Japanese Finance Since the War

Login or Register to leave a comment.

Sign-up for free weekly updates from ForeignAffairs.com.

IN OUR day even a victorious war is followed by great financial difficulties, either because the state is obliged to liquidate its short-term debts and other obligations contracted during the hostilities or because many states are prone to allow themselves to be dragged into great social expenditure. Often both reasons operate. This has been the case in Japan; but there the post-war period has been a time of even greater difficulties than elsewhere for a third reason -- one peculiar to the Empire of the Rising Sun -- namely, that since 1895 each successive war won by that Empire, instead of assuring a period of peace, has brought in its train the anticipation or fear of a still greater war.

Thus, on the morrow of the Treaty of Shimonoseki (April 1895) Japan was forced by the intervention of Russia, backed by France and Germany, to renounce the continental territories ceded to her by China. To the irritation caused by this intervention were soon added the fears inspired by Russia's acquisition of Port Arthur and by the completion of the Trans-Siberian railway. The consequence was that Japan quintupled her ordinary budgets for the military services -- from 12,402,000 yen^[i] in 1894 to 60,865,000 yen in 1903-04 -- and in addition, during the period between 1896 and 1904, devoted to these services extraordinary expenditure to the amount of 421,440,000 yen. This sum was considerably in excess of the 365,529,067 yen paid by China as war indemnity. Hence Japan's public debt rose from 295,807,000 yen in 1895 to 552,181,000 in 1903, while during the same period the existing taxes were increased and new taxation was created. The ordinary state revenues, which in 1894-95 did not exceed 89,700,000 yen, reached the figure of 221,200,000 in 1902-03...