Japanese Economic Policy in the Inter-War Period

Inoue Junnosuke , translated by E. H. de Bunsen, Problem of the Japanese Exchange, 1914-26 (Glasgow, 1931), p. 2.

In this book, Inoue gave an analytical explanation of the problem of the Japanese exchange in this period, and at the same time advocated the essential need to return to the gold standard in order to restore Japanese economic stability and growth.

The stagnant productivity of the peasants under the feudalistic landlord system and the decline of demand and price of agricultural products (especially of silk and rice) had a strong impact upon the Japanese agrarian economy.

Because of the severe decline in exports of silk to the United States (the decline of its price as well as in the volume of its export) Japanese silk industries and sericulture suffered much damage. Raw silk production was the main subsidiary job for small peasants and supplemented their low money income. On the other hand, silk export was the largest component in Japanese exports during the period. It was 36 per cent. of the average yearly exports of 1925-29. The main market for silk remained the United States, which took 88 per cent. of Japanese silk exports for the same years. The decline of Japanese silk exports and the rapid increase in the export of cheap Chinese silk to America during the Depression period, accompanied by the increased production of rayon in the United States, decisively damaged the Japanese silk industry. After the Depression, the Japanese silk industry could not recover its pre-Depression levels in Japanese industry and exports. This entire episode imposed grave strains upon the Japanese agricultural economy.

Japanese industrialisation had been made possible by the import of manufacturing goods (including machines) and raw materials for industry and by the compensatory export of silk and other traditional manufactured goods. The decline of silk exports greatly damaged the trading and production structure of Japanese capitalism.

The price of all agricultural products declined very steeply in the Depression. The import of rice from the Japanese colonies (Korea and Formosa) in particular depressed the price of rice in mainland Japan. Silk and rice were the two principal products of Japanese agriculture, but during the Depression the price of these two products fell sharply. Japanese agriculture was thrown into a crisis which inevitably led to moves towards agricultural reform. This crisis was the heart of the structural crisis in Japanese capitalism after the First World War.

Ikeda Shigeaki , Kojin Konjin (1949).

Fukai Eigo , Kaiko 70 Nen (1941).

Ibid.

Yamamuro's article in Diamond, XVI: 24 (1924), pp. 8, 15.

A.M. Schlesinger , Jr , The Age of Roosevelt, Vol. I: The Crisis of the Old Order, 1919-33; Ando Yoshio , Showa-Seiji-Keizai-Shi e no Shogen, Vol. I (1965).

S. Ikeda Shigeaki Denki Kanko-kai , Ikeda Shigeaki Den (1962), pp. 188-189. 9.

Shidehara Kijuro , Japan's Minister for Foreign Affairs, wanted to promote a peaceful policy towards China. On September 5, 1929, he had a confidential talk with Cho Kei, a Central Committee Member of the Kuomintang, and sounded him out on the possibility of negotiating a non-aggression pact between Japan and China. The main points of the proposed treaty were (1) recognition of the authority of China in Manchuria; (2) prohibition of imperialistic invasion and the use of violence; (3) co-operation between Japan and China in the economic development of Manchuria. Vide Komatsu Toshisaburo, "Nishi Fukashin Jyoyaku no Teiketsu ni tsuite," Gaiko-Jiho ( 1929).

Mitani Taichiro , "Wall Street to Kyokuto," Chuo Koron, XIX, p. 1062 (1975).

E. Varga , Sekai-Keizai-Nenpo, translated by Keizai-Hihankai, Vol. IX (1930). This book was widely read in Japan, even within business circles, because Varga's foresight about the coming of a great depression was regarded as a kind of prophetic alarm of economic trends in those days which had been deduced by his Marxian analysis. Its analysis was accepted by Japanese left-wing economists without any objection or questioning.

J. Degras , ed., translated into Japanese by Arahata, Kamson, etc., Comintern Documents, Vol. II (1970).

Kawakami Hajime , "Kachi-Hosoku kara mita Kinhoni-sei Hakai nolgi" ("The Meaning of the Collapse of the Gold Standard from the Point of View of the Law of Value "), Toyokeizai Shimpo ( 1932).

Today, the Japanese Communist Party criticises its own strategy of that period: " The thesis of 1932 was decided upon the basis of a wrong subjective idea that Japanese society was in a severe crisis and was facing a battle in which the Party would win the revolutionary victory.... This thesis was an expression of the tendency of the Comintern's strategy towards the world depression and the rise of Fascism as the sign of the maturity of revolutionary crisis.... Because of such an unscientific estimate concerning the Japanese political situation, the Japanese Communist Party could not employ adequate policies and tactics based upon a cool and objective analysis of the political dynamism of social powers" Nihon-Kyosan-To no 50 Nen (1972).

Kita Ikki , Kokka-Kaizoan-Genri-Taiko (1919).

Gondo Seikyo , Komin-Jicki-Hongi (1920). Tachibana Kozaburo , Nihon-Aikoku-Kakushin-Hongi (1932).

Matsushita Konosuke , Watashi no Yuki-Kata Kangae-Kata ( 1954).

We can doubt whether Takahashi's reflationary policy would have brought about economic recovery and growth in that period. If the democratic political situation could have been maintained, I think his policy might have achieved his aims. After the Second World War, Japan realised a high economic growth with narrower territory, a smaller population, and fewer natural resources. But even if success might have been possible in economic terms, Takahashi's " New Deal " was politically hampered in that period.

In 1937, after a considerable economic recovery, Roosevelt came back to the sound finance principle. Then a recession came again. At that moment P.M. Sweezy and others proposed a plan for reflation. In a short book review in 1938 Sweezy wrote: "Does this mean that a socialist party should take no part in shaping governmental policies unless it is in a position to carry out a programme of rapid socialization? The answer is No. To behave in this way in a period of capitalist disintegration would clearly be playing straight into the hands of reaction. Socialists should, on the contrary, take the lead in organizing mass support behind a policy of large-scale government spending, since at the present time this is the only policy which can save democratic institutions and thus keep the way clear for eventually winning the masses to a socialist position... In this country, thanks to the New Deal, there is less attachment to the ruinous principles of' sound finance.' '' P.M. Sweezy , The Present as History (1953 ), pp. 339-340. This is a critical comment relevant to the wrong strategy pursued by the Japanese left-wing during the Depression.