ABSTRACT
After the fall of the Minseito Government and the abandonment of the gold standard in December 1931, the key position of Finance Minister was filled for the next four years by Mr. Takahashi, who had on previous occasions shown his financial skill, first as long ago as the Russo-Japanese War and, more recently, during the financial crisis of 1927. The restoration of the militarists' influence over policy, which had already been demonstrated by the course of events in Manchuria and was to show itself in a steadily increasing pressure for larger armaments, meant that there was no possibility of pursuing deflation further. Even if the new path had not been marked out for him by others, it seems that Takahashi had fully realized that the strain imposed by deflation on the social and economic structure of the country was too great for it to bear. He proposed, therefore, to follow a policy of reflation which, he thought, would in the course of four years or so bring economic recovery to Japan, without at the same time involving her in the danger of cumulative inflation.
