zaibatsus

Zaibatsu were large family-controlled industrial and financial conglomerates that dominated the Japanese economy from the late 19th century until the end of World War II. The term, meaning wealth cliques, referred to groups built around holding companies that controlled banks, trading houses, and major industrial firms, with the same families maintaining influence across several companies. The four most prominent zaibatsu were Mitsui, Mitsubishi, Sumitomo, and Yasuda, though others existed.

Structure and operations: Zaibatsu used holding companies, cross-shareholding, and affiliated banks to channel capital into strategic industries such as mining, steel, shipbuilding, chemicals, machinery, and textiles. This integrated structure allowed centralized control of production, finance, and distribution. Interlocking directorates linked many group companies, creating a dense financial-industrial network.

Role and influence: The zaibatsu collaborated closely with the state during industrialization and later wartime expansion, providing capital for government projects and military procurement. They had significant influence over political and economic life, though formal political power rested with the state and oligarchic groups.

Dissolution and legacy: After Japan's defeat in 1945, the Allied occupation authorities dissolved the zaibatsu to reduce their economic and political power, ordering the separation of banks from industrial enterprises and breaking up holding companies. Many former zaibatsu firms survived and reconfigured into postwar keiretsu or standalone corporations; the four major groups—Mitsubishi, Mitsui, Sumitomo, and Yasuda—continued as large enterprises, albeit in reorganized forms. The term is now used mainly by historians and in discussions of Japan's industrial history.