Japan's Foreign Economic Policy and Relations with the United States, 1969-1977:

Change in Japan - A Comparison of Japan's Response to International Monetary Crisis in 1971 and 1973

Working Paper No. 3

Hiroshi Ando

Kozo Keikakyu Engineering, Inc.

I. Introduction

The early 1970s international monetary crisis exposed inefficiencies within the Japanese national bureaucracy. Developed to pilot Japan through the turbulent political and economic environments of the postwar era, Japan's elite national bureaucracy pro ved unable to adapt its bulk to the changing requirements of the new era. Especially serious was the bureaucracy's blind dependence on the United States. This dependence left the bureaucracy helpless in the face of the US decision to implement drastic cha nges in its global monetary policy. The national bureaucracy's clumsy behavior was especially well illustrated by its response to the August 1971 "Nixon Shock," the suspension of the convertibility of the US dollar into gold. The bureaucracy could only st ick stubbornly to the status quo in the face of undeniable evidence of environmental change. It failed to present Japan's political leaders, business community, and public with a coherent scheme that would allow the overall system to devise a response app ropriate to the changing world. Their only refuge, as Professor Angel has put it, was to rely upon external pressure (gaiatsu-riyou) to cope with drastic changes in the global order.1

Governmental response to the next crisis in early 1973, however, was quite different. Simply put, Japan's national monetary bureaucracy proved somewhat more flexible in its response to the dramatic structural changes in the international monetary syste m than it had in 1971.

Focusing on the difference in Japan's response to the two crises, this paper explains how, when, and in what fashion Japan's posture toward the United States changes with reference to response to the two crises to explain the significance of change in the US-Japan relationship during the Cold War.

The flexibility observed during the 1973 crisis was influenced more or less by Japan's attitude towards the United States. Although the degree of change should not be exaggerated, it can properly be characterized as one indication that Japan was moving away from dependent country status toward greater independence. Thus, comparison of the two crisis responses should help to explain the delicate association between dependence and independence in Japan's relationship with the United States

The paper begins with a description of the main differences in the two cases. Next it presents a general view of the background of developments related to US-Japan relations and the Cold War structure. Third, it analyzes determinants of the change in r esponse with reference to business cycle conditions and personal characteristics of the policymakers. The conclusion includes suggestions for better bilateral relations during the post-Cold War era.

II. The Main Differences in the Two Cases

Before examining overall global economic conditions and US-Japan relations during the 1970s, clarity demands an interpretation of the difference in Japan's response to the two crises. Japan was the only nation in the world to maintain open foreign exch ange market after the 1971 Nixon Shock.1 But it was the first country to close its market before the 1973 conversion to a system of floating exchange rates.2

It took Japanese authorities two weeks to reach the decision to close the market after announcement of the "shock" in August 1971. During those weeks, MOF and BOJ authorities bought huge quantities of dollars from those sectors of the business communit y (banks, trading companies, ship builders, and plant construction companies) that owned large quantities of dollar credit. The amount purchased equaled approximately half of Japan's official reserves at the time, reserves already bloated by intervention buying during the previous months of uncertainty. In other words, the government decided to assume a significant portion of the private sector's losses engendered by the revaluation of the currency. Criticism of the bureaucracy for its incredibly late dec ision to close the market remains strong both abroad and at home.3

In mid-February 1973, in contrast, Japanese government authorities decided quickly to close the exchange market in the face of growing market tension resulting from specu-lative buying of European currencies such as the Deutsche mark and Swiss franc, a nd did so far earlier than any of the other countries in the world. At the time, the yen's value had risen far above the $1=Y308 set at the Smithsonian Conference, and the rise seemed likely to continue.4 So the decision to close the market rather than to continue buying dollars as they did in 1971 indicated acceptance of the sharp rise of the yen.

Both the government and the business community hoped to prevent a sharp increase in the international value of the yen. Their basic position remained unchanged in 1973. But what had changed, and changed considerably, since 1971 was the government's res ponse to the uncontrollable flows of international currency, and to US government demands for another yen hike.

Plainly speaking, Japan's monetary authorities recognized the unavoidable reality of pressure to increase the parity of the yen. In other words, Japan had begun to accept its development of powerful trade competitiveness, and to realize it was no longe r a poor war-defeated country. Pressure for an up-valuation of the yen resulted from this growing trade competitiveness, and consequently Japan accepted the inevitability of appreciation of the yen, whether they liked it or not. Crystallization of this re alization provided Japan's national bureaucracy with the flexibility required for such decision making.

This flexibly then, conferred a certain toughness on the Japanese government representatives at the negotiation table with the United States. When Under Secretary of Treasury Paul Volcker demanded Finance Minster Kiichi Aichi appreciate the yen by nine percent (ten percent at a later meeting) in response to a nine percent depreciation (ten percent later) of the dollar, Aichi replied "No!"5 The meeting was held in the evening of February 8, 1973 immediately after Volck er's arrival at Yokota US air base. The US called their demand a "fifty-fifty deal," which meant the US and Japan should equally share the burden of realignment of the international monetary order.

On Saturday, February 10, 1973, the Japanese government closed the Tokyo Foreign Exchange Market. Minster Aichi at a press conference explained that the market was closed to avoid any unexpected disorder, and that it was necessary to be sure that Tokyo did not become the world's only open foreign exchange market. (The US and European markets were closed on Saturday for the weekend. But at that time, Japan didn't yet take weekends off).

Although Aichi rejected the idea of a "fifty-fifty deal," he and his subordinates at the MOF had prepared alternative proposals for the conference at an urgent MOF meeting held just a few hours before Volcker's arrival.6 The gist of the alternative proposal was that Japan would allow the yen to float, but with intervention to avoid excessive or abrupt appreciation. After a period of intense discussion, the two countries reached fuzzy agreement on the level of interven tion.7 The American side left the meeting with the understanding that the Government of Japan could intervene to limit the yen's appreciation to under eight percent (namely, $ 1=Y257). In other words, Japan should be wil ling to accept a yen rate rise of eight percent. Japanese government representatives left with the understanding, on the other hand, that intervention that maintained the rise in the yen exchange rate under six percent (or $ 1=Y264) was acceptable.

Japan's official response even to the second international monetary crisis was far less dramatic than the measures actually necessary to adapt the Japanese economy to the changing global economy. We should recognize, however, that certain experiences d id make it possible for the stubborn and rigid Japanese bureaucracy to adjust to change.

