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No.8 1930s and War Economy
Economic Development of Japan
Pure dictatorship
Full democracy
Democratic institution
(Form)
Political competition
ConstitutionLawsParliamentElectionCourt
Reform vs conservatism, big vs small government, other policy debates
EdoMeiji
Taisho
Fascism
ConstitutionParliament
Democracy movement,
Party cabinet
DemocratizationNew constitution
Showa2
War1937
1945-51 LDP dominanceLack of policy debate
Male suffrage
1960Now
US rule
Defeat
Showa1
1889
1925
1931Military rises
1937-45
(Content)Political fights
Two-party Politics 1924-1932 PP.130-32
Minsei Party 民政党 (Kenseikai until 1927)
Seiyukai 政友会(Estab. in 1900 by Hirobumi Ito)
Economy Small government, free market, fiscal austerity & industrial restructuring for return to gold
Big government, fiscal activism, local public works for securing votes
Foreign policy
Oppose militarism, protect Japan’s interest by diplomacy, promote disarmament
To attack Minsei Party, support military and fascism if necessary, even deny democracy
Remark Peace orientation is laudable, but stubborn deflation policy caused fascism to gain force
Economic recovery policy was welcomed, but its opportunism severely undermined democracy
Seiyukai statements:“Prof. Minobe’s theory denies the supreme dignity of Emperor. Just banning his books is not enough.”“Go, go, Japan, the leader of Asia, the vast land of Manchuria and Mongolia is waiting for you!!!” (election campaign song)”
Northeastern China today
Shidehara Diplomacy
His policy was more moderate than before or after him• Maintain good relations with US and UK• Respect Washington Naval Disarmament Treaty (1921-22)• No military intervention in China; secure Japan’s economic
interest through diplomacy and negotiation• When China protests and resists, his diplomacy breaks down• Domestically, criticized as Coward Diplomacy• Fail to stop Manchurian Incident (1931) started by Kantogun
(Japanese Army stationed in China)
PP.106-9
Kijuro Shidehara, 1872-1951 Foreign Minister, 1924-27, 1929-31 Prime Minister 1945-46
Tanaka Cabinet (Seiyukai), 1927-1929
• The Oriental Conference (Japan’s policy towardChina): defend Japan’s interests in Manchuria-Mongolia 満蒙 , but welcome FDI from any country.
• Send Japanese troops to prevent Chiang Kai-shek 蒋介石’ s army to unify China (1927 & 1928).
• Suppress communists and proletariat parties.• Strengthen Security Maintenance Law 治安維持法
(introduce death penalty).• Kantogun 関東軍 (Japanese army in China) kills
Chinese military leader 張作霖 by train bombing. PM Tanaka did not report the truth to Emperor. Emperor criticizes him and he resigns.
Giichi Tanaka 1864-1929
Hamaguchi Cabinet (Minsei Party), 1929-31
• Fiscal austerity and industrial restructuring for returning to gold standard ($1=2 yen)
• Disarmament (supported by people, opposed by navy)
• Social policies for workers and farmers
Prime MinisterOsachi Hamaguchi
Finance MinisterJunnosuke Inoue
Foreign MinisterKijuro Shidehara
Hamaguchi Cabinet is regarded as the crown of pre-WW2 democracy achievement. However, its stubborn deflation policy encouraged fascism and militarism, despite Minsei Party’s peace orientation.
Promoting Naval Disarmament
• London Naval Disarmament Treaty (1930) signed and ratified against opposition by Navy and Privy Council (cruisers & submarines, 69.75% vs 70% of US/UK tonnage)
• Navy attacks government for “violation of Emperor’s supreme command authority” 統帥権干犯
• Seiyukai supports Navy to undermine Minsei Party Government (=helping fascism)
• PM Hamaguchi shot at Tokyo Station (1930), dies next year
Note: Before WW2, many PMs were assassinated or almost killed: Ito, Okuma, Hara, Inukai, Hamaguchi, Takahashi, Saito, Suzuki
Showa Economic Crisis 昭和恐慌Causes
(1) Impact of global depression
(2) Austerity policy initiated and continued by FM Inoue
Consequences
(1) Severe price deflation
(2) Rural impoverishment, coupled with famine
(3) Cartelization and rationalization (“free market doesn’t work”)
(4) Rise of fascism (army, navy, right-wing groups)
--Rejection of party politics--“Reform” movement 1/ Military readiness for total war 2/ Totalitarian state for the benefit of farmers and workers
PP.126-130
0
5
10
15
20
1929 1930 1931 1932 1933 1934
Nominal GNP (bil yen)
Takahashi Budget and Recovery 1932-36• Korekiyo Takahashi, FM in Inukai Seiyukai Cabinet and two
other cabinets (1932-36)--“Japanese Keynes”
• “If someone saves 30,000 yen out of his income of 50,000 yen, his savings will increase, which is fine for him. But from the viewpoint of national economy, his saving will surely reduce demand elsewhere, which lowers national output. For the nation, it is actually better that this person spend all his income of 50,000 yen.” (Takahashi speech on austerity and returning to gold standard, 1929)
• Reversing Inoue’s austerity policy
--Terminate gold standard, let yen fall
--BOJ monetization of fiscal deficit
--“Spending Policy” on public works
PP.131-32
Takahashi was assassinated by rebellion army in 1936
Manchurian Incident (1931)(Sep. 18 Incident)
• Kantogun ( 関東軍 Japanese army stationed in China) initiates well-planned invasion of Manchuria without informing Tokyo
• Tokyo Government and Army HQ try to stop it but fails Kantogun is now uncontrollable Violating “open door, equal opportunity” principle
• US Secretary of State Stimson’s press statement undermines FM Shidehara (regarding Jinzhou bombing)
• Seiyukai (Inukai) Government declares the “independence” of Manchuria (1932).
