Although I had been trying to get to Japan from the fall of 1945 I did not succeed until April 1946, some eight months after the start of the Occupation. My going was in response to a named request by the Government Section of SCAP, which desperately needed staff with some knowledge of Japan.

To have been a participant in this undertaking was exciting, stimulating, and sobering. The Occupation was the most intellectually challenging environment in which I have ever lived. When one's ideas would affect seventy million people (Japan's population at the time), one did not offer them lightly. The staff of the Government Section in the beginning years of that effort was both diverse and exceedingly able. There were T. A. Bisson, Cyrus Peake, and Andrew Grajdanzew (later Grad), all published authors. There was Howard Meyers, later to rise to class one Foreign Service officer. There was Alfred Oppler, head of legal work in the Government Section, a German-born American who had formerly been associate justice in Prussia of the Supreme Administrative Court. And there was Milton Esman, later to be on the Cornell University faculty.

I traveled on an army transport from the West Coast of the United States after reaching Seattle by rail. This ship was the first to bring women to the Japanese theater apart from nurses, Red Cross personnel, and USO (United Service Organizations) staff. Deck space was duly segregated. We took the northern route to Japan, which is to say twelve days of cold, foggy weather and uncalm seas.

While the voyage itself is by now a blur in my memory, my impressions of Japan when we at last arrived across the Pacific are exceedingly vivid. The trip from the pier in Yokohama to Tokyo was my introduction to what the consequences of "total war" actually looked like. Like all Americans, I had heard over and over again the message of U.S. officials about how-during Japan's military operation in China preceding and following Pearl Harbor-Japan's operations had failed to distinguish between civilians and combatants. But, as it turned out, so had we. The incendiary raids on Japan's cities did not distinguish between women and children, grandparents and military personnel. We burned them all up.

Notwithstanding that some eight months had passed since hostilities ended, all was devastation. I could scarcely believe the scale of destruction we had wrought in the industrial corridor between Yokohama and Tokyo. In the room that I later occupied in Tokyo, one looked out at night on acres of blackness. The climax of this "incineration," of course, came from the atomic bombs dropped on Hiroshima and Nagasaki-which had the effect of havoc, not only instantaneous but lingering.

My first nights back in Tokyo I spent in a women's billet in the Nippon Yusen Kaisha (NYK) Building just up from Tokyo Station on the Nakadoori ("inner road"). A portion of the building had been converted from its former lofty status of housing a major shipping company to a dormitory. Later I transferred to a women's billet located between the Imperial and Daiichi Hotels.

This was a short walk from my office at the General Headquarters (GHQ), although my commute was always an eventful one. The street held lots of GIs-indeed, American soldiers were to be seen all over Tokyo, keeping the peace. And they had become quite unused to the sight of a young American woman, there being very few of us among the U.S. personnel in the Occupation. I became so used to being whistled at that, on the rare day when there were no whistles I started to wonder if there was something lacking in my grooming. (This was long before the days when American women learned to complain about this sort of customary rudeness; we were expected to accept it in good humor.)

Because it was awkward from both sides to be seen "fraternizing" with Japanese, I saw little of my former student conference friends. Exceptions were a few very close friends, including Takahashi Kuwako and Yasundo. He later became a member of the Berkeley faculty in electrical engineering, and she became a nationally known speaker on Japanese flower arrangement and the author of a best-selling Japanese cookbook. Also, there were Watanabe Hanako and Chujo, she of an ILO (International Labor Organization) background and he a Reuters correspondent. And there were Ikeuchi Hisako and her husband, Akira. It was Hisako who had found the 1938 scholarship for me . . . Ikeuchi Akira, her husband, was a staff person of the Holding Company Liquidation Commission; in fact, he was part of the group that documented the entire volume of law relating to the deconcentration program in 1949.

Other friends I had known prewar, the Takagis, took me to see their home, which had been completely destroyed by the bombing. Nothing was visible except the pathstones that used to lead to their door. Mr. Takagi had brought these stones all the way from Korea when they built the house. Seeing this was a painful experience and brought home to me once more the extent of devastation the war had wrought.

There were several "special" sections advising the supreme commander in addition to the traditional four military sections--G1 (Personnel), G2 (Intelligence and Counterintelligence), G3 (Operations), G4 (Supply). In addition to the Government Section, there were the Economic and Scientific Section, the Civil Intelligence and Education Section, and the Diplomatic Section--to name only a few of these special sections…. The power and influence of sections, traditional or special, were a function of the importance of their responsibilities and of the closeness of their respective chiefs to MacArthur. Government Section had the benefit of both.

