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Chapter Six
Period of President Tanaka's Leadership

Following the resignation of the long-lived Sato Cabinet, the young and energetic Kakuei Tanaka was selected on July 5, 1972 as the LDP's 6th President. At age 54, Tanaka was the youngest person in the Party's history to become its president and form a cabinet as Prime Minister.

In light of the increasingly complicated state of affairs both at home and abroad, Tanaka decided that his administration's theme should be "decisiveness and action" (ketsudan to jikko). One of his most important policy initiatives was a plan to "remodel the Japanese archipelago" (Nihon retto kaizo ron). By responding more effectively to problems associated with rapid economic growth such as the depopulation of rural areas, the overpopulation of urban areas, damage to public health, and the destruction of the environment, he hoped to make Japan into a more balanced and affluent country. With this, the new cabinet and "Tanaka Politics" got off to a quick start.

The first important item on the Tanaka Cabinet's agenda was the normalization of diplomatic relations between Japan and the People's Republic of China. Coming in the wake of major events that occurred during the tenure of the Sato Cabinet, including China's entrance into the United Nations in October of 1971, the resulting departure from this organization of the Republic of China (Taiwan), and the visit of U.S. President Nixon to China in February of 1972, the establishment of formal ties between the two countries was a truly dramatic turning point in Japan's postwar diplomatic history.

To prepare for this, Prime Minister Tanaka met with U.S. President Nixon in Hawaii in August and British Prime Minister Heath in Tokyo in September to exchange views on the restoration of formal ties between Japan and China. On September 25, Prime Minister Tanaka and Foreign Minister Ohira traveled to Beijing for a series of discussions with Chinese Communist Party Chairman Mao Tse-tung and Prime Minister Chou En-lai. Their efforts resulted in the signing of the Japan-China Joint Communiqu_ that brought to an end a period of over 40 years (since the Manchurian Incident in 1931) of troubled relations between the two countries.

Even when compared with the conclusion of the Treaty of Peace with Japan, the signing of the Japan-Soviet Joint Declaration, the normalization of relations with South Korea, and the return of Okinawa, the re-establishment of formal ties with China was arguably one of the most important and difficult diplomatic endeavors of the postwar period. Prime Minister Tanaka's determined efforts to make this political achievement possible are perhaps more worthy of praise than any other accomplishment during this period.

Unfortunately, during the ensuing two years and five months of the Tanaka administration, the internal and external shocks of the "Turbulent Seventies" greatly complicated the management of politics and the economy.

The most important of the domestic challenges the government faced during this period was undoubtedly the battle with inflation. In response to the "Dollar Shock" in 1971, the government had greatly relaxed controls on finance and dramatically increased fiscal spending. This, when coupled with unexpectedly strong exports, a vibrant economy, and large wage increases, resulted in an overly fluid economy. This trend was strengthened even further by speculative demand based on expectations of future economic growth that dramatically increased total demand. These pressures triggered a sharp rise in prices that, when combined with skyrocketing land prices, made inflation into the country's most pressing political issue.

To cope with this, the government enacted the "Law Concerning the Prevention of Cornering and Hoarding" (Kaishime Urioshimi Boshi-ho) in 1973, in addition to introducing other strict measures to control total demand such as postponing public works and raising the official discount rate in successive stages.

Just as the positive effects of these inflation-dampening measures were beginning to be felt, the Yom Kippur War broke out in the Middle East in October of 1973 and the ensuing Oil Crisis threw the global economy into turmoil. The Japanese economy and society were strongly affected as well with concerns about the future sparking speculative commodity purchases, panicked buying and hoarding of daily necessities, and wildly fluctuating prices.

In response to these developments, the government quickly enacted the "Law for the Normalization of Petroleum Supply and Demand" (Sekiyu Jukyu Tekiseika-ho) and the "Emergency Law for the Stabilization of National Life" (Kokumin Seikatsu Antei Kinkyu Sochi-ho) in December of the same year. At the same time that it was establishing new national regulations and laws governing the demand and supply of petroleum and the prices of important basic necessities, the government continued to enforce austerity measures. These various emergency provisions, albeit of a temporary, minimalist nature, introduced control mechanisms into a free-market economic system the maintenance of which the LDP has always advocated as a basic policy. Their historic significance lies in the fact that they made it possible for the Party to continue to follow liberal economic principles while at the same time prioritizing the pursuit of social justice.

