The Dodge Plan in Historical Perspective(PAPERS READ AT THE AUTUMN CONFERENCE SYMPOSIUM, 1991 : The Formative Period Postwar Japanese Capitalism : A Comparison with the German Case)

Abstract

The Dodge Plan was the anti-inflationary policy carried out by Joseph Dodge in 1949. Dodge, who had been a planner of the currency reform in Germany as a deputy financial advisor to Lucius Clay, was assigned the task to stabilize the Japanese economy by President Truman. In this paper we consider the Dodge Plan as a part of the policy which the United States pursued after the World War II to rebuild the world capitalist economy. The targets of the stabilization program were as follows: 1) To stabilize the wage level so as to enable firms to resume capital accumulation. The wage stabilization policy was supported by the revision of Trade Union Laws which was to suppress the influence of the left-wing labor movement. 2) To fulfill the conflicting aims at the same time; to curb inflation and to supply funds to industries. The inflation was halted through the reduction to the budget. As the subsidies to industries were drastically cut, all the entrepreneurs run to the banks to get funds. Consequently the money supply increased steeply, and the banks' position fell into the dangerous situation. To sustain the over borrowing condition the reform of the banking system was executed. 3) To rehabilitate the relationships with capitalist countries. Introduction of the single exchange rate of 360 Yen was not enough for that purpose. To make up for the dollar shortage, Japan must expand trade with Southeastearn Asia. But the project of the cooperation with Southeastearn Asia had not much success because of the lack of capital to export to this area.