was a political scandal

Political scandal

A political scandal is a kind of political corruption that is exposed and becomes a scandal, in which politicians or government officials are accused of engaging in various illegal, corrupt, or unethical practices...

 in the early Shōwa period

Showa period

The , or Shōwa era, is the period of Japanese history corresponding to the reign of the Shōwa Emperor, Hirohito, from December 25, 1926 through January 7, 1989.The Shōwa period was longer than the reign of any previous Japanese emperor...

 of the Empire of Japan

Empire of Japan

The Empire of Japan is the name of the state of Japan that existed from the Meiji Restoration on 3 January 1868 to the enactment of the post-World War II Constitution of...

 which brought about the collapse of the administration of Prime Minister

Prime Minister of Japan

The is the head of government of Japan. He is appointed by the Emperor of Japan after being designated by the Diet from among its members, and must enjoy the confidence of the House of Representatives to remain in office...

 Saitō Makoto

Saito Makoto

Viscount was an admiral in the Imperial Japanese Navy, two-time Governor-General of Korea from 1919 to 1927 and from 1929 to 1931, and the 30th Prime Minister of Japan from May 26, 1932 to July 8, 1934.-Early life:...

 in 1934.

History and background

In June 1933, the Banchokai, a group of young investors, purchased 100,000 share

Share (finance)

A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...

s of Teijin

Teijin

is a Japanese chemical and pharmaceutical company. It is listed on the Tokyo Stock Exchange with a market capitalisation of USD 3.9 billion. It operates in five main business segments: synthetic fibres; films and plastics; pharmaceuticals and home health care; trading and retail; and IT and new...

 (a leading Rayon

Rayon

Rayon is a manufactured regenerated cellulose fiber. Because it is produced from naturally occurring polymers, it is neither a truly synthetic fiber nor a natural fiber; it is a semi-synthetic or artificial fiber. Rayon is known by the names viscose rayon and art silk in the textile industry...

 and textile firm) from the Bank of Taiwan

Bank of Taiwan

The Bank of Taiwan is a bank headquartered in Taipei, Republic of China . It is administered and owned by the Executive Yuan of the Republic of China.-History:...

 at a price of 125 yen per share. The stock steadily rose in price, reaching 200 yen per share by the end of the year, and rumors began to arise in the editorial pages of various newspapers that the Banchokai had somehow managed to manipulate the market.

Working with this unsubstantiated rumor, ultrarightist

Uyoku dantai

Uyoku dantai are Japanese nationalist right-wing groups.In 1996, the National Police Agency estimated that there are over 1000 right wing groups in Japan with about 100,000 members in total.-Tennō period:...

 officials in the Ministry of Justice

Ministry of Justice (Japan)

The is one of Ministries of the Japanese government.-Meiji Constitution:The Ministry of Justice was established under the Constitution of the Empire of Japan in 1871 as the .-Constitution of Japan:...

 accused officials in the Ministry of Finance

Ministry of Finance (Japan)

The ' is one of cabinet-level ministries of the Japanese government. The ministry was once named Ōkura-shō . The Ministry is headed by the Minister of Finance , who is a member of the Cabinet and is typically chosen from members of the Diet by the Prime Minister.The Ministry's origin was back in...

 and members of the cabinet

Cabinet (government)

A Cabinet is a body of high ranking government officials, typically representing the executive branch. It can also sometimes be referred to as the Council of Ministers, an Executive Council, or an Executive Committee.- Overview :...

 of Prime Minister Saitō of conspiracy with the Bank of Taiwan to permit the Banchokai to purchase shares at an artificially low price in return for bribes

Bribery

Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...

 of cash and stock. In April 1934, the Ministry of Justice ordered the arrest of the Vice-Minister of Finance, director of the Bank of Taiwan and president of Teijin. On receiving word that a number of cabinet ministers were also scheduled to be arrested, Prime Minister Saitō dissolved the government on 3 July 1934. Soon afterwards, 13 more officials were arrested on charges of corruption.

Consequences

After a lengthy trial, all 16 defendants were cleared of all charges, and the entire set of stock transactions involving Teijin shares was found to be free of fiscal irregularities. However, the Japanese public in general was left with a strong impression on extensive corruption in high levels of government and finance, which further eroded public confidence in both liberal democracy

Liberal democracy

Liberal democracy, also known as constitutional democracy, is a common form of representative democracy. According to the principles of liberal democracy, elections should be free and fair, and the political process should be competitive...

 and in the capitalist system

Capitalism

Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

. This image was encouraged by the right-wing Kokuhonsha

Kokuhonsha

The was a nationalist political society in late 1920s and early 1930s Japan.-History:The Kokuhonsha was founded in 1924 by conservative Minister of Justice and President of the House of Peers, Kiichirō Hiranuma....

, led by Kiichiro Hiranuma

Kiichiro Hiranuma

Baron was a prominent pre–World War II right-wing Japanese politician and the 35th Prime Minister of Japan from 5 January 1939 to 30 August 1939. The modern Japanese politician, Takeo Hiranuma, is his adopted son.- Early life :...

, who was also chief prosecutor

Prosecutor

The prosecutor is the chief legal representative of the prosecution in countries with either the common law adversarial system, or the civil law inquisitorial system...

 in the trial. Indirectly, the Teijin Incident contributed to an increase in violent, terrorist attacks by secret societies such as the Sakurakai and League of Blood

League of Blood Incident

was a 1932 assassination plot in Japan in which extremists targeted wealthy businessmen and liberal politicians. The group chose twenty victims but succeeded in killing only two: former Finance Minister and head of the Rikken Minseito, Junnosuke Inoue, and Director-General of Mitsui Holding...

 against leading figures in government and finance. It also contributed to attempted military coup d'etat

Coup d'état

A coup d'état state, literally: strike/blow of state)—also known as a coup, putsch, and overthrow—is the sudden, extrajudicial deposition of a government, usually by a small group of the existing state establishment—typically the military—to replace the deposed government with another body; either...

s, such as the February 26 Incident

February 26 Incident

The was an attempted coup d'état in Japan, from February 26 to 29, 1936 carried out by 1,483 troops of the Imperial Japanese Army. Several leading politicians were killed and the center of Tokyo was briefly occupied by the rebelling troops...

against the perceived corruption of civilian rule.