Saihei Hirose: Part 1

Author: Teruaki Sueoka


Saihei Hirose, appointed sorinin of the House of Sumitomo (the first director-general), separated the business from the family. Born in Yabu-mura, Yasu-gun in Omi Province (present-day Chuzu-cho, Yasu City, Shiga Prefecture) in 1828, he was the second son of Risaburo Kitawaki. He was adopted by his uncle Jiemon Kitawaki in 1834, who was working at the Besshi Copper Mines. In 1836 at the age of nine, he moved to the Besshi Copper Mines, accompanying his uncle. Two years later he was apprenticed to the House of Sumitomo. This was the start of long and distinguished career in which he served the House of Sumitomo.

At the age of 28, he was adopted by Giemon Hirose on the recommendation of Tomomi, the 10th head of the Sumitomo family. In 1865 at the age of 38, he was appointed manager of the Besshi Copper Mines. Immersing himself in the Chinese classics whenever he could spare the time, Hirose learned the essence of business management from those profound works.

Overcoming the crisis of the Besshi Copper Mines

The House of Sumitomo was producing copper bars for export to the Netherlands and China from Nagasaki. In those days, copper exports were controlled by the doza (copper guild) authorized by the Tokugawa Shogunate. Thus, Sumitomo’s copper mining and production business was aligned with Japan’s national policy. The Besshi Copper Mines were essentially viewed as a national asset serving the interests of an emerging Japan.

Through copper trading, Hirose was well aware of Japan’s vulnerability and fraught circumstances, with the Tokugawa Shogunate in terminal decline just as the Western great powers were jockeying for power in East Asia and threatening to intervene in Japan. In fact, he journeyed to Matsuyama to see foreign steamships at anchor in 1866, a sight that surely heightened his growing sense of urgency regarding Japan’s situation vis-à-vis the leading Western maritime nations.

Hirose was far from being a deskbound manager whose career was a predictable ascent of the bureaucratic ladder. The mountainous Besshi terrain had been his home ever since his childhood. Frequenting the mines, his knowledge of the rich veins of copper buried in the Besshi mountains surpassed that of the miners. His capabilities as a manager were rooted in those formative years spent at Besshi.

In February 1868 Hirose challenged Koichiro Kawada of the Tosa Domain (present-day Kochi Prefecture) over the control of the Besshi Copper Mines, which the government was threatening to requisition. Hirose’s argument was rational. Although the Besshi Copper Mines were in the territory of the Tokugawa Shogunate, the House of Sumitomo had discovered the copper deposit and was managing the mines unaided. If the new government were to commandeer the Besshi Copper Mines and put inexperienced people in charge, the national interest would suffer.

Like Hirose, Kawada was a highly capable contender in the private sector who sought to serve the nation. Hirose’s argument according priority to the national interest struck a chord with Kawada. In March 1868, following a request submitted jointly by Hirose and Kawada, the new government granted the House of Sumitomo permission to continue owning and managing the Besshi Copper Mines. Although still a relatively minor official at that time, Kawada was later instrumental in establishing Mitsubishi and eventually became president of the Bank of Japan. The subsequent development of Sumitomo can be traced back to this seminal encounter of Hirose and Kawada, two men blessed with capabilities of the highest order.

Serving the new government

Current view of Niihama City from a vantage point
above the former Besshi Copper Mines
Photo by Hitoshi Fugo

In September 1868, having recognized Hirose’s capabilities during the negotiations concerning the Besshi Copper Mines, the new government appointed him to serve as an official of the Mine Agency. In its infancy, the Meiji Government promoted talented men regardless of their background or class.

In accordance with the government’s instructions, Hirose visited the Ikuno Silver Mine (Hyogo Prefecture) and the Izu Gold Mines (Shizuoka Prefecture). Hirose met Jean-François Coignet, a French engineer hired by the government, at the Ikuno Silver Mine, learning from him about modern mining techniques using gunpowder. This experience convinced Hirose that only by introducing Western technology could the Besshi Copper Mines be revived.

To concentrate Sumitomo’s resources and talent on the Besshi Copper Mines, it was necessary to withdraw from unprofitable businesses. In December 1868, en route to the Izu Gold Mines, Hirose visited Tokyo to close the financial operations, namely, the money-changing business (present-day bank) in Nakahashi (present-day Yaesu 1-chome, Chuo-ku) and Fudasashi in Asakusa. Notwithstanding the restructuring, Hirose retained promising personnel, including Tsuruzo Koike then in his fourth year at Sumitomo, bringing them back to Sumitomo’s Osaka Head Office with him.

Hirose’s journal of his business trip written in pencil in a Western-style notebook.
The diary concludes with an entry on February 16, 1896: “At dawn, as our ship traverses (the stretch of water between Sanuki and Iyo (Kagawa Prefecture and Ehime Prefecture), our copper mines are visible in the distance. I am filled with joy.” This memorable vista may well have stirred Hirose to redouble his efforts to modernize the Besshi Copper Mines.

