Mitsui & Co. - Company History

The trade learned at Senshu Kaisha, and the range widened from Miike coal

In July 1876 Masuda Takashi (益田孝) launched the former Mitsui Bussan Kaisha inside the Mitsui-gumi House at Suruga-cho, Nihonbashi, Tokyo[1]. Masuda, then 28, had left the Ministry of Finance and picked up the practical trade — Western-style bookkeeping, shipping and the agency system — at Senshu Kaisha (先収会社), the firm Inoue Kaoru (井上馨) had started in 1873[2]. When Inoue returned as an adviser to the Mitsui-gumi in 1876, Masuda was brought in to head the trading arm as a man who understood how a Western-style trading house was run[3]. The Mitsui family was about to turn towards banking and needed the losses of the trading business hived off into a separate legal entity, so no formal capital was recorded[4]. Working funds for buying and selling goods were borrowed from the Mitsui-gumi and settled afterwards — a substitute-capital arrangement — so that the trading house was raised with no money of its own[5].

Immediately after its founding, Mitsui Bussan Kaisha was entrusted with selling the coal of the state-run Miike colliery, and secured a steady income from steamer fuel bound for Shanghai[6]. Holding that the way of commerce lies in people, Masuda Takashi moved quickly to promote young men and send them overseas[7], dispatching staff to Shanghai, Paris, London and New York from the year after the founding to build out a branch network[8]. The range of goods widened from the Miike coal base: in the years 1882 to 1886 it took in imports of British spinning machinery and exports of domestic cotton yarn to China, and between 1887 and 1896 railway materials, minerals and fertiliser[9]. In December 1893 the firm was reorganised as Mitsui Bussan Gomei Kaisha[10].

Reorganisation as a joint-stock company, and Mitsui & Co. under attack on the zaibatsu

In October 1909 Mitsui & Co., Ltd. was established as a joint-stock company with capital of ¥20 million[11]. Before the war Mitsui Bussan accumulated an overseas branch network, product knowledge and long-standing trading relationships, and became the base on which Japanese companies conducted international trade[12]. The scale shows in the trade statistics: taken as an average across the years 1937 to 1943, it accounted for 18.3 per cent of Japan's total trade[13]. Counting Toyo Menka, its offshoot, the share reached a quarter[14]. Divisions were also being spun out; on 28 December 1942 the shipping department became independent as Mitsui Steamship[15].

That scale also made it a target in the slump. When Britain suspended the gold standard in September 1931, criticism of Mitsui mounted over selling yen and buying dollars[16]. On 5 November that year the governing Minseito party issued a denunciation of the Mitsui zaibatsu[17], charging that the Mitsui zaibatsu, anticipating the re-imposition of the gold embargo, sold yen and bought dollars, and so accelerated the outflow of the specie reserve.[18] In December Mitsui & Co. published a statement in the Chugai Shogyo Shimpo denying that any speculative buying had taken place[19]. The criticism did not subside, and on 9 March 1932 Dan Takuma (団琢磨), managing director of Mitsui Gomei, was shot dead at the entrance of the Mitsui Main Building by a member of the Ketsumeidan, the League of Blood[20].

A trading house under the controlled economy, and the dissolution order from GHQ

When the Marco Polo Bridge Incident of July 1937 began the war with China, wartime economic controls were tightened[21]. That September three laws were promulgated — the law on the application of the Munitions Industry Mobilisation Law, the Law on Temporary Measures Concerning Imports and Exports, and the Temporary Funds Adjustment Law[22] — and the National Mobilisation Law of April 1938 brought in a fully controlled economy[23]. Imports now required an allocation of foreign currency based on export performance[24], and the room in which a trading house could move freely narrowed. Markets narrowed too: as the world divided into blocs, exports to the United States and the British Commonwealth levelled off[25], and trade shifted towards war-related goods.

After the defeat, Mitsui Honsha was ordered on 6 November 1945, together with the head companies of Mitsubishi, Sumitomo and Yasuda, to dissolve[26]; in 1946 it handed all its shareholdings to the Holding Company Liquidation Commission and on 30 September resolved to wind itself up[27]. Because Mitsui & Co. also held a large number of subsidiaries, it was included in December 1946 in the commission's third designation along with Mitsui Mining and 18 other companies[28], and on the 28th of that month was designated a holding company[29]. With the Anti-Monopoly Law and the Law for the Elimination of Excessive Concentration of Economic Power being promulgated and brought into force, the company judged that it could not survive unless it reorganised and divided itself by its own hand[30], and on 4 December 1946 began drafting a plan for division and reconstruction[31].

