The zaibatsu (literally financial cliques) were the diversified family enterprises that rose to prominence in the Meiji Era. Some of the most important zaibatsu and their origins were:

• Mitsui:

  The founder of the Mitsui zaibatsu, Mitsui Hachirobei Takatoshi, established shops for dry goods in Kyoto (the old capital) and Edo (now Tokyo) in 1673 to sell high quality kimonos. Ten years later he and his sons established money changing shops which soon were carrying out exchange operations for the Tokugawa Shogunate, the government of Japan. One operation Mitsui performed for the Shogunate was to convert taxes which were paid in rice into money available in Edo. Osaka was the principal commercial center of Japan at the time and Mitsui sold in Osaka the rice collected as taxes. Mitsui handled the transfer of funds from Osaka to Edo. Transporting money itself from Osaka to Edo was dangerous and expensive so Mitsui instead bought the promissory notes Edo merchants gave to Osaka and Kyoto merchants and transferred these to Edo for collection. Mitsui did not charge a fee for these important services to the Shogunate but instead was compensated by having the use of government funds for a period of months. For those months between the receipt of the rice tax and the payment of money in Edo Mitsui had, in effect, an interest-free loan which it could lend at interest to other borrowers. Eventually these financial services businesses became more important than the dry goods shops which were the original business of the Mitsui family.

  Although providing services for the Shogunate was profitable for Mitsui there were risks. When the Shogunate got into political difficulties and needed funds it squeezed the political merchants like Mitsui who had been making profits from its patronage. After demanding substantial comtributions in the 1864-65 period from Mitsui and other political merchants, in 1866 it demanded a payment from Mitsui alone which was more 50 percent larger than Mitsui's operating assets.

  Mitsui had to petition for a reduction in the amount the Shogunate was demanding. Mitsui founded a talented negotiator, Minokawa Rihachi, who had once been a servant of the Minister of Finance. Minokawa was uneducated and illiterate but he was a very sharp political operator. Minokawa got the payment demanded of Mitsui reduced by two-thirds. Furthermore the payment was split into three installments. Before the last two installments were due the Shogunate was overthrown.

  However before its overthrow the Shogunate had asked that Mitsui set up in Yokohama a lending organization that would be funded by custom duties. Minokawa as a reward for his successful negotiation was selected to manage the Yokohama lending institution for Mitsui. Minokawa changed his name to Minomura for this new career.

  When the Tokogawa Shogunate was overthrown Mitsui was selected by the new Meiji government to provide financial services and handle the creation of a new currency. Mitsui was also instructed to begin preparation for the creation of a central bank for Japan.

  After Mitsui was well along in its plans to create a central bank the Meiji government changed its mind and called for Mitsui to collaborate with another business, Ono, in the formation of the central bank. Mitsui, Ono and Shamada were the three businesses which held government deposits and benefited from having the use of these funds interest free for a period of time. In October 1874 the government demanded that each of these three firms make a payment to the government equal to one-third of the amount that the government held with them. This payment was required within a couple of months which was too short a time for Ono and Shamada to collect on the loans they had out of government funds and they went bankrupt. Mitsui was able to survive because government funds were a smaller proportion of their holdings than they were for Ono and Shamada. Mitsui had also been more cautious in its lending than Ono and Shamada. But the key to Mitsui surviving is that its political operator, Minomura, had gotten advanced warning of the change in government policy and had longer to raise the payment required.

  In 1876 Mitsui formed the Mitsui Bank, a major financial institution in Japan in the years ahead.

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  Mitsubishi:

  Mitsubishi (Three Diamonds) was founded by Iwasaki Yataro of what is now Kochi Prefecture but was at the time Tosa domain, a samarai-controlled region. Iwasaki was selected to serve in the bureaucracy and later headed the Nagasalo office of the financial agency of the domain. The financial agency was charged with promoting the sale of domain products and using the proceeds to purchase ships and weapons from foreign merchants. The Meiji Revolution brought an end to his domain's Nagasaki office and Iwasaki was transferred to Osaka in 1869. The trust and relationships Iwasaki developed with foreign merchants were important factors in his career. The Meiji government banned domain enterprises so the financial agency Iwasaki managed was transformed into a private business under Iwasaki's management. Its primary activity was shipping.

