The Search for a New Order: Intellectuals and Fascism in Prewar Japan by William Miles Fletcher III

Author:William Miles Fletcher III [Fletcher, William Miles III]
Language: eng
Format: epub
Tags: History, Asia, General
ISBN: 9781469620749
Google: sjAaDgAAQBAJ
Goodreads: 10929385
Publisher: UNC Press Books
Published: 1982-01-01T00:00:00+00:00

Demands for a Defense Economy

As the China War escalated, Japan’s most immediate economic problem was a balance of payments deficit following a dramatic increase in imports during 1937. The stockpiling of strategic raw materials caused Japanese imports in 1937 to exceed exports by a huge amount.51 In order to correct this deficit the Diet passed the Temporary Funds Adjustment Act and the Temporary Foreign Trade Control Act, which required prior governmental approval for large purchases of imports and restricted the volume and type of imported goods. The government also limited imports of raw cotton for Japan’s textile industries and favored imports of raw iron and scrap steel for heavy industry. By the end of 1938 Japan had restored a favorable balance of trade.

Despite the short-term success of the new trade policies, new problems arose in Japan’s economic situation. No new export-oriented industries emerged to replace the restricted textile industry. Japan, therefore, could not expand its capacity to earn foreign exchange outside of the yen bloc in order to buy imports of raw materials. Because Japan was dependent on countries outside its empire for iron ore, scrap iron, oil, and other essential items, raising imports and finding reliable sources of raw materials became key economic issues during the China War. The difficulties that Japan faced in purchasing raw materials were evidenced by the stagnation of imports after 1938, despite the economic mobilization program.

The economic demands of the China Incident, in addition, placed a serious strain on capital resources, as Japan attempted to create new sources of raw materials. Although North China and Manchuria had important reserves of fuels and metals, such as coal and iron ore, the cost of their long-term development was expensive. Japan poured investment into both regions between 1932 and 1937, mostly in exported machinery, but could not significantly augment its purchase of supplies. By 1937 the government realized that Japan was reaching its fiscal limits. Plans for future development stressed the need for Manchukuo to finance its own economic development and the necessity for Western investment.52

The growing military portion of the national budget, along with increased budget deficits, also presented a major problem. As the national budget expanded, the percentage comprising military expenditures rose from 31 percent in 1931 to 47 percent in 1936.53 Cuts in civilian administration and domestic economic relief measures had reduced the annual deficit of the budget between 1934 and 1936. After the assassination of Finance Minister Takahashi in February 1936, however, the government resumed a policy of increased military expenditures and deficit financing. That policy stimulated inflation, and the retail price index jumped sharply.54

Given these difficulties, the need for more economic control by the state was obvious to military and bureaucratic circles. The most forceful call for a state-controlled economy came from the army. In December 1935, Miyazaki Masayoshi, an economist working for the South Manchurian Railway, and Colonel Ishiwara Kanji, head of the Operations Section of the General Staff, had organized the Japan-Manchuria Financial and Economic Research Association in order to draw up plans for the industrial development of Japan’s empire.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.