This article describes the rise and fall of what might be termed a local zaibatsu which was founded by Terada Jinyomo (1853-1931). During the Tokugawa era, the Terada family manufactured sake just south of Osaka in the Kishiwada district of Senshu, where cotton spinning had long been practical as a subsidiary industry in agricultural households. During the Meiji period, Terada Jinyomo invested profits from sake manufacture in many new industries, such as spinning, banking, and railroad construction. In 1894, he established Kishiwada Cotton Spinning Co. Ltd., which was to become the most successful of his new ventures, especially in the rapidly expanding China market. Terada Jinyomo was born into a large family. He had six brothers and a sister, but all but one of these brothers, Motokichi, were step brothers born after Jinyomo's mother remarried following the death of the first husband. Significantly, Jinyomo excluded not only his step-brothers and their families but also his very talented and fullblooded brother, Motokichi, from the Terada Holding Company established in December 1920 after the spinning company had reaped unprecedented profits during world war One. Jinyomo allowed only members of his own nuclear family, that is himself, his wife, and their children, to become stockholders in the newly founded holding company. His brother, Motokichi, followed his lead by setting up his own holding company, the Sano Cotton Spinning Company, with his own nuclear family members as stockholders in the same month and year. Jinyomo's decision to separate himself from his more distant relatives and to not rely on lineage ties proved to be a fatal errors because although he had bought property in Shanghai in 1923 in the hope of establishing there, this plan was never realized. At home, he failed to make the switch to manufacturing newer products like rayon. Perhaps Jinyomo was more narrow-minded and conservative than he himself believed or understood.
In 1917, the Furukawa family established a family-dominated Konzern, consisting of Furukawa Gomei as the group's holding company, Furukawa Mining, Tokyo-Furukawa Bank and Furukawa Shoji in foreign trade. In the first two years of its operation, the Konzern expanded itself remarkably relying on bank loans. But in the spring of 1920, Furukawa Shoji went to bankruptcy, because it lost heavily in bean speculation in Dairen. In order to make up the loss of 26 million yen, Furukawa Gomei had to dispose of its assets, mainly stocks of its subsidiary companies. Moreover, Furukawa reduced its business and gave up foreign trade activities in 1922 and banking activities in 1931. Thus, the main business of Furukawa became nothing more than mining. As a result, the development of Furukawa-Zaibatsu was retarded and it lagged far behind the other major Konzerns such as Mitsui and Mitsubishi.
The object of this paper is to trace the formative process of business organization in coal mining of the Sumitomo family and analyze its business results during the period. It is a well-known fact that the Sumitomo family invested in other undertakings as well, a large amount of profits derived from operating the Besshi Copper Mine and thereby diversified its business into coal mining, banking, rolled copper industry and warehousing business in the 1890's. In such a case, the high level of strategic decision-making shown by the Sumitomo family is worthy of consideration, since it extended its business to coal mining with the intention of not only providing for itself a great deal of coal which was consumed in the Besshi Copper Mine, but also obtaining a profitable investment. In 1893, the Sumitomo family bought the Shoshi Coal Mine and, for the first time participated in coal mining. Further, the next year the Sumitomo family succeeded in purchasing the Tadakuma Coal Mine which was regarded as very promising in the Chikuho Coalfield, and then opened a place of business in Wakamatsu (coal trading center). Business results at these three places were very favorable because the years 1894 and 1895 were the boom years due to the Sino-Japanese War. In a few years after starting its business, the business organization of coal mining was arranged in order, and at this point the Sumitomo family acquired a position as one of the leading coal-mine owners in the chikuho district. But, afterwards coal mining business of the Sumitomo family couldn't show a substantial development because of its failure to get other promising coal mines from the latter half of 1890's to the first decade of the 20th century, in addition to the Tadakuma Coal Mine. As mentioned above, in this paper we made an attempt to observe the managerial characteristics of the formative process in coal mining business of the Sumitomo family.