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Financing Japan’s World War II Occupation of Southeast Asia

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Author Info

  • Gregg Huff

    ()
    (Pembroke College, University of Oxford)

  • Shinobu Majima

    ()
    (Faculty of Economics, Gakushuin University)

Abstract

This paper analyzes how Japan financed its World War II occupation of Southeast Asia, the transfer of resources to Japan, and the monetary and inflation consequences of Japanese policies. In Malaya, Burma, Indonesia and the Philippines, the issue of military scrip to pay for resources and occupying armies greatly increased money supply. Despite high inflation ,hyperinflation hardly occurred because of a sustained transactions demand for money, because of Japan’s strong enforcement of monetary monopoly, and because of declining Japanese military capability to ship resources home. In Thailand and Indochina, occupation costs and bilateral clearing arrangements created near open-ended Japanese purchasing power and allowed the transfer to Japan of as much as a third of Indochina’s annual GDP. Although the Thai and Indochinese governments financed Japanese demands mainly by printing large quantities of money, inflation rose only in line with monetary expansion due to money’s continued use as a store of value in rice-surplus areas.

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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Oxford University Economic and Social History Series with number _109.

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Length: 43 pages
Date of creation: 31 Oct 2012
Date of revision:
Handle: RePEc:nuf:esohwp:_109

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Web page: http://www.nuff.ox.ac.uk/economics/

Related research

Keywords: war; financial and macroeconomic crises; resource transfer; occupation costs; bilateral clearing arrangements; seigniorage; hyperinflation; Greater East Asian Co-Prosperity Sphere; Japan; Southeast Asia;

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  1. Michael Bruno, 1990. "High Inflation and the Nominal Anchors of an Open Economy," NBER Working Papers 3518, National Bureau of Economic Research, Inc.
  2. Filippo Occhino & Kim Oosterlinck & E.N. White, 2007. "How occupied france financed its own exploitation in world war II," ULB Institutional Repository 2013/142694, ULB -- Universite Libre de Bruxelles.
  3. Thomas J. Sargent, 1982. "The Ends of Four Big Inflations," NBER Chapters, in: Inflation: Causes and Effects, pages 41-98 National Bureau of Economic Research, Inc.
  4. Filippo Occhino & Kim Oosterlinck & E.N. White, 2008. "How much can a victor force the vanquished to pay? France under the nazi boot," ULB Institutional Repository 2013/142695, ULB -- Universite Libre de Bruxelles.
  5. Fischer, Stanley, 1982. "Seigniorage and the Case for a National Money," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 295-313, April.
  6. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
  7. Kim Oosterlinck & Filippo Occhino & Eugene N. White, 2006. "How occupied France financed its own exploitation during WW2," Working Papers CEB 06-012.RS, ULB -- Universite Libre de Bruxelles.
  8. van der Eng, Pierre, 1992. "The real domestic product of Indonesia, 1880-1989," Explorations in Economic History, Elsevier, vol. 29(3), pages 343-373, July.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How Japan financed WWII
    by Economic Logician in Economic Logic on 2012-12-07 15:53:00
  2. The three lives of Japanese military pesos
    by JP Koning in Moneyness on 2013-11-30 14:40:00

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