User:Nateji77/Comments of Japanese Finanzes

Comments on Japanese finance during WWII

Pre-SCAP Japan's economy was unique: a centralized economy dominated by a collaboration between government oligarchs and the socalled zaibatsu, chief among them Mitsui, Mitsubishi (Iwasaki), Sumitomo and Yasuda, who had direct control over more than 25% of Japan's industry, a significant part of the foreign commercial merchant fleet and 60% of the commercial stock exchange, at a total value of more than 3.5 billion (thousand million) US dollars. Mitsui alone had assets totalling 1.2 billion US dollars and total ownership and control over private banking in Japan.

The Zaibatsu were the heart of economic and industrial activity within pre-war and war-time Japan, and held great influence over Japanese national and foreign policies. They managed their investments both to keep Japan at war and combat-ready from 1931 (the time of the Manchurian Railway Incident) on as well as to profit from the war effort. While zaibatsu leaders might have disagreed with military leaders from Japan's army and navy over policy matters, their ultimate vision of Japan as an aggressive, expansionist power were the same. Mitsubishi was well-connected within the navy, and Mitsui within the army.

Joining with medium and small-sized firms, the zaibatsu maintained control over 57% of total capital in the wartime industries. The concentration of financial wealth continued. In 1940 alone, US$475 million invested in small companies were absorbed by heavy trust.

The cotton industry, which employed more workers than, was reduced to fourteen companies, while the wool industry remained at a low eight. The monopolies granted by the government gave this industry an advantage, taxing at a rate similar to that of farmers as opposed to industry.

There were however new rivals appearing on the scene, on what had traditionally been zaibatsu turf. A group of war businessmen who had speculated in regions of conflict in Japan's newly acquired Manchurian and Chinese territories returned to Japan where and continued their financial speculations, soon receiving lucrative war contracts. These new capitalists were members of the army and navy or the often-fanatical nationalist societies. During the early stages of the Pacific war, in Tokyo's public and private stock exchanges, engaged in speculative transactions on properties in San Francisco which they expected to be under Japanese control as a result of the war. From 1929 on, influx of new capital into Japan did not derive from foreign investment.

In the period 1933-1939 investment of new capital exceeded US$5.4 billion, the greatest amount of new capital invested in any country at the time. In 1940-1941 these investments reached at US$1.1 annually.

In effect, from the ten-year period following the Mukden Incident in 1931 until 1941 Japan saw more than US$9 billion in capital used to expand industrial growth and capacity.

The new revenues proceeded from two previously non-existant sources: the systematically planned economic plundering of Manchuria and China, and extensive gains in domestic cost efficiency obtained from exploitation of Japanese workers in the name of the war effort, and new foreign slaves (e.g., Chinese and Koreans) captured during the war.

The central government gave unprecedented aid in the centrally planned expansion by offering loans and subsidies at low interest rates. The Japanese army accorded indirect aid, with US$250 million invested in Manchukuo and the subsequent military investments to protect these primary investments. The organization of the "Yen Block"—one economic system with countries where were no longer required to pay tarrifs for excess imports, thereby greatly increasing the financial expansion. In the use of its "Yen Block", Japan utilizied it's economic powers in order to increase it's power and wealth, prior to Germany's similar uses to bolster it's wartime effort.

As a result, the national rents raised from nearly US$2 billion to US$6 billion during the period 1931-1939, while the yen itself dropped 3/4 parts in equal terms in gold values. The national debt rose from US$1.4 billion in 1931 to US$4.9 billion in 1939.

The yen fluctuated around the value of US$.234 during the period 1939-1942. Cost of living rose 30% between 1939 and 1943. Bank deposits, which reflect wartime inflation, rose from US$3.5 billion in 1939 to US$8.4 billion in 1943. The savings, despite depletion due to scarcities of consumption articles, rose from US$1.6 billion to $US4.5 billion during the same period. Peacetime savings averaged US$23 per person; the comparable figure during wartime was approximately US$64 per person.

The most important economic factor for Japanese militarists, the war budget, rose 400% from 1939, and was 50% larger than the national rent in 1939. The specific figure for the national budget for 1943-44 was ¥37 billion (thousand million) (approximately US$8.6 billion) is not certain. The internal debt, then near US$5 billion, rose drastically—300% since 1939—but the foreign debt, at US$345 million, was not considerable.