ABSTRACT
Taiwan tells a story of "rags to riches." In 1950, it was quite a political, economic, and military basketcase, ready to be consigned to the garbage heap of history. The island had lost its chief prewar export market and source of capital and entrepreneurship, namely Japan. Much of its industrial and transportation infrastructure was in disarray due to wartime destruction or neglect. The Kuomintang's (hereafter KMT) defeat in the Chinese civil war on the Mainland further saddled the island with a bureaucracy and an army of a continental size. Rampant inflation and political demoralization threatened the KMT's demise in its last territorial remnant, even in the absence of an impending invasion by the People's Liberation Army across the Strait. The KMT regime was, figuratively speaking, only saved by the bell when the Korean War broke out. The U.S. intervention in the latter conflict led to a concomitant decision to neutralize the Taiwan Strait and subsequently to provide the KMT with massive economic as well as military aid.
