THE CHARACTER OF FUND RAISING IN THE SUMITOMO ZAIBATSU

Abstract

The historical side of the Sumitomo Zaibatsu has yet to be studied deeper. The writer has attempted to get the whole perspective of the Group, based on his 5 previous theses.
The object of this study is to analyse the fund raising mechanism of the Group, in the 1921-1943 period. This is because the analysis of the flow of funds inside the Group is a short cut to grasping the structure of the Zaibatsu.
In this study, the writer utilized documentary materials from the Honsha (the holding company of the Group named Sumitomo Goshikaisha) and annual reports from its member companies. Some notable results of the analysis follow;
(1) Within the Sumitomo Zaibatsu the Honsha functioned as the financial control organ for the companies of the Group. Whenever the Honsha was short of funds, the necessary amounts were furnished to it by the Sumitomo Bank. There were no example of fund raising from outside the Group. Even when an enterprise directly managed by the Honsha became an independent affiliated company, the financial control by the Honsha over the company was strictly maintained.
(2) In substance the fund raising of the Group depended largely on its own accumulated capital and comparatively on little on bank loans.
Thus, the Sumitomo Bank had rather little business within the Group both in loans and in deposits. This is partly because the Group had not such giant enterprises as Mitsui & Co., Ltd. or Mitsui Mining Co., Ltd. of the Mitsui Zaibatsu.
(3) During World War II, however, the scale of manufacturing companies of the Group expanded rapidly and they were forced to raise necessary funds outside the Group also. As a result the fund raising function of the Honsha weakened. In turn, the role of the Sumitomo Bank increased and the share of funds from outside the Group became more important.