The International Order of Asia in the 1930s and 1950s

Nicholas J. White, Shigeru Akita

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781317027188
• Topic: History
• Subtopic: World History
• Index: History

This book reconsiders the nature and formation of Asia's economic order during the 1930s and 1950s in light of the new historiographical developments in Britain and Japan. Recently several Japanese economic historians have offered a new perspective on Asian history, arguing that economic growth was fuelled by the phenomenon of intra-Asian trade which began to grow rapidly around the turn of the 19th-20th centuries. On the other side, British imperial historians, P.J. Cain and A.G. Hopkins, have presented their own interpretation of 'gentlemanly capitalism', in which they emphasize the leading role of the service sector rather than that of British industry in assessing the nature of the British presence overseas. In order to assess and test these new perspectives, this volume addresses three key issues. The first is to reconsider the metropolitan-peripheral relationship in Asia, focusing particularly on the role of the sterling area and its implications for Asian economic development. The second is to examine the formation of inter-regional trade relations within Asia in the 1930s and their revival and transformation in the 1950s. The final issue is the comparison of the international order of Asia of the 1930s with the 1950s, and the degree to which the Second World War represented a break-point in Asia's economic development. Dealing with issues of trade, economy, nationalism and imperialism, this book provides fresh insights into the development of Asia during the mid-twentieth century. Drawing on the latest scholarship it will prove invaluable to all who wish to better understand the position of countries such as Japan, China, India, Singapore, Malaysia and Korea within the wider international order.

PART 1
The International Order of Asia, the British Empire and the Sterling Area

Chapter 1
British Economic Interests and the International Order of Asia in the 1930s

Shigeru Akita

Structural Power and the History of Economic Relations

The purpose of this chapter is to reconsider the nature and formation of the ‘International Order of Asia’ in the 1930s in the light of new historiographical developments in Great Britain as well as in Japan,¹ and to present a framework for the reconsideration of the ‘International Order of Asia’ in the 1950s from the perspective of the continuities from previous decades. The main focus of the argument is to evaluate the role played by the United Kingdom in the formation of the ‘International Order of Asia’ in the 1930s.

Recently, in an attempt to take the debate on British imperialism beyond the confines of the formal/informal empire discourse, Tony Hopkins has distinguished between two forms of power in the international system and made use of the concepts of ‘structural power’ and ‘relational power’, as a means of interpreting the British presence in Latin America, especially in Argentina, in the nineteenth century. ‘Structural power’ allows its possessors to determine, or at least exert, a predominant influence, and to lay down the general rules of the game governing international relations and can be seen in this context as fundamentally a manifestation of the core values and policy priorities of the British liberal state, with its preference for free trade, low taxation and sound money. On the other hand, ‘relational power’ deals with the negotiations, pressures and conflicts that determine the outcome of particular contests within this broad framework.² These concepts of ‘structural power’ and ‘relational power’ originate with Susan Strange, an eminent specialist in international political economy. She identified four aspects of structural power: control over credit, control over production, control over security, and control of knowledge, beliefs and ideas.³ Let us try and apply these concepts to the broader context of global history.

