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Japanese Multinationals in the United States: Continuity and Change, 1879–1990

Published online by Cambridge University Press:  13 December 2011

Mira Wilkins
Mira Wilkins
Affiliation:
Mira Wilkins is professor of economics at Florida International University.
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Extract

A great deal of attention has recently been focused on the extent of Japanese direct investment in the United States. In the following historical survey, Professor Wilkins details the size and scope of these investments from the late nineteenth century, showing that Japanese involvements in America have deep historical roots. At the same time, she analyzes the ways in which late twentieth century Japanese direct investment differs from the earlier phenomenon and attempts to explain why it has aroused such concern among both business leaders and the general public.

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Articles
Information
Business History Review , Volume 64 , Issue 4 , Winter 1990 , pp. 585 - 629
Copyright
Copyright © The President and Fellows of Harvard College 1990

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References

1 Miami Herald, 6 Jan. 1990.

2 Wilkins, Mira, “The Contributions of Foreign Enterprises to Japanese Economic Development,” in Foreign Business in Japan before World War II, ed. Udagawa, M. and Yuzawa, T. (Tokyo, 1990), 43–44Google Scholar.

3 For the pre-1914 history, I have relied on data developed for Wilkins, Mira, “Japanese Multinational Enterprise before 1914,” Business History Review 60 (Summer 1986): 199–231CrossRefGoogle Scholar; see especially 218-21. Mitsui's first New York office was a short-lived venture, closed at the start of the 1880s; it was reopened in the mid-1890s.

4 On Kikkoman, Kinugasa, Yosuke, “Japanese Firms’ Foreign Direct Investment in the United States—The Case of Matsushita and Others,” in Overseas Business Activities, ed. Okochi, Akio and Inoue, Tadakatsu (Tokyo, 1984), 57Google Scholar; on the “big three,” Wray, William D., “Japan's Big Three Service Enterprises in China, 1896-1936,” in Japan's Informal Empire in China, 1895-1937, ed. Duus, Peter, Myers, Ramon H., and Peattie, Mark (Princeton, N.J., 1989)Google Scholar; on N.Y.K., Wray, William D., Mitsubishi and the N.Y.K, 1870-1914: Business Strategy in the Japanese Shipping Industry (Cambridge, Mass., 1984)CrossRefGoogle Scholar. On the insurance company, Wilkins, “Japanese Multinational Enterprise,” 221.

5 Wilkins, “Japanese Multinational Enterprise,” 209, 222.

6 Wilkins, Mira, The History of Foreign Investment in the United States to 1914 (Cambridge, Mass., 1989)Google Scholar.

7 Sugiyama, Shinya, Japan's Industrialization in the World Economy, 1859-99: Export Trade and Overseas Competition (London, 1988), 80Google Scholar, on the growing U.S. importance to Japanese silk exports; by 1896/1900, 57.8 percent of Japan's raw silk exports went to the United States.

8 Wilkins, “Japanese Multinational Enterprise,” 220.

9 This was the surprising finding of Wilkins, Mira, “American-Japanese Direct Foreign Investment Relationships, 1930-1952,” Business History Review 56 (Winter 1982): 504–7CrossRefGoogle Scholar.

10 Ibid., 506.

11 Percentages based on U.S. Department of Commerce, Bureau of Foreign and Domestic Commerce,Foreign Long-Term Investments in the United States, 1937-39 (Washington, D.C., 1940), 34Google Scholar.

12 Based on the Annual Reports of the Superintendent of Banks, New York. U.S. law made no provision for foreign bank branches or agencies; thus state law prevailed. New York state law did not allow foreign bank “branches,” only “agencies,” which could make loans but could not legally take deposits.

13 Alien Property Custodian, Annual Report for Year Ending June 30, 1944, 58n.

14 The Sumitomo Bank of Seattle had three Americans among its five directors but was, in the eyes of one Japanese observer, “more correctly called a branch of the Sumitomo Bank of Osaka than a joint enterprise.” Odate, Gyoju, Japan's Financial Relations with the United States (New York, 1922), 81, 84Google Scholar. As noted in the text, before the First World War the Yokohama Specie Bank had branches in San Francisco, Los Angeles, and Honolulu. By 1926 it had a branch in Seattle. See Polk's Bankers Encyclopedia 1926.