From the day of his departure from the Mining Agency in Osaka on November 1, 1868, Hirose kept a journal during his business trip. It was written in pencil in a Western-style notebook, which was unusual in those days.

The journal records that on November 12 Hirose was a guest of Hidetake Egawa Tarozaemon, the governor of Nirayama Prefecture. On December 14, he concluded a deal in Tokyo whereby the government gained control of a copper refinery, making it a branch of the Mining Agency. On December 29, on his way home, he visited the Iba family, into which his sister had married, in Nishijyuku, Omi-hachiman (present-day Nishijyuku-cho, Omi-hachiman City, Shiga Prefecture), spending the New Year with his sister and her husband, as well as with his nephew Teigo Iba who had returned home on completing his assignment as a member of the imperial guards stationed at the Kyoto Imperial Palace.

On January 7, 1869, he recorded: “The day before yesterday, an incident occurred in Kyoto. Government advisor Heishiro Yokoi was assassinated. Strict measures have been taken to secure the city.” Hirose happened to be in Kyoto when an assassin struck down Shonan (Heishiro) Yokoi, an important figure in the government. He described Kyoto as being in an uproar.

Hirose took full advantage of this trip to grasp the reality of Japan’s situation. The experience convinced him of the wisdom of placing the Besshi Copper Mines at the heart of Sumitomo’s business. Hirose’s business strategy was farsighted, considering that Mitsui, Mitsubishi, Furukawa, Fujita, and Kuhara (Hitachi) were only able to develop heavy industry after acquiring mines previously managed by the government.

Happy New Year heralding change!

In April 1896, it was without any regrets that Hirose resigned from his position as a government official in order to focus on modernizing the Besshi Copper Mines. Far from relishing the status and accolades that he could expect as a government official, he was eager to contribute to the nation through achievements in the business world. Sumitomo’s business during the Edo period had been dependent on the administration of the Tokugawa Shogunate, which had been the exclusive purchaser of copper for export from Nagasaki. This system had persisted into the Meiji era, with the Mining Agency as the exclusive purchaser, but in February 1896 the government announced that copper would henceforth be traded freely, and moreover the system whereby the state undertook to supply rice for the miners and extended credit to mine owners would be abolished. This meant that the House of Sumitomo would itself have to sell copper to customers overseas and secure some 6,000 goku of rice for the miners each year. Hirose petitioned the Ministry of Finance in Tokyo to continue supplying rice and extending credit. On the other hand, the Osaka Head Office, failing to appreciate that the old order was about to be swept away, was increasingly out of step with the new era.

On January 5, 1870, Hirose attended the New Year reception at the Osaka Head Office on his way home from Tokyo. Frustrated by the complacency of the Osaka Head Office, Hirose began his New Year’s address, with a novel riff on the customary greeting, wishing everyone “A Happy New Year heralding change!” Executives and representatives of the cadet branches of the Sumitomo family who constituted the old guard resented Hirose, expressing their view that his deviation from the customary greeting was inauspicious. In response, he doubled down, stating: “What we should wish for now is the eradication of the old and the introduction of the new so as to transform the dross of misfortune into the gold of good fortune. The words ‘heralding change’ in my New Year greeting to you indicate my resolve to jettison outmoded tradition because from the bottom of my heart it is my earnest desire that the House of Sumitomo will flourish far into the future.” Hirose wanted to emphasize the need for change and make sure everyone recognized that if Sumitomo continued with its old practices that were no longer fit for purpose in the new age of civilization and enlightenment, Sumitomo could not survive.

Hirose acted swiftly. In October 1870, he opened a temporary office for copper sales in Kobe and opened the permanent Kobe branch in February 1871 to promote sales to foreign firms. While procuring rice for miners from Shimonoseki and other markets in Japan, Hirose endeavored to secure adequate supplies of rice for Sumitomo by purchasing agricultural land near Niihama.

Sumitomo hires Louis Larroque

Seizanbo (rod like tool in the photo) exhibited at the Besshi Copper Mine Memorial Museum (Niihama City, Ehime Prefecture). This is a tool for making a hole used for charging gunpowder in veins. Hirose coined the name to signal his determination to ensure the prosperity of the mines.

In February 1869, Hirose improved on the mining techniques he had learned in Ikuno by introducing tools called seizanbo, bits for drilling holes in which gunpowder is charged. Seizanbo literally means “bars for prosperity of the mines.” Hirose coined this name for the new tool to signal his commitment to ensuring the prosperity of the mines. Subsequently, Seizanbo were widely used at mines in the Kansai region.

