The Exchange Policy in the 1920's

Abstract

This study analizes the exchange policy in Japan in the 1920's. The main purpose of this study is to make clear a change of the manner by which the Finance Ministry tried to control the exchange rate. Preceding studies of this matter have not recognized the change clearly. According to them, throgh the 1920's the Finance Ministry sold foreign currency to the Yokohama Spiecie Bank, and the Bank sold the currency to the other banks. By this manner the Finance Ministry intended on controling the exchange rate. But this view is wrong. At the middle '20's that policy was turned. Afterwards, the Finance Ministry tried to rise the exchange rate by stimulating the speculative exchange market. And, this paper makes clear the background of this change. That is, firstly, the Yokohama Spiecie Bank couldn't cooperate with the Finance Ministry for going up the exchange rate, because the Bank suffered for his holding large amounts of foreign currency at that time (1925〜6). Secondly, the exchange market, especialy the Chinese market, had become speculative after the earthquake of 1923. Above all the Shanghai market had a peculiar organization "Shanghai Gold Stock Exchange Ltd." which was extremely speculative. Lastly, this paper will suggest the historical premise of the exchange control policy in the 1930's.