By day I worked in the Government Section (GS) located in the Daiichi Life Insurance Building, which was across the moat from the palace and a ten-minute walk from my lodgings. I began as a P-3, the equivalent of an army captain, but was advanced fairly rapidly to a P-5, the equivalent of a major. My job description said I was responsible for preparing studies and recommendations on the relationship between government and business, and specifically for research on corporate reorganization, the dissolution of the zaibatsu and liquidation of their properties, decartelization, antitrust measures, and nationalization of industry.

My assignment may sound a little anomalous, since economic deconcentration and antitrust belonged in the first instance not to the Government Section but to the Economic and Scientific Section (ESS), headed by General Marquat (who had an anti-aircraft background). But General Whitney, who was chief of GS, took a somewhat imperial perspective, seeing a political dimension to most any program. Accordingly, it seemed appropriate for me to follow deconcentration and antitrust for GS, which I did. (General Marquat, who chanced to see me as I was leaving for the United States, asked, "Eleanor, why did you not come to my section?" I replied, "Because you did not invite me." He objected, "But I did!" In any event, the invitation never reached me.)

A further advantage for me, being assigned to the Government Section, was that several of my colleagues had previously been known to me only as the names of authors I had read as a student. Imagine having such persons as colleagues! Moreover, the section had as its deputy chief Charles L. Kades, the most wonderful administrator under whom I ever worked. The final plus was that General Courtney Whitney headed the section. Among the generals of the Headquarters, each heading a different section, he was number one. Before the war, in the Philippines, he had been MacArthur’s personal lawyer As seen from staff members’ perspective, the two men were so close one could not confidently distinguish their handwriting. Most important for those lucky enough to work under him, Whitney was the only section head with easy access to “the Chief” (MacArthur), assuring that the work we did had a maximum chance of making a difference.

The chief and deputy chief of the Government Section were a study in political contrasts. General Whitney was conservative. Colonel Kades was a New Deal Liberal. But so skillful a lawyer was Kades that, if one could persuade him, Kades was likely to influence Whitney, and Whitney in turn to persuade MacArthur...

Curiously, I came into this extraordinary enterprise in 1946 as a young person with relatively little political identity or sophistication. Indeed, it is fair to say that it was not until my State Department experience that I grew at all politically conscious. Coming from a family that leaned toward Republican views, it took me some time to become a New Deal liberal. But by the time I got to Japan I had indeed become one. Having grown up with images of the Great Depression and coming of age as the country went to war, I was drawn to the challenge of designing a better world, as were most of my generation. For those of us studying to become economists in Cambridge, Massachusetts, the issues and ideals forming FDR's New Deal were the air we breathed. There was no question in my mind that I deeply believed in the principles enunciated in the Basic Directive [Hadley is here referring to the detailed secret directive from the Joint Chiefs of Staff to General MacArthur, early November 1945; it was preceded by the initial basic directive, State-War-Navy document 150, approved by President Truman and made public on September 22, 1945.] The Basic Directive in its instructions to MacArthur used the term "combine" instead of "zaibatsu" because of the fuzziness of the latter term. Briefly put, "combine" refers to a complex of corporations that display unified business strategy arising primarily (but not exclusively) out of an ownership base. "Zaibatsu," on the other hand, can refer to individuals or families, or to a business structure producing the wealth. In the latter case, it can refer to a family or organization at the top of the business structure or to the whole. It can be singular or plural.

The typical zaibatsu structure consisted of a holding company at the apex and beneath it the complex of subsidiaries, and subsidiaries of subsidiaries, that it controlled. The Mitsui zaibatsu was made up of eleven families; in the Mitsubishi case there were two (Iwasaki) families; and in the case of Sumitomo, one family. The eleven Mitsui families were not equal: the senior main family controlled 23 percent of the assets of the holding company; the other four main families, 10.5 percent each, and the remaining ones, 3.9 percent each.

Within two months of my arrival in Tokyo, I had prepared a four-page single-spaced memorandum for General Whitney calling attention to the disparity that had developed in the economic deconcentration program: the gap between the JCS 1380/15 instructions to MacArthur and the reality of what was actually being done. I argued that MacArthur might have good reasons to deviate, but deviation should be done knowingly, not unwittingly.