III. Background

The Bretton Woods international monetary system gave proof during the Cold War that the Western free market nations were in far better shape than the socialist economies of the East. The fixed relationship between the gold-backed US dollar and the othe r currencies provided monetary stability. Complementing the other post-World War Two international economic regime, the Bretton Woods system with the GATT constituted the very core of the "Free World" led by the United States. This "fixed" rate system at the same time incorporated some flexibility. It allowed countries in "chronic imbalance" to make necessary adjustments to their rates of exchange.

Yet the system had two inflexible elements. One was the relationship between the dollar and gold. The whole system was founded on the premise that one troy ounce of gold was equal to 35 US dollars, and this fixed relationship guaranteed the credibility of the whole system. This principle was thought of most highly in the United States. However, European countries such as France had more faith in gold than in the US dollar and expressed frustration with the low gold price against the dollar.

The other inflexible element was Japan's yen. Japan's economy had been plagued since its opening to the West after the mid-nineteenth century Meiji Restoration with a lack of foreign currency required to purchase raw materials needed for economic devel opment. Yen appreciation therefore represented a great threat to the Japanese. Japan had to compete commercially during the post-World War Two reconstruction era with the advanced economies on the basis of the $1=Y360 rate set in 1949. This meant that an appreciation of the yen would immediately affect Japan's export competitiveness, and that Japan would suffer a severe foreign currency shortage.

Given this type of trade policy, any country, not only Japan, would be reluctant to face an appreciation of their currency. Switzerland and West Germany were the only two major countries throughout the history of the Bretton Woods System to appreciate the value of their currencies. Other countries, such as the United Kingdom and France, devalued their currencies several times. In other words, the free market economies were inclined to follow mercantilist trade policies and devalue their currencies. And , with continual inflation throughout the Western world currencies were constantly devalued in relation to gold.

Within the context of the Cold War, this left the Western allies participating in an international monetary relationship that had become a minus-sum game. And with the enemy Soviet Union as the world's second largest provider of gold, devaluation of We stern currencies against gold represented something of a defeat for the West in their economic battle against the East. Yet, the system functioned quite well for the free market economies. By allowing minimal adjustments while maintaining the fixed, or st able, rate structure, the system contributed to the active trade and investment of the Wetter nations, ultimately a plus-sum result. With this dynamism, the West maintained its advantage against the East.

The two monetary crises of early 1970s occurred during the middle stage of the Cold War. At that point, the internal contradictions within the system had slowly generated a tense momentum. The American economy which was highly dominant right after Worl d War II was gradually losing its advantage over countries such as West Germany and Japan. Further, the severe economic gap between West Germany and other European countries was turning into a potential geological fault line at the center of the monetary system. The most severe contradiction within the system, however, was the yen's relationship with the dollar. Specifically, the yen required a radical appreciation against the dollar. This situation coincided with the above-mentioned problem in Europe, co mbining into a huge time-bomb within the Bretton Woods system.

Within the Cold War context, Western free market economies began to develop serious internal cracks, although they still maintained their advantage against the Eastern planned economies. The Nixon Shock, the surprise announcement of an American New Eco nomic Policy, exposed the internal contradictions of the free market monetary system. Amiable chats over lunch no longer produced suitable adjustments. In December of 1971, the monetary authorities of the free market countries gathered in Washington, D.C. where they agreed upon measures to shore up the crumbling Bretton Woods System. However, their efforts endured for only a short time.

Participating nations agreed at this Smithsonian Conference to changes in the fundamentals of the international monetary structure: devaluation of the dollar against gold by 7.89 percent, and an appreciation of the yen against the US dollar of 16.88 pe rcent. Battles in international politics sometimes create ironically twisted results. In spite of agreement to devalue its currency, a defensive measure that recognized losses in the on-going competition, President Nixon made a "victory speech" at the end of the Smithsonian Conference.8 Japan, on the other hand, returned from Washington with the air of a loser because of its agreement to appreciate its currency.9 Such theoretically ques tionable attitudes were the result of ingrained mercantilist thinking. And Nixon in his speech not only praised the mercantilist victory, but also lauded the success of the conferees in cementing over the cracks that had developed among the Western allies .

Within two years of the Smithsonian Agreement, the gold-based international monetary system had collapsed totally. And it proved impossible for the international monetary system to return to the fixed rate structure as it encountered the Oil Shock prod uced by the fourth Mid-East crisis in the autumn of 1973. This should have been a critical development within the Cold War context. The US dollar, against expectations, became the international currency that dominated flows within the international moneta ry system.

As a result, the dollar's role within the system became even stronger. Assessing the process of shifting to a system of floating exchange rates in the context of the Cold War, it was feared that the Western international monetary system faced perils th at might result in serious disadvantage vis-à-vis the Soviet Union. But the Eastern Bloc states faced even more serious problems as the Western countries endured the dislocations of the Middle East Oil Shock. Ultimately, the economies of the Easter n Bloc countries suffered severe damage, especially the Soviet Union, damage that endured to help cause its collapse in 1989.

So, the relaxation of the integrity of the West's international monetary system, luckily, did not lead to a defeat of the West. In Russia today, the dollar has replaced the ruble as the most trusted currency. People regularly carry and use dollars toda y even on the streets of Cuba, where such behavior would have been grounds for arrest during the Cold War.10 In Cold War terms, it is safe to conclude that the dollar has achieved a complete victory over the Communist a dversary.

A. Monetary Affairs as a Source of US-Japan Friction

International monetary arrangements had never arisen as an official issue in US-Japan relations before the sudden announcement of the closing of the gold window. The key issue for Japan in its bilateral relationship with the United States during th e early 1970s was restoration of Japanese sovereignty over Okinawa. The islands of Okinawa had been under American rule since the end of World War Two. For the United States, in contrast, the primary concern was regulation of textile import from Japan. Th is issue was especially important for President Nixon, who counted on votes from Southern states such as South and North Carolina for his re-election.

During the year of the "Shock," the Okinawa Reversion Treaty was signed and Japan began to implement "voluntary restraints" on textile exports. This year marked the beginning of "normalized " US-Japan economic friction, at the very peak of the friendsh ip between the two countries. Points of friction had arisen between the two countries since the 1950s over issues such as "dollar blouse" exports, or the export of tableware or steel. But the friction generated by the issue of textiles that began in the l ate 1960s was far more serious, and it set the pattern for subsequent bilateral economic friction. The course of later negotiations over commodities such as color television sets and automobiles followed that pattern.

Since then, the two countries have experienced friction in almost every aspect of the relationship: light (textiles) to heavy industries (steel); raw materials (wood) to consumer durables (television sets and automobiles); low value-added products (tab leware) to high-tech goods (semi-conductors); and indeed, services (banking and air travel) as well as goods. The disputes have included export restraints as well as the level of imports (beef, citrus, rice); problems primarily in the private sector and t hose of macro economic policy, and even talk of basic structure and culture (the Structural Impediment Initiatives). At times, highly political issues such as taxation, military technology, or defense expenditures, have been brought to issue.

