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On August 14, 1945, the Japanese government accepted to the Potsdam Declaration, which called for unconditional surrender, at last bringing the four-year war in the Pacific to an end. This finally brought long-awaited peace after the loss of millions of lives; in Japan, most had lost their homes and the population faced severe food shortages.
Following the war, the Allies set up an occupation administration in Tokyo to carry out deep reforms. As part of the effort to transform Japan from militarism to democracy, a series of fundamental policies that underpin modern Japanese society were put into place, including the new constitution and the principle of equality between the sexes.
The occupation’s reforms extended to the economic sphere as well the political. One was the breakup of the industrial conglomerates—the zaibatsu. The occupation administration considered Japan’s zaibatsu a force the old military government had used in its war effort and made their breakup one of the key steps in transitioning the economy away from strict government-control and influence in order to help prevent a revival of militarism. Realizing that it would inevitably be subject to this policy, Sumitomo moved to face the coming changes squarely. It took active steps in the direction of the occupation administration’s policy by notifying companies under its umbrella that they could no longer use the Sumitomo trade name and trademark while at the same time exploring the dissolution of its central holding company or offering its shares to the public, and renewing the top management.
In November 1945, the occupation administration ordered the breakup of 4 big(Mitsui, Mitsubishi, Sumitomo, Yasuda) zaibatsu. Then in December, it specified 336 going concerns as 18 zaibatsu members. This included a large number of Sumitomo companies involved in a range of businesses. At a time when demand for capital was high, both to pay for raw-material costs that were being driven up rapidly by staggering inflation, and to pay for post-war reconstruction of damaged equipment and facilities, Sumitomo was restricted the scope of its business activities. |
