MEMO FOR RECORD: (SCAPIN - 1388)
4 November 1946
1. Pursuant to the policy set forth in JCS Directive 1380/15 dated 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 additions thereto.
2. An investigation of Ishikawajima Heavy Industries Company, Ltd., disclosed the following information:
a. Description and History of the Company: This Company was established in 1889 with authorized capital of ¥175,000. From the date of establishment until 1935 the capital had been progressively increased until it reached ¥5,000,000. During the next ten (10) war years the capital increased twelve and one half (12 1/2) times, reaching ¥100,000,000 in 1945 of which ¥74,000,000 was fully paid. With net assets of about ¥250,000,000. (unpaid capital and war damage claims excluded) it is about the tenth (10th) largest shipbuilding company in Japan, and now employs about 2,500 people. The largest stockholder is the Wartime Finance Bank, owning 15.4% of the shares, with known Mitsui interests next, owning 9.1% of the shares. Mitsui interests exercise additional control through a subsidiary, Teikoku Bank, Ltd., in that Ishikawajima Heavy Industries Company, Ltd., is indebted to the Bank in the amount of ¥11,500,000.
b. Investments: As of 31 May 1946, Ishikawajima Heavy Industries Company, Ltd., had investments totaling nearly ¥7,500,000 as follows:
Subsidiary Percentage of Control Ishikawajima Heavy Industries Ltd.
In Japan
Ishikawajima Industry Company, Ltd. 98
Ishikawajima Precision Machinery Company, Ltd. 100
*Ishikawajima Shibaura Turbine Company, Ltd. 49
Tokyo Shipbuilding Works, Ltd. 55
(Some interlocking directorates exist between Ishikawajima Heavy Industries Company, Ltd., and the above named subsidiary companies.)
Outside Japan
Manshurian Ishikawajima Heavy Industry Company, Ltd. 100
Mukden Engineering Works, Ltd. 40
*Now on the Schedule of Restricted Concerns Under Tokyo Shibaura Electric Company, Ltd.
c. Conclusions:
(1) The growth of this Company was rapid during the war. It has now reached a favorable position, and can be classed as a small "Zaibatsu." Unless some control is exercised over this Company it is probable that it will continue to expand to a size which would be as objectionable as that of the present holding companies which are now being reorganized and dissolved by this Division.
(2) One of its shipyards and one of the yards of its subsidiary, Tokyo Shipbuilding Company, Ltd., have been designated for interim reparations.
(3) The Company owns forty-nine (49) percent of the stock of Ishikawajima Shibaura Turbine Company, Ltd., the remainder being owned by Tokyo Shibaura Electric Company, Ltd., a Restricted Concern. When the interest of Tokyo Shibaura Electric Company, Ltd., is liquidate, the interest of Ishikawajima Heavy Industries Company, Ltd., should also be liquidated.
(4) In order to accomplish the above surveillance procedure is necessary; consequently the attached Memorandum restricts the activities of the Company and its subsidiaries, requiring that they shall comply with the provisions of pertinent directives and make the same reports required of companies on the Schedule of Restricted Concerns.
(5) This surveillance procedure is used to secure reports from these companies to determine whether further surveillance is necessary, and so that SCAP's activities of investigating the structure of the Japanese industrial economy can be kept at the minimum consonant with objectives of the Occupation.
3. This is an administrative matter, and no surveillance by the Eighth Army is required.
4. The interests of USAFIK are not concerned.
5. Concurrences: ESS/IN (Mr. G. T. Walker); ESS/FI (Lt. Col. D. H. Jennings);
ESS/LE (Mr. Harry T. Straitiff).
V. H. K.