Foreign exchange rates are, in general, a very special sort of issue. It is delicate and highly political subject. Foreign exchange rates under a fixed system are thought to represent the very core of national sovereignty. Therefore, discussions relate d to foreign exchange rates were conducted in great secret.

US representatives often linked international monetary issues and trade issues to achieve favorable outcomes in the negotiations. Recognizing Japan's sensitivity to the yen parity issue, the United States indirectly intervened in the exchange market th rough so-called "benign neglect," and the US government official's welcome comment of yen appreciation. The Japanese government, in response, would come up with market access liberalization policies. The United States always judged Japan's response unsati sfactory, describing it as "too little; too late." The US government purposely employed a "yen attack" strategy during the Carter Administration to force Japan to open its market to the export of American beef and citrus, and vice versa, to persuade Japan to restrain the export of automobiles and color television sets to the American market. The US threat of forcing a higher yen proved significantly successful.

B. The Main Actors

During both the 1971 and 1973 crises, the key personnel involved did not occupy regular governmental posts, a situation unusual within Japan's normal bureaucratic structure. Instead, they were former bureaucrats who held the title of adviser to the minister of finance.11 Nor were they directly appointed by the prime minister, and they worked within the national bureaucracy as top-ranking officers of the Finance Ministry.

The explanation of this aberration is simple. Both crises represented situations so extraordinary that they required men with greater experience and knowledge than the active duty personnel available at that time in the ministry. Both men were presumed able on their own judgment to make the more important decisions and to receive the final approval of the minister of finance or prime minister; both were comfortable conducting direct negotiations with foreign monetary representatives.

It is difficult to determine precisely when, by whom, and how it was decided that the Finance Ministry was to take full charge of these issues. However, the unusual arrangement of mobilizing ex-MOF bureaucrats is characteristic of the Japanese governme nt's response to crisis. No one, within or without the ministry of finance, raised objection to this arrangement.

Yusuke Kashiwagi, the key figure during the 1971 shock, was given the nickname "Emperor Kashiwagi" within the ministry. He enjoyed the full personal confidence of Prime Minister Eisaku Sato.12 Kashiwagi was responsib le for the decision to keep the Tokyo foreign exchange market open in a desperate effort to maintain the fixed $1=Y360 exchange rate. Once he left for consultations in Europe and the United States after the decision on maintaining the rate was made, remai ning MOF officials had no choice but to await his return before ending their futile purchase of depreciating US dollars, a situation that endured for two weeks.

Japan's political leaders, including the prime minister, did virtually nothing other than grant final approval to the MOF officials handling the issue. Prime Minister Sato, for example, was so dependent on Kashiwagi and the MOF bureaucrats that he even promised the Emperor at an audience following the shock that he would maintain the fixed $1=Y360 rate of exchange.13 He was as blindly dependent on the symbol of the rate as were the bureaucrats who failed to demonstra te leadership during the first stages of the Shock.

The Finance Minister behaved in basically the same fashion. By relying more heavily on and giving more discretion to the monetary specialists within his ministry than any of the other ministry officials, including the top-level vice-minister for admini strative affairs, Finance Minister Mikio Mizuta failed to demonstrate effective political leadership in responding to the shock. He failed to recognize the logic of the argument that viceminister Iichiro Hatoyama made in support of closing the exchange ma rket, in opposition to Kashiwagi's insistence that it be maintained open. Mizuta simply accepted without personal review or assessment the judgment of the individual with the reputation for expertise, regardless of the situation.

Kiichi Aichi played a more activist role as finance minister in 1973. He personally met with Under Secretary of the Treasury Paul Volcker during his secret mission to Japan, inviting him to his home for talks.14 He r olled back Volcker's strong demand for further appreciation of the yen during their conversations with the assumption of conversion to a floating exchange rate system. He had recognized that it was no longer possible to maintain the fixed rate system afte r the dollar had begun to float.

The Finance Ministry's primary motivation when deciding on a floating rate system was, however, not the result of rational choices informed by cool judgments about the international monetary system, but rather stubborn respect for the tradition of nati onal budget procedures.15 The Japanese bureaucracy, specifically MOF budget bureau, maintains an unwritten code that prohibits revision of the national budget during Diet budget deliberations. The decision to float rath er than experience another appreciation of the fixed yen rate was based mainly on reluctance to face the implications of another exchange rate after decisions on the national budget had been made and before those budget decisions had been ratified by parl iament. The bureaucrats feared that announcement of a new yen rate might inspire members of parliament to demand revision of those aspects of the budget dependent on the exchange rate as calculated by the bureaucracy. They feared exposing their handiwork to the possibility of revision by uninformed persons who might deface their sacred document in an attempt to curry favor with the vote-granting public. Therefore, a float would be a safer choice since it would not require announcement of a new rate of exc hange. Finance Minister Aichi's preference for a floating rate was greatly influenced by this MOF tradition.

Other government agencies, such as MlTI and the Ministry of Agriculture, Forestry, and Fisheries (MAFF), also were quite negatively disposed toward yen appreciation since it was expected to decrease Japan's export competitiveness and increase the impor t of foreign products into the Japanese market. However, they considered the exchange rate the responsibility of the ministry of finance, and therefore concentrated their own efforts on protecting their client domestic markets from the possibility that MO F would try to trade concessions there to the Americans for lighter treatment on the exchange rate issue.

Their position remained basically consistent throughout both the 1971 and 1973 international monetary crises. One noteworthy difference was MITI's energetic proposal of a new budget scheme that would use accumulated foreign exchange reserves (mainly do llars) to buy up stockpiles of the raw materials that Japan needed.16 The MlTI proposal was backed by then MITI minister Kakuei Tanaka who eagerly campaigned for its adoption.17 MOF r esolutely rejected the idea, finding such new schemes that involved issues within their authority anathema. Thus during both crises a relatively small number of MOF international monetary bureaucrats were able to dominant management of the issue.

IV. Determinants of the Change in Manner of Response.

The difference is explained by three factors. First, the national bureaucracy gained experience dealing with the difficult problems encountered during the yen's first bout of appreciation in 1971. Differences in the personalities of top political leade rs is the second factor. This affected the manner in which the government as a whole operated. Eisaku Sato, a typical bureaucrat-turned-politician, held the post of prime minister during the 1971 crisis. Kakuei Tanaka was prime minister in 1973. Party pol itician par excellence Tanaka's background and behavior was considerably different from that of Sato. Finally, the overall economic environment surrounding the two cases was significantly different.