An additional defining characteristic of the Tanaka administration was the emphasis that it placed on "politics prioritizing welfare." In 1973, the government compiled and passed the first "Inaugural Welfare Budget" (Fukushi Gannen Yosan). This included provisions to reduce the tax burden on ordinary wage earners and increase welfare spending by 28.3 percent. This is turn made it possible to raise welfare pensions by 50 percent, make dramatic increases to social security pensions, and establish a contributions-based, 50,000 yen national pension.

The budget for the following year was similarly structured. It included tax cuts amounting to two trillion yen, a 37.6 percent increase in social welfare spending, yet another 50 percent addition to welfare pensions, and introduced a new inflation-indexing system for social security pensions. Without a doubt, the dedicated work done by the Tanaka administration to improve the country's pension plans was one of its most important and lasting legacies.

It is true that the Tanaka Cabinet was compelled by rapidly changing international and domestic circumstances to scale back many of the public works projects that were part of its initial policy pledge to "remodel the Japanese Archipelago" (Nihon Retto Kaizo Ron). However, this brave decision deserves high praise as it demonstrated the government's willingness to subordinate one of its major policy goals to the more important one of stabilizing the lives of people who were struggling at the time to cope with rapid inflation.

In 1974, the government enacted the "National Land Use Planning Law" (Kokudo Riyo Keikaku-ho) that was designed to protect the natural environment, create a healthy, cultural living environment, and stabilize land prices. The establishment of the National Land Agency as the central government organ charged with the administration of land use policies further contributed to the country's development.

In addition, the Tanaka administration made important contributions to the long-standing efforts of the Party to promote and improve education and secure a stable supply of well-qualified, outstanding teachers for the nation's schools. This was accomplished in large part through the implementation of the "Law for Special Measures to Secure Teaching Personnel for Schools Providing Compulsory Education" (Gimu Kyoiku Sho Gakko No Kyoiku Shokuin No Jinzai Kakuho Ni Kan Suru Tokubetsu Sochi-ho) that set wages for teachers of compulsory education at a level 25 percent above that of regular government employees. This revolutionary education policy must not be overlooked as one of the Tanaka Cabinet's numerous achievements.

In the field of international diplomacy, Prime Minister Tanaka traveled extensively between 1973 and January of 1974 to meet with his counterparts in the United States, the United Kingdom, France, West Germany, the Soviet Union, and five countries in Southeast Asia. Tanaka's visit to the Soviet Union was the first made by an incumbent Japanese Prime Minister in 17 years since Hatoyama made the trip. In his discussions with General Secretary Brezhnev, Prime Minister Tanaka doggedly pursued the issue of the Northern Territories and won an agreement that the two sides would continue talks on this matter. In April of 1974, the Japanese government concluded an aviation agreement with China that further improved friendly relations between the two countries. Then in November of the same year, Gerald Ford became the first sitting U.S. President in the over 110-year history of relations between Japan and the United States to visit Japan. This event greatly strengthened Japan-U.S. relations and was of enormous historic significance.

In the general election held in December of 1972, the LDP succeeded in taking control of an absolute majority of 284 seats. However, the Socialist Party and the Communist Party were also able to increase their strength from 90 to 118 seats and from 14 to 38 seats respectively. This outcome prompted much reflection within the LDP upon the Party's organizational capabilities and the activities of individual party members. However, in the election for the Tokyo Municipal Assembly held in July of the following year, the LDP increased its seats to 53 despite earlier predictions that the Party's popularity was waning in urban areas. This established a solid foundation for making additional gains in the future.

Unfortunately, in the House of Councillors election held in July of 1974 during the height of economic and social turmoil precipitated by the first Oil Crisis, only 65 of 70 LDP incumbents were able to maintain hold on their seats. This reduced the number of seats separating the LDP from opposition parties from 24 to 7 and ushered in a new "period of parity" between the two political camps.

A close examination of the election results reveals that voter turnout improved and votes for the Party actually increased by 5,550,000, slightly boosting its share of the total vote from the previous election to 44.4 percent. However, poor election strategies such as the running of too many candidates in the national constituency prevented the Party from translating these gains into an increase in seats.

In the midst of these changes, criticism both within and outside the LDP of the Tanaka Cabinet and the Party leadership increased. Following the conclusion of President Ford's historic visit to Japan, Prime Minister Tanaka expressed his hopes for the Party's future prosperity and announced his intention to resign on November 26, 1974.

The turbulent state of both domestic and international affairs at the time prompted Prime Minister Tanaka to retire from office before he was able to complete his entire ambitious policy agenda. However, this does not detract from the important and successful work he engaged in during the two years and five months of his administration to normalize relations with China and create a solid foundation for the country's welfare state.

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