October 2025 Best Buys

Not Even Douglas MacArthur Could Bury This Business

A 400-Year-Old (And Counting) Japanese Dynasty

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Hideki Tojo figured that he couldn’t miss if he drew a charcoal-pencil target on his own left breast pocket.

Hidden away in a modest cottage in suburban Tokyo, Japan’s former prime minister – with a body count in the millions and a reputation on par with Hitler and Mussolini – figured he’d reached the end of his road.

Nine days earlier – after the devastation of atomic bombs at Hiroshima and Nagasaki in August 1945 – Japan’s Emperor Hirohito had officially surrendered to Allied forces, ending World War II. And now U.S. General Douglas MacArthur had touched down on the tarmac at Atsugi Airbase, heading up an occupying force of 350,000 soldiers who would run Japan the American way.

There was nothing left for one-time strongman Tojo but a samurai’s death – honorable suicide.

Or so he thought.

As a task force of American GIs – plus curious reporters – surrounded Tojo’s cottage, ready on MacArthur’s orders to arrest him for war crimes, he cocked his pistol and pulled the trigger.

And somehow – despite the charcoal “X marks the spot” over his heart – the bullet went wide…

Bleeding from a flesh wound, Tojo swayed on his feet as a dozen Americans swarmed into the room. New York Times reporter George Jones later recalled that “the gun dropped from his hand and clattered to the floor. His knees buckled and he dropped into an easy chair behind him. Welling streams of blood spread over his white shirt front.”

There would be no hero’s death for Hideki Tojo.

Recorded by the reporters’ eager flashbulbs, he was forced to suffer the indignity of care from American medics… imprisonment in Tokyo’s Sugamo Prison… and, a year later, trial for war crimes at the hands of an American tribunal. After conviction, Tojo would swing, along with over 900 other high-ranking war criminals in the Japanese military. (Emperor Hirohito was spared to serve as a useful figurehead.)

And General Douglas MacArthur – having started out his occupation of Japan with a bang – set out to radically reform Japanese society over the next six-plus years… whether they liked it or not.

After five years of war and two atomic bombs, Japan was a wasteland with a quarter of its industrial capacity destroyed and 9 million people (about 30% of the urban population) homeless. MacArthur’s mandate was to rebuild Japanese society while ensuring it stayed compliant and demilitarized. 

To him, that meant tearing down the country’s conservative, feudal social structures and replacing them with a heavy helping of New Deal-style progressivism.

MacArthur’s ambitious Operation Blacklist was designed to quickly and effectively sever the Japanese from their national identity. “Rising sun” flags were lowered and replaced with the Stars and Stripes. The Emperor made a painful public statement that he was human, not divine. And, after rounding up Tojo and the other war criminals, MacArthur forced the Japanese to hack up their own military: destroying 11,000 aircraft and dumping 190,000 artillery pieces and several million tons of rifles and ammunition into the ocean. (The plum ships of the fleet, though, went to the Allies for their own use.)

Next, he purged public offices, ousting about 200,000 Japanese ultra-nationalists from service. He discontinued the national religion (Shinto Buddhism) and instigated labor unions. And as the pièce de résistance, he broke up one of Japan’s most treasured cultural institutions: the zaibatsu.

If It Ain’t Broken, Don’t Bust It

Zaibatsu – monopolies – were family-owned holding companies, dating back to the mid-1800s, that controlled huge swathes of trade and industry. At the top of each zaibatsu sat an all-powerful bank, controlled by an all-powerful family: the Mitsubishis, the Mitsuis, the Yasudas, the Sumitomos, and a few others. The Mitsuis and Mitsubishis alone handled about 70% of Japan’s trading industry, pre-WWII.

MacArthur felt the zaibatsu were entirely too powerful – so, in 1947, in his role as the Supreme Commander of Allied Powers, he drew up a new economic constitution for Japan: it abolished the holding companies and confiscated the wealth of the 10 families at the top, allotting each of them a fixed monthly living wage of just $30 (though, granted, that was worth a little more in 1940s dollars).

It was a massive trust-busting operation. And it cleared the financial landscape like Fat Man and Little Boy had cleared the cities.

After a couple of years of nanny-state babysitting, MacArthur’s New Deal policies came back to bite him (and Japan) in the rear. Between 1945 and 1958, inflation soared – with prices increasing more than 700% – and food shortages rose. Without the stabilizing influence of the zaibatsu, the new trade unions bubbled with unrest. And, worse, the boogeyman of communism was gathering steam in China and Russia – leaving weak, de-militarized Japan ripe for the picking.

On the home front, MacArthur had lost some clout: President Franklin D. Roosevelt had died in 1945, a few months into his fourth term, and the pendulum was swinging away from the New Deal welfare state in American politics. U.S. politicians like California Republican Senator William Knowland had begun to grumble about MacArthur’s handling of Japan, saying that breaking up the zaibatsu was “socialistic” and resembled “Soviet views.”

Sensing shifting sentiments, in a move that would come to be called the “Reverse Course,” MacArthur reinstated swathes of hard-line Japanese right-wingers in public office. He disenfranchised the labor unions and encouraged Japan to rebuild its military (what a pity all that ammo was at the bottom of the sea).

And – quietly – he eased up on the zaibatsu…

Officially, under Japan’s new constitution, the monopolies were disbanded, but MacArthur now invited them to come back – with a few modifications. The all-powerful ruling families at the top were replaced with shareholders. And instead of zaibatsu, they’d now be known as keiretsu: conglomerates.

But structurally, not much changed: the big holding companies resumed their historic role as the backbone of the Japanese economy. And it worked – setting the stage for a 1950s recovery that would come to be known as the Japanese “economic miracle.”

MacArthur wasn’t around to enjoy it. President Harry S Truman fired MacArthur in 1951 and recalled him from Japan for insubordination – underscoring the age-old moral that socialism does not pay.

As for the zaibatsu – now, keiretsu – they never really went away. Having been around for hundreds of years before this shakeup, they just sat back and waited. And, of course, they’re still around today and still dominating vast sectors of Japanese industry, from autos to semiconductor chips. It’s one of those original conglomerates – an extremely capital efficient one – that we’ve added as one of our newest Best Buys.

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