2017 Volume 60 Issue 1 Pages 30-41
This paper analyzes the process of asset accumulation in the nobility ‒‒ a class composed of former daimyo lords ‒‒ from 1910 to 1930. The specific focus is on the Kikkawa family, descendants of the lords of the Iwakuni domain.
The Kikkawa family’s total assets increased steadily on a foundation of long‒term increases in stock holdings, and then surged after World War I. The increase in stock value was particularly notable, with World War I having an extremely large effect on the increase in Kikkawa assets. In principle, the family procured its investment capital from internally generated funds, first from profits and second through the disposal of assets in its possession. When, in the course of rapid capital accumulation, it was short of capital for investment, the family supplemented its own funds by taking short‒term loans.
The Kikkawa family holdings of both local and non‒local securities were acquired on a “non‒anonymous” basis, at par or near‒par value, either on the founding of a company or when its stocks were issued. Additional investments, in the case of major stocks, were made through “non‒market” means: directly underwriting the new shares based on its holdings of old ones; underwriting them by the face value of the increase in shares; or making additional payments by installment. With this two‒stage capital accumulation pattern, the family was able to generate “stable and significant” profits from non‒local stocks, such that its capital formation became largely tied to dividend income from “central,” or non‒local, stocks.
The most profitable of its stock holdings were its equity in the manufacturing and electrical industries. The family procured much of its income not only from dividends but from intermittent gains made on sales, from free share issues, and from gains on the issuance of securities at the time of purchase, all of which together amounted to a high degree of capital accumulation. By contrast, the annual rate of return on local stocks was low, at 2.8％, compared to the 13.3％ return on non‒local stocks. This paper demonstrates that the Kikkawas took seriously the need to discuss stock acquisition opportunities with the Mori family and former Iwakuni clansmen, and examines their relationship with the building of corporate competitiveness.
