After the war, to many he symbolized the cause of cultural preservation. Others viewed him as a defender of what was left of the old clan oligarchy. His victory in 1946 was a lesson for SCAP, and while they could displace him from office, the Liberal Party he headed was entrenched firmly in postwar Japanese politics.

SCAP would have preferred a more pliable type of leadership. After the surrender, Kijuro Shidehara was appointed to replace Prince Higashikuni as head of the Cabinet. Shidehara, like Hatoyama, had links to prewar party government. The two had been on opposite sides Hatoyama with the Seiyukai and Shidehara with the Minsei-to Party. In his role as Foreign Minister, Shidehara had been vilified by the militarists and by Hatoyama for his non-intervention policy toward China.

The two men had much more in common after the war. SCAP liked Shidehara, though his unwillingness to define democracy outside of Meiji framework was disappointing. If there was a link between Hatoyama and Shidehara it was in the person of Shigeru Yoshida, Shidehara's Foreign Minister. After winning the 1946 election, and then being purged, Hatoyama chose Yoshida to take his place as Prime Minister. This strange series of events was a testimonial to Hatoyama's power.

Hatoyama's strength was in part due to his "bend but don't break" resistance to the American occupation. It was also due to his connection to and defense of the privileged class. However, it was not unique. There were many postwar political figures with the same credentials. The edge he had, that others did not, was a friend by the name of Yoshio Kodama.

After his release from prison, Kodama went to work as a covert civilian employee for the Imperial Navy and was stationed in Shanghai. In 1941, he set up the Kodama Kikan as an intelligence organ, the main function of which was to rape Asia of its gold, nickel, platinum and tungsten as well as to secure supplies of raw cotton and castor oil. The Kikan, or Agency, moonlighted in the opium trade.

By 1945, the operation had grown to five hundred Japanese overlords controlling more than 2,000 Chinese, Europeans and South Asians, panning an area that stretched from Manchuria to Indochina. When the war ended, naval officials wanted to pretend that the Kodama Kikan hadn't existed. Mitsumasa Yonai, Secretary of the Imperial Navy, left the entire organization to Kodama to do with as he wished. Kodama cashed it in and returned to Japan a billionaire, receiving an advisory post with the transformation Higashikuni Cabinet. During this brief period he was approached by Ichiro Hatoyama, who prevailed upon him to sponsor a postwar political party. Kodama agreed conditionally. If the Hatoyama Liberal Party promised to protect the Emperor system, he would donate 160 million yen ($46 million). It was agreed and the Liberal Party was established.[28]

In 1946, Kodama was sent to Sugamo Prison as a Class A war criminal. While there, be befriended a number of soon-to-be-prominent political figures. Said the Americans of him, "Kodama is extremely clever, wily and capable. He is a radical nationalist who has dangerous thoughts."[29] The American occupation forces estimated Kodama's wealth in 1947, to be 105.5 billion yen ($13.5 billion).[31] To the Americans, Kodama's wealth was far less intriguing than his Asian network of contacts. The OSS (which later became the CIA) took a special interest in him. After three years he was released from prison without trial. He was given permission to keep his money and allowed to reestablish his Kodama Kikan (renamed Midori Kikan or green agency) on the Ginza in Tokyo, where he put together a thriving black market operation. He also set up shop as a "fixer," helping to nefariously settle management and labor conflicts within business organizations.

Throughout his life Kodama lived by a very simple creed, "Blood for your country, tears for your friends and sweat for your family." He worshipped the Emperor and tried to donate to him twenty boxes of diamonds and gold bullion. Hirohito refused the gift. As an addendum to his black market operation, Kodama employed an army of thugs to help his business friends settle postwar labor disputes. In his new role as underworld Czar, with a special pipeline into the U.S. Government, he cast a unique shadow over early postwar political development. Socially focused and ruthless in character, Kodama's close association with Hatoyama assured a future for the Liberal Party. In 1946 Tokyo, Kodama was a good friend to have. Violence rocked the nation as labor, business, farm and political cliques organized, disbanded and reorganized in a life or death struggle for legitimacy. MacArthur's election, then purge, only exacerbated the situation. With SCAP approval, Yoshida dissolved the Diet and slated a new election for April 25, 1947. This time, Tanaka was ready.

The 1947 election was the first true test for SCAP's version of parliamentary government. As such it produced several aberrations. The least noticed was the election of Tanaka. It is a valid assumption that high public service in Japan presupposes one is an alumnus of Tokyo, Keio or Waseda Universities. Being that Tanaka's highest degree was from Futada Elementary, most people believed that he had vastly exceeded his proper station in life. But others, especially those in need of his money, preferred to view him as a sort of Japanese rendition of Davy Crockett goes to Congress. In either case, his presence in the halls of the Diet was a most unusual phenomenon. Despite his lack of academic credentials, pedigree and maturity, he was entering service with three years of experience in macro-management with his construction company. This was fortuitous, in that construction was the major legislative task at hand.

