Japan’s record military budget

On 1 February 1940 the Japanese parliament, the Imperial Diet, reconvened after its New Year recess. The sitting heard in turn the ministers of a government that had been in office for just two weeks: the Prime Minister, Admiral Mitsumasa Yonai, the Foreign Minister, Hachirō Arita, and then the Finance Minister, Yukio Sakurauchi, who presented the draft budget for the fiscal year running from 1 April 1940 to 31 March 1941. It was the first state budget in Japanese history whose total expenditure exceeded 10 billion yen. Some two-thirds of that sum was earmarked for the armed forces and for the war in China, which was now in its third year.

Some accounts state that it was the Diet that “announced” the record budget. In fact the draft had been prepared by the previous government, and on 1 February the Finance Minister laid it before the two houses. The Diet debated it and approved it over the following weeks. The day after the ministers’ speeches, one of the most senior members, Takao Saitō, delivered a speech in the House of Representatives that has gone down in history as the Imperial Diet’s last open protest against the war.

The previous government’s budget

The draft budget had been taking shape in the Finance Ministry since the summer of 1939, under the governments of Kiichirō Hiranuma and then of General Nobuyuki Abe. According to Reuters reports of 8 December 1939, the War Ministry had demanded around 6 billion yen for 1940, and the Finance Ministry had cut this to 4.4 billion. After all-night talks between the two ministries a compromise was reached. The Abe government approved the ordinary expenditure on 8 December 1939 and the extraordinary war expenditure on 6 January 1940. A few days later the government fell, having the backing of neither the parties nor the army. On 16 January Yonai, a former Navy Minister and an opponent of an alliance with Germany, became Prime Minister. According to Japanese historians he was the choice of Emperor Hirohito, who wanted a moderate admiral in the post. The army accepted him with reluctance; it had hoped that the War Minister, General Shunroku Hata, would become Prime Minister. The new cabinet had no time to prepare a budget of its own and submitted its predecessors’ draft to the Diet, as the Tokyo Gazette, a monthly published by the government’s information bureau, openly acknowledged.

Ten billion yen

The budget was made up of two parts. The first was the general account, the ordinary state budget: 5,822 million yen, more than a billion higher than the year before. It included the War and Navy Ministries’ spending on the upkeep of the armed forces, and among the new items the largest, 970 million yen, went on “replenishing national defence” – that is, on new weapons and warships. Other items covered allowances for the families of conscripted soldiers (89 million), the expansion of industry, economic controls and settlement in Manchukuo.

The second part was the special account for extraordinary military expenditure. It had been opened in the autumn of 1937, after the Marco Polo Bridge Incident, to finance a war that Japan never formally declared. The whole period of the war was treated in it as a single fiscal year, and the military spent its money almost without oversight by the Finance Ministry or the Diet. For 1940 it provided 4,460 million yen: 2,973 million for the army, 737 million for the navy and 750 million in reserve. On 5 February the War Minister, Hata, explained to the budget committee that the situation in China allowed neither operations nor troop numbers to be reduced.

Together the two parts came to 10,283 million yen, or 9,406 million after transfers between the accounts were deducted. At the exchange rate of the day, about 23 American cents to the yen, this was roughly 2.4 billion dollars. The budget passed by the Diet was larger still, because the government added further expenditure during the session. According to the Canadian Commercial Intelligence Journal, the general account rose to 6,097 million yen and the total to 10,557 million. The War and Navy Ministries alone accounted for 2,304 million of the general account. Together with the war account, military spending reached about 6.8 billion yen, or two-thirds of the budget. The claim that the military swallowed “more than half” of all expenditure is therefore true, and even cautious. According to the Finance Ministry’s accounts, drawn up after the year had closed and further supplementary sums had been added, military expenditure in fiscal 1940 amounted to 7,963 million yen, or 72.5 per cent of all state spending. By comparison, in 1936, before the outbreak of war with China, it had been 1,085 million yen and 47.6 per cent.

Such sums could not be raised through taxation. The government carried out a sweeping tax reform and raised tobacco prices, passing 600 million yen of the new revenue straight to the war account. Even so, in 1940 the state was to issue bonds worth almost 5.8 billion yen, 3.7 billion of them for the war alone. By the end of 1939 the public debt exceeded 21 billion yen and was growing fast. According to calculations by Keishi Ono of the National Institute for Defense Studies in Tokyo, prices across the economy rose by around 27 per cent in 1940. In the end it was ordinary citizens who paid for the war: private consumption had been falling since 1937, and the cities were beginning to run short of rice, coal and sugar.

Where the money went

Most of the extraordinary expenditure was consumed by the war in China. Several hundred thousand Japanese soldiers – around 850,000 by most estimates – were bogged down there with no prospect of victory. After the capture of Wuhan and Canton in the autumn of 1938 the front had stalled, and the government of Chiang Kai-shek in Chongqing had no intention of surrendering. In November 1939 the Japanese took Nanning to cut China’s supply route from Indochina, and from the end of November they were fending off the Chinese Winter Offensive, the first Chinese attack along the whole front. At the same time the army was drawing lessons from its defeat at Khalkhin Gol in the summer of 1939. The clash with the Red Army had shown how far Japanese armour and artillery lagged behind Soviet equipment, and so in 1940 the army launched a four-year programme of modernisation and mechanisation worth more than a billion yen.

The navy, meanwhile, was building a fleet for a war against a different enemy. Ever since Japan had renounced the naval treaties and the tonnage limits had lapsed at the end of 1936, the shipyards had been building the Yamato-class super-battleships, the largest warships in the world. In 1939 the Fourth Fleet Replenishment Programme was adopted: two more battleships, an aircraft carrier, six cruisers and dozens of smaller vessels, some 300,000 tons in all at a cost of about 1.2 billion yen. This programme was aimed not at China, which had almost no navy, but at the United States and Britain.

Yet Japan was wholly dependent on supplies from the very countries it was preparing to challenge. It bought most of its oil, scrap metal and machine tools in the United States, and on 26 January 1940, a week before Sakurauchi’s speech, the American–Japanese commercial treaty of 1911, which Washington had denounced in July 1939, expired. From then on the Americans could restrict exports to Japan at any moment. On 1 February Prime Minister Yonai declared that the policy of non-involvement in the European war, announced by the Abe government in September 1939, remained unchanged, and that Japan would support the new central government of China which was shortly to be set up in Nanjing under Wang Jingwei.

Takao Saitō’s speech

At about three in the afternoon on 2 February, the 69-year-old Takao Saitō mounted the rostrum of the House of Representatives. A lawyer who had studied law at Yale University, he sat for Hyōgo Prefecture, had first been elected in 1912 and belonged to the Minseitō party. He was one of the few politicians who openly criticised the military. In May 1936, after the young officers’ revolt of 26 February, he had demanded in the Diet that politics be purged from the army, and in February 1938 he