Thus, the Japanese economy suffered debilitating effects from two sources, the impact of the worldwide depression and the appreciation of the yen associated with the return to the gold standard. The consequences, economically, were abrupt deflation and a severe contraction of economic activities in 1930 and 1931.
--Monetary expansion and low interest rates. Thanks to this policy turnaround, the Japanese economy began to recover in 1932 and expanded relatively strongly until 1936 (the last year of non-wartime economy). Among major countries, Japan was the first to overcome the global depression of the 1930s.
The 1929 New York Stock Exchange crash and the failure of important European banks plunged the entire world into an economic depression. Japan was hit especially hard. With practically no natural resources, the nation had to import oil, iron, steel, and other commodities to keep its industry and military forces alive.
In Japan, militarists seized control of the government during the 1930s. In an effort to relieve the Depression, Japanese military officers conquered Manchuria, a region rich in raw materials, and coastal China in 1937. A third response to the Depression was totalitarian communism.
The 1930s were a decade of fear in Japan, characterized by the resurgence of right-wing patriotism, the weakening of democratic forces, domestic terrorist violence (including an assassination attempt on the emperor in 1932), and stepped-up military aggression abroad.
The previous spring Japan in fact had almost experienced a military coup. As he mulled it over, Hitler envisaged an alliance with Tokyo primarily for what it meant in the struggle against “Jewish” Bolshevism. This was to be a pact emphatically denouncing Marxist revolution.
After Japan agreed to surrender on August 14, 1945, American forces began to occupy Japan. Japan formally surrendered to the United States, Great Britain, and the Soviet Union on September 2, 1945.
Between 1931 and 1933, the government switched to Keynesian policies, well ahead of other Western countries, to boost aggregate demand. Currency depreciation, fiscal stimulus, and easy monetary conditions helped Japan to recover from the worldwide depression earlier than most countries in Europe and North America.
The economic troubles of the 1930s were worldwide in scope and effect. Economic instability led to political instability in many parts of the world. Political chaos, in turn, gave rise to dictatorial regimes such as Adolf Hitler's in Germany and the military's in Japan.
The Great Depression that began at the end of the 1920s was a worldwide phenomenon. By 1928, Germany, Brazil, and the economies of Southeast Asia were depressed. By early 1929, the economies of Poland, Argentina, and Canada were contracting, and the U.S. economy followed in the middle of 1929.
The Shōwa financial crisis was a financial panic in 1927, during the first year of the reign of Emperor Hirohito. It was a precursor of the Great Depression. It brought down the government of Prime Minister Wakatsuki Reijirō and led to the domination of the zaibatsu over the Japanese banking industry.
Seeking raw materials to fuel its growing industries, Japan invaded the Chinese province of Manchuria in 1931. By 1937 Japan controlled large sections of China, and war crimes against the Chinese became commonplace.
Japan did not have an unemployment insurance system such as England, nor were data collected by trade unions as in the U.S. In Japan there is a widespread view that the number of unemployed at the bottom of the depres- sion amounted to three million workers.
Hence we can say that Japan was not affected by the economic depression during 1929-30.
In the early 1990s, as it became apparent that the bubble was about to burst, the Japanese Financial Ministry raised interest rates, and ultimately the stock market crashed and a debt crisis began, halting economic growth and leading to what is now known as the Lost Decade.
The Depression affected virtually every country of the world. However, the dates and magnitude of the downturn varied substantially across countries. Great Britain struggled with low growth and recession during most of the second half of the 1920s.
In 1931, Japan decided it was going to act aggressively and invaded an area of China called Manchuria. Japan did this because The Depression of the 1930s hit Japan badly. Without trade with America Japan could not feed its people. In 1931, Japan looked to expand its Empire and invaded Manchuria.
USSR was able to escape the effect of the Depression because it was not integrated with the international market. Secondly, it had a planned economy in which the state decided what has to be produced and how much. This helped them to maintain a balance between demand and supply.
China's answer was, typically enough, the same of other economies in times of crisis, then and later: it placed strict controls on the economy, shifting away from the laissez-faire approach that had characterized its former years, and become a more centrally-directed state economy.
After gaining support from the United States and achieving domestic economic reform, Japan's economy was able to soar from the 1950s to the 1970s. Furthermore, Japan also completed its process toward industrialization and became the first developed nation in East Asia.
The U.S.A. spent the most on the war, just over 340 billion dollars. All together, this table, which includes more than 15 countries and its allies, totals 1,301.316 billion dollars.
Japan's population structure was shifting and becoming increasingly elderly. Aging meant slower growth of the labor force. Declining fertility combined with aging eventually reduced the domestic saving that supported economic expansion during the rapid economic growth period.
There were "clearly not enough forces in the Pacific." The participation of other Allied forces in a Pacific invasion would have been limited — Great Britain, France, Canada and the Soviet Union had been fighting the war longer than the United States.
The main reason Japan would not surrender was that it did not want to get rid of the Emperor, a seemingly non-negotiable term for the U.S.
Japan had the best army, navy, and air force in the Far East. In addition to trained manpower and modern weapons, Japan had in the mandated islands a string of naval and air bases ideally located for an advance to the south.