The disparity in SCAP actions compared to instructions began with the fact that JCS called for the elimination of combines, not merely holding companies as the Headquarters appeared to be doing. As noted above, a holding company forms the corporate peak of a combine's organization, but there are many combine ties binding parts to the whole besides those of legal ownership by the top holding companies. Thus, eliminating holding companies alone left many ties intact: for instance, intracombine ownership, interlocking directors, joint credit, joint buying and selling. And these would be a real help in any effort to reassemble the combines should such an effort occur later.

Rereading this memorandum now, I realize far more clearly than I did then why I stood out with my trust-busting mandate; it was because at that time no one was pushing for antitrust policy as written by the Joint Chiefs of Staff. That is to say, staff were satisfied with the liquidation of holding companies rather than the liquidation of combines. My isolation in this would not change until Lester Salwin arrived six months after me. Ed Welsh did not arrive until a year later, when he took over as chief of the Antitrust and Cartels Section of ESS in March 1947...

SCAP's plan for combine dissolution grew out of the "Yasuda Plan," a program agonizingly extracted as a "voluntary" proposal from the "big four" zaibatsu groups (Mitsui, Mitsubishi, Sumitomo, and Yasuda). Mitsui, Mitsubishi, and Sumitomo officials found it incomprehensible that the United States was calling for their demise. They believed the United States did not understand what had really happened: as they saw it, they had opposed the war, viewing the military as interfering with their business and as a rival to their own power. But-as seen by an outsider-given the proportion of strategic production that they controlled, could they have done anything but support the military effort in the end?

One thinks of our own industrial titan Henry Ford, who vehemently opposed the United States' participation in World War II, and in particular the use of his Willow Run plant for war production. He, too, was ultimately unsuccessful in distancing himself and his mammoth company from the U.S. engagement. But the comparison is flawed: whereas Ford's opposition to U.S. participation in World War II was utterly clear and quite individual, the zaibatsu could not be seen in the same light. If for no other reason, it is difficult to think of real opposition to the war on the part of the "big three," who actually doubled their position in the economy between 1941 and 1945, rising from 12 percent of the paid-in capital of Japanese corporations in 1941 to 24.5 percent by the end of hostilities. The experience of the fourth group, Yasuda, was a bit different: overwhelmingly centered in finance, Yasuda's position stayed essentially unchanged during World War II, changing from 1.3 percent of paid-in capital at the beginning to 1.6 percent at the end of the war.

Yasuda's anomalous role in this postwar interaction had partly to do with personalities. In 1944 Yasuda Bank was headed by a former vice admiral, Takei Daisuke, who was also a standing director of the holding company, Yasuda Hozensha. Takei had earned a graduate degree in political science at Columbia University in 1919 and had some comprehension of American views toward concentrated business. Fluent in English, he had studied what the United States had called for in its zone of occupied Germany. He told Hajime Yasuda, the head of the Yasuda combine, that in his (Takei's) judgment there was nothing to do but accept the situation...

The deconcentration program was an economic program to change corporate structures, with the aim of reducing the overwhelming power of the combines. But, because family and personal ties were such a critical part of the zaibatsu combines' structure, it was recognized that a successful deconcentration also required a purge—that is, a program to remove key personnel who had been involved in constructing and running these organizations and who might be in a position to reconstruct them if left in place. In other words, a change of personnel was necessary if there were to be combine dissolution and not merely holding company dissolution. The two were not the same, as I had been arguing starting with my very first memorandum as a member of the General Headquarters staff-and as indeed had been clearly recognized by the joint Chiefs of Staff instructions given to MacArthur.

Personnel links among the different zaibatsu took various forms. In the case of "key" subsidiaries, the holding company might appoint the entire board, or it might appoint the president and/or chairman of the board and have them appoint the rest of the board for its approval. In addition, there might be a written contract between the holding company and the key subsidiaries as to what topics could be discussed in board meetings without prior top holding company approval. It was understood that key subsidiaries were to borrow from the financial institutions of the group, not outside; that they were to sell through the trading company of the group, and so on. Under such arrangements, top holding companies were able to speak of key subsidiaries as "perfectly" under their control...

