The Wartime Finance Control and the Money Market

Abstract

The purpose of this paper is to make clear the change of wartime finance policy in the end of the war against China and analyze its backgrownd of money market. The characteristic of monetary policy during the war against China was nationwide mobilization of funds for the public loan and strategic industries. This mobilization made the financial structure unstable and lead it to reorganization. In deposit market concentration trend turned. Some provincial banks, especially influential ones grew big rapidly partly owing to the amalgamation movement. The cheep money policy in local money market and the funds control policy made provincial banks change their banking operation, rush in the urban money market. The advance competition became intense. That was a result of the control policy. But large equipment funds controled by financial adjustment law was supplied by a few financial organs oligopolistically. They had organized joint financing groups excluding other banks. Influential provincial banks increased advance as rapidly as big banks, but they supplied funds for newly rising or subcontract enterprises with some risk. After the outbreak of WWII, risky advance competition was going to result in credit crisis. Ministry of finance and Bank of Japan requested financial circles to organize a council of financial association aiming at stabilization of money market. Local Banker's Association joined it positively aiming at extending finance of the strategic industries through co-operation with monetary policy, so did big banks aiming at maintaining oligopoly. Thus the organization of financial constitutions was promoted with conflict objects.