A. The United States Government as a Factor

It is no exaggeration to describe the impact of the August 15, 1971 Nixon announcement as a severe shock to the Japanese national bureaucracy. First, consider the timing. Japan's international monetary authorities hardly could have expected it righ t at that time. Also, the date coincided with the twenty-sixth anniversary of Japan's surrender in the Second World War. This made many of Japan's bureaucrats and businessmen believe that President Nixon really was venting his frustration with the course of the textile negotiations during the late 1960s and early 1970s (In fact, the announcement was made at 10:00 am, 16 August Japan time, but accuracy of timing was a secondary concern).

Second, prior to the surprise announcement, Japanese government officials had been holding numerous talks on economic relations with the United States. But not one of the meetings, according to the vivid recollections of participants, concerned the mon etary issue. Therefore, the shock was even more severe for the authorities.

While Japan's economic authorities had no premonition of the United States "message" in 1971, US intentions for a revaluation of the yen were obvious in 1973. Paul Volcker, then Under Secretary of Treasury, flew into Yokota Airbase on the outskirts of Tokyo in a military plane rather than on a commercial airliner. Receiving an advance cable notice from President Nixon via the American Embassy in Tokyo, the Japanese government was able to know in advance of the secret mission's arrival. At the meeting, Volcker articulately and directly stated the US demand: Japan was to appreciate the yen by 20% vis-à-vis dollar.

The letter, addressed privately to Prime Minister Kakuei Tanaka, was clear and unambiguous: the United States intended to implement a drastic change in the international monetary regime which would include a 10 percent devaluation of the dollar and a 1 0 percent upvaluation of the yen, an arrangement that represented a "fifty-fifty" deal, at least, from the perspective of the United States, but which represented a 20 percent upvaluation of the yen for Japan.

B. Domestic Economic Factors

Domestic economic conditions in Japan constitute a second explanation for the difference in the Japanese bureaucracy's response to the 1973 shock. While the economy was suffering from recession in 1971, by 1973 it showed clear signs of inflation an d boom. The 1971 recession was caused indirectly by a deficit in foreign revenues and reduction of official reserves during late 1960s. Japanese monetary authorities, facing a drop in official reserves below the sensitive 2 billion dollar level, had moved to tighten up the economy. But their decision led to worsening economic conditions. It was under those bleak conditions that they then were faced in 1971 with the Shock. Therefore, the government's immediate concern was for the possibility that upvaluati on of the yen would further deflate the economy. The most important impediment to prompt closure of Japan's foreign exchange market in response to the August 1971 Shock was government fear that the already bad economy would be thrown into chaos by announc ement of a revaluation, a development thought to follow naturally. The 1973 situation was completely different in the sense that the 1971 parity change had created deflation far smaller than that predicted by the authorities.

With an inflating economy, it was possible to imagine that revaluing the yen would reduce inflation, a desirable outcome at the time. Still, the decision to close the market obviously was not an intentional and rationally calculated determinant of yen revaluation. It was the only possible decision they could have reached in light of the chaotic monetary conditions in Europe and the hard-line pressure from Washington for a revaluation of the yen.

C. Balance of Payments and Foreign Currency Reserves

The third factor explaining the difference in reaction to the two international monetary crises is the level of Japan's official foreign currency reserves. Easier reserve conditions in 1973 made Japan's international monetary authorities less afrai d of an appreciation of the yen.

The first Shock in 1971 hit Japan only three years after foreign currency reserves had dropped below the critical two-billion-dollar level. By 1973, however, Japan was well known for its excessive balance-of-payments surplus and high foreign currency r eserves. Therefore, some MOF officials including Minister Aichi even had considered voluntary appreciation of the yen as a means of avoiding foreign pressure for an even higher level of appreciation.

When criticized for their imprudent decision to keep Japan's foreign currency market open in 1971, monetary authorities justify their action with the argument that continuation of Japan's "chronic surplus" situation at the time was far from certain. As evidence they cite conditions in 1968 when Japan teetered on the brink of requiring rescue from the IMF, only months before the shock. Americans and Europeans consider all of these "facts" simple excuses for maintaining an under-valued yen. However, it i s true that in 1971 most of Japan's government officials and businessmen lacked confidence in the sustainability of the surplus under strong yen conditions, and that their obsession with a foreign currency shortage remained strong.

In the event, however, their concerns over trade deficits and currency shortages proved groundless. Although many in Japan, including media observers, feared "bankruptcy" from the higher-than-anticipated (16.88 percent) appreciation of the yen at the S mithsonian Conference, Japan's balance of payments remained in surplus and foreign currency reserves continued to rise. So, far from excessive, the rate of yen appreciation established at the Smithsonian proved to be considerably lower than necessary.

The primary determinant of the early 1973 international monetary crisis was the continuing deficit in the US balance of payments. And the international monetary community blamed a considerable portion of that deficit on Japan's surplus. Despite officia l statements denying Japan's chronic surplus status, Japan's international monetary authorities already had recognized it, and this change in perception served as the basis for a quicker response to the renewed international monetary crisis in 1973, which , in turn, led to the shift to a floating rate system after the Tokyo market close.

D. Personality of the Decision Makers

1 . Prime Ministers

Differences in personality of the decision makers involved had a considerable effect on the foreign policy making process during the two crises. Eisaku Sato, prime minister in 1971, and Kakuei Tanaka, prime minister in 1973, shared many general att ributes. Both were conservative Liberal Democratic Party politicians who reached the top through intensive party factional rivalry. A closer look, however, reveals important differences in their backgrounds. Although we must avoid over-simplification, the ir differences in education, family background, appearance, and pre-political career were factors in their overall character that must be considered if we are to understand the difference in Japanese bureaucrats' response to the two crises.

Sato, in orthodox LDP political leadership style, focused his efforts on reversion of Okinawa. Emulating his political mentor, Shigeru Yoshida, who focused exclusively on Japan's postwar reconstruction, he devoted himself to this remaining task. To fac ilitate concentration on this single issue, Sato encouraged maintenance of the status quo on other issues. Sato therefore appointed a quintessential status-quo-loving bureaucrat to manage the response to the dollar shock (more on the character of this bur eaucrat later).

Tanaka, in contrast to the more passive Sato, managed his cabinet with his well known active and forceful personality. His "leap-before-you-look" style of politics accounted for many markers in Japan's postwar history. For example, he forced through th e normalization of relations with China in spite of powerful opposition within the LDP. Also, blithely marching along under the banner of his program to "Reorganize the National Archipelago," Tanaka allowed ballooning public works nationwide to generate a sharp increase in the price of land which ultimately lead to the ultra-hyper-inflation that even affected the prices of daily household products.

