Historical Sketch

The Japanese imperial expansion into mainland Asia had already started in after the military victory of 1895, leading to the annexation of Korea in 1910 and the establishment of extra-territorial trade posts in China. In 1931 followed the invasion of Manchuria where the Manchukuo puppet state got erected. Six years later, Japan invaded China and quickly occupied large portions in the north and east. In December 1941 followed the next step, by attacking the United States in Hawaii and driving out the European colonial powers (Great Britain, France, Netherlands) out of Southeast Asia and the Pacific Islands. In 1943, Japan began organizing its Asian empire outside China into the "Greater East-Asian Co-Prosperity Sphere" as preparation of the post-war order with puppet governments installed in the different parts. The declining war success of Japan stopped the "Sphere" from developing, culminating in the defeat of August 1945. The local governments installed by the Japanese tried to stay in power and attain independence, but the ousted former colonial powers all returned.

Monetary History Overview

Between 1931 and 1939, Japan had created four distinct occupation currencies in China which continued to co-exist until the liberation of 1945. For the occupied territories of the 1942 campaign the Japanese military command immediately introduced the so-called Japanese Military Yen everywhere as sole legal tender. It was not considered a separate currency but a special (however inconvertible) form of the Japanese Yen. In each territory, the denominations used on the paper money were the same as the colonial one, "Dollar" in Hong Kong, Malaya and Singapore, "Gulden / Roepiah" in Netherlands Indies, "Peso" in the Philippines, "Rupee" in Burma, and "Shilling" in the Pacific Islands. The currency exchange was always at 1 : 1, irrespective of the pre-occupation exchange rate against the Japanese Yen, so that the population experienced a devaluation (expropiation) by 20-50%. Occupied Hong Kong was not included into one of the currency areas of China but also saw the Military Yen introduced. In April 1943, the Southern Development Bank, which had been founded a year earlier in Tokyo as the central bank for the future "Greater East Asian Co-Prosperity Sphere", took over the issuing privilege for paper money from the different military admnistrations. Due to the negative development of the war, the bank could neither exchange the military notes nor exercise any influence on the economic development of the "Sphere". The Japanese defeat of August 1945 led to the collapse of the "Sphere" and its institutions everywhere. The European powers retook their colonies and the Japanese occupation money got abolished and withdrawn immediately, in most cases without compensation. After the capitulation, also the Japanese Ministry of Finance declared the occupation money worthless and ruled out any redemption. The local population got expropriated again.

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