The three largest cities in Japan--Tokyo, Osaka and Nagoya--are used to examine the financial situation of Japanese urban areas. The 1949 Shoup Mission findings and recommendations are reviewed. Demographic data and information on the administrative and the fiscal organization of Japanese cities during the past three decades are presented. Details of local public expenditures in the 1970's are offered and contrasted with figures for the nation as a whole. Major spending in the areas of education, public works, and social welfare is discussed. Resources available to local level governments for meeting these expenditures are examined. Differences between prefectures (such as Tokyo) and municipalities are pointed out in this context. Taxation and fiscal policy, such as revenue sharing and special grants to municipalities from national and prefectural sources, are described and some prospects for future fiscal reform are outlined. Discussion throughout this work is supported by extensive statistical data. (GC)