Working under a political leader with such dynamic personal characteristics, monetary authorities at the time could respond more flexibly to the 1973 international monetary crisis. Of course, the basic policy of trying to avoid appreciation of the yen remained in spite of the passage of two years since 1971. Further, Tanaka was an even stronger proponent of anti-yen appreciation than was Sato. However in 1973, there was no alternative to closing the market and float. The critical decision was one of th e timing of its closure. In 1971, the decision was implemented two weeks after the Shock. In 1973, in contrast, it came right after the event.

This can be explained only by a certain degree of determined decisionmaking. The decision initially came from the bureaucracy. But it is safe to say that Tanaka's active personality provided incentive for such exceptionally rapid policy implementation.

2. Finance Ministers

The ministers of finance at the time, Mikio Mizuta in 1971 and Kiichi Aichi in 1973, were unusual among senior politicians in that both took a rather reserved attitude about becoming prime minister. Throughout their political careers both remained decent technocrat-type politicians. Thus, the personal knowledge and understanding of economic affairs of the two finance ministers should have worked properly to lead their subordinate MOF officials.

As finance minister, however, Mizuta could not make use of his credibility but only played a "messenger boy" role, running between the Ministry of Finance and the prime minister. He had been finance minister twice in the past for a total of four years. This experience won him a reputation among finance ministry officials as a moderate and reasonable boss who never violated the dictates of the bureaucratic regime of which he was the titular head. His economic administrative experience, however, focused more on issues related to the national budget and taxation than on international monetary affairs. So he, like every other Japanese politician, was an amateur in that arcane field.

Faced with the need to respond to the crisis with an appropriate policy, he tended to rely on the opinions of the bureaucrats in charge who insisted on maintaining an open foreign exchange market. In other words, he rejected the opinions of administrat ive vice minister Iichiro Hatoyama who insisted on closing the market because he thought it ridiculous for the government to buy up currency destined to decline in value. This decision, however, was not the result of Mizuta's personal rational calculation s. Rather, he simply concluded that he would be better off relying on the expertise and judgment of the ministry's international monetary experts than on his own common sense.

Aichi, on the other hand, had a brilliant MOF bureaucratic career where he had specialized in monetary affairs. He therefore was much more informed than Mizuta or any of the other senior LDP politicians about those obscure issues. He himself met with P aul Volcker and discussed how Japan and the United States might cooperate in the face of the new monetary crisis that originated within the European markets between 9:00 PM on February 8 and 2:00 am on February 9, 1973. His bureaucratic experience as a yo ung financial attaché in London before World War Two worked very much to his advantage during the period of tough negotiations.

Although Aichi rejected the US demand for a so-called "50-50 deal," he accurately recognized that the end of the Smithsonian currency realignment was near at hand and that Japan's yen would require appreciation in any event. The next day, February 10, 1973, the Japanese government closed the Tokyo exchange. This resulted in the float of the yen and an end of government market intervention in support of the fixed rate established at the Smithsonian.

With an accurate understanding of the significance of the need to move from the Smithsonian realignment, Aichi became an effective bridge between Prime Minister Tanaka and the MOF bureaucracy. The political strain was far lower during 1973 than during the 1971 crisis, and the conversion to a floating exchange rate went as smoothly for Japan as for any of the G- 10 member states. The presence of a well informed, well trained former bureaucrat as finance minister at the time contributed significantly to the decision-making process and management of a momentous change in Japan's monetary system.

3. Bureaucratic monetary officials (adviser to the minister of finance, vice minister for international monetary affairs, director general of the international monetary affairs bureau)

A new generation of MOF bureaucrats had assumed office by 1973, replacing those who had been in charge during 1971. Vice minister for international monetary affairs, the top post within the ministry concerned directly with the yen's international v alue, was held by Koichi Inamura. He had replaced Takashi Hosomi who held the post in 1971. Daizo Hayashi had become director general of the Ministry's International Monetary Bureau, succeeding Koichi Inamura. Personnel shifts also moved Takashi Hosomi to the post of adviser to the minister of finance, the position held by Yusuke Kashiwagi in 1971.

Although this post had been created for retired ministry officials, in both crises it actually did exercise significant influence over policy implementation. Thus, the comparison here will focus on Kashiwagi and Hosomi. His nickname, "The Emperor," wit hin the bureaucracy was given in part due to his vast experience in handling international monetary affairs. He held elite status even within the elite of the ministry's bureaucracy and he had a personality forceful enough to make his subordinates fear hi m. Immediately after the 1971 "shock," he flew to Europe and the US at Prime Minister Sato's request to determine the European understanding of the situation and the real intentions of the United States.

Japan's decision to keep its foreign exchange market open was made during an intraministerial conference held before Kashiwagi's trip to Europe and the US. Kashiwagi apparently played an important role in the decision taken at that conference, and one reason the status-quo-defending policy was maintained so long was that this powerful figure was out of the country. The remaining bureaucrats could do nothing but to await his return before reversing a decision that had been taken under his influence. No retired bureaucrat in Japan's political history ever wielded such influence over the decisions of his former ministry.

For Kashiwagi, an official who had assumed responsibility for international monetary affairs throughout the postwar fixed rate period, there was never any question of changing the fixed rate system regardless of changes in the external environment. And , indeed, such stand-pat policies had served Japan well in the past, and were perfectly in accord with Prime Minister Sato's personal inclinations, as mentioned earlier.

Hosomi, in contrast, a self-described international monetary policy amateur, served as adviser to the minister of finance during 1973 crisis. Prior to his selection in early 1971 to replace Kashiwagi as vice minister for international monetary affairs, he specialized mainly in issues of taxation and had never once served in a post related to international monetary affairs. Like Kashiwagi, he was a top-level "elite" bureaucrat within the ministry. But in contrast to Kashiwagi, Hosomi had a less forceful personality that never made much of his elite background.

Changes in the international monetary system in both 1971 and 1973 were events significant not only for Japan's monetary policy but also for other countries. It proved more beneficial for Japan at the time to have an inexperienced person like Hosomi in a key bureaucratic position rather than a thorough specialist such as Kashiwagi. This raises the question of how events would have evolved in 1971 had Hosomi rather than Kashiwagi been in charge. It probably would have taken less time to reach the decisi on to close the exchange market. And had expert Kashiwagi been in Hosomi's post in 1973 it probably would have taken a little longer to reach the same decision.

V. Questions

Here are several questions raised according to the determinant factors listed in Chapter IV.

