Addendum: Reform of the Deposit Bureau of the Ministry of Finance—Problems with the Management of Massive Funds and the Advisory Committee

As the popular funds, the aggregation of small-amount savings by individuals developed in Japanese economy since the beginning of 20th century, Deposit Bureau funds also grew tremendously together with the expansion of postal savings, which was the typical small-amount individual savings. Considering the fact that postal savings were primarily composed of the small-amount savings of ordinary people, the management of Deposit Bureau funds sought first to maintain them and to secure the interest to be paid on them. However, the design of the system and specific management plans were not predetermined. As such, the management of the Deposit Bureau funds of the Ministry of Finance and the design of that system were highly path dependent. As postal savings saw a huge increase in a relatively short period thanks to the economic boom during World War I, there emerged a number of large funds with no obvious outlet. The bulk of these funds were poured into the notorious loans. These bad managements induced public criticism after the war-time boom and political actions took place to reform the management system. In 1925, a package of legislation related to the Deposit Bureau were enacted, known simply as the reform of the Deposit Bureau of the Ministry of Finance. The reform led to the establishment of the Steering Committee of the Deposit Bureau Funds of the Ministry of Finance, an advisory committee that met semi-regularly. This addendum intends to shed light on the reform that led to the design of a new system for the Deposit Bureau in 1925, and examines the actions and role of the newly established advisory committee.