15 In 1924 the Sumitomo Bank, headquartered in Osaka, acquired the assets of the insolvent Nippon Savings Bank, Sacramento, and in 1925 established the Sumitomo Bank of California, Sacramento. Earlier (August 1916), the Sumitomo Bank had opened a branch bank in San Francisco; in 1924 it opened in Los Angeles. Cross, Ira B., Financing an Empire: History of Banking in California, 4 vols. (Chicago, Ill., 1927), 4: 274-75, 696, 699Google Scholar, and 2: 764, 787-88. Curiously, Odate (whose book was published in 1922) did not seem to be aware of Sumitomo's branch bank in San Francisco (as reported by Cross). Data in the Superintendent of Banks, California, Annual Reports, confirms the accuracy of Cross's information.

16 An example of the type of business it did was its role in the $25 million Japanese Currency Stabilization credit of 21 November 1929. On 19 November 1929, J. P. Morgan & Co., Kuhn, Loeb & Co., the National City Bank, and the First National Bank, New York, at the request of the Japanese government and the Bank of Japan, agreed to grant the Yokohama Specie Bank, Ltd., a revolving credit for $25 million; the negotiations were through Yokohama Specie Bank in New York; the collateral delivered by the Yokohama Specie Bank to J. P. Morgan & Co. consisted of Japanese government bonds equal in value to at least 120 percent of the advance. See U.S. Senate, Committee on Banking and Currency, Stock Exchange Practices, Hearings, 73d Cong., 1st sess. (1933), pt. 1, 251-52.

17 Wilkins, “American-Japanese,” 508.

18 For suggestions along this line see Hiroaki Yamazaki, “The Yokohama Specie Bank during the Period of the Restored Gold Standard in Japan [January 1930–December 1931],” forthcoming in Finance and Financiers in European History, ed. Cassis, Youssef (Cambridge, England, 1991)Google Scholar. This paper has material on the accounts of the New York agency of the Yokohama Specie Bank in the 1920s and in 1929-31.

19 Ibid.

20 Cross, , Financing an Empire, 3: 266, says 1923Google Scholar; Paul J. Hauser, Daiwa Securities America Inc., to Mira Wilkins, 22 Feb. 1989, gives a 1924 date. In 1927, Kuhn, Loeb & Co. made a $1 million broker's loan to Fujimoto Securities Corporation (which was repaid in three months); the collateral consisted mainly of Japanese imperial government bonds, City of Tokyo bonds, and also a diversified set of bonds, including Buenos Aires, Brazilian, and Italian bonds. Stock Exchange Practices, Hearings, pt. 3, 1404-5.

21 Nomura Securities Company in New York furnished me (29 June 1988) with data on the company's history, indicating that Nomura Securities opened an office in New York City in March 1927. (The material claims that Nomura was the first Japanese securities company in the United States; it was not: Fujimoto Securities was the first).

22 Data from Nomura Securities Company, 29 June 1988, and from Daiwa Securities, 22 Feb. 1989.

23 The largest was the Tokyo Marine and Fire Insurance Co. (the successor to Tokio Marine Insurance Co.); the two others were the Sumitomo Marine and Fire Insurance Co. (licensed in New York state in 1921) and the Meiji Fire Insurance Co. (licensed to do business in New York and Illinois in 1931). New York Times, 11 Dec. 1941.