A. Attitude of the US Government

It is understood in Japan that the United States did not distinctively request Japan appreciation of yen, despite its frustration regarding undervalue of yen, or over load expectation to the dollar from abroad. To put it, 'shock' was a result of sudden emergence of momentum that discredited the monetary system, which tried to restructure the system.

Why didn't the United States express openly its policy to restructure the $1=I360 rate?

Yet, this understanding could be shared among very few people in Japan, such as Iichiro Hatoyama, then Vice Minister of MOF.

Is it possible to say that the US did in fact send a message to Japan to appreciate the yen?

If the American authorities truly did not send any message to Japan in advance, it should be safe to assume that the shock was caused by intention. But since their real aim was appreciation of yen, causing shock on Japan was an unnatural procedure. Thus it gives the Japanese people good reason to believe that the shock was a revenge against the textile issue.

Didn't the United States even have a slightest idea of revenge against Japan regarding the textile issue, setting the date of shock very close to August 15, the day Japan surrendered against the United Allies twenty six years ago?

B. Domestic economic status

How did the Japanese monetary authorities regard the relations between Japan's domestic economy and the appreciation? Beyond the general theory which says appreciation of currency causes deflation in the market, how did the authorities estimate th e effect of appreciation to the economy at the point of 1971 crisis?

How did the Japanese authorities consider the fact that their estimate turned out to be wrong (they estimated appreciation of yen would significantly damage the economy, but in reality it had recovered)? What were the elements that made them to belie ve the estimate?

Was it widely accepted among the authorities to welcome the appreciation of yen at the time of 1973 yen float, being confident with the development to hold down the counter effect of inflation?

What effect did the dollar shock in 1971 have on the bureaucrats other than MOF monetary specialists, such as officials in MITI and EPA, regarding their understanding to the yen appreciation ? Can we see the result in their response to the crisis in 1973?

C. External Factors

The disastrous situation which was predicted by the Japanese authorities, as a result of the appreciation of yen in 1971 in fact didn't happen. Japan maintained its trade surplus. Foreign reserve continued to grow. The authorities tried to defend thems elves claiming that the growth is a tentative effect resulted by the yen hike in the market, which they called the J curve theory. Both the trade surplus and the foreign reserve, however, continued to grow over two years. Pressure to revalue the yen grew in the foreign exchange market. Trade competitiveness didn't lose its credibility at all.

As noted in section B, their miscalculation regarding the effect of the appreciation was not only on the economy but also on the trade surplus. Finance Minister Aichi had recognized this fact and had asserted the necessity of appreciation, but his view s were not shared widely.

Why did the Japanese authorities tried so hard to avoid appreciation of yen? Was it a simple mercantilist idea, preferring lower value of yen in purpose of getting advantage in the international trade? Or was it their honest lack of confidence to the yen and to the export competitiveness?

What was the reason behind Japan's decision to close down the market prior to the yen float in late 1973, rejecting the US demand to revalue the yen? Was it because they were determined that fixed rate system should be abandoned? Did they truly belie ved that floating rate system would take over the fixed rate system, the Bretton-Woods regime which structured the foundation of postwar inter-national monetary order? Or was it because they simply needed to step away from the fixed rate system tentativel y in order to meet the rigid budget procedure, thinking they would return to the original fixed rate system?

What was the appropriate value of yen in the authorities' estimate, at the point of transformation of rate system in 1973? Why did they stubbornly insisted to set yen as low as possible during the discussion of setting the value of yen to the dollar?

D. Decision makers

1 . Political Leaders

Comparing the Prime Minister Sato's attitude towards the yen appreciation, there seems to be a clear distinction between that of right after the dollar shock in summer of 1971 and right before the Smithsonian Conference at the end of the same year. Right after the shock, it is said that Sato had adopted the policy to persistently defend the 360 yen fixed rate, influenced by the 'monetary mafias' of the MOF headed by the 'emperor' Kashiwagi. In contrary, the speculation is that he was willing to acc ept wide range of yen's appreciation, reflecting the notion that it would prove to the world Japan's grown economic strength.

As well as Sato, there is very little information available regarding Tanaka's attitude towards yen appreciation. Only story we know is when US Secretary of Treasury Connally visited Japan during his time of the head of MITI, he stressed that appreciat ion of yen would cause significant drop in Japan's import from the United States, and lead to a disastrous situation in Japanese economy.

What were the personal feelings of the political leaders during that period concerning yen appreciation? How did they regard the pros and cons of the appreciation? Or did they not have any particular thoughts about the issue and had simply adopted what the bureaucracy came up with?

How did the political leaders of that time, Sato and Tanaka especially, gave the MOF officials exclusive right to deal with the issue, excluding other ministries concerned? In other words, how was Kashiwagi possible to hold such a power which led peo ple to call him the 'emperor'?

To what degree is Japan's political leadership indecisive, in comparison with the United States government? In other words how strong is the bureaucracy? (From time to time monetary 'mafia' in the United States also seems to take over the power of th e

decision makers as much as the Japanese bureaucracy. It is said, for example, that Under Secretary of Treasury Paul Volcker was the de facto decision maker for the monetary issue during the 1970s, given President Nixon's indifference to the issue.)

What were the personal feeling of the Finance Ministers Mizuta (1971) and Aichi (1973), towards the yen appreciation? How were they successful, or unsuccessful, in implementing their views on the policy formation, during the monetary crises of 1971 a nd 1973, as a politician, and as the top monetary authority?

2. MOF Bureaucrats

One of the reasons for Japan's smooth response to the 1973 crisis was that non-monetary specialist Hosomi was in power, which is obviously a rare case.

Why and how was Hosomi appointed to such an influential post in the MOF, without having any distinguishable experience nor knowledge of international monetary affairs? Was it some kind of strategic idea to bring non-specialist under a significant transformation?

What caused the MOF officials led by Kashiwagi to decide on sticking to the fixed rate system right after the 1971 shock, irrationally trying to buy off dollar in the Tokyo Exchange Market? Did they have a rational reason? Or was it a tentative decis ion having no better way to go by? Or was it their intention to lower the appreciation rate as much as possible, being aware that the system will soon enter a wide range realignment?

How did the MOF officials analyze the American decision making at that time of 1973 float? How did they estimate Paul Volker's understanding regarding the transformation of the exchange system? Were they determined to move into floating rate system r egardless of the American decision? Or did they go ahead with the idea calculating that the US (or Volcker) will do the same?

Vl. Hypothesis

Comparison of the Japanese government's response to the 1971 and 1973 international monetary crises leads to at least two working hypotheses. First, the Japanese bureaucratic system, often criticized as rigid and static, can adapt to necessary conditio ns when it has leaders with the right personal characteristics. And second, the above conditions can enable Japan to formulate more independent policy alternatives, and even to say "no" to the big-brother United States.

