The gold standard in wartime

I was just reading the 1938 edition of “Social Education in Taiwan,” published by the Japanese colonial government, when I came across this rather neat line in the middle of a section (page 76) on how the civilian population was being taught to aid the war effort (Second Sino-Japanese War) on the home front.


This translates to:
The value of gold held by an individual merely possesses the value a piece of jewelry, or of causing vanity, but should that ownership be transfered to the state, then it will not serve a function in resolving the international balance of payments, but also serve as a grand contribution to the development of the fate of the nation.

It then goes on to recommend that citizens (or perhaps “subjects” is a better word)
think of their own personal finances and sell their gold to the government, as it will not only be highly profitable to sell at the current high market price, but that by exchanging the gold official currency, it can be invested in other ways such as bank deposits, where it will bring about a natural increase in wealth [i.e. through interest], which will be far more profitable than letting it going to waste  sitting at home. [Error in my original translation corrected thanks to Aki’s comment below.]

I don’t feel 100% confident about my translation of the latter part, so if anyone has a better translation for 「之を貨幣に換へ、貯金其の他の方法にて運用せば自然財産の増加を来すを以て徒に死蔵し置くに比し極めて有利になること」 than please let me know. Incidentally, this isn’t a section I plan to use in what I’m working on now, just that I thought it would be of interest to all of you.

Now, I wonder how the value of the original gold vs. the paper money held up over the course of the next several years.

9 thoughts on “The gold standard in wartime

  1. Well I am in studying history in grad school at Kyoto University, so this is the sort of thing I typically borrow from the library.

  2. by exchanging the gold for paper currency it will bring about a natural increase in their wealth, which will be far more profitable than simply letting it go to waste as savings.

    Is this part of your translation corresponds to the quoted Japanese text, “之を貨幣に換へ、貯金其の他の方法にて運用せば自然財産の増加を来すを以て徒に死蔵し置くに比し極めて有利になること“? If so, what the Japanese text is saying is different from your translation.

    貨幣 is not paper currency but coins. Paper currency is called 紙幣. In the case of the quoted text, the word 貨幣 is used to mean simply “money” because the latter part of the text recommends to deposit them in banks. 死蔵 is not keeping savings in banks but keeping money and properties in homes. The texts are not recommending people to change gold into paper currency. They are recommending people to put money in banks in order to circulate them in the market rather than to keep properties in the home.

    The quoted Japanese text means the following. (it may contain grammatical errors, as I don’t have very good command in English.)

    “by exchanging them for money and by investing them in other forms such as savings in banks, it will bring about a natural increase (as interest), which will be far more profitable than simply keeping them in homes.”

  3. In light of the new translation and current opinions on the value of keeping your money in the bank in Japan, the irony is almost too much to ignore or maintain my composure when I read it.

  4. The real “natural increase” when you deposit money in a bank, especially in Japan, comes from the multiplier effect: thanks to loose capital adequacy rules the bank can basically lend out several times what you put in. You don’t see much of the “natural increase” yourself, but the broader economy does—especially from government spending, since banks buy lots and lots of government bonds. Of course, the people who clean up most on your deposits are the bankers choosing where to toss the money. If you can’t beat ‘em, join ‘em…

  5. Thanks Aki! I didn’t look up the word 死蔵 since I thought I remembered it, but it turns out I was wrong. I’ve made a correction in the original post based on your suggestion.

    You are also correct about 貨幣 meaning “currency” rather than “paper money” specifically, but I wrote paper money because I believe they were specifically talking about paper Taiwanese Yen issued by the Bank of Taiwan during the colonial period, which was technically a different currency from the Yen used in 内地 or other territories, even though I think it had the same value. But since the paper money was backed by the Bank of Taiwan, I believe that in principle the colonial money could be devalued separately from the Japan Yen.

  6. Presidential Order 6102 prohibited “hoarding”, not all private ownership.

    It allowed for personal jewelery and art objects and up to $100 in gold coins, and made exceptions for anyone who actually used gold in their line of work.

    I’m not sure what the regulations were regarding “hoarding” of gold in the Japanese Empire at that time, but the text I quoted above is encouraging people to voluntarily turn in even gold used in jewelry.

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