24 Wilkins, “American-Japanese,” 508.

25 Ibid., 509; Hiroaki Yamazaki, “The Logic of General Trading Companies in Japan,” and Kawabe, Nobuo, “Development of Overseas Operations by General Trading Companies, 1868-1945,” both in Business History of Trading Companies, ed. Yonekawa, Shin'ichi and Yoshihara, Hideki (Tokyo, 1987), 34, 56, and 81Google Scholar. Kawabe, Nobuo, “Japanese Business in the United States before World War II: The Case of Mitsubishi Shoji Kaisha, the San Francisco and Seattle Branches” (Ph.D. diss., Ohio State University, 1980), 17Google Scholar [henceforth cited as Kawabe, “Japanese Business”]. Kawabe is excellent on the activities of the Mitsubishi Shoji in the United States before the Second World War. On the Seattle branch, see Ibid., 34, 36, 49. The reader is also directed to Kawabe, Nobuo, “Japanese Business in the United States before the Second World War: The Case of Mitsui and Mitsubishi,” in Historical Studies in International Corporate Business, ed. Teichova, Alice, Lévy-Leboyer, Maurice, and Nussbaum, Helga (New York, 1989), 177–89CrossRefGoogle Scholar.

26 Yamazaki, “The Logic,” 24, 28, 34, and Kawabe, “Development,” 81.

27 Lockwood, William W., The Economic Development of Japan (Princeton, N.J., 1954), 398 (1925 peak)Google Scholar. Kawabe, “Japanese Business,” 20, has figures that indicate that the dollar value of Japanese silk exports to the United States peaked in 1929 and then fell off sharply. In the years 1924-29, Japanese silk exports to the United States represented between 82 and 84 percent of all Japanese exports to this country. Between 1930 and 1932, they hovered around 79 percent of exports, although the dollar amounts had gone down dramatically.

28 Lockwood, Economic Development of Japan, 398, 401; Kawabe, “Development,” 87; and Kawabe, “Japanese Business,” 20.

29 Lockwood, Economic Development of Japan, 401.

30 Kawabe, “Development,” 88.

31 Kawabe, “Japanese Business,” 26.

32 Alien Property Custodian, Annual Report for … 1944, 81-82.

33 For details on the role of Japanese trading firms in Japanese imports and exports in the period 1921-25, see Yamazaki, “The Logic,” 24-31.

34 Hideki Yoshihara, “The Business History of Shogo Shosha in International Perspective,” in Yonekawa and Yoshihara, eds., Business History of Trading Companies, 340-41.

35 On technology transfer, Wilkins, “American-Japanese,” 509; Kawabe, “Development,” 80, 82; and Kawabe, “Japanese Business,” 18, 35, and passim. Major joint ventures in Japan between American and Japanese companies took place in the interwar years. No one has done research on the extent to which preliminary negotiations for such joint ventures were undertaken through American offices of the Japanese trading companies and where exactly the Japanese direct investments in the United States fit into these Japanese-American relationships in Japan. Mason, Mark, “The Development of United States Enterprise in Japan” (Ph.D. diss., Harvard University, 1988)Google Scholar, is suggestive in this regard, but the subject requires more systematic study. There is no question, however, that the trading companies' presence in the United States served as an information channel and a communicator of technologies from the United States to Japan; more research is necessary on the specific details of the technological transfer and on the relative importance in different industries of the Japanese trading company versus the American direct investor in Japan in this regard. The use of service companies to ferret out information and to transmit technology was not distinctive to Japanese business. My current research indicates that Chemnyco, Inc., of New York served that function for I.G. Farben in the interwar period.

36 Alien Property Custodian, Annual Report for … 1944, 83-84.

37 Kawabe, “Development,” 82. Safford, Jeffrey J., Wilsonian Maritime Diplomacy, 1913-1921 (New Brunswick, N.J., 1978), 136-39, 152Google Scholar, indicates that the steel was released to the Japanese shipbuilders in exchange for U.S. Shipping Board purchases of forty-five cargo carriers. In May 1918, to meet Japanese iron and steel needs, a Japanese-owned company made plans to start up an abandoned iron furnace in Talladega, Alabama. Ibid., 137. I have no evidence, however, that this direct investment was ever made.

38 Wilkins, “American-Japanese,” 509; Lockwood, Economic Development of Japan, 349.

39 See note 35 above. That note notwithstanding, this generalization is based principally on my rethinking of my own earlier research on American business abroad.