British imperial history increasingly is being seen as a bridge to global history. In the last chapter of the second edition of British Imperialism, 1688–2000,⁴ Cain and Hopkins suggest that imperialism and empire can be viewed as globalizing forces. Furthermore, in the introduction to his recent edited volume on globalization, Tony Hopkins emphasizes the importance of ‘imperial’ or ‘modern’ globalization as a driving force in the world order.⁵ This chapter will analyze the British economic relationship with three Asian countries in the 1930s, that is, with Japan, China and British India, and try to economically connect these countries with each other as well as with Great Britain. In the context of British imperial history, British India has usually been recognized as a core colony or dependency in Britain’s ‘formal empire’, while China has been regarded as a typical example of ‘informal empire’ in the nineteenth and the early twentieth centuries. The term ‘informal empire’ was mainly applied to areas and regions of the non-European developing world, as the original definition of the term assumed the unequal political and economic status of these countries. However, the overseas influence of Great Britain ranged far beyond the confines of formal and informal empires, due to the global network of the City of London and the influence of its financial and service sectors in the capitalist world-economy. For example, after the conclusion of the Anglo-Japanese Alliance in 1902, Japan was treated as an ally of Great Britain rather than as part of the British informal empire.⁶ Nevertheless, even in the 1930s, the United Kingdom continued to exert financial influence upon Japan and the colonies of other Great Powers through the establishment of the sterling area, by setting ‘the rules of the game’ for international finance in East Asia. At that time, as we will consider later in the third section, the Chinese Nationalist Government strengthened its political authority, and partly manipulated the balance of power in East Asia as a newly emerging nation-state. Thus debates continue about the validity of applying the concept of informal empire to China. Juergen Osterhammel favours analyzing the dynamic interactions between the British government, the Nationalist Government of China and her ‘bureaucratic capitalism’, as well as the evolution of a Japanese informal empire in East Asia, by using a more sophisticated version of informality.⁷ But perhaps the best way to consider these interactions is to use the newer concepts of ‘structural power’ and ‘relational power’, which incorporate these types of autonomous activities by the non-European countries, and which allow us to understand the extent to which the United Kingdom exerted its influence upon international relations.

In this analysis of economic relationships in the 1930s, three series of data sets, published by the Department of Overseas Trade will principally be drawn upon. They are the Reports on Economic and Commercial Conditions in Japan, China and British India. To foster British overseas trade, the Department of Overseas Trade maintained the following commercial representation abroad. In the British Empire, it had the Trade Commissioner and Imperial Trade Correspondent Services. In the 1930s, there were 16 Trade Commissioners’ offices, including British India (Calcutta and Bombay, which also covered Ceylon). Sir Thomas M. Ainscough (the Senior Trade Commissioner) represented the department in India. In foreign countries, there were 38 commercial diplomatic posts, situated in all of the more important foreign markets of the world. They consisted of ‘Commercial Counsellors’ and ‘Commercial Secretaries’, and both were members of the staff of the British Embassy or Legation in which they served. In certain countries where no commercial diplomatic officer was stationed, the senior consular officer undertook duties of a similar character. H.J. Brett and L.B.G.S. Beale (Commercial Counsellors) represented the department in China, and Sir George Sansom (Commercial Counsellor) did the same in Japan. Related materials at the Foreign Office and the Bank of England archives, which are concerned with financial matters and the interests of Great Britain, will also be referred to.

British Perceptions of Japanese Economic Development in the 1930s

(1) The Changing Perspective of ‘Complementarity’

In a previous article, the present author has emphasized the existence of a complementary relationship between the United Kingdom and Japanese industrialization at the turn of the last century.⁸ The British Consular Reports expressed high expectations of growth in the Japanese capital goods market, and encouraged the formation of a highly developed ‘commercial nation’, which would lead the rapid growth of intra-Asian trade in the early 1910s. This more favourable attitude of British officials towards the expansion of the Japanese export trade coincided with the financial interests of the City of London.

However, during the inter-war years, this complementarity tended to diminish, especially in the case of British exports of machinery. Just after World War I, it was noted that ‘American competition is being keenly felt and threatens to become a permanent danger.’ ‘The pre-war positions of Great Britain and America have been reversed and a recapture of the market will be a matter of the greatest difficulty,’ while ‘a great advance was made in local [Japanese] manufacture.’⁹ The rapid growth of the Japanese manufacturing industry was accelerated in the 1920s¹⁰ and the early 1930s ‘under the stimulus of a vigorous campaign for the encouragement of home products’.¹¹ This reflected ‘the increasing ability of Japan to supply her own machinery requirements’,¹² and indeed Japan started to export its machinery and machine tools to Manchuria in the 1930s (and especially after 1934). Therefore, the competitiveness of British machinery was lost in the Japanese import-market and led to the weakening of a recognized sense of complementarity, given the difficulties of keeping pace with the higher development of Japanese industrialization.

