The Depression Crisis and Responses
From the 1890s through the 1920s a hybrid politics of imperial democracy had emerged in Japan. The political order was anchored by a modernized imperial institution, which looked to the British monarchy as a model and anxiously offered space for a significant degree of pluralism. Organizations of landlords and businessmen, factory workers and tenant farmers, and women and men pursued their goals in a messy politics of confrontation and compromise.
Then, beginning with the years from 1929 to 1932, a combination of shocks— economic depression, intense social conflict, military expansion, and the assassination of prime ministers and leading capitalists—transformed Japan's political system. By the end of the 1930s, independent political parties, business associations, producer cooperatives, labor unions, and tenant unions were replaced by a series of statecontrolled mass bodies intended to mobilize the nation for its “holy war” with China and bring harmony and order at home. A new political order that bore great similarity to the fascist systems of Germany and Italy had become ascendant and would plunge Japan and Asia into a disastrous war. At the same time, some of the changes initiated during the depression and in the name of mobilization for war proved enduring. It is possible to identify a transwar system in state policies toward economy and society and a transwar society in some of the characteristics of daily life.
In October 1929 the New York stock market crashed. The global economic crisis that followed was a key incident in the conjuncture of events that brought about Japan's political shift. The world depression coincided in destructive fashion with a recent initiative in Japanese financial policy. A Minseitō government under Prime Minister Hamaguchi had come to power in July 1929. It resolved to implement two policies that had been pursued on and off throughout the 1920s to revive the stagnant economy. First, domestic prices would be forced down and exports encouraged by tightening the money supply and cutting government spending (i.e., retrenchment). Second, international trade and investment would be stabilized by returning to a fixed exchange rate. Japan would follow the lead of the Western powers by going back to the gold