40 Herzberg, James, A Broken Bond: American Economic Policy toward Japan, 1931-1941 (New York, 1988), 70–81Google Scholar, on cotton textile imports; the quotation is on p. 79. This book is very good on U.S.-Japanese economic relations in the 1930s.

41 Wilkins, “American-Japanese,” 510. The freezing of Japanese assets in the United States was one of a number of steps that the United States took in view of worsening economic and political relations. For a sequence of U.S. economic activities affecting Japan, 1938–41, see Wilkins, Mira, “The Role of U.S. Business,” in Pearl Harbor as History: Japanese American Relations, 1931-1941, ed. Borg, Dorothy and Okamoto, Shumpei (New York, 1973), 373Google Scholar.

42 Alien Property Custodian, Annual Report for … 1944, 58.

43 Wilkins, “American-Japanese,” 512-14. Note that the figures given on Tables 1 and 2 are book value ones; measures of foreign companies' “assets” in the United States cannot be reconciled with these numbers.

44 Mitsui & Co., The 100 Year History of Mitsui & Co., Ltd., 1876-1976 (Tokyo, 1977), 139, and 146–52Google Scholar (for the process of dissolution).

45 For a number of years, foreigners were told that the relationships between Japanese companies were “very different” from those before the war; by the 1980s there was no disguising the cooperation between group members. The Mitsui & Co. Annual Report 1983, 75, published in English, listed the “Major Group Companies, Getsuyo-Kai (Monday Conference) Members.” See also Wassmann, Ulrike and Yamamura, Kozo, “Do Japanese Firms Behave Differently? The Effects of Keiretsu in the United States,” in Japanese Investment in the United States, ed. Yamamura, Kozo (Seattle, Wash., 1989)Google Scholar.

46 Toyota Motor Corporation, Toyota: A History of the First 50 Years (Toyota City, 1988), 97Google Scholar. Under the dissolution rules Toyota, as a “restricted concern,” could not open a new branch or new division; Toyota Motor Company was, moreover, by 1949-50 at the brink of bankruptcy. Toyota sources suggest that the separation of Toyota Motor Sales from Toyota Motor Company was at the insistence of the banks. Toyoda, Eiji, Toyota: Fifty Years in Motion (Tokyo, 1987), 99-101, 158–59Google Scholar. In any case, the sales company for Toyota, Toyota Motor Sales Company (established in 1950), was separately incorporated, separately financed, and separately managed. It was run by the legendary sales manager, Shotaro Kamiya. Only in 1982 (after Kamiya's death in 1980) were the manufacturing and sales companies merged. Ibid., 157-61.

47 Wilkins, “American-Japanese,” 516.

48 Ibid.

49 Mitsui & Co., The 100 Year History, 144. Even earlier, some had sent representatives abroad to make “market surveys.” Sen Yurugi went to the United States in July 1949 on behalf of Daiichi Bussan (one of the companies to emerge out of the dissolved Mitsui & Co.); Ibid., 166-67.

50 On the survey, which I have not seen, see Mitsui & Co., The 100 Year History, 144. A tabulation of foreign direct investment in the United States by the U.S. Department of Commerce found Japanese interests in this country in 1950 to be negligible. Wilkins, “American-Japanese,” 516.

51 Wilkins, “American-Japanese,” 516.

52 Mitsui & Co., The 100 Year History, 168, 199.

53 Yamamura, ed., Japanese Investment in the United States, 141.

54 Channon, Derek F., Global Banking Strategy (New York, 1988), 30Google Scholar.

55 Superintendent of Banks, California, Annual Report for 1953, 130, and Lees, Francis A., Foreign Banking and Investment in the United States (New York, 1976), 31CrossRefGoogle Scholar.

56 Superintendent of Banks, California, Annual Report for 1953, 139, and Lees, Foreign Banking, 31.

57 Superintendent of Banks, California, Annual Report for 1953, 8, 138.

58 Euromoney, April 1988, 16, and booklet, Nomura, “The Evolution of the Tokyo Capital Market and Nomura Securities,” n.d. [1988?].

