The aim of this study is to clarify the historical premises of the establishment of the tax treaty between the UK and the US in 1945. Particularly, the UK-US treaty to prevent the international double taxation made an economic and political impact on the UK multinationals and the government. It was the first time that the UK government concluded a general tax treaty with elsewhere in the British Empire.

The problem of international double taxation on business income between UK and US occurred since the First World War. However, the UK government did not introduce a foreign tax relief for foreign investment to the US until 1945 because the government persisted to abhor reduction of the tax revenue. Thus, the tax issue became one of the causes that the British investment to the US had been sluggish. In addition, not a few UK multinationals were forced to change their organization alongside the tax environment during the period, raising cries of protest through some employer's associations such as the Federation of British Industries. The organizational changes like Phelps Dodge or Courtaulds sometimes influenced corporate long term investment strategy. Finally, the introduction of the American dividend tax in 1936 and the outbreak of the Second World War pushed the UK multinationals into further tax planning to alleviate the tax burden. The corporate behaviors and complaints of those firms made the UK government reconsider the tax regime of the interwar period. As a result, the general tax treaty between the UK and the US was concluded in 1945, a prototype of tax treaty of not only both countries but many countries in the Post Second World War.

This paper aims to provide a brief account of the growth of the Western confectionery industry in Japan, focusing on Morinaga's vertical integration during the interwar period.

Western confectionary was introduced into Japan around the beginning of the Meiji period. When Morinaga was founded, in 1899, there was neither a market for the ingredients nor a distribution channel for Western confectionary in Japan. In that case, how did Morinaga procure ingredients and create a market for its new products?

The dairy industry was immature in those days but had excellent business opportunities, both inside and outside the country. Morinaga thus developed these and moved into the dairy industry. Consolidating some dairy businesses into a single company after WWI, it was thereby able to steadily secure ingredients. Later, when Morinaga's performance fell, it founded a corporate spin-off as the running costs were too high for Morinaga to maintain it.

In the 1920s, in order to strengthen sales when a competitor, Meiji Seika, was established, Morinaga and various wholesale stores established sales companies. There was only a low-level capital relationship between Morinaga and these sales companies, however, so their elimination or consolidation did not damage Morinaga. The sales companies to which Morinaga sold its products had to take the risk of sluggish Morinaga sales, which supported Morinaga, especially through asset liquidation and a capital reduction from 15 to 7.5 million yen. In spite of Morinaga's development of a Beltline store system, however, it was unable to control the small retail-store units.

Summarizing, Morinaga took measures towards vertical integration in order to secure ingredients and control its distribution network. The immaturity of the ingredients market meant that the main factor in this aspect of the vertical integration was the stabilization of ingredients provision, while Morinaga was able to maintain its group through corporate spin-off and risk hedging.