2
SCAP was pleased by this development, since textiles earned foreign exchange, but Japanese bureaucrats saw an energy crisis looming. And even the policy of export promotion was seriously undermined by the devaluation on September 18, 1949, of the British pound. The pound was cut by 30.5 percent in terms of U.S. dollars, its value dropping from $4.03 to $2.80, a step that caused some 30 other
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countries also to devalue their currencies. Japan, which had just pegged its own currency at ?360 to $1, suddenly found that its products were overpriced in its principal export markets. During the winter of 194950 the Japanese people faced some of the harshest economic conditions they had seen since the war ended, and the threat of revolution came perilously close.
3
On June 25, 1950, warfare erupted on the Korean peninsula, and the United States intervened. This development ended the 'stabilization panic' quantitatively, if not qualitatively. In addition to the American foreign aid that had sustained the Japanese economy since stabilization began, the United States now began to place extensive orders with Japanese firms for ammunition, trucks, uniforms, communications equipment, and other products needed for the war effort. The Americans also started to buy fertilizers and consumer goods destined for South and Southeast Asian noncommunist countries as part of the American foreign aid effort. For example, between July 1950 and February 1951 the U.S. armed forces and the U.S. Economic Cooperation Administration placed orders with Japanese firms for some 7,079 trucks worth nearly $13 million; this was the key to the revival of the Japanese automotive industry.
4
The Enterprises Bureau of MITI supervised these 'special procurements' (
) to ensure that the foreign exchange thus gained was used for investment in basic industries. For a while the 'special procurements boom,' as it was called, provided a false sense of euphoria and a feeling that the hard times were over. Special procurements plus the expenditures of U.S. troops and their dependents constituted 37 percent of all foreign exchange receipts in 195253, and they still contributed 11 percent in 195960.
5
This windfall, however, created major internal financial difficulties. Japanese firms could not obtain investment capital fast enough to retool to meet the orders that the Americans were placing, and their working capital was insufficient to keep them in business if even a few of their contracts involved delays in payment of six months or more. The Japanese economic bureaucrats debated among themselves about what emergency measures to take to rectify this situation, and the outcome of this debate had a profound significance for the economy of later years and for governmental economic policy. It led to the two-tiered structure of government-guaranteed 'city bank' overloaning and newly created government-owned 'banks of last resort.' These latter institutions, particularly the Japan Development Bank (Nihon Kaihatsu Ginko*, abbreviated Kaigin), came to possessand still retain todaytremendous indicative powers over the whole economy as a result of their decisions to make or refuse 'policy loans.'
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TABLE
14
Governor and tenure
Background
Shibusawa Keizo *, 3/4410/45
Yokohama Specie Bank; Dai Ichi Bank.
Araki Eikichi, 10/456/46
Bank of Japan; purged; depurged, 1950.
Ichimada Naoto, 6/4612/54
Bank of Japan; later minister of finance in the Hatoyama and Kishi cabinets.
Araki Eikichi, 12/5411/56
See above.
Yamagiwa Masamichi, 11/5612/64
Ex-vice-minister of finance; Export-Import Bank.
Usami Makoto, 12/6412/69
Mitsubishi Bank.
Sasaki Tadashi, 12/6912/74
Bank of Japan.
Morinaga Teiichiro, 12/7412/79
Ex-vice-minister of finance; Export-Import Bank.
The two great antagonists in this industrial finance debate were Ikeda Hayato (18991965), former vice-minister of finance and minister of finance in the third Yoshida cabinet (February 1949 to October 1952), and Ichimada Naoto (b. 1893), governor of the Bank of Japan from June 1946 to December 1954.
*
Their conflict was based as much on political and bureaucratic differences as it was on genuine differences over policy. As it turned out, Ikeda emerged victorious and his ministry asserted its dominance over the Bank of Japan (particularly after November 1956, when for the first time in 29 years the ministry named one of its own officials governor of the bank; see Table 14). But Ichimada made his own important contribution to Japan's