59 Lees, Foreign Banking, 26. According to Lees, by 1974 and possibly at origin, the Bank of Tokyo Trust Company was owned by the Bank of Tokyo and the Industrial Bank of Japan. The background material is based on data that I have collected from the Superintendent of Banking, Albany, New York.

60 Lees, Foreign Banking, 12-13.

61 Superintendent of Banks, California, Annual Report for 1959, 115, 127, 126. The assets are as of 30 June 1959.

62 Ozawa, Terutomo, Multinationalism: Japanese Style (Princeton, N.J., 1979), 12Google Scholar, and Crowe, Kenneth C., America for Sale (Garden City, N.Y., 1978), 242–43.Google Scholar

63 Morita, Akio, Made in Japan (New York, 1986), 86Google ScholarPubMed; see also, Ozawa, Multinationalism, 12.

64 Kinugasa, “Japanese Firms,” 30-32.

65 It had a capital of $1 million and was half owned by Toyota Motor Company and half by the Japanese sales company, Toyota Motor Sales Company (see note 46 above).

66 The early story of Toyota in America is told in Kamiya, Shotaro, My Life with Toyota (Toyota City, 1976), 74–83Google Scholar; Toyoda, Toyota: Fifty Years, 120-21; and Toyota Motor Corporation, Toyota: A History, 165-68.

67 Table 3 stops in 1973. There was a major benchmark survey made for the year 1974, resulting in a sizable reduction in U.S. Department of Commerce Japanese direct investment figures for 1974. Table 4 starts with the revised figures for 1974.

68 The explanation is given in the Survey of Current Business, Feb. 1973, 31. Note that the “minus” numbers are lower in 1972 than in 1971 as the loans from affiliates to parents were reduced.

69 U.S. Department of Commerce, Foreign Business Investments in the United States (Washington, D.C. [1962]), 7Google Scholar. Reprinted in Foreign Investments in the United. States, ed. Wilkins, Mira (New York, 1977)Google Scholar.

70 U.S. Department of Commerce, Foreign Direct Investment in the United States, 9 vols. (Washington, D.C, 1976), 1: 35–37Google Scholar [henceforth cited as Benchmark Survey, 1974].

71 Morita, Made in Japan, 93-96, on the financing of the new American sales subsidiary. Nomura Securities served as co-manager with Smith Barney when, in 1961, SONY issued Japan's first ADRs (American Depository Receipts) on the New York market. See Nomura, “The Evolution of the Tokyo Capital Market.”

72 Tetsuo Abo, “US Subsidiaries of Japanese Electronics Companies,” The Annals of the Institute cf Social Science, no. 26 (1984), 26, and Wilkins, Mira, Foreign Enterprise in Florida (Gainesville, Fla., 1979), 16Google Scholar.

73 Toyota Motor Corporation, Toyota: A History, 167, 209-13; Wilkins, Foreign Enterprise in Florida, 113.

74 Tsurumi, Yoshi, The Japanese Are Coming (Cambridge, Mass., 1976), 104Google Scholar.

75 Morita, Made in Japan, 128-29.

76 Tsurumi, The Japanese, 108.

77 Ibid., 106 (Yoshida K.K. in zippers); 120 (the Tsuzuki Cotton Spinning Company in 1965 with a spinning mill).

78 Yoshino, Michael Y., Japan's Multinational Enterprises (Cambridge, Mass., 1976), 80Google Scholar.

79 Tsurumi, The Japanese, 108.

80 Yoshino, Japan's Multinational Enterprises, 80.

81 Lees, Foreign Banking, 27, 26, 49-50, 30.

82 Ozawa, Multinationalism, 112. These figures make much more sense than the ones on Table 3 (see text above for the problems with the numbers in Table 3).

83 Survey of Current Business, Aug. 1990.

84 Morita, Made in Japan, 175-76, for a 1968 antidumping case against SONY.

85 International Monetary Fund, International Financial Statistics, Supplement on Exchange Rates (Washington, D.C., 1985), 67Google Scholar.

