Historical Dictionary of United States-Japan ... - Bakumatsu Films

76 • DODGE LINE
(“national seclusion”) policies of the Tokugawa government. See also
DUTCH LEARNING.
DODGE LINE. The Dodge Line was a series of fiscal and monetary
austerity policies carried out in Japan in March 1949. The policies
were based on a nine-point economic stabilization program that General
Headquarters/Supreme Commander for the Allied Powers
(GHQ/SCAP) showed to Japan in December 1948, and SCAP was
insistent on strict adherence. The nine-point directive ordered Japan
to: balance the consolidated budgets; increase tax collection efficiency;
restrict the increase of credit extension; control wages; control
prices; control foreign trade; maximize exports by improving allocation
and rationing systems; increase industrial and mining
production; and increase the efficiency of the food collection program.
In order to stabilize the Japanese economy based on the ninepoint
program, President Harry S. Truman sent Joseph M. Dodge,
president of the Detroit Bank, to Japan in 1949. Dodge forcefully laid
down the so-called Dodge Line, consisting of the following measures:
balancing the consolidated budget; more efficient tax collection;
tight credit; reducing wage and price increases; controlling
trade; allocating supplies to exporters; replacing the RFB with yen
counter part funds; establishing a single exchange rate; and decreasing
the amount of currency circulation. In March 1949, Dodge made
a budget proposal based on rigid balance in the consolidated budget,
including those of general, special, other government-related institutions,
and local governments, which would result in a 156.7 billion
yen surplus. The Dodge Line, in fact, rapidly achieved the balanced
budget; however, the Japanese economy severely suffered from deflation,
a large amount of unemployment, and general economic deterioration.
The Japanese economy could not return to growth until
the outbreak of the Korean War brought economic windfall to Japan.
DOLLAR DIPLOMACY. President William Howard Taft (1909–1913)
once explained that his foreign policy was driven by the concept of
“substituting dollars for bullets.” In practice, Taft’s dollar diplomacy
aimed not only to use diplomacy to advance America’s foreign business
interests, but inversely to use dollars abroad to promote American
diplomacy.