31 Early Management at Mitsui Bussan

Early Products Handled

At its initial founding, Mitsui Bussan was heavily weighted toward government-related business such as rice trading, including government rice exports; munitions for the Seinan War during the Satsuma Rebellion; and documentary draft operations using interest-free funds from the government. However, that government-related business gradually declined with, among others, the establishment of the Yokohama Specie Bank (causing the loss of the documentary draft business) and the government-run woolen textile factory in Senju (decline in textile imports).

In the 1880s, products were increasingly centered around exports and domestic sales of coal produced at the Miike Coal Mine. From early on, the company also owned steamships to facilitate coal exports. As the company entered its growth period from 1886 onward, imports of machinery such as cotton spinning machines (→Fig. 31b) gradually increased, and its trade in cotton also began to grow. In the 1890s, coal, machinery, and cotton became established as the company’s basic commodities.

Change in Profit/Loss

From its initial founding through 1880, Mitsui Bussan posted steady profits. In 1881, the company was hit hard by the so-called Matsukata deflation (extreme deflation brought about as a result of policies adopted by Minister of Finance Matsukata Masayoshi), and failures in domestic rice trading, combined with poor collection of payments for overseas exports, resulted in the company recording a huge loss in excess of 100,000 yen. In the 1880s, there were losses from the initial investment in the London branch, and during the period of the company’s rise, losses were also incurred in the mining business and the Hokkaido fishing business. Research in recent years has revealed that these losses were largely covered by profits from coal trading and ship operations.

Early Overseas Branches

Mitsui Bussan’s first overseas branch was the Shanghai branch, opened in 1877. Subsequently, overseas branches were also established in Hong Kong and Paris (1878) and in New York and London (1879). Of these, however, the Hong Kong branch was closed in 1881, followed by the New York branch in 1882 and the Paris branch in 1888.

Establishment of London Branch

In the midst of those changes, the London branch had managed to establish itself after overcoming its initial difficulties. In London, Mitsui Bussan started business in 1877 with Robert Irwin acting as their agent. In 1879, Sasase Motoaki was dispatched to London where he opened the first branch there staffed by a Japanese manager. Initially, the London branch generated large losses, and it was not until after 1883 that the branch began posting a profit. In the 1880s, profits from the handling of government rice exports were significant, and in the 1890s, the London branch profited from importing machinery to Japan. During that time, the branch accumulated expertise in marine transport and insurance, essential to trading operations, and also built its credibility in London, forming its foundation as a trading company.

Chugai Bukka Shimpo

While not part of Mitsui Bussan’s main business, one of the more unique activities of the company initially was its publishing of the Chugai Bukka Shimpo, the inaugural issue of which was put out by the company on December 2, 1876. Masuda Takashi decided to publish the paper on the recommendation of Kawase Hideharu, director of the Home Ministry’s Commercial Bureau. As editor, he brought in Otawara Noritaka, also from the Commercial Bureau, on an introduction from Kawase. The newspaper was issued with the support of Fukuchi Genichiro, president of Nipposha and publisher of the Tokyo Nichi Nichi Shimbun, for printing, delivery and other operations. The newspaper was published by the Chugai Bukka Shimpo Kyoku (Chugai Bukka Shimpo Bureau) of Mitsui Bussan until 1892, when the silent partnership Shokyosha was established and the publisher was transferred to that entity. The name of the paper was subsequently changed to the Chugai Shogyo Shimpo, which in turn led to the Nihon Keizai Shimbun (Nikkei) of today.

This is a document prepared by Masuda Takashi in October 1891, in the course of Mitsui’s organizational reforms and business restructuring. The report details Mitsui Bussan’s transaction volume by product during 1890, clarifying the state of its business. As for future business policy, the report states that once the company has sufficient capital flexibility through its organizational reforms, it should reduce the variety of products it handles wherever possible and choose to carry products that are “in high demand and have a broad range of uses.” Specifically, Masuda listed eight businesses: coal, cotton, textiles, rice for export, “overseas-related miscellaneous businesses” (machinery and sundries, etc. imported from the London branch), domestic rice, marine products (fish fertilizer and fish oils), raw silk, and processed tea (for sale in Yokohama). He goes on to state that, based on his previous experience, these are the safest and most lucrative products, and that if the company’s business policy is set around these areas of business, it will be able to generate substantial profits and build a solid business.

Mitsui Bussan entered into an agency contract with Platt Brothers & Co. Ltd. of the U.K., a manufacturer of spinning machines, and during Mitsui’s growth period, sold a large number of these machines to the many spinning companies that were being established at the time. The photo depicts 1888 Platt spinning machines in operation at Dainippon Boseki’s Hirano plant (formerly Hirano Boseki).

At Senshu Kaisha (→30), accounting records were kept in Western-style ledgers using double-entry bookkeeping. Mitsui Bussan carried on that practice, also using Western-style ledgers. These Ledgers, Journals, and Cashbooks from the company’s founding through the 1890s have been preserved at Mitsui Bunko. Since Western-style ledgers were not being manufactured in Japan at the time, these ledgers were ordered from London.