86 Morita, Made in Japan, 129.

87 Ibid., and Akio Morita and Shintaro Ishihara, “The Japan That Can Say ‘No,’” typescript (1989), 46.

88 Yoshino, Japan's Multinational Enterprises, 81; see Tsurumi, The Japanese, 108-11, and New York Times, 15 July 1973, on Nippon Miniature Bearings (NMB), another of the early ball bearing companies in the United States. Concerns over the Japanese role in the U.S. ball bearings industry continued in the 1980s. See Gordon, Sara L. and Lees, Francis A., Foreign Multinational Investment in the United States (New York, 1986), 211–12Google Scholar; U.S. Senate, Committee on Armed Services, Subcommittee on Preparedness, Sale of New Hampshire Ball Bearings, Inc. to the Japan-Based Minebea Company, Hearings, 98th Cong., 2d sess. (1984); and Glickman, Norman J. and Woodward, Douglas P., The New Competitors: How Foreign Investors An Changing the U.S. Economy (New York, 1989), 267Google Scholar.

89 Abo, “US Subsidiaries of Japanese Electronics Companies,” 9.

90 Encarnation, Dennis J., “Cross-Investment: A Second Front of Economic Rivalry,” in America versus Japan, ed. McCraw, Thomas K. (Boston, Mass., 1986), 129–30Google Scholar.

91 Wall Street Journal, 14 Nov. 1988, ran a long list of “selected Japanese direct investments in the U.S. electronics industry,” 1985-87. the investments were typically under $50 million and often minority interests in existing companies. Many were under $10 million.

92 Tolchin, Martin and Tolchin, Susan, Buying into America (New York, 1988), 12Google Scholar.

93 Ibid., 12, 269. the French firm was Schlumberger, Ltd.

94 Glickman and Woodward, The New Competitors, 268.

95 Wall Street Journal, 10 Nov. 1989. A half-billion dollar investment in 1989 was not “large,” but what is important here is that in ceramic semiconductor parts the Japanese were making vital innovations and had real advantages.

96 Tolchin and Tolchin, Buying into America, 9, 109.

97 Wall Street Journal, 21 Jan. 1988 and 2 Jan. 1990. The CBS Records Group that SONY acquired had plants in fourteen countries and subsidiaries, joint ventures, and licensees in more than fifty nations. Ibid., 24 Dec. 1987. The acquisition of CBS Records was arranged in 1987 and finalized very early in 1988. Ibid., 27 Nov. 1990, on the Matsushita acquisition.

98 The investments were in keeping with those of investors from other foreign countries whose currency was strong in relation to the dollar. Before 1984, there had been no foreign takeovers of over $1 billion. In 1985 there were two; in 1986, five; in 1987, six; and in 1988, twelve. Survey of Current Business, May 1989, 23.

99 SONY, of course, did, but so did others. For example, Mitsubishi Electric ran a full-page advertisement in the Wall Street Journal, 19 April 1988, explaining that it assembled televisions in Santa Ana, Calif.; had a semiconductor assembly and testing plant in Durham, N.C.; a television and cellular mobile phone assembly plant in Braselton, Ga.; and an automobile parts plant in Cincinnati, Ohio. It employed almost 3,000 Americans.

100 In 1988, a U.S. affiliate of a Japanese metal, petroleum refining, and petrochemical company acquired an Illinois-based manufectuter of computers and electrical products that had large defense contracts. The acquisition was “to obtain access to the U.S. company's research and development expertise in electronic parts manufacturing—particularly in the manufacture of copper foil, a material used in printed circuit boards.” The U.S. federal government was concerned and only approved the acquisition when the Japanese agreed to put the U.S. company's defense operations into a trust that would be run by the existing U.S. management. Survey of Current Business, May 1989, 23-25.

101 I do not have the 1970s figures, but in 1985, four Japanese motorcycle makers—Honda, Kawasaki, Yamaha, and Suzuki—accounted for approximately 94 percent of the American market. Wall Street Journal, 16 Sept. 1986.

102 Yoshino, Japan's Multinational Enterprises, 82.

103 Wilkins, Foreign Enterprise in Florida, 114.

104 Based on data collected by a group headed by Professor Tetsuo Abo of the University of Tokyo, plus U.S. press reports.

