The Money Doctors from Japan: Finance, Imperialism, and the Building of the Yen Bloc, 1895–1937 by Michael Schiltz (review)

Michael Schiltz has written a first-rate book about Japanese efforts to build a yen bloc in the short half-century between the first and second Sino-Japanese Wars. His book focuses on the efforts of a group of men, whom he calls the “money doctors from Japan,” to use financial and monetary reform to integrate Taiwan, Korea, China, and Manchuria, that is, Northeast China, into an autonomous empire capable of competing with the British and U.S. empires. Schiltz tells us that much has been written about the political and military aspects of Japanese expansionism but that “the role of monetary and financial matters in the project of ‘total empire’ remains conspicuously unexamined” (p. xv). Fortunately, Schiltz has stepped in to fill the breach.

In his introduction, Schiltz lays out a number of premises. First, money doctors, that is, foreign financial advisors, rarely give finance advice without political constraints, or for that matter, without economic and political interests of their own. “International financial advising is fundamentally interested, even though its claims and aspirations may suggest otherwise” (pp. 2–3). Second, the gold standard, which money doctors often imposed on other countries, was to its proponents (often the most powerful financiers in Western Europe, the United States, and Japan) a moral good. “Gold was the metal of the strong and advanced nations, and the gold standard would instill discipline and responsibility.” Silver invited “feminine” traits of spending, not the “accumulation of wealth through thrift and delayed gratification” (p. 6). Third, and this is very important, “prewar and wartime Japanese imperialism were anything but a monolithic entity, contrary to popular versions of pre-1945 history” (p. 21). Fourth, this diversity in how to build and run an empire reflected itself in the advice Japanese money doctors introduced to their empire or hoped-for empire. Key figures in each of Schiltz’s case studies often advocated conflicting proposals of how to best create a stable and organized monetary system. And fifth, these men advocated creating a “yen bloc” because great powers have Monroe Doctrine regions or pound sterling blocs. Japan is becoming a great power, so it too needs an autonomous monetary policy in its region of dominance.

In chapter 1, Schiltz introduces Gotō Shinpei and his efforts to create a monetary system for Japan’s new colony in Taiwan. One of the key questions Gotō was forced to ask, and successive money doctors in other parts of Japan’s growing empire had to ask later, is whether the new colonies should be left to develop on their own or should be assimilated into Japan so that their people would become “loyal subjects ruled by a benevolent Japanese emperor” (p. 40). In monetary policy, therefore, the question was whether the Taiwanese monetary system should reflect the Japanese one, after 1897 based on the gold standard, or not. While the policymakers aimed to link Taiwan’s money to gold, and finally did so in 1906, the process was not easy. Pre-1900 Taiwan had many kinds of money and was also tied to the mainland of China by silver. But as Gotō and other administrators reorganized Taiwan’s agriculture to satisfy the needs of the Japanese homeland, they were able to reorganize its finances along assimilationist lines.

In chapter 2, Schiltz turns to Korea, where Japan’s efforts to reorganize and control the peninsula’s monetary system began well before Japan annexed it in 1910. It was in Korea that Japanese financial and economic planners began their quixotic quest of building an autarkic economy in Japan and its colonies. The key figures in Korea were Megata Tanetarō, a financial bureaucrat, and Shibusawa Eiichi, a giant of the Meiji-Taisho private sector. But in the end, Megata and those who wanted what Schiltz calls Japanese Lebensraum, that is, wanted to organize the...