Japanese Monetary and Financial Policy in Manchuria

This article aims to analyze the formation of the Japanese monetary and financial policy in Manchuria from World War I to mid 1920s and to draw the real aspect of its function. In 1905 the Yokohama Specie Bank began to issue silver notes in Manchuria in order to withdraw the military notes issued by the Japanese Army. At this time the Yokohama Specie Bank was charged with the task of unification or monetary system on the basis of Japanese silver yen in Manchuria, where multifarious local currencies had been issued with fluctuating exchange rate. The silver notes became the legal tender in the Kwan-tung Leased Territory and in the South Manchuria Railway Zone. This policy, however was doomed to fail in a few years due to worldwide fluctuation of silver price. In 1917 the Bank of Korea which had previously established many branches in Manchuria was given the right to issue the sole legal tender, which was gold notes, in place of the silver notes of the Yokohama Specie Bank. But the silver notes continue to be utilized in the trade of soya-beans, which was the main product, even after the new decision. This change of policy which the Terauchi Cabinet decided meant appearance of a remodeled monetary and financial policy of Japanese imperialism in Manchuria. The Terauchi Cabinet, especially Financial Minister Shohda, intended to unify monetary system through gold notes of the Bank of Korea and to establish gold standard in Manchuria. After several years, however, a few contradictions of the policy of 1917manifested themselves. One of them was a contradiction in the unification policy by gold standard in a region where there was really a limping standard with more gold notes and less silver ones circulating at the same time. The problem resultant therefrom was twofold. (1) A great disturbance was raised in Dairen Soya-beans Exchange when they changed official market quotations from traditional, usual silver coin standard to gold standard for the purpose of making gold standard thoroughgoing in Manchuria. (2) The Bank of Korea suppressed remittance from Dairen to Japan by means of high prohibitive charge for remittance in viev of a great increase in the amount of money sent from Dairen to Japan owing to the fact that gold notes in Manchuria were cheaper than Japanese yen because of their trade relations. Another Manifestation of the contradiction was dificulties in which Japanese banks, particularly the Bank of Korea with the role of a central bank among the Japanese banks in Manchuria,were involved. But the Japanese government, faced with those problems, could not fundamentally amend the framework of the policy of 1917, and temporized till September 1931.