ABSTRACT
J. P. Morgan shattered the barriers to foreign entry into Japan. After a two-year observation period, the Ministry of Finance (MoF) viewed the experiment as successful and allowed a spate of other foreign banks into the country. The need for foreign banks as conduits to the international capital markets abruptly ended. As the number of foreign banks continued to grow, the MoF had to adjust to the new reality of a sizable – and less controllable – foreign presence. The J. P. Morgan license represented an epochal event. A new consensus within the Ministry concerning foreign banking access had emerged. In the early 1970s, Japan needed capital and depended on foreign banks for necessary credit. The MoF further insulated the retail sector by making clear that foreign banks could open only a single branch. J. P. Morgan sent shock waves through the Japanese banking community in 1970 when John F. Loughran convinced Osamu Toba to leave the Bank of Tokyo.
