UNITED STATES-JAPAN ECONOMIC COOPERATION, 1950-53
ON appropriate occasions, Japanese compose short poems called haiku that express a single overwhelming emotion in seventeen syllables. In April 1952, just before the Occupation ended, the Nihon Yukan newspaper ran a haiku as an editorial: "Cherry trees have blossomed out; we will be independent soon. Why don't we feel as happy as we should?" It seemed clear, an American diplomat remarked of the poem, that "anxiety over Japan's economic survival" restrained celebrations over regaining sovereignty. Having lost the war and an empire, 85,000,000 Japanese were confined to an island area unable to produce "enough food or industrial raw materials to supply the[ir] minimum needs." 1
As of June 1950, despite two years of American assistance, Japanese industry lacked needed capital and export markets. The austerity program initiated by Joseph Dodge during 1949 curbed inflation and halted deficit spending, yet it also triggered a severe recession. By June, unemployment reached 500,000 -- twice the level of the year before. Share prices fell sharply on Tokyo's stock exchange and small business failures increased dramatically. The index of industrial production had risen to over 80 percent of its prewar level, but a credit crunch limited investment in plants and equipment. More ominously, Japan exported less than half the amount of textiles and manufactured goods it had before the war. 2
The Toyota Motor Sales Company typified heavy industry. The company was squeezed between declining sales, unions resisting layoffs, and a credit crunch that prevented acquisition of badly needed technology. In June 1950, Toyota produced barely 300 trucks. President Kamiya Shotaro flew to the United States hoping to induce the Ford Motor Company to invest in Toyota. He arrived on June 24, just as the news broke of the Korean attack.