The other aberration in the 1947 election was the emergence of three equally divided parties and a the 29 member Kokkyo Party with a Socialist victory within that group. Tanaka's Democratic Party, formed a coalition with the Socialist Party and ousted the Hatoyama-Yoshida-Kodama Liberal Party. Tetsu Katayama became Japan's first and last Socialist Prime Minister. It was a precarious balance from the start. The Socialists controlled 143 seats in the Diet, the Liberals 131 and the Democrats 124.
Naturally, each party claimed a key to the truth, [32] an appeal based on an a priori rule of traditional culture: good politics preserve the national essence by providing long-term security for individuals in the society. Historically, the coalition between royalty, big business, rural gentry, military and bureaucracy guaranteed perpetuation of Japanese society. SCAP removed the military and wealthy landlords from this coalition, and diminished imperial authority as well. Despite that exorcism, both the Liberal and Democratic parties based their strength on past ties to traditional authority.

Industrial labor was an alien force in society with no ancestral link to the past. For a half century they were looked down upon as a displaced class of people. Before the war and directly after, their exact station in society had yet to be affixed. By Japanese codes of collective behavior, their group was free to seek, indeed forced to seek, legitimacy elsewhere. They found warrant in the internationalist doctrines of Socialism and Communism.
The intellectual and cultural chasm between the Socialists and the Democrats was far greater than that between the Liberals and the Democrats, yet the Socialists and the Democrats formed a union in order to win. If the Democrats had aligned with the Liberals, their role would have been subordinate and second class. Aligned with the Socialists, their role was as a go-between, a far more powerful position.

Macro-group dynamics aside, Tanaka had to worry about the more concentric micro-collectives into which he was about to enter. The Diet was a very exclusive club. He had no familial or village ties. He lacked a benefactor and his acquaintances, up to this point, were of marginal value.

The fragile government only managed to pass several watered-down reforms, the most startling of which was the nationalization of the coal mining industry. This reform was so controversial that it led to the collapse of the Katayama Cabinet after only ten months in office.

Nationalization of this industry was a cornerstone of Socialist reform. The Democrats found it to be an excruciating issue that led to a number of party defections. The bill, in mutilated form, came before the House in November 1947. Shidehara, in open rebellion against his party, instructed his faction to vote against it. The bill passed and soon after that his group defected from the Democrats, declared themselves independent and formed what it called the Doshi Club, a twenty-four-member society of "like-minded persons."[34] Tanaka was placed in charge of the club's political funds.
Until the coal mining issue, Tanaka's political lean was very hard to ascertain. He had campaigned as an able administrator who cared about his Niigata roots.[35] The nationalization bill, however, came very close to him. He had a branch office of his construction company in the southern island of Kyushu and it was profitable precisely because of contracts with private mining interests.[36] Once this bill came up, Tanaka became a vocal champion of free enterprise, though his primary concern stayed centered on the dynamics of power more than on its ideological use.

During this period of non-party affiliation, he learned something about political corruption in property transactions. As a member of the Committee to Research Unfair Property Transactions, he improved his image by taking an active role in ferreting out criminal conduct. One of the issues being addressed by the Committee turned out to be the largest scandal in Japanese history to that date.

A Socialist Cabinet Minister was involved as well. The organization paying for political favor was the Showa Denko Chemical Industry. Hence, the acronym Sho-Den came into use. As a consequence of this enormous scandal, all three parties fell into disrepute. In October, the Cabinet resigned.
Two months after Ashida became Prime Minister, the Doshi Club joined the Yoshida-Hatoyama (Kodama) Liberal Party. It was a timely alliance. Along with other defectors, party chiefs decided to reorganize into the Democratic Liberal Party (DLP) with Shigeru Yoshida as its president. Tanaka became manager for election campaigns of the party.

The DLP took power by default after Ashida resigned. Because of a cerebral hemorrhage that partly paralyzed him, Hatoyama's strength in party affairs was diminished. Still under purge restrictions, he could not have become Prime Minister in 1948. Yoshida was in a good position to vie for that post. The only obstacle he faced was Takeshi Yamazaki who, upon Hatoyama's illness, was elevated to the DLP position of Secretary General. Yamazaki thus became a potential rival of Yoshida, creating a rift within the party.

Tanaka first came to Yoshida's attention during the interparty conflict. Using the argument that Yamazaki was little more than a puppet of the American occupation forces and that his candidacy was tantamount to interference in Japan's domestic affairs,[37] Tanaka was able to put up a strong defense in Yoshida's favor. Tanaka's sudden affinity for the aristocratic Yoshida was in part based on the former Prime Minister's willingness to say no to the occupation forces whose constant meddling in the business world had grown extremely tiresome. The affair concluded when Tanaka and numerous others took part in an Executive Council meeting with Yamazaki and convinced him to resign,[38] a task that was greatly simplified by Yamazaki's unambitious nature. Yoshida once again ascended to the Prime Ministership.

Even prior to Tanaka's help with the Yamazaki problem, he had caught Yoshida's attention by compiling a detailed district-by-district political map.[39] The map impressed Yoshida because of its comprehensive compilation of each party member's connections, source of financial support and family ties. It was valuable intelligence that demonstrated Tanaka's talent for organization and political maneuvering.

Yoshida rewarded Tanaka for his help with Yamazaki and the map by appointing him as the nation's youngest Vice Minister of Justice.[40] For a freshman legislator, Tanaka's new appointment was truly remarkable. At age thirty he had earned himself a footnote in Japanese history. With only two months left in his first term as a Dietman, he had made the most of a turbulent time and quite convincingly escaped obscurity. This inaugural period of high achievement, however, was not without tragedy. His political energy was tempered by grief. After only four months in office, his only son, Masanori, died.