The bureaucracy's relatively precise response to the 1973 international monetary crisis provides many lessons for post-Cold War Japan concerning the formulation of policy in a changing global environment. Between 1969 and 1977, Japan, together with the other Western democratic countries, experienced historic changes in its monetary system. For Japan, however, the change was not confined to the economic system alone.

The 1971 Shock and the 1973 collapse of the Bretton Woods system demonstrated to Japan that the United States no longer is the dominant economic power it once was, while it maintained hegemonic military status. The US economy, while still remained no. l in the world, had to counter economic challenges from Europe and Japan. Also, the US economy was seriously damaged by the cost of the Vietnam War and other military commitments throughout the world. "Closing the gold window" in 1971 simply represented t he announcement that the United States alone could no longer shoulder the burden of maintaining the international monetary system and that it needed to shore up its economic position in the face of European and Japanese competition.

Realizing that the United States now was economically "no. l-with-competition," rather than hegemonic, Japan had to accept the fact that the United States would play hard ball with Japan if necessary and that it was responsible for maintaining the stab ility of the global economy, and of the international monetary system most of all. This kind of realization might be compared to that of young children initially developing a sense of self. Although Japan regained its status as an independent sovereign na tion after the Allied Occupation headed by General Douglas MacArthur, the country failed to develop a realistic sense of its position within the world. Like boys and girls who concentrate their effort exclusively on manipulation of the technology necessar y to survive the entrance exam hell, Japan concentrated first on economic recovery, then on economic growth and catching up with advanced Western countries. In the process, Japan ignored the fundamentally important fact that their effort was supported by the Western alliance, and that the economic system within which Japan was able to display its economic talents was sponsored mainly by the United States.

The Nixon-Ford/Sato-Tanaka era was a period of transition during which Japan made a serious effort to become an American ally rather than a spoiled "Free Rider" with an inferiority complex vis-à-vis the United States. The above comment made by K iichi Aichi to Paul Volcker during talks at Aichi's house one evening in early February 1973 is one indication that Japan was trying to originate a sophisticated initiative that would provide some alternatives.

Japan's decision to cut ties with the Smithsonian Regime of fixed exchange rates and to let the yen float did not represent a genuine initiative toward a new international monetary system. The decision to float was made primarily for traditional bureau cratic reasons the world, had to counter economic challenges from Europe and Japan. Also, the US economy was seriously damaged by the cost of the Vietnam War and other military commitments throughout the world. "Closing the gold window" in 1971 simply rep re-sented the announcement that the United States alone could no longer shoulder the burden of maintaining the international monetary system and that it needed to shore up its economic position in the face of European and Japanese competition.

Realizing that the United States now was economically "no.1-with-competition," rather than hegemonic, Japan had to accept the fact that the United States would play hard ball with Japan if necessary and that it was responsible for maintaining the stabi lity of the global economy, and of the international monetary system most of all. This kind of realization might be compared to that of young children initially developing a sense of self. Although Japan regained its status as an independent sovereign nat ion after the Allied Occupation headed by General Douglas MacArthur, the country failed to develop a realistic sense of its position within the world. Like boys and girls who concentrate their effort exclusively on manipulation of the technology necessary to survive the entrance exam hell, Japan concentrated first on economic recovery, then on economic growth and catching up with advanced Western countries. In the process, Japan ignored the funda-mentally important fact that their effort was supported by the Western alliance, and that the economic system within which Japan was able to display its economic talents was sponsored mainly by the United States.

The Nixon-Ford/Sato-Tanaka era was a period of transition during which Japan made a serious effort to become an American ally rather than a spoiled "Free Rider" with an inferiority complex vis-à-vis the United States. The above comment made by K iichi Aichi to Paul Volcker during talks at Aichi's house one evening in early February 1973 is one indication that Japan was trying to originate a sophisticated initiative that would provide some alternatives.

Japan's decision to cut ties with the Smithsonian Regime of fixed exchange rates and to let the yen float did not represent a genuine initiative toward a new international monetary system. The decision to float was made primarily for traditional bureau cratic reasons concerning Japan's budget "protocol." However, the floating rate system proved to be the only viable solution to the 1973 international monetary crisis. Bypassing US demands premised on a fixed rate system may not have been an intentionally positive proposal, but it turned out well in the end.


1 Robert. C. Angel, En no Koso [Explaining Economic Policy: Japan in the 1969-71 International Monetary Crisis]. Trans. Hiroshi Ando, Mariko Era (Tokyo: Jiji Press, 1993), p.292.

2 The market was "closed" many times during the international monetary crises of the early 1970s. The longest and the most wide-ranging started March 1, 1973 and continued for approximately two weeks. Japan's decisio n to close its market in early February, 1973, was only a preliminary step on the way to a float. No other countries immediately followed Japan's example.

3 The criticism focuses on the bureaucracy's (1) foolish decision to buy up dollars; (2) disregard for the likelihood of a dollar devaluation; and (3) the resulting huge loss for Japan's taxpayers. Yet, the bureaucra ts' explanation that their buy-up plan actually worked as it was supposed to, that it saved the economy from even worse damage, makes a certain amount of sense. Japanese companies during that period worked under tight government regulation and thus were n ot capable of coping with a devaluation of the dollar. Since early 1970, especially the banks had been forced to hold foreign currency in order to make government reserves appear to be lower than they otherwise would. It is possible to conclude that the g overnment had an obligation to cover their losses, at least to some extent, since they were the victims of government guidance. But the real problem was not the decision to maintain the open market itself, but rather the excessively stubborn thinking of t he international monetary specialists who insisted that the fixed rate system should be maintained at any cost, and who were incapable of conceiving any alternatives.

4 The yen's value as of February 9, 1973, one day before the market close, was 301.10 (Tokyo Central Rate). On February 14, the day the Tokyo market was re-opened after being closed for three days, it was 271.20. And on the next day, February 15, it was 265.50, amounting to about 12 % appreciation before the close and about 14 % up from the Smithsonian rate.

5 Takafusa Nakamura, (ed.), Nihon Zaiseishi, Showa 27-48. [Japan's Financial History, 1952-1973] Vol.12, (Tokyo: Financial History Study Group, Ministry of Finance, 1992), p.468.