105 The learning process differed by company. Initially, the managements of U.S. manufacturing and of U.S. marketing were separate, with each reporting back to decision-makers in Japan. In the case of Toyota, it was not until 1982 that its manufacturing and sales companies were merged in Japan (see note 46 above). At the start of the 1990s, Toyota in the United States still had separate companies to handle manufacturing and sales, albeit by the end of the 1980s there was increasing communication in the United States between the managements of the manufacturing and sales companies.

106 Tolchin and Tolchin, Buying into America, 81-83; Wall Street Journal, 18 Feb., 21 March 1988. On its relative size, see Survey of Current Business, May 1989, 23.

107 See Crowe, America for Sale, 204, and Heller, H. Robert and Heller, Emily E., The Economic and Social Impact of Foreign Investment in Hawaii (Honolulu, Hawaii, 1973)Google Scholar, and Heller and Heller, , Japanese Investment in the United States: With a Case Study of the Hawaiian Experience (New York, 1974)Google Scholar.

108 Benchmark Survey, 1974, 1:186Google Scholar.

109 John H. Makin, “The Effects of Japanese Investment in the United States,” in Yamamura, ed., Japanese Investments in the United States, 81.

110 I believe that even with strict capital export restraints, the investments in U.S. manufacturing would have been authorized (since they were a response to potential protectionism); without capital liberalization, the real estate investments probably would not have been allowed.

111 Franz, Douglas and Collins, Catherine, Selling Out (Chicago, Ill., 1989), 21Google Scholar.

112 New York Times, 12 Nov. 1989.

113 Mitsui & Co., Ltd., Annual Report 1983.

114 Wall Street Journal, 26 Feb. 1990.

115 Mitsui & Co., Ltd., Annual Report 1983.

116 Wall Street Journal, 2 Nov. 1989.

117 Ibid. And one wonders in how many more companies Mitsui & Co. had less than a 35 percent interest.

118 The Bank of California in 1905 had purchased the London and San Francisco Bank, Ltd., one of the early British banks in California. See Wilkins, History of Foreign Investment in the United States to 1914, 459-61.

119 Lees, Foreign Banking, 31; Channon, Global Banking Strategy, 30-32; 1989 figures in Wall StreetJournal, 12 Oct. 1989; New York Times, 1 Oct. 1989; Wall Street Journal, 17 Feb. 1989 (on Bank of Tokyo's California acquisitions).

120 New York Times, 1 Oct. 1989.

121 Wall Street Journal, 12 Oct. 1989.

122 Ibid.

123 Ibid.; New York Times, 1 Oct. 1989, gave the price as $1.4 billion.

124 New York Times, 1 Oct. 1989.

125 Ibid. This includes all branches, agencies, and subsidiary banks. It does not include the Dai-Ichi Kangyo 1989 acquisition of the CIT Group.

126 For an interesting article on Nomura, see Wall Street Journal, 1 April 1987. See also Euromoney, April 1988, 16. Nomura and Daiwa became primary dealers in December 1986, Nikko in 1987, and Yamaichi in 1988. Their status was reconfirmed by the Federal Reserve in August 1989. See Wall Street Journal, 22 Aug. 1989.

127 See Wall Street Journal, 1 April 1987, and 10 Nov. 1989; and Glickman and Woodward, The New Competitors, 60. Along the same lines, Yamaichi Securities acquired an interest in the Lodestar Group and Nikko one in the Blackstone Group. Lodestar and Blackstone were described as takeover and merger “boutiques.” New York Times, 11 June 1989.

128 See Wilkins, History of Foreign Investment in the United States to 1914.

129 Ibid.

130 See ibid, on the early dominant role of the British. In the 1860s and 1870s, Britishowned banks were major participants in California banking, so there is precedent. Ibid., 135, 459-63.

131 Channon, Global Banking Strategy, 33. The International Banking Act of 1978 had been designed to give foreign banks “national treatment”—that is, to take away their advantages and let them have the same treatment as domestic banks.

