History of Japan
Decade - 1950s
Decade - 1940s

What was Japan's economic situation after World War 2?

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July 17, 2015 5:29PM

Well, Japan's economic experiences could have been better. They were at the low of their lows. But after the war, the U.S. helped rebuild everything, Japan became one of the most economic empires of the world. After this great devistation, Japan was changed and soon became one of the wealthiest country's there is.

At the end of World War II, Japan's economy was in ruins. The major urban and industrial areas had been almost completely destroyed by the U.S. Army Air Force incendiary raids which had commenced in the summer of 1944. The transportation network was destroyed, the merchant marine navy had ceased to exist, the agricultural sector was unable to meet even the requirements of basic subsistence and food stocks were non-existant. It was only due to the reluctant and belated intervention of the U.S. Government (many members of the Congress and the Truman administration were opposed to feeding the Japanese) that wide spread starvation of the Japanese populace was averted in 1946.

It is a wide spread belief that the United States "rebuilt" Japan's economy after World War II. This is not true. More countries were involved in the rebuilding. Following the surrender, Japan was occupied by the allied powers, chiefly the United States with the lesser participation of the British, until 1952 when the peace treaty was signed. One of the conditions of the surrender was that Japan make war reparations. Both the United States and the Soviet Union seized capital assets, cash, and property in both Japan proper and the the former Japanese occupied areas of Manchuria as partial payment toward these reparations. This had the effect of further crippling what remained of Japan's industry and economy. The United States cancelled further payments in 1954 but the payment of reparations to other countries continued long after. Some sources assert that Japanese war reparations exceeded by a large margin the amount of foreign aid received by Japan which in any case was chiefly in the form of bank loans.

Nor was Japan the recipient of an aid program such as the Marshall Plan which attempted to rebuild Europe. Despite massive infusions of Marshall Plan dollars and assistance to Great Britain and France, neither country ever regained its pre-war economic power. Japan's economic miracle was largely due, not to any overt action of the United States, but to the industriousness of its people. Of course there were other contributing factors as well, such as the 100 per cent literacy rate, the high rate of personal saving, and generous government subsidies to key industries and emerging technologies.

Perhaps the most important contribution the Occupation made to Japanese economic recovery was in the introduction and nurturing of democratic reforms. Capitalism works best in a free society.

If anyone is going to answer on here, please cite sources for your comments. The person who wrote here about the U.S. NOT being the major source of rebuilding is obviously not well-informed or has some other agenda. QUOTE sources...this site wants "answers" not half-baked opinions. BTW, the BCOF was responsible for the demilitarizing of Japan's war industries. The U.S. put billions of dollars into reconstruction.