• The League of Nations determines that Manchuria is not an independent state and Japan’s action is not self-defense Japan withdraws from the League of Nations (1933)
PP.133-35
Democracy Fascism/militarism
Pro-Zaibatsu,
Pro-Capit-alism
Workers’ &
Farmers’
Rights
Multiplicity of Political Players and Policy Debates(1930s until the outbreak of Japan-China War (July 1937)
Seiyukai Party
Minsei Party
“Proletariat” partiesMilitary
Ugaki
Proletariat parties
Minsei Party
SeiyukaiParty
Discipline Faction
Imperial Faction
Navy
R Wing
Political parties in parliament Army factions
Social reform through parliament
Social reform thru coup & terrorism
Political terrorism1931‐36
Failed coupFeb. 26 Incident, 1936
XDominant & suppressive
Rivalry among fascio groups
Supports fascism to undermine Minsei Party
Lose electionFeb. 1936
Opposes fascism, promotes social policies
Gain seats under broad voter base, demands social policies
FASCIODEMOCRACY
Attempt to cooperate to fight
fascism fails
Anti-military criticism in parliament
XJapan-China War, 1937
Dissatisfied with two major parties, sympathetic to “social reform” by fascio groups
無産政党 民政党 政友会 陸軍統制派 陸軍皇道派
Why People & Media Supported Military?(Not all of them, but some)
• The Sense of “Crisis in Manchuria-Mongolia” 満蒙の危機— need to protect Japan’s interests against the emergence of anti-Japanese movement in China; Shidehara Diplomacy is regarded as too soft
• Showa Economic Crisis—workers and farmers suffer severely while big businesses make money
• Disgust with political parties—both Seiyukai and Minsei Party are regarded as corrupt and unfriendly to workers’ welfare
• However, some journalists criticized militarism consistently--Tanzan Ishibashi 石橋湛山 , Kiyoshi Kiyosawa 清沢冽
War Economy 1937-45• Political debate and democracy completely suppressed.• Economic planning to mobilize people and resources
under private ownership (no nationalization).1937-39 Planning Board, National Mobilization Law; State
Power Management Law
1939-41 Control over civil life becomes pervasive
1941-44 Total war with US--Ministry of Military Demand; Military Needs Company Act
1944-45 Economic collapse due to lack of inputs
War with China prolongs Resource shortage within Yen Bloc Invade SEA for more resources Total war with US and rest of the world
PP.136-39
0
5
10
15
20
25
1942:H1 1942:H2 1943:H1 1943:H2 1944:H1 1944:H2 1945:H1
Other
Oil from SEANonferrous metals
Iron oreCoal
Million tons
(1937=100)
0
500
1000
1500
2000
2500
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
Weapons & ammunition
Planes (army)
Planes (navy)
Battleships
0
20
40
60
80
100
120
140
160
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
Total
Food
Clothing
(1933=100)
Military Production Consumer Product Supply
Maritime Transport during Pacific War
1941-1945
Origin of the Post-WW2 Japan System• Featuring long-term commitments and official intervention
Government-led industrial drive, administrative guidance, subcontracting, lifetime employment, keiretsu, mainbanks, friendly trade unions, BOJ window guidance, etc.
• Negative view—this system was installed artificially after 1937 to execute war. It continued to work reasonably well in the 1950s-60s, but it is now obsolete.
• Positive view—advanced industrialization requires such features. Free markets do not generate high-tech or heavy industries. Japan needed such a system to develop.
This means laissez-faire policy supports light industries and simple processing only; to go further, developing countries need above features even today.
PP.140-41