The Gakunan District lies on the southwestern foot of Mt. Fuji. It is the leading pulp and paper industry center with a production of over 16% of Japan's total, Silk, the leading product here in the former day, was replaced by pulp and paper. Of late, however, machineries are becoming important. Before 1880, agriculture, especially rice cultivation, was the dominant productive activity in the district, There were small rural industries such as brewery, silk, Japanese paper and others related to agriculture. All of them were ubiquitous all over. A mechanized silk manufacture sparked an incipient industrialization. A small silk mill, which was built at Omiya, a trade center, in 1886, was the first seat of mechanized industry in the district. The President of the Bank of Omiya was given a major credit for the establishment of this silk mill. It was ten years later, however, than the establishment of mills in the advanced silk production regions in Japan. The mill employed 75 women. An increase of number the of silk mills resulted in a rapid increase of employees, even up to 1200 in 1900, and the district could be said to have been specialized in silk. All silk mills were established by the natives of the district such as land owners or bankers. The distribution pattern of the mills was intimately related not only to sites where water power sufficed, but also to the distribution of enterprisers, in other words, land owners. The latter was presumably a primary cone emn in deciding the location of mills in an early stage of industrial development. More mechanized industrialization began with the establishment of the Fuji Paper Mill in 1890. The first pulp and paper integrated factory of the Mill was built on a river near Omiya. The factory emp-loyed 400 persons, mostly men. While the laborers were supplied from the surrounding rural communities, the shareholders were found in Tokyo. This paper factory was quite different from the traditional system of Japanese paper production. Many other paper mills were established by the natives, especially land owners, after 1910 when paper production was booming. It is characteristic that the mills established by the enterprisers of Tokyo were specialized in pulp and printing paper but the mills built by the local people produced many kinds of Japanese paper. There have been no mills that gained all their raw materials from the forests in and around the district. Much raw materials have been sent from Hokkaido and other parts of Japan. Most mills in the area have been oriented toward the foot of Mt. Fuji where water supply was suffi-cient. Establishment of those mills were based on the agricultural structure which provided cheap labor and, on the other hand, local land owners became enterprisers by opening several banks, which helped to promote the industrialization of the Gakunan District. The distribution pattern of above-mentioned two industries has changed through time sequence. The emerging electric power made possible the change of the location of pulp and paper industry that had been oriented to water power. Since silk manufacture was too small to utilize electric power, its distrimbution pattern did not change as pulp and paper industry did. Silk production was then restricted only to Omiya, one of the silk trading centers in Shizuoka Prefecture. As the silk industry in other parts of this district died out, its place was taken by the mechanized Japanese paper industry. The rise of pulp and paper spelled relative decline of silk. Hence, the manufacturing center moved southward from Gmiya. Fig. 2 shows this change (circles in black represent pulp and paper and double circles are for silk mills). But all the paper mills were not flourishing, finding themselves in severe financial straits during the depression following World War I. Concentration of production thus took place.