The was a

political scandal In politics, a political scandal is an action or event regarded as morally or legally wrong and causing general public outrage. Politicians, government officials, Political party, party officials and Lobbying, lobbyists can be accused of various ...

in the early

Shōwa period Shōwa most commonly refers to: * Hirohito (1901–1989), the 124th Emperor of Japan, known posthumously as Emperor Shōwa ** Shōwa era (昭和), the era of Hirohito from 1926 to 1989 * Showa Corporation, a Japanese suspension and shock manufactu ...

Imperial Japan The Empire of Japan, also known as the Japanese Empire or Imperial Japan, was the Japanese nation state that existed from the Meiji Restoration on January 3, 1868, until the Constitution of Japan took effect on May 3, 1947. From Japan–Kor ...

which brought about the collapse of the administration of

Prime Minister A prime minister or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. A prime minister is not the head of state, but r ...

Saitō Makoto Viscount (27 October 1858 – 26 February 1936) was a Japanese naval officer and politician. Nussbaum, Louis-Frédéric. (2005)"Saitō Makoto"in ''Japan Encyclopedia'', p. 809. Upon distinguishing himself during his command of two cruisers in t ...

in 1934.

History and background

In June 1933, the ''Banchokai'', a group of young investors, purchased 100,000 shares of

Teijin is a Japanese chemical, pharmaceutical and information technology company. Its main fields of operation are high-performance fibers such as aramid, carbon fibers & composites, healthcare, films, resin & plastic processing, polyester fibers, prod ...

(a leading

rayon Rayon, also called viscose and commercialised in some countries as sabra silk or cactus silk, is a semi-synthetic fiber made from natural sources of regenerated cellulose fiber, cellulose, such as wood and related agricultural products. It has t ...

and textile firm) from the

Bank of Taiwan The Bank of Taiwan (BOT; ) is a commercial bank headquartered in Taipei, Taiwan. It was established in 1897-1899 as a Japanese policy institution or "special bank", similarly as the Nippon Kangyo Bank (est. 1897), Hokkaido Takushoku Bank (est. ...

at a price of ¥125 per share. The stock steadily rose in price, reaching ¥200 per share by the end of the year, and rumors began to arise in the editorial pages of various newspapers that the ''Banchokai'' had somehow managed to manipulate the market. Working with this unsubstantiated rumor, ultrarightist officials in the

Ministry of Justice A justice ministry, ministry of justice, or department of justice, is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...

accused officials in the

Ministry of Finance A ministry of finance is a ministry or other government agency in charge of government finance, fiscal policy, and financial regulation. It is headed by a finance minister, an executive or cabinet position . A ministry of finance's portfoli ...

and members of

Saitō Cabinet The Saitō Cabinet is the 30th Cabinet of Japan led by Saitō Makoto Viscount (27 October 1858 – 26 February 1936) was a Japanese naval officer and politician. Nussbaum, Louis-Frédéric. (2005)"Saitō Makoto"in ''Japan Encyclopedia'', p. ...

of conspiracy with the Bank of Taiwan to permit the ''Banchokai'' to purchase shares at an artificially low price in return for

bribes Bribery is the corrupt solicitation, payment, or acceptance of a private favor (a bribe) in exchange for official action. The purpose of a bribe is to influence the actions of the recipient, a person in charge of an official duty, to act contrar ...

of cash and stock. In April 1934, the Ministry of Justice ordered the arrest of the Vice-Minister of Finance, director of the Bank of Taiwan and president of Teijin. On receiving word that a number of cabinet ministers were also scheduled to be arrested, Prime Minister Saitō dissolved the government on 3 July 1934. Soon afterwards, thirteen more officials were arrested on charges of

corruption Corruption is a form of dishonesty or a criminal offense that is undertaken by a person or an organization that is entrusted in a position of authority to acquire illicit benefits or abuse power for one's gain. Corruption may involve activities ...

Consequences

After a lengthy trial, all sixteen defendants were cleared of all charges, and the entire set of stock transactions involving Teijin shares was found to be free of fiscal irregularities. However, the Japanese public in general was left with a strong impression on extensive corruption in high levels of government and finance, which further eroded public confidence in both

liberal democracy Liberal democracy, also called Western-style democracy, or substantive democracy, is a form of government that combines the organization of a democracy with ideas of liberalism, liberal political philosophy. Common elements within a liberal dem ...

and in the

capitalist Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit. This socioeconomic system has developed historically through several stages and is defined by ...

system. This image was encouraged by the right-wing ''

Kokuhonsha The was a nationalist political society in late 1920s and early 1930s Japan. History The ''Kokuhonsha'' was founded in 1924 by conservative Minister of Justice and President of the House of Peers, Kiichirō Hiranuma. It called on Japanese pat ...

'', led by

Hiranuma Kiichirō Baron was a Japanese lawyer and politician who served as Prime Minister of Japan in 1939. Hiranuma rose to prominence as a prosecutor and official in the Ministry of Justice. He served as minister of Justice under Prime Minister Yamamoto Gonnoh ...

, who was also chief

prosecutor A prosecutor is a legal representative of the prosecution in states with either the adversarial system, which is adopted in common law, or inquisitorial system, which is adopted in Civil law (legal system), civil law. The prosecution is the ...

in the trial. Indirectly, the Teijin Incident contributed to an increase in violent terrorist attacks by secret societies such as the ''

Sakurakai , was an ultranationalist secret society established by young officers within the Imperial Japanese Army in September 1930, with the goal of reorganizing the state along totalitarian militarist lines via a military coup d'état, if necessary. Its ...

'' and League of Blood against leading figures in government and finance. It also contributed to attempted military coup d'etats, such as the February 26 Incident, against the perceived corruption of civilian rule.

History and background

Consequences

References

Further reading