While prime ministers disparaged the efforts to reduce concentration in the industrial sector of the country, many Japanese economists and members of the general public hailed them. I received numerous letters from the public saying "Keep it up." In addition to expressing sympathy with the goal of democratizing Japan's economy, some of these were also responses to seeing a woman pushing for economic change, which needless to say was unusual in Japan of 1946. I was not directly involved in the GHQ's efforts on behalf of women's rights in Japan. Others were, of course; in particular, Ethel Weed, who worked tirelessly and with considerable effect to help Japanese women gain their rights in the postwar democracy. But I remember on at least one occasion being visited by representatives of Japanese women's groups who "thanked" me for providing an example of female participation in government.

To the Japanese government and business leaders, however, I was primarily a headache. It was not until after the Occupation ended that I learned the extent of the problem I had presented to them. I was known as "the mysterious Miss Hadley—daytime of the GHQ, night-time of the Ph.D. dissertation"—since it was no secret that I was gathering materials in my spare time for an intended doctoral dissertation on prewar zaibatsu history. I made a few trips outside Tokyo to the Mitsui archives, and was treated with the utmost courtesy and helpfulness. I remember telling a Japanese journalist many years later that I had felt no uneasiness about traveling like this on my own; he commented that it was probably the Mitsui people who were uneasy, having little idea what use might be made of this "individual research" I was doing on them!

Given the "chess game" that was being played between the Occupation authorities on the one hand and the Japanese business and government leaders on the other, the zaibatsu were anxious to know as much as possible about the internal workings of the GHQ. The maids of top officials (those with rank of general) were invaluable in this respect, and no doubt every plan and project was conveyed to the Japanese side. At GHQ offices one was constantly aware of the visits paid by all manner of representatives of Japanese business. They endeavored to learn the personal characteristics of all important personnel and tailored their approaches accordingly. Invitations to luncheon and geisha parties were a favored tool-with information no doubt flowing more freely with the aid of sake at these occasions. Japanese government officials, too, found geisha parties a not ineffective way of persuading Occupation persons to modify their positions.

But what to do with a female professional person?—not high enough in the hierarchy to have a personal maid, not interested in geisha, nor likely to have found a suitable Japanese man—whose only known social activity among Japanese was to enjoy an occasional concert on her own? Illustrative of corporate confusion in how to deal with a woman was an encounter I had with Sumitomo officials just a few weeks before my departure from the Headquarters. No doubt hoping that it would make me more "understanding" in my treatment of Sumitomo, they brought me a copy of the Rules of the House of Sumitomo, which I was exceedingly eager to have for my planned doctoral dissertation at Radcliffe, and a bouquet of a dozen red roses.

It does seem that impressions of my role became somewhat exaggerated among the Japanese. As one example, Morozumi Yoshihiko once wrote, in describing his experience as a Ministry of Commerce and Industry official "translating" the antimonopoly policy, that it had been "the direct order of Eleanor Hadley at GHQ" that the Fair Trade Commission's chairman should be a government official whose appointment was confirmed by the emperor. This was a rather fundamental position and would have been widely vetted among GHQ officials (although in this case with little disagreement); I may have conveyed it on behalf of Colonel Kades, but certainly not as my personal "order."

There were also some Japanese who offered helpful information out of their own belief in aspects of what the Occupation was trying to accomplish. One of these was Fujisawa Hisashi, a director of the Mitsui Trading Company who had been passed over for promotion to director of the top holding company in the group on grounds, not of performance, but of "insufficient loyalty to the House." It was from Fujisawa that I gained a full appreciation of how important personal ties were in the zaibatsu oligopoly structures, and a reinforcement of my understanding that putting pressure on the holding companies alone would not suffice to diminish their power. This man was the one who made me realize the important role that a so-called real-estate company could play within one of the combines. Without his information, it is very likely that this innocuous-looking (on paper) entity would not have been included in the economic purge...

Hadley received unwanted publicity later by Japanese who blamed her for doing her job and carrying out orders from Washington and SCAP. One of the critics was Prime Minster Yoshida in his Memoirs (published in English in 1964). Retorts Hadley:

Naturally, the U.S. government did not want to come out and say that our earlier diagnosis of the problem had been flawed. We chose more palatable phrasing: it was in terms of the burden on American taxpayers. Japan was told that American taxpayers demanded revitalization of the economy—that Americans could no longer continue to subsidize Japan with food and certain industrial raw materials. This was the conclusion articulated by the secretary of war on a ten-day mission to Japan.

