Appendices - Hirohito's War
ECONOMICS OF THE PACIFIC WAR – THE NEW DEAL MOBILIZED
Japan’s Wartime Economy: Japan’s commercial fleet started to lose 30,000 tons per month within six months of the December 1941 start of the war (360,000 tons annual rate) and 50,000 tons per month by 1943 (600,000 tons annual rate); at these levels losses were unsustainable. If naval and army cargo ships and warships were included however, the alarm bells should have sounded much earlier. In November 1942, Japan lost an aggregate tonnage of 151,000 tons of shipping of all types, which amounted to an annualized figure of 1.8m tons, some 400 percent more than Japanese shipyards had the capacity to produce. Annual net tonnage losses for all shipping was to rise from 233,000 tons in 1942 to 943,000 tons in 1943 and 2.1m tons in 1944.
It would be a mistake to think that, just because the Japanese economy was running at full capacity in 1941, their capacity to produce military goods had peaked. From 1939 to 1944, annual Japanese production of aircraft rose 630 percent from 4,467 units to 28,180 units. Ultimately military production was able to grow because the Japanese government imposed a draconian reduction in living standards on their citizens. By 1945 the calorie intake of the average Japanese citizen had halved over the course of the war and the population was well on its way to starvation. The Japanese economy was also running its stocks of raw materials down to zero. The ‘end of run’ nature of the Japanese military production in 1944 was demonstrated by a complete collapse in production across all sectors in 1945.
In 1941, Japan, the world’s sixth largest economy, with a US$196bn GDP, had already committed itself to a total war economy with China, the fifth largest economy, GDP US$250bn. With its economy running at full capacity and eating into the living standards of its citizens, Japan’s leaders embarked on a strategy to go to war with the US, the world’s largest economy, US$1,100bn and Great Britain, at US$344bn, the fourth largest. In the background was the Soviet Union, perhaps Japan’s most natural enemy, and the world’s third largest economy (US$359bn), with whom Japan had negotiated an uneasy neutrality as recently as 1939 after their defeat by the Soviets at the Battle of Nohoman.
Against this collective economic might of the Allied powers (US$2,053bn), Japan and its allies, Germany (US$412bn), Italy (US$144bn), Austria (US$29bn) and Vichy France (US$130bn), had a collective GDP of US$911bn. The Allies not only had an aggregate GDP more than double that of the Axis but, unlike Germany and Japan, the Allies could coordinate their productive assets. By comparison Japan was effectively blockaded from Germany. As the war continued and the economies of both Germany and Japan degraded, the Allied superiority vis-à-vis the Axis powers grew to 3:1 in 1944 and 5:1 in 1945. Uniquely too, America could finance its militarization at almost no cost to the domestic standard of living. In the course of the war the US government spent US$300bn (in 1944 dollars) with little impact on inflation. In modern day terms the American government’s spend was US$9.6bn over four years at 2007 prices. (To put this in perspective, the US government during the ten years of the Iraq-Afghan Wars 2003 – 2013 is estimated to have spent US$6.0bn at current day prices.)