132 This may have been particularly true in 1988 and 1989 in real estate. I calculated the rate of return for Japanese investment in that sector for 1988 at 1.7 percent and for 1989 at 2.3 percent. Based on data in Survey of Current Business, Aug. 1989, 52, 57, and Ibid., Aug. 1990, 46, 51. In 1987, Japanese companies had losses on their real estate investments. Ibid., Aug. 1989, 57.

133 All multinational enterprises have a certain amount of flexibility as to where they take profits; if U.S. operations have low profits or losses, it is possible that the profits may be recorded elsewhere, in complementary activities. The U.S. Internal Revenue Service has become suspicious. A U.S. law passed on 19 Dec. 1989 gave U.S. tax authorities a broad mandate to assess taxes on foreign-owned companies that do not comply promptly with all the IRS's requests for records. Japanese companies seemed especially vulnerable. See New York Times, 18 Feb. 1990. In 1990 there were Congressional hearings looking into alleged Japanese tax evasion. One possible reason for the low profits that is not tax-related might be that the Japanese have fears of being targets in U.S. anti-dumping litigation. Pricing inputs from Japan at a high level would reduce the profits of the U.S. affiliate. High profits in Japan of some companies suffering losses in the United States added to suspicions that their U.S. accounts did not reflect realities.

134 For the losses of all foreign investors in the United States involved in manufacturing “motor vehicles and equipment,” 1985-89, see Survey of Current Business, Aug. 1990, 55. On real estate, see note 132.

135 Wall Street Journal, 2 Nov. 1989.

136 New York Times, 1 Oct. 1989.

137 Wall Street Journal, 24 Oct. 1989; Euromoney, April 1988, 16, reported that during Nomura Securities's first twenty-seven postwar years in America, it made little or no money; it nonetheless persisted. the Wall Street Journal, 5 June 1989, obtained before-tax results for the Japanese “Big Four “ securities firms in the United States for year-end 1988; all experienced large losses (that greatly offset the prior year's modest profits); in the six months ending 31 March 1989, Nomura and Yamaichi posted losses once more, while Daiwa and Nikko had minimal profits. The New York Times, 11 June 1989, ran an article entitled “Japan's Washout on Wall Street,” calling the efforts of these Japanese securities firms “the biggest flop by a major Japanese industry trying to crack the American market.”

138 Survey of Current Business, Aug. 1989.

139 Graham, Edward M. and Krugman, Paul R., Foreign Direct Investment in the United States (Washington, D.C., 1989), 40–41.Google Scholar

140 Wall Street Journal, 29 Aug. 1990.

141 Graham and Krugman, Foreign Direct Investment, 22.

142 I am sure that it would be inappropriate to compare banking asset shares with asset shares of companies devoted to automobile production (these are entirely different measures).

143 Wall Strtet Journal, 2 Feb. 1990.

144 Miami Herald, 3 Nov. 1989.

145 Wall Street Journal, 27 Nov. 1990.

146 See report on it in Miami Herald, 3 Nov. 1989.

147 See Wilkins, History of Foreign Investment in the United States to 1914, esp. chap. 16, and Wilkins, Mira, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge, Mass., 1974), 345–46CrossRefGoogle Scholar. On incoming investment, past and present, some of the rhetoric and emotional responses are similar: in times past Americans criticized British investment, claiming that America was losing to British investors what the nation had won in 1776; now the phrase is that the United States is losing to Japanese business what the victory brought in 1945. In the 1960s American business was welcomed in Europe for the technology and management methods it brought, but resented for its very presence.

148 For some of the “clusters” of British foreign direct investment worldwide, see Wilkins, Mira, “The Free-Standing Company, 1870-1914: An Important Type of British Foreign Direct Investment,” Economic History Review, 2d ser. 41 (May 1988): 265–70CrossRefGoogle Scholar.

149 U.S. Department of Commerce, Foreign Long-Term Investments in the United States, 1937-39 (Washington, D.C., 1940), 34Google Scholar.

150 Survey of Current Business, Aug. 1990, 46.

151 Wilkins, The Maturing of Multinational Enterprise, 414-22.