A Vision of the Settlement of the Sino-Japanese War and the Question of Currency in Central China

Following the occupation of Nanking (December, 1937), the question of how to deal with the currency system in central China so as to weaken the Chiang Kai-shek regime became an important issue for Japan. Most papers concerning this issue have discussed only economic assaults on the Chinese currency, like the Hua Hsing Commercial Bank and similar economic maneuverings.<br>However, the situation was more complex. Firstly, the Chinese currency system, introduced with the help of the Britain government adviser Leith-Ross in 1935, was strong, and it looked difficult to destroy. Secondly, even if Japan could succeed in destroying the system, it seemed unlikely that Japan could make an alternative currency system by herself, and the destruction would bring about serious economic confusion in the occupied areas, too. Thirdly, in spite of the existence of anti-British forces in Japan, from an economic viewpoint, the Japanese government strongly needed good relations with Britain and the U. S. A. for the purpose of strengthening her wartime economy, and Britain was anxious about her interests in central China, especially the maintenance of the Chinese currency system. On this occasion the Japanese government placed high hopes on Munakata Hisanori's currency plan for occupied central China.<br>The aim of this article is to introduce the hitherto almost unknown Munakata Plan and to examine its political meaning and role. Munakata was a banker of the Bank of Japan, and he had assisted the Chinese currency system reform plan of Leith-Ross, which originally envisioned Anglo-Japanese cooperation on China issues, but which Japan had declined. Now, as the Japanese Army, Navy, and Foreign Ministry's adviser, he made what was essentially a revival of the Leith-Ross's plan, but this time with Japanese participation. His planwas roughly as follows. Under Japan's military and economic mastery over China, Japan reforms the currency system in central China with the cooperation of Britain and other powers, through which she would put an end to the war. Upon the end of hostilities she is able to exploit postwar China.<br>The Munakata Plan was promoted with the support of Ikeda Shigeaki (Cabinet Councillor, and later Minister of Finance and Commerce and Industry) and Prime Minister Konoe, the Army General Staff, the Navy and the forces in central China. The plan was also approved by the Cabinet, and it became evidence which the Chamberlain Cabinet used in its decision not to give financial aid to China.<br>The defeat of the Munakata Plan was caused mainly by the international factor of Britain's disagreement. However, the opposition of the Ministry of the Army, combined with the difference of stances on China policy between the idealistic Foreign Minister Ugaki and other imperialistic pro-British leaders, like Ikeda, and Ugaki's later resignation also affected the Munakata Plan's failure.<br>Now, from today's viewpoint, the Munakata Plan may not seem feasible, but the hope placed by the Japanese government on the plan in the harsh diplomatic environment indicates the high level of importance Japan's moderate leaders attatched to her economic needs.