President Noboru Goto’s diversification: into retail, hotels, leisure and aviation (1968)

The merits and demerits of an expansion that chased “volume”

President Noboru Goto’s diversification can be seen as an attempt to turn the surplus produced by one great success — the Tama Garden City — toward a broad range of businesses touching daily life. The railway gathered people along the line, and the group would catch even their spending and leisure — as long as high growth and rising land prices continued, this expansion widened the base of the business and worked as a virtuous circle that lifted passengers and earnings alike. The corporate group, counting thirteen listed companies, was that circle made visible. Yet while success continued, the question of how much each individual business actually earned tended to recede into the background.

As the phrase the Garden City’s “buried treasure” suggests, Tokyu’s expansion rested on the profit a single development kept throwing off. The blessed condition — that so long as land prices rose, the balance would not shrink even as land was sold — also, seen from the other side, weakened the motive to press hard on the profitability of each business. The 1990s rebuilding, when the collapse of the bubble forced the cleanup of resorts and department stores and drove a selection-and-concentration onto railway, real estate and life-services, was in part the work of squaring the accounts of an age that had chased volume. Where expansion ought to have switched over into a scrutiny of quality is a question that still remains for a private-railway management that owes so much to a single foundation — its line.