Nippon Kogaku Kogyo Kabushiki Kaisha (Nikon) was founded in 1917 as an optical weapons instrument shop to satisfy Imperial Japanese Navy's goal of self-sufficiency in optical munitions by reducing or eliminating overseas suppliers. The company mainly worked on German designs producing precision optical instruments such as telescopes, microscopes, binoculars, range finders and surveying equipment. It was only after the second world war that it made forays into consumer camera market.
Nippon Kogaku During 1920s
Washington Naval Conference of 1921 placed restrictions on capital ship tonnage thus depressing Japanese shipbuilding industry and therefore, adversely affecting affiliated munitions suppliers like Nikon in their finances. However, the Great Kanto earthquake of 1923, that had destroyed Nippon Kogaku's facilities, had also destroyed military and navy facilities, forcing vast resources to be assigned to new plant of Nippon, thus enhancing its relationship with the Imperial Japanese Navy as both a military supplier and as a research and design arm.
Nikon in Pre-war 1930s
Terms of the London Naval Treaty resulted in acceleration of Japan's military research and development during the 1930s. While Nippon Kogaku benefitted from increased naval construction, its product line now included photographic lenses. While not a camera manufacturer yet, it was providing lenses to camera companies like Canon with products like 75 mm, 105 mm, 120 mm, and 180 mm Nikkor lenses. All Canon camera built before WWII were fitted with Nikkor lenses.
Imperial Japanese Navy asks Nikon to Develop Cameras
Nikon itself states that "... it was primarily in response to the demands of the navy that [Nippon Kogaku] took up camera research." London Naval Conference of 1930 and the Naval Supplementary Bill promoted the Japanese navy to try to reduce its dependence on France and it started asking Nippon Kogaku to design and manufacture cameras for reconnaissance aircrafts. Soon the company was producing complex cameras for the navy.
Among the most technically demanding of projects done for the navy was the creation of optical rangefinders, or fire-control directors for capital vessels to be built in Japan. Nippon Kogaku's first periscope was produced in 1918 and it improved during the 1930s. It also worked on lens coating problem during this period.
Detailed history at NIKON AND THE SPONSORSHIP OF JAPAN'S OPTICAL INDUSTRY BY THE IMPERIAL JAPANESE NAVY, 1917-1945 on which this summary is based.