MEMO FOR RECORD: (SCAPIN - 1320)
WFM/VHK/MEF/gg
24 October 1946
1. Pursuant to the policy set forth in Joint Chiefs of Staff directive 1390/15, 3 November 1945, investigations are being made of concerns which are not listed on inclosure to SCAP Memorandum AG 004 (8 Dec 45) ESS/AC (SCAPIN-403), subject: "Establishment of a Schedule of Restricted Concerns," or subsequent addition thereto.
2. a. The Kobe Steel Works, Ltd., (capitalization ¥182,700,000.) experienced tremendous expansion since its organization in 1911. During the period from 1935 to 1945 assets of the company increased from ¥43,775,816. to ¥958,212,440., an increase exceeding 2000% for the ten (10) year period. Capitalization during the same decade increased over 800% from ¥20,000,000. to ¥180,700,000. Utilizing war profits and government sponsored loans, growth of the company was affected by various amalgamations and financial manipulations since the beginning of Japan's aggressive warfare in the Orient.
b. The position of the Kobe Steel Works, Ltd., as a producer of steel and steel products, has been enhanced during the occupation. Steel production of this firm has increased considerably since January 1946, and the production of one type of steel, which was one-third of the total production of this type steel in January 1946, by July 1946 has increased to approximately 85% of the total production of this type steel for the industry in Japan.
c. Although the company has an unobjectionable distribution of capital ownership, the Zaibatsu influence has been operative in Company's policies through interlocking directorates with the various Zaibatsu organizations. The company operates 17 plants at the present time and because oi labor difficulties causing financial stress, reorganization of the parent company into smaller operating concerns is contemplated by the management. Since the company is not listed on the Schedule of Restricted Concerns at the present time, consultation with SCAP concerning the reorganization of the parent company has not been consummated.
4. The affiliates listed below are considered as subsidiaries as defined by SCAP Memorandum AG 319.1 (22 Oct 45) ESS/IE (SCAPIN-177), subject: "Reports to be Made by Certain Business Firms."
Name Percentage of Control by Kobe Steel Works, Ltd.
In Japan:
Harima Dockyards Company, Ltd. 100%
Nihon Airbrake Company, Ltd. 35%
Shinko Arms Company, Ltd. 20%
Diesel Engine Company, Ltd. 13%
Outside Japan:
Manshu Shinko Company, Ltd. 100%
Chosen Shinko Company, Ltd. 84%
Manshu Coal-Liquefaction Laboratory Co. 18%
3. On the basis of the above facts and in compliance with Joint Chiefs of Staff directive referred to in paragraph 1, above, the Kobe Steel Works, Ltd., and its subsidiaries as listed in paragraph 2, above, should be added to the Schedule of Restricted Concerns referred to in paragraph 1, above.
4. This is an administrative matter, and no surveillance by Eighth Army is required.
5. The interests of USAFIK are not concerned.
6. Concurrences: ESS/IN (Mr. A. B. Otis); ESS/LE (Major E.R. Minnich).
V. H. K.