Kankichi Yukawa

From the Ministry of Communications to Sumitomo

Kankichi Yukawa graduated from Tokyo Imperial University in July 1890, joining the Ministry of Communications on July 14. In 1894, during the Sino-Japanese War, he served as the postmaster of a field post office. In August 1895, he was appointed the principal of Tokyo Post and Telegraph School where he fostered many excellent staff. In March 1897, he travelled to the United States to attend a Universal Postal Congress of the Universal Postal Union. He was appointed counsellor of the Ministry of Communications in 1897 and director of Tokyo Post and Telegraph Office in 1898. He concurrently served as a counsellor of the Ministry of Foreign Affairs in 1899 and was appointed director-general of Tokyo Post and Telegraph Administration Bureau in 1903. Although Yukawa wanted to establish a communications system in Japan modeled on the German system, the Japanese government was lukewarm about the idea and Yukawa felt his prospects would be bleak if he remained in the bureaucracy.

On the recommendation of Masaya Suzuki who had been Yukawa’s senior at university, Yukawa joined Sumitomo on February 17, 1905. He emphasized the Sumitomo Spirit prioritizing the alignment of business interests with the public interest and, in light of what he had seen in the United States, he was convinced of the the need to establish manufacturers of steel plate and electric wire in Japan as a matter of urgency. Appointed general manager of Head Office, Yukawa’s task was to assist Director-General Suzuki. In April 1910, Yukawa was promoted to director, becoming No. 3 in the corporate hierarchy, following Suzuki and Nakada.

Establishment of the manufacturing business

In May 1910 Yukawa also became general manager of Sumitomo Copper Plant (the predecessor of Sumitomo Metal Industries, Sumitomo Electric Industries, and Sumitomo Light Metal Industries). Yukawa was resolved to position Sumitomo as a leading contender in Japanese industry.

Firstly, from 1910 to 1911, he focused on the pipe-making business of Sumitomo Copper Plant. Although the Japanese Navy launched the Eight-Eight Fleet Program in 1907 to expand its naval forces, at the time Japan lacked the expertise to manufacture high-grade items, such as boiler pipe and condenser tubes, being reliant on imports. Yukawa invited engineers from the British Naval Ordnance Department and in May 1912 Sumitomo became the first Japanese company to manufacture seamless pipe successfully.

Secondly, in August 1911, Yukawa established Sumitomo Electric Wire & Cable Works (the predecessor of Sumitomo Electric Industries) by spinning off the electric wire and cable business from Sumitomo Copper Plant. In light of his experience at the Ministry of Communications, he foresaw expanding demand for electric wire and cables. Sumitomo started full-scale manufacturing of sheathed electric wire and cables, for both communication and electricity distribution, establishing an industrial base for these products in Japan. In 1920, with an eye to communication cables, Sumitomo took an equity stake in Nippon Electric (NEC) and launched a communications equipment business.

Having become a director of Sumitomo Steel Foundry (the predecessor of Sumitomo Metal Industries) in 1915, Yukawa was appointed chairman of the board in 1925. Sumitomo Steel Foundry began manufacturing steel products, such as hubcaps, wheel axles, gears and bogies for naval and railway use. The frustration he felt years before at the American steelworks had been dispelled.

Financial internationalization

Yukawa was a director when Sumitomo Bank was reorganized as a joint-stock company in February 1912. In a speech upon taking office as managing director, effectively the bank’s chief executive, in 1915, he stated: “I will be in charge of the bank from today. In my opinion, it is important to cultivate transactions with foreign countries.” In 1916, Sumitomo Bank established branches in California and Hawaii to meet the needs of Japanese immigrants to America wishing to make remittances. They were the first overseas branches of a Japanese bank. While working at the Ministry of Communications, Yukawa had been involved in introducing a simplified insurance system based on a Belgian scheme. And moreover, his experience as a Postal Money Order and Postal Savings Administration manager had convinced him of the crucially important role of international finance. Subsequently, in 1921, he assumed office as chairman of Osaka Note Exchange. Amid the Showa Financial Crisis of 1927, he strove to stabilize the financial sector and advocated establishment of a system to provide guarantees for export notes. He also clarified a policy of providing greater financial support, particularly for small and medium-sized commercial and industrial enterprises. He urged, “Look after them more than ever and provide loans.”