In 1872, Hirose requested Coignet to visit the Besshi Copper Mines. In January 1874, Hirose hired French mining engineer Louis Larroque, overriding the objections of other Sumitomo executives. Larroque stayed at Hirose’s residence in Kaneko-mura, Niihama (present-day Kubota, Niihama City, Ehime Prefecture). The villagers stared at Larroque, curious about this exotic foreigner, and some expressed their disapproval by throwing stones at him. It was a time when foreigners were a rarity in Japan and foreign influence was widely resented. Osaka Head Office’s objection to the hiring of Larroque reflected the temper of the times.

Larroque’s monthly salary of 600 yen was six times greater than that of Hirose. Eager to prove his worth, Larroque completed the Besshi Copper Mines Masterplan for modernization of the mines. The deeper Laroque delved into the Besshi Copper Mines, the more they enchanted him. Although he requested Hirose to continue his employment after the expiry of his contract, Hirose firmly rejected Larroque’s request. Mindful of cases in which mines operated by the government had failed, Hirose was determined to complete the modernization of the Besshi Copper Mines without relying on a foreign engineer.

In February 1876, with a view to fostering Japanese engineers, Hirose sent Monnosuke Shiono, who had been hired from the Ministry of Foreign Affairs to serve as an interpreter for Larroque, and Yoshizo Masuda, a clerk, to France to study mining engineering. Hirose also formulated a business policy based on Larroque’s Masterplan to promote modernization of the Besshi Copper Mines.

In order to accomplish the modernization project, Hirose needed to recruit people with determination.

Assignment of talents based on his belief in gyakumei rikun

“Disobey your master’s order and benefit him. That is loyalty.” Calligraphic work by Hirose from 1913, the year before his death
Photo courtesy of Hirose History Museum in Niihama City

A surviving calligraphic work by Saihei Hirose from 1913, a year before his death, is an eloquent testimony to this distinguished man. It bears his lifelong favorite maxim, “Gyakumei rikun, kore wo chu to iu,” meaning “Disobey your master’s order and benefit him. That is loyalty.” It is derived from “True loyalty is not unquestioning obedience to your master’s order, even if it is an order emanating from the state. If the order is contrary to the interests of the merchant house or the state that you serve, you should disobey it.” This is one of the four precepts that originally appeared in the Shuo Yuan or Garden of Stories, a Chinese classic that also contains its obverse, “Obey your master’s order and make him sick. That is flattery.”

Flattery and the obsequious carrying out of orders will sicken the master and lead the state to corruption. Hirose detested flattering yes-men.

Just as Hirose was a protégé of Tomomi, the 10th head of the Sumitomo family, and Ubee Imazawa and Soemon Shimizu, who were Hirose’s superiors, recognized his capabilities, individuals who rose to prominence in the Meiji Restoration tended to be protégés of masters who were also their mentors. Takamori Saigo and Toshimichi Okubo, both of whom were lower-ranking samurai of the Satsuma Domain (present-day Kagoshima Prefecture), were protégés of Lord Nariakira Shimazu; Takayoshi Kido and Masujiro Omura of the Choshu Domain (present-day Yamaguchi Prefecture) were protégés of their superior Masanosuke Sufu; and Eiichi Shibusawa, a farmer in Musashi Province (present-day Saitama Prefecture), was the protégé of Enshiro Hiraoka, a retainer of the Hitotsubashi family. The net was cast wide for talented individuals and the Meiji Restoration was largely accomplished by men who practiced gyakumei rikun.

Hirose promoted many individuals who practiced gyakumei rikun. He recruited talented people from the government, such as Teigo Iba (Ministry of Justice), Sadakichi Tanabe (Ministry of Education), Monnosuke Shiono (Ministry of Foreign Affairs), and Tomokiyo Oshima and Tan Hirose (Ministry of Engineering). Hirose also promoted Kensuke Hasegawa, Sadamatsu Abe, and Tsuruzo Koike, who were clerks of Sumitomo. These were men of conviction who contributed to Sumitomo’s development in various ways, not least by drafting the Rules Governing the House of Sumitomo and modernizing the Besshi Copper Mines, although they did not always see eye to eye with Hirose. Blessed with a vigorous attractive character, Hirose engendered affection and respect even among those whose views differed from his.

Hirose wrote: “The House of Sumitomo has been engaged in mining for 400 years. Our customs express the precepts of the house. In the conduct of business, Sumitomo has never been inclined to pursue its own benefit to the exclusion of other considerations...Therefore, unworthy as I am, in the conduct of business I have always sought to work for the public interest and the benefit of the nation.”

Just as Koichiro Kawada was persuaded by Hirose at the time of the Meiji Restoration, individuals recruited by Hirose were attracted by the Sumitomo business philosophy that he so powerfully advocated. Teigo Iba described his uncle Hirose as a larger-than-life character reminiscent of those who brought order to a fractious Japan in the 16th century. Hirose displayed strong leadership in a turbulent period, reminiscent of Oda Nobunaga, the celebrated daimyo who united Japan in the 16th century.