San José State University|
Department of Economics
& Tornado Alley
In Japan the Ministry of Finance has a concentration of power unsurpassed and not equaled by any other. It has the following powers:
The Bank of Japan, the central bank of Japan, has been administered from within the Ministry of Finance as has the National Tax Agency. The staffing of the Defense Agency has also been controlled by the Ministry of Finance.
The Japanese name for the Ministry of Finance is the Ministry of the Big Storehouse. This goes back to the time when Japanese peasant farmers had to pay a tax in rice. The Government collected the rice and sold it to be able to pay the samurai (warrior class) a stipend. In the Meiji Era and later the Ministry of Finance was not the administrative center of government that it is now. At earlier times the military and the agency that controlled the secret police were more powerful than the Ministry of Finance.
In the days after World War II the Ministry of Finance liquidated the other power centers. The Occupation authorities wanted to reform land tenure and had the Government purchase the land with bonds and sell the land to the cultivators. Likewise the zaibatsu owners were bought out with govenment bonds. With the post-war inflation the value of the bonds fell to a small fraction of their initial value effectively wiping out the power of the former landowners and zaibatsu families. The post-war inflation came as a result of the vast expansion of the money supply carried out by the Ministry of Finance.
HOME PAGE OF Thayer Watkins