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Reviewed by:
  • Bankrupting the Enemy: The U.S. Financial Siege of Japan before Pearl Harbor
  • Kerry Smith (bio)
Bankrupting the Enemy: The U.S. Financial Siege of Japan before Pearl Harbor. By Edward S. Miller. Naval Institute Press, Annapolis, Md., 2007. xvi, 323 pages. $32.00.

This informative, somewhat quirky book relies on recently declassified records to describe the evolution of U.S. policies that sought to influence Japan’s diplomatic and military agendas, first by limiting access to key U.S. products and eventually, in late July 1941, by freezing all of Japan’s financial assets in the United States. The quirkiness is a product of unusual organizational strategies (21 chapters in a book that is not long make for some jarring transitions) and of the author’s problematic use of English-language sources for his analysis of developments in Japan. Fortunately, much as this author’s War Plan Orange: The U.S. Strategy to Defeat Japan, 1897–1945 (Naval Institute Press, 1991) provides an exhaustive investigation of U.S. military planning for the Pacific theater, Bankrupting the Enemy focuses on “the U.S. strategy of achieving the nation’s foreign policy aims, without combat, by bankrupting Japan” (p. x), and says relatively little about Japanese policies or perspectives.

Miller’s narrative is built around records produced by the U.S. Department of the Treasury’s Office of the Assistant Secretary of International Affairs and other government agencies involved in regulating foreign trade and banking, both before and shortly after the start of the war with Japan. “These records,” Miller argues, which were first made accessible to scholars in the mid-1990s, “contain a trove of U.S. assessments of Japan’s financial problems, and U.S. proposals to exploit them, that have not appeared in other histories” (p. xi). Prior scholarship on U.S. actions leading up to Pearl Harbor has relied on Defense and State Department archives as well as the memoirs and collected papers of key actors. Miller’s assiduous reading of these newly available sources, and documentation of his findings, are certainly services to the field.

Bankrupting the Enemy provides a wealth of information on the U.S.-Japan [End Page 436] economic relationship in the 1930s and early 1940s and on the workings of the U.S. bureaucracies charged with managing that relationship. Those who teach or write about early twentieth-century Japan inevitably refer to silk’s importance to the domestic economy, for example, and to its singular significance as an export bound for the United States. Miller’s discussion of silk’s role in the U.S. consumer market, on the other hand, is a reminder of how precarious a position Japan was in and sheds new light on changes in the U.S. demand for silk through the end of the 1930s. Even as demand for Japanese silk suffered, first due to the economic crises of the early 1930s and later to the availability of silk substitutes such as rayon and nylon, Miller demonstrates that tariffs and other barriers to trade effectively prevented Japanese exporters from finding viable replacements for silk.

Another useful narrative thread offers a clear explanation of the mechanics of foreign exchange. Because the yen could not be directly exchanged for other currencies (with the exception of those used within Japan’s colonies and occupied China), Miller describes in helpful detail how Japanese firms, and the government, obtained the dollars needed to purchase goods within the United States. Selling silk or other Japanese products to U.S. buyers, for example, was one way to generate dollars; the other was for the Japanese government to sell gold bullion directly to the U.S. treasury, which paid for said gold, unsurprisingly, in dollars. These mechanisms and the dollars they generated were vital to the Japanese economy even before the start of the war with China in 1937. Once the conflict in China was underway, Japan’s dependence on the United States for oil and other essential materials grew only more pronounced. Analysts for the State and Treasury Departments and other agencies concerned with the Japanese government’s actions in China observed the constraints on foreign exchange—the falling U.S...

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