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  • Bankrupting the Enemy: The U.S. Financial Siege of Japan before Pearl Harbor
  • Mark Metzler
Edward S. Miller. Bankrupting the Enemy: The U.S. Financial Siege of Japan before Pearl Harbor. Annapolis, MD: Naval Institute Press, 2007. xvi + 325 pp. ISBN 978-1-59114-520-2.

This is a fascinating and exceptionally presented book based on research in hitherto unused archives and is a fine sequel to Miller’s 1991 book, War Plan Orange: The U.S. Strategy to Defeat Japan, 1897–1945. The U.S. trade sanctions against Japan, particularly the oil embargo, are relatively well known, but the U.S. financial embargo is not. This is the first study of it, set within the fuller story of the road to “economic war.” In parts, this book has an almost encyclopedic treatment of U.S.–Japan trade and of Japanese resource dependencies; in parts, an examination of inter-agency politics and personalities within the burgeoning U.S. bureaucratic state; and in parts a detective story. The archives employed include those of the Treasury Department’s international office, the Federal Reserve System’s international division, and the U.S. Alien Property Custodian, among others. The author does not utilize Japanese language sources, so this is the story told by U.S. analysts as preserved in U.S. archives. It is quite a revealing one.

Some of the most fundamental material comes at the beginning, often in endnotes. Here, we learn how a clause, Section 5(b), inserted into the 1917 Trading with the Enemy Act, allowed the U.S. president to regulate, ban, or require information concerning any financial transaction involving U.S. citizens and foreigners or any transaction among foreigners, of any nation, whether at war or in peace with the United States, to be administered by the Treasury and Federal Reserve System. This obscure provision became the basis for a long series of executive declarations of “emergencies” extending through the post–World War II period, upon which a great pyramid of federal powers [End Page 860] has been erected (6–8, 256–57). From this starting point, Miller describes the development of a program of economic warfare, taking shape as an embargo strategy in response to the invasion of China in 1937 and becoming serious in July 1940.

Along the way, we get a valuable analysis of Japan’s international trade and payments in the 1930s as they relate to the United States, including details of Japanese exports from silk to plastic (celluloid) sundry goods. We learn, for example, how Japanese goods stocked the shelves of U.S. dime stores and were then forced out by U.S. protective tariffs. The content is detailed and factual, but Miller’s cleanly written narrative retains its interest and pace throughout. Summarizing the results of U.S. economic warfare studies, Miller gives an equally lucid analysis of Japan’s various dependencies on imported materials. There are some two dozens of excellent charts and graphs.

U.S. financial authorities expected Japan’s invasion of China to bankrupt the country within a few years; for all the data they assembled, part of the story is one of misjudgment. The greatest surprise came with the discovery by U.S. authorities in August 1940 of a secret Japanese cache of $100 million in New York banks, much of it apparently moved out of London with the coming of war and imposition of foreign-exchange controls there in September 1939. The U.S. executive branch’s declaration of financial war against Japan in the form of a complete freeze of assets came on July 26, 1941, but most Japanese dollar reserves had been removed before that time. Miller raises the possibility that the embargo, designed by a sub-cabinet-level committee, ended up going faster and further toward war than Roosevelt had intended. There were some final Japanese efforts to reopen trade by barter, but the freeze was now quite absolute.

One minor, but important, correction concerns the impression left by Miller’s account that the U.S. government did not use American financial power for political leverage against Japan until the 1930s (10). In fact, there was an earlier history of repeated U...


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