Opinion inside the company divided over whether to split by commodity or by region, and in the end several alternatives were put forward for General Headquarters of the Allied Powers to choose between[32]. Against the ten-way split first proposed, the responsible officer had hinted that the number might be held to five or six[33]. Yet on 5 July 1947 the executive summoned to the Ministry of Finance was handed a copy of a memorandum dated 3 July[34], and what it set out was the dissolution of Mitsui & Co. and Mitsubishi Corporation[35]. The memorandum allowed no division into a few companies either; it permitted survival in no form whatever[36]. The dissolution broke the former Mitsui & Co. into roughly 180 companies[37], and the new Bussan-line firms that former staff started around the country numbered more than 200[38].

Dai-Ichi Bussan, founded by thirty-seven men, and the standing that came with a listing

Conditions were attached to the dissolution order to prevent a revival: a new company was forbidden to employ two or more people who had served as directors or department heads in the previous ten years[39]; more than 100 employees were not allowed to organise a new company; occupying the former offices and using the old trade name were both prohibited[40]; and the directive was to remain in force for the next ten years[41]. At dissolution the company had more than 3,000 male staff alone, and each had to find his own way[42]. Thirty-seven men from the non-ferrous metals, foodstuffs, fertiliser, chemicals, building materials and planning departments came together, and on 25 July 1947[43] Dai-Ichi Bussan was founded with capital of ¥195,000[44].

The head office was a rented former Showa Bank branch building at Horidome, its atrium partitioned to make a mezzanine[45]. The rent was ¥6,000 a month[46]. Less than two years after its founding, in May 1949, Dai-Ichi Bussan listed its shares on the reopened Tokyo Stock Exchange[47]. The only listed trading house at the time was Takashimaya Iida, which made Dai-Ichi Bussan the second[48]. Its third capital increase, paid in during January 1949, was the first offered to the general public: Mitsui Mutual Life and Fukoku Mutual Life led seven major life insurers onto the register[49], followed by the non-life companies. In 1951 a tie-up with Bache (ベーチェ社) brought in $138,889 (¥50m) of foreign capital and lifted capital to $555,556 (¥200m)[50].

The fight over the name with Muromachi Bussan, and a grand merger four years and seven months late

When the peace treaty took effect in April 1952 and the zaibatsu trade names could be revived[51], the presidents of 14 new Bussan-line companies gathered at the Mitsui Main Building and agreed to place the name Mitsui & Co. in the keeping of Nitto Soko Tatemono so that no other firm could take it[52]. The understanding was that at a suitable moment the old Bussan-line traders would merge and inherit the name, but nothing was put in writing[53]. In July 1953 Muromachi Bussan, a steel trader, merged that very company, Nitto Soko Tatemono, and took the name Mitsui & Co.[54] Dai-Ichi Bussan treated this as a breach of the understanding and countered by merging Mitsui Mokuzai Kogyo[55].

Merger talks between the two reached agreement late on the night of 30 August 1955, in an eleven-point memorandum setting the exchange ratio at one to one[56], the name after the merger as Mitsui & Co., and the effective date as 1 April 1956[57]. But on 25 August, just before that, Muromachi Bussan had announced without notice a bonus issue equal to half its capital[58], and from there the talks became tangled. The central dispute was which company would be the surviving entity[59]. Dai-Ichi Bussan was six times the size of Muromachi Bussan by turnover, and it needed to be the survivor in order to write off for tax purposes the $6.1M (¥2bn) of bad debt it had set out in its accounts[60].

The talks ran parallel and the April 1956 merger did not happen[61]. What moved matters was the market. Commodity prices surged with the Suez crisis of October 1956 and then swung back[62]; steelmakers cut output, the bills covering the scrap Muromachi Bussan had bought in quantity could not be met, and the company fell into financial difficulty[63]. Its main banks, the Bank of Tokyo and the Fuji Bank, both had deep dealings with Dai-Ichi Bussan as well and had long wanted the grand merger[64]. On 16 February 1959 the merger was completed with Dai-Ichi Bussan as the surviving company, and the trade name was changed to Mitsui & Co.[65]