6 Takafusa Nakamura, (ed.), Nihon Zaiseishi, Showa 27-48. [Japan's Financial History, 1952-1973] Vol.12, (Tokyo: Financial History Study Group, Ministry of Finance, 1992), pp.467-468. The MOF's plan of respons e, adopted prior to Volcker's arrival at the ministry-level meeting, was roughly as follow: (1) avoid yen devaluation before the Diet completes work on the FY 1973 budget; (2) refuse to take any independent action apart from key European countries such as West Germany; (3) if countries concerned should close their markets and free their currencies, Japan would follow those actions in the spirit of international cooperation; (4) insist that the dollar also be made subject to necessary adjustment (depreciat ion of the dollar); (5) reserve the right to decide the method of yen float, taking Japan's economic situation into account; (6) avoid involve-ment to the question of the dollar's convertibility into gold; (7) reject the "Volcker Paper."

7 Japan and the United States were represented, respectively, by Hosomi and Volcker during the bilateral discussions, a continuation of the meetings in Bonn where Volcker arrived to discuss the problems with his coun terpart in Bonn. Both representatives agreed to keep vague the specifics of Japan's level of market intervention in an effort to enable both countries to put a favorable spin on the agreement. For Japan the agreement was significant in that Japan gained W ashington's approval for market intervention.

8 Paul Volcker, and Toyoo Gyoten, Tomi no Kobo [Changing Fortunes], trans. Yuuichi Ezawa (Tokyo: Toyo Keizai Shimpo, 1992), p.5. Recalling the moment of the Smithsonian agreement, then Under Secretary of Treas ury for International Monetary Affairs Paul Volcker criticized Nixon's inclination to treat the dollar cut as a "political victory," and exposes his suspicion that the floating rate system is "dangerously unstable."

9 Ibid., p. l 45. There was an evident tendency for Japan's communications media to evaluate the international monetary issue as if it were a win-or-lose battle. Toyoo Gyohten, who served as Kashiwagi's assistant in 1971, sarcastically referred to the Japanese media as "masochistic," contending that "They amuse themselves by insulting their own country."

10 Takashi Higaki, "Cuba Kikou ["A Cuban Journey"], Ronza February 1996, p.150.

11 Both Kashiwagi and Hosomi served as the Ministry's financial specialists until just before the incident.

12 Mitsuo Takagi, Sen-go Kinyu Zaisei Rimenshi [The Secret History of Japan's Postwar Finance and Treasury], (Tokyo: Kinyu Zaisei Jijo Kenkyu-kai, 1980). p.486.

13 From an interview the author and an Asahi Shimbun journalist, Eiichiro Kirimura, had with Mizuta on December l, 1975. Sato, later, at the conclusion of the "shock" period, at the conclusion of the Smithsonian Con ference, became oddly confident concerning yen appreciation. When Mizuta discussed the rate as were the bureaucrats who failed to demonstrate leadership during the first stages of the Shock.

14 Takafusa Nakamura, ed., Nihon Zaiseishi, Showa 27-48 [Japan's Financial History,1952-1973] Vol.12, (Tokyo: Financial History Study Group, Ministry of Finance, 1992), p.468.

15 Hiroshi Ando. Sekinin to Gengai: Akaji Zaisei no Kiseki [Responsibilities and Limitations: The Path of the Financial Deficit] vols. l & 2. (Tokyo: Kinyu Zaisei Jijo Kenkyu-kai), 1987, p.144. Hosomi cri ticized traditional budget procedures, noting that it was unreasonable for the Diet to revise a cabinet-approved budget proposal simply because the official exchange has moved.

16 Takafusa Nakamura, ed., Nihon Zaiseishi, Showa 27-48 [Japan's Financial History,1952-1973] Vol.12, (Tokyo: Financial History Study Group, Ministry of Finance, 1992), pp.446-451; pp457-459.

17 Hiroshi Ando. Sekinin to Cengai: Akaji Zaisei no Kiseki [Responsibilities and Limitations: The Path of the Financial Deficit] vols. 1 & 2. (Tokyo: Kinyu Zaisei Jijo Kenkyu-kai), 1987, pp. l31-132. Tana ka, promoting his new budget scheme that would utilize accumulated foreign currency, even confronted reluctant MOF officials with the threat he would destroy the MOF if they didn't approve MITI's proposal.

Vll. Bibliography

Ando, Hiroshi. "Himitsu Bunsho ni yoru Beikoku no Taigai Senryaku" ["United States Foreign Economic Strategy as Seen in 'Classified' Documents"]. Sekai August, 1981, pp. 72-83.

Ando, Hiroshi. Nichibei Joho Masatsu [U.S. -Japan Information Friction] . Tokyo: Iwanami Publishing, 1991.

Ando, Hiroshi. Sekinin to Genkai: Akaji Zaisei no Kiseki [Responsibilities and Limitation: The Path of Financial Deficit] vols. 1 & 2. Tokyo: Kinyu Zaisei Jijo Kenkyu-kai, 1987.

Angel, Robert. C. En no Koso [Explaining Economic Policy Failure: Japan in the 1969-71 International Monetary Crisis]. Trans. Hiroshi Ando, Mariko Era. Tokyo: Jiji Press, 1993.

Kamiya, Matake. "Anarchy no Moto Deno Kyoryoku to 'Tekido no Aimaisei" [Moderate Ambiguity under Anarchy (Beyond Neo-Realism and Neo-Liberal Institutionalism]." KokusaiSeiji. May, 1994, pp. 29-45.

Nakamura, Takafusa, ed., Nihon Zaiseishi, Showa 27-48 [Japan's Financial History,1952-1973] Vol.12. Financial History Study Group, Ministry of Finance, Japan. Tokyo: Toyo Keizai Shimpo,1992.

Purrington, Courtney. "Posuto Reisen-ki Nihon no Anzen-Hosho-Seisaku" ["Japan's Post-Cold War Security Policy"]. Trans. Haruya Anami. Kokusai Seiji. August, 1992, pp. 220-235.

Sakurada, Daizo. "Tai-ou no Seiji: Nixon Shock ni Taisuru Nichi-Ka Seisaku no Hikaku" ["Response Politics: A Comparison of Japan and Canada to the Nixon Shock"]." Kokusai Seiji. September, 1994, pp. 164- 180.

Takagi, Mitsuo. Sen-go Kinyu Zaisei Rimenshi [The Hidden Side of the History of Japan's Postwar Finance]. Tokyo: Kinyu Zaisei Jijo Kenkyu-kai, 1980.

Volcker, Paul; Gyoten, Toyoo. Tomi no Kobo [Changing Fortunes]. Trans. Yuichi Ezawa. Tokyo: Toyo Keizai Shimpo, 1992.

Yamamoto, Yoshinori, "Kokusai Keizai ni Okeru Tairitsu to Kyocho: Riron to Seijikatei" ["Confrontation and Cooperation in the International Economy"]. Kokusai Seiji. May, 1994, pp. 11-28.

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