My role in this paper is to research into the theory and history of Japanese industral policy in time of war. Although the actual industrial
policies are very complicated and diversified, the theoretical framework in the background is considerably simple. First two main economic tools, that is, the production possibility
frontier and budget constrained are adequately used in this research, including the policy - decision line. Next the various realities of industrial policies are described in detail from the Japan - China War to the Pacific War. At the last section one more important diagram appears on the stage. That explains a model including relations of the number of resource allocative sectors and three kinds of cost, namely, production cost, internal governance cost and exclusion cost. I can find that the suggestions from this modelling study are unexpectedly interesting. I can observe two intertemporal equilibrium points by shifting twin functions determining the number of the above mentioned
sectors and total of three kinds of cost. The important conclusion is that we can decrease both of the number of sectors and total cost by employing nicely the principles of market, not the principle of planning.