  In 1871 the Meiji government abolished the domain governments and put in their place the prefecture system. Iwasaki took over the managment of the privatized domain enterprises and assumed responsibility for the debts of the Tosa domain. This assumption of unpaid debt gave foreign merchants great confidence in Iwasaki's integrity. Initially the new company was named Mitsukawa (Three Rivers) because three of the principle owners had "kawa" as part of their surnames. By 1873 Iwasaki had emerged as the dominant personality in the company and he renamed the company Mitsubishi Shokai.

  The company headquarters was moved to Tokyo in 1874 and the name changed to Mitsubishi Steamship Company (Mitsubishi Jokisen Kaisha). In 1874 the Meiji government wanted transportation for a military expedition to Taiwan and foreign shipping firms refused to provide the ships. There was a national government enterprise, the Japan National Mail Steamship Company (YJK), from which the government sought transportation. YJK was not an efficiently managed enterprise and it also refused to provide the ships needed. In desperation the government turned to Mitsubishi for aid and Mitsubishi provided transport the government needed. Thereafter Mitsubishi gained favor and protection from the Meiji government. It subsequently changed its name to Mitsubishi Mail Steamship Company.

  Mitsubishi started a Shanghai-Yokohama line and, with government backing, drove foreign ship lines out of the market. When the Meiji government needed military transport Mitsubishi provided it.

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  Yasuda

  The Yasuda zaibatsu was founded by Yasuda Zenjiro at the end of the era of the Tokogawa Shogunate. Yasuda came from a poor samarai class family in what is now Toyama Prefecture. He migrated to Edo and worked in a money changing business until 1863, at age 25, he was ready to start his own money changing business. In 1867 Yasuda became a political merchant, carrying out financial operations for the Shogunate like overseeing the collection of gold and silver. Under the Meiji government Yasuda continued to provide financial services. Like other political merchants Yasuda handled tax collections and profited from the delay between collection and the time at which those funds had to be forwarded to the government. Yasuda bought up depreciated paper money which had been issued by the new regime. When the regime announced the paper money would be accepted at its face value in gold coin Yasuda made a fortune. In 1876 Yasuda founded the Third National Bank of Japan.

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  Sumitomo

  The Sumitomo enterprise had its origins in mining and smelting. Soga Riemon learned copper smelting and processing in Osaka and then founded a copper refinery in Kyoto in 1590. Sumitomo Masatomo was a wealthy druggist and publisher in Kyoto. When the eldest son of Soga married the daughter of Sumitomo he adopted the Sumitomo surname. The copper business grew and the Sumitomo family became one of the companies allowed by the Shogun to trade in copper. Later the Sumitomo family enterprise was allowed to operate the Besshi copper mine owned by the Shogunate.

  In the 1860's the Sumitomo enterprises were experiencing financial difficulties which became catastrophic when the Shogun was overthrown. All the special privileges of Sumitomo were lost. The loans that Sumitomo had made to daimyo governments in the past were cancelled.The Meiji government intended to expropriate the Besshi copper mine as a property of the Shogunate government.

  The mangager of the Besshi mine, Hirose Giemon, was able to make the case that the Shogunate had given Sumitomo the right to operate the Besshi mine in perpetuity and thus Besshi was really the property of Sumitomo. Hirose Giemon was made manager of the head office of Sumitomo and successfully negotiated some terms for the settlement of other financial obligations of Sumitomo. Hirose then began selling copper to foreign buyers and with the advice of a French mining engineer was able to expand production at the Besshi copper mine.

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  Okura:

  In contrast to most of the zaibatsu, the Okura zaibatsu was founded by someone from the peasant class. Okura Kihachiro moved from what is now Niigata Prefecture on the north shore of Honshu to Edo and worked for three years before starting his own grocery store in 1857. After selling groceries for eight years he began to sell guns during the last days of the Shogunate.