Assumption of office as director-general

Kankichi Yukawa assumed office as the fifth director-general of the House of Sumitomo on October 1, 1925. In May 1926, in an inauguration speech at a gathering of management, Yukawa expressed his resolve thus: “The House of Sumitomo’s policy emphasizes the need for the most careful consideration when contemplating embarking on a new business. Nevertheless, I urge you to be energetic in proposing improvements to existing businesses and in identifying sound and beneficial new businesses.”

In July 1927, Yukawa removed the Besshi Copper Mines—referred to in the Rules Governing the House of Sumitomo formulated by Saihei Hirose, the first director-general, as an “eternal asset” of Sumitomo through successive generations—from the direct control of Sumitomo Goshi Kaisha, and repositioned them as an affiliate supervised by Head Office. In Sumitomo’s Business Rules issued in June 1928, the reference to the Besshi Copper Mines was removed from the Business Principles. In accordance with Sumitomo’s philosophy, “Sumitomo’s business interests must always be in harmony with the public interest; Sumitomo shall adapt to good times and bad times,” Yukawa decided to transform Sumitomo from an enterprise reliant on copper mining into a comprehensive enterprise comparable to Mitsui and Mitsubishi.

Under Yukawa’s leadership, Sumitomo pursued diversification and its many affiliates included marine & fire insurance companies, Sumitomo Trust, Sumitomo Life Insurance, Sumitomo Warehouse, Sumitomo Bank, Osaka Hokko (North Harbour), Sumitomo Building, Sumitomo Ringyo-sho (forestry), Sumitomo Besshi Mine, coal mines, Sumitomo Steel Tubes & Copper Works, Sumitomo Steel Works, Sumitomo Electric Wire & Cable Works, Nippon Electric, Sumitomo Fertilizer Works, and Nippon Sheet Glass. Yukawa, however, did not neglect to remind people of Sumitomo’s overarching purpose: “Although Sumitomo is a profit-seeking enterprise, our longstanding commitment to benefiting the nation and society must inform everything we do.”

Yukawa’s interviews with candidates seeking careers at Sumitomo reflected his unique approach. He would discuss deeply with students and, seeking to point them in the right direction, refer to his own experience with such emotion that he would sometimes be moved to tears. Students were surprised to learn that the director-general of Sumitomo was such an affectionate father-like individual. Sincerity was Yukawa’s hallmark and he would never treat anyone lightly even if he were a student. It is as if Yukawa’s frankness, empathy, and broad perspective mirrored the mild climate of Shingu, his hometown looking out across the expanse of the Pacific Ocean. He married twice but both his wives predeceased him, had seven children, and was a keen golfer throughout his life.

Grateful for the divine blessings

Although Yukawa reached 60, the retirement age, in May 1928, his term of office was extended for three years so that he could mentor Tomonari, the 16th head of the Sumitomo family, who was still young. Tomonari developed into a fine young man. Noting, “It is indeed a divine blessing that he has grown to be a just, ethical individual with a refined sensibility,” Yukawa resigned in August 1930 before the expiration of the extended term of office. After retirement from his post as director-general, he served as an advisor, capitalizing on his extensive knowledge and gentle personality. He also became a member of the House of Peers and was an important figure in Osaka business circles. However, on August 23, 1931, he suddenly died of pneumonia caused by influenza at the age of 64. The company-sponsored funeral was held on August 25 at a memorial service venue in Abeno, Osaka, in a modest and simple manner in accordance with the will of the deceased.

In his memorial address, Tomonari, the 16th head of the Sumitomo family, expressed his wholehearted appreciation of Kankichi Yukawa: “As well as giving prime importance to integrity and sound management in the conduct of business in accordance with the fundamental principles of Head Office, you strove to achieve improvement, always sensitive to the changing needs of the era. As a result, the House of Sumitomo has gained a greater presence in Japan and overseas. We are deeply indebted to you for your indefatigable efforts.”

Yukawa’s ashes were interred at the grave of the Yukawa family in Yanaka, Tokyo. Having accomplished his vision at Sumitomo, his farewell words were “I am truly grateful for the divine blessings it has been my good fortune to receive.”