Upon examination, it was a somewhat odd explanation for the policy change. It is estimated that the United States spent $100 billion fighting and winning the Pacific War. How is it that $194 million in American aid for the fifteen months from the start of the Occupation to December 1946, and $404 million for calendar 1947, became so burdensome when it was aimed toward securing the peace? Germany--a Marshall Plan country, which Japan was not-received $1 billion in fiscal 1949 and $3.5 billion in fiscal 1950. But this money was spent to fight the spread of communism in Europe. In contrast, Japan's aid from the United States was to fight disease and unrest. Japan had assumed the cost of the Occupation, with the exception of salaries and food for Occupation personnel and limited emergency shipments of food from the United States.

By 1947 the U.S. government was beginning to be anxious about the spread of communism in Asia. Hence the shift in its policy toward Japan from treating Japan as the ex-enemy to treating Japan as partner. Chiang Kai-shek was not winning against Mao's communists: it would be 1949 before Mao's victory, but the handwriting was on the wall. In this period we saw communism as monolithic, failing to realize that the Soviet Union did not bring about the 1949 communist victory in China. We now needed a revitalized Japan for our security interests in the Pacific.

In a sense this development undermined the logic of the whole Pacific War. We had not fought the Japanese because of their divine emperor and undemocratic procedures at home; we fought them because of Japanese expansionism in China and elsewhere in Asia. Now, the Department of the Army decided that greater attention had to be given to the security interests of the United States vis-à-vis the USSR, and that, instead of putting our energies into trying to build a more democratic Japan, we should be focusing on how to build up Japan as a foil against the USSR. We needed to reverse our priorities.

Treating a country as an ex-enemy and treating it as a partner call for quite different policies. In the former case, the aim was to prevent future Japanese aggression; in the latter, the idea was to help Japan get on its feet and prosper. We became focused on Japan joining with us against threats from the Soviet Union. At Headquarters, staff working on recovery enjoyed greater and greater prestige. Presently the staff found reform measures interfering with the effort to build up the Japanese economy; and so was born the "reverse course." In my view, needless to say, this was a mistake, a betrayal of our original purpose: in the midst of fundamental social change it is good to stay the course, not to lose interest in it a few years down the road.

When I left Japan in the fall of 1947 to resume my Ph.D. work in Cambridge, it appeared that we were on the way to staying the course. But within a short period I became discouraged, as reflected in the review of Occupation antitrust reforms that I published in the following year in the Harvard Business Review. By then it was apparent that opponents of deconcentration reform were making headway in the United States: indeed, by early the following year they would succeed in having the American policy document on this matter withdrawn...FEC 230 [Far Eastern Commission policy paper 230] was formally withdrawn on March 12, 1948. As I noted in the Harvard Business Review article, the criticism had already influenced MacArthur, whose "weakening interest in the combine-dissolution program" led him to propose substantial modifications over the months before.

My arguments for believing this reverse course to be a serious mistake were both economic and political. I thought it obvious that a more open and competitive economy would enhance Japan's long-term development (although admitting that this might not be true in the short term) and would also offer opportunities to our own businesses. I wrote: One would have anticipated that American businessmen would have welcomed a program which extended the rules of their game to an area which had never observed them.... In the past, Japan's combines were tough, unfair competitors-unfair, that is, according to our rules of the game. Abolishing the combines would make it easier for American businessmen rather than harder [by forcing them to pay better wages and assuring that] individual Japanese businesses would have to stand on their own feet in competing with foreign businesses rather than being able to rely for advantage on some more remunerative part of a combine.

But the political reasons were clearly dominant at the time—a time when none of us, reformers and businessmen alike, viewed the economic opportunities in Japan to be all that great. My main argument was that combine dissolution was critical to enabling "a democratized Japan to be important to American leadership of the Anti-Soviet Bloc.” As I developed this argument:

Change in the political structure of a country is not a simple matter to effect. It is not achieved by the substitution of a new constitution for an old one, because to mean anything a constitution must reflect the political beliefs of the dominant groups of a nation. To effect political change, one must proceed to destroy or modify existing power groups and to be midwife to new ones.... It was because the great business combines were, as a group, one of the architects of Japan's irresponsible government [including its pursuit of war] that Washington decreed MacArthur into the trust-busting business.

Hadley, Eleanor M. (with Patricia Hagan Kuwayama). Memoir of a Trustbuster: A Lifelong Adventure with Japan. Honolulu: University of Hawaii Press, 200), 60-64, 67-70, 77, 99, 105-05 115-117.