At the same time, British financial interests witnessed a diminishing share of Japanese business. Japan reopened its foreign-bond issues in 1923, especially for the reconstruction projects following the Great Earthquake. Japan raised $536,000,000 (£57,000,000) from foreign capital markets up to 1931, when the country was forced to re-adopt an embargo on sales of gold following the abandonment of the gold standard by the British government. This period in the 1920s was referred to as the second introductory period of foreign capital.¹³ However, the proportion of British capital was reduced owing to the heavy inflow of American money in the 1920s. In these processes, the financial presence and influence of the City of London declined significantly. Moreover, the Japanese government adopted new monetary and financial policies from 1932.

(2) Changes in the Character of Japanese Import-Trade

On the eve of the Great Depression of 1929, Japanese economic development was described as ‘remarkable and well-sustained’,¹⁴ notwithstanding the Financial Crisis of 1927. Over half of Japan’s imports were raw materials, and it was noted that ‘Japan’s position is not unlike that of Great Britain.… She must purchase abroad the raw materials of industry, and with her profits buy such finished goods as she requires’.¹⁵ This changing character in Japan’s import-trade gradually increased the value of imports from British India (raw cotton and pig-iron), Malaya (iron ore and rubber), Australia (wool) and the Dutch East Indies (sugar). ‘As her manufacturing capacity advances, she buys more raw materials and less finished products, to the advantage of those countries which supply such commodities as raw cotton, wool, wheat, iron, oil and timber.’¹⁶ Accordingly, the importance of the British Empire, especially that of British India, increased greatly, whereas the imports of manufactured goods from the United Kingdom to Japan dropped drastically.

In the late 1920s, Sansom observed that ‘this appears to be an inevitable tendency in world trade … the sale of vast quantities of raw materials by these regions increases, in the long run, their purchasing power and their consumption of manufactured goods’.¹⁷ He also pointed out that ‘disturbed conditions, or any other causes which reduce purchasing power in China or British India, affect seriously the total volume of her [Japanese] exports and, indirectly, her purchasing power in foreign markets in general .. The defeat of a customer in one market may mean the loss of a customer in another’.¹⁸ His remarks reveal the so-called ‘final demand linkage effect’, which promoted industrialization in Japan. Kaoru Sugihara explained its logic as follows: Southeast Asian countries, such as Burma, the Straits Settlements, and the Dutch East Indies, specialized in the production and export of primary products to European countries; in return, they earned hard currency, sterling, and imported cheap consumer goods from Japan or British India.¹⁹ Through the process of its rapid recovery from the Great Depression, Japan became an important buyer in the world’s markets for raw materials and ‘one of the most important consumers of raw materials’.²⁰ Therefore, Japanese demands and imports of raw materials contributed, to a great extent, to the economies of the primary-producing countries. In this sense, Japanese economic development had a vital link with and influence upon the recovery of the world economy in the early 1930s.

(3) The Strong Competitiveness of Japanese Exports

As mentioned before, achieving rapid economic development in 1928, ‘Japan has already … developed from an importer, through an intermediate stage of production for domestic needs, into an exporter.’ She was ‘not only … an importer of manufactured products but also … a potential competitor in other markets.’²¹ This trend continued in spite of the Great Depression, and in 1932 Sansom observed that ‘Japan offers less and less prospect as a market for the manufactured goods of other countries. ... She is now established as one of the most serious competitors of those countries, and is at the same time one of the most important consumers of raw materials.’²²

The Japanese export market changed drastically in the early 1930s. On 11 January 1930, the Japanese government ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Tables
• List of Figures
• Notes on Contributors
• Acknowledgements
• General Editor’s Preface
• Introduction: The International Order of Asia in the 1930s and 1950s: Contexts, Hypotheses and Scope
• PART 1 THE INTERNATIONAL ORDER OF ASIA, THE BRITISH EMPIRE AND THE STERLING AREA
• PART 2 THE INTERNATIONAL ORDER OF ASIA AND ASIAN REGIONAL ECONOMIES
• Index