Financing Japan's World War II Occupation of Southeast Asia

42 Pages Posted: 23 May 2013

See all articles by Gregg Huff

Gregg Huff

University of Oxford - Pembroke College, Oxford

Shinobu Majima

Gakushuin University - Economics

Date Written: February 28, 2013

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.

Keywords: war, financial and macroeconomic crises, resource transfer, occupation costs

JEL Classification: G01, N15, N45, P44

Suggested Citation

Huff, Gregg and Majima, Shinobu, Financing Japan's World War II Occupation of Southeast Asia (February 28, 2013). Available at SSRN: https://ssrn.com/abstract=2268889 or http://dx.doi.org/10.2139/ssrn.2268889

Gregg Huff

University of Oxford - Pembroke College, Oxford ( email )

OX1 1DW
Oxford
United Kingdom

Shinobu Majima (Contact Author)

Gakushuin University - Economics ( email )

1-5-1 Mejiro, Toshima-ku
Tokyo 171-8588
Japan

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