Financial Policy and Economic Development, 1897–1937

Abstract

From the early years of Japan’s modernisation her leaders showed a firm grasp of the functions of a well-wrought financial system in economic development. The architect of the Japanese system was Count (afterwards Prince) Matsukata who presided over the country’s finances during the last two decades of the nineteenth century. The survey in this chapter, which begins at the time when his work was almost complete, follows the course of financial events and policies from the adoption of the gold standard in 1897 to the ‘China Incident’ of 1937. The aim is not, of course, to present a comprehensive history of Japan’s banking and monetary system but to analyse what can be identified as the most significant features of the financial policy from the standpoint of its contribution to economic development.

This chapter has resulted from the conflation of two articles. The first was published in the Economic Journal in March 1925 under the title of ‘The Recent Currency and Exchange Policy of Japan’, and the second in (Economic History a supplement of the Economic Journal) in January 1933, under the title of ‘The Last Decade in Japan’. The latter had previously been read before Section F of the British Association at York on 5 September 1932.