  In 1872 Okura traveled to Europe and the United States where he met members of a Meiji government mission who were also traveling there. After his return to Japan and he obtained government contracts as a result of the acquaintances of government people he made on that trip. Later he established a trading company with a branch in London but his profits came more from services he provided rather than the trading operations of the company. Okura also provided military supplies to the government.

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  Furukawa:

  Ono was a political merchant company which held government funds on deposit and invested the idle funds in raw silk exporting and mining. When the Meiji government demanded a matching deposit Ono was not able to raise the funds and went bankrupt. Furukawa Ichibei was an employee of Ono when it collapsed. He founded a company to engage in the same activities as Ono. After Furukawa found raw silk exporting unprofitable he concentrated on mining ventures.

  When the Ono bank collapsed depositors such as Furukawa lost their savings. Soma, a wealthy daimyo family also lost a large amount in the collapse of the Ono bank. Furukawa convinced the Soma family to relinquish its large claim for its lost deposits in return for the ownership of two mines which the Ono company had owned. Furukawa was to manage the mines for the Soma family.

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  Kuhara:

  The Kuhara zaibatsu had its origins in the Fujita zaibatsu. Kuhara Fusanosuke was the nephew of the founder of Fujita. Kuhara became the manager of an unprofitable Fujita silver mine at Kosaka. Kuhara transformed the unprofitable Kosaka silver mine into a profitable copper mine by utilizing the low grade copper ore available there. The success of the Kosaka mine revived the Fujita zaibatsu. At the time the Fujita zaibatsu was a partnership of three brothers, but Fujita Denzaburo decided to buy out the interests of his two brothers' heirs, which included Kuhara.

  With his compensation from Fujita, Kuhara purchased a mine which he renamed Hitachi. Kuhara developed his operations into the third largest copper producer in Japan, exceeded only by Furukawa and Fujita.

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  Suzuki:

  The Suzuki zaibatsu was founded by Suzuki Iwajiro of Kobe. Suzuki began as a sugar importer in 1874 but expanded to exporting camphor and mint. Suzuki marketed 65 percent of the camphor oil produced in Taiwan when it became a Japanese colony. In the early years of the twentieth century Suzuki moved into sugar refining and the processing of camphor and mint. It also built a steel mill, the Kobe Steelworks, and sought contracts to supply the Japanese navy.

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  Fujita:

  Fujita Denzaburo capitalized upon his connections with government officials in Choshu to obtain government contracts for goods and civil engineering projects. The profits from being a political merchant far surpassed the earnings from the Fujita family brewery of soy sauce and saki in Choshu (now Yamaguchi Prefecture). Fujita was what Americans later called a "wheeler-dealer." At one point Fujita spent four months in jail because of government suspicion that he was using counterfeit currency in his dealings. He and his two brothers later founded Fujita-gumi, a company that engaged in mining and drainage projects.

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  Asano:

  The Asano zaibatsu had a quite different origin from the other zaibatsu, coming neither from a political merchant family business nor a family mining enterprise. The founder, Asano Soichiro, came to Tokyo with practically nothing. He progressed from a street vendor of sugar water through a variety of small businesses to retailer of firewood, charcoal and coal. One major use of coal at the time was to produce coal gas for gas light systems for homes and businesses. In producing coal gas coal is heated to a high temperature without burning and is turned into coke. Coke is valuable fuel and essential for smelting iron ore to produce iron, but at that time the coke was not being used for anything. Asano saw a use for the coke as fuel at the government-owned cement where cement was produced by heating clay and limestone to a high temperature. Asano was also able to induce a Tokyo paper manufacturer to use coke as fuel.

  From his success in marketing coke as fuel Asano went on to capture a major share of the coal market through marketing the production of a government-run coal mine in Hokkaido. In 1884 he purchased a government cement plant and started his own shipping company to transport his coal and cement. Later he obtained from contacts in the government the exclusive rights to import kerosene from a Russian company.

The relative sizes of the zaibatsu changed somewhat over time. In 1895 the annual incomes of the various zaibatsu families were as follows.

Reference: Hidemasa Morikawa, Zaibatsu: The Rise and Fall of Family Enterprise Groups in Japan, University of Tokyo Press, 1992