Colonel SATO, H., of the Military Affairs Section of the War Ministry, has commented on that law as follows:
Whereas the purpose of steel controls had hitherto been the active fostering of the industrialists' interest, the newly enacted . . . law had as its primary object the rapid expansion of steel producing capacity and the creation of a self-sustaining steel industry . . . entering upon a period of military preparedness.
The primary production expansion plan, formally approved in January 1939, was the Cabinet Planning Board's embodiment of detailed plans for strengthening the critical industries. In it the expansion of steel capacity was given top priority. The period covered by the plan was five years, from 1938 through 1942. Its scope is shown in Table 4. Pig iron capacity was to be more than tripled, ingot-steel capacity was to be increased by 125 percent and finished-steel capacity by 85 percent in Japan proper, Korea, Manchukuo, and China.
The problem of establishing self-sufficiency within the Japanese sphere of influence with regard to essential raw materials was principally one of substituting pig iron for scrap. The established practice of using a high ratio of scrap to pig iron in the manufacture of steel had made Japan very dependent upon potential enemies such as the United States. This explains the great emphasis in their plans on increasing pig-iron capacity.
A corollary of that design was to accumulate stockpiles of iron ore, scrap, manganese, and other ferro-alloy ores. The venture into China resulted in giving the Japanese direct control over their major source of raw materials and thus neatly fitted into their program of self-sufficiency.
5. Success of expansion plans
Although the war commenced fully a year before the end of the five-year expansion period, a remarkable degree of success had been achieved by 1941. The over-all expansion is shown in Chart 1. The total metallurgical coke and pig-iron capacity in Japan, Korea, and Manchukuo had more than doubled from 1937 to 1941. Significant, but smaller, gains were made in ingot-steel and rolled-steel products capacity.1
' Data on forged and cast-steel capacity for these earlier years are not available.