Interlude (Deflation)
Interlude (Deflation)
This chapter focuses on the credit restriction program that was imposed under U.S. orders and directed by American Bankers Association president Joseph M. Dodge in 1949. Dodge launched this program immediately on his arrival to Tokyo in February 1949, enforcing a “one-stroke” stabilization plan that ended government price subsidies and ended lending by the Reconstruction Finance However, Dodge's restriction of credit did not end the Japanese government's policy of subsidized priority investment. Rather, it displaced it into private banking channels, which Dodge left unregulated. This set in place the final piece of the integrated state-bank mechanism that would form the financial core of the High-Speed Growth system. The sources and control of capital thus assumed the distinctive forms of the classical age of Japanese capitalism.
Keywords: Joseph M. Dodge, credit restriction, economic policy, finance policy, government price subsidies, lending, Japanese capitalism
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