The East Asian international economic order in the 1950s
Introduction The purpose of this chapter is to reconsider the international economic order in East Asia in the 1950s from a new perspective, which focuses on the interconnection between the sterling area in East Asia and the resurgence and development of the Japanese economy in the 1950s. This is part of a larger joint project to reconsider the nature and formation of the ‘international order of Asia in the 1930s and 1950s’ in the light of new historiographical developments in Britain and Japan.1 Recently several Japanese economic historians have offered a new perspective on Asian economic history.2 They have argued that the economic growth of Asian countries was led by the phenomenon of intra-Asian trade, which began to grow rapidly around the turn of the nineteenth and twentieth centuries. In addition, the British imperial historians, P.J. Cain and A.G. Hopkins have presented their own provocative interpretation, ‘Gentlemanly capitalism and British expansion overseas’, in which they have emphasized the leading role of the service sector rather than that of British industry in assessing the nature of British expansion overseas.3 Our joint project has attempted to integrate these two new perspectives in order to present a fresh interpretation of the international order of Asia in the 1930s and 1950s.4 This chapter seeks to reveal the economic importance of the sterling area for East Asia, and present the economic linkages between Britain, the British Empire and Commonwealth, and East Asian economic recovery and developments in the 1950s. What kind of role did the British Empire and Commonwealth play in the context of the transformation of the international economic order in East Asia? Why did Japan achieve so early and smoothly its economic recovery in the 1950s? The author will specifically analyse the historical role of the Sterling Payments Agreement (SPA) with Japan (1951-57) and its impact on the economic development in East Asia. The SPA with Japan lacks much scholarly attention even though it played an important role in the process of post-war economic reconstruction in East Asia. Its function was to connect Anglo-Japanese trade relations (export and import of goods or ‘visible trade’) with the financial ties between the two countries (the exchange of services or ‘invisible trade’).5 Looking at the operation of the
Sterling Payments Agreement with Japan is crucial for any comprehensive understanding of economic interests of the British Empire in East Asia in the 1950s. The only substantial work produced on this topic is by Noriko Yokoi.6 Yokoi explored Britain’s sterling and trade policies towards Japan from 1948 to 1962, and challenged the conventional view that the British had been opposed to Japan’s economic recovery in the 1950s. Her excellent detailed work elucidated Britain’s complex policies concerning Japan in the 1950s very well. Nevertheless, her extensive research was still dominated by an analysis of the reaction of British home industries against Japanese competition. Especially, she put much emphasis on the attitudes of the Manchester Chamber of Commerce and the Board of Trade to Japan’s economic recovery, and their fears of a revival of the severe Japanese competition of the pre-war period. Moreover, her work remained within the framework of the bilateral relationship between Britain and Japan. On the other hand, Kaoru Sugihara has revealed in his recent work that the 1950s saw the revival in the cotton goods markets of the ‘intra-Asian competition’ that had existed in the 1930s and the rapid recovery of Japanese cotton industries.7 The author will try to relocate Yokoi’s pioneering work into a wider and more global context because the sterling area covered wider areas and regions than East Asia in the post-war era and clearly reflected the economic interests of the City of London and of the British Empire and Commonwealth.8 For the reconsideration of British sterling policies in the 1950s, we must refer to recent works in British imperial history. As already mentioned, the work of Cain and Hopkins deals with the post-war international economic policy of Great Britain, the survival of the ‘gentlemanly order’ and the role of the City, mainly focusing on the role of the sterling area.9 Receiving a strong influence from their work, Gerold Krozewski presents us with a new analysis of the end of empire in the 1950s, located at the intersection between British imperial policy and international relations. Especially in the late 1940s and early 1950s, when political control was feasible, discriminatory management of the colonies and the sterling area sustained Britain’s post-war recovery. However, the emergence of liberal multilateralism, in the new international economic order dominated by the United States, exerted a strong influence on Britain’s international position and policies.10 We had better incorporate the Japanese case and East Asia into these new evaluations of the later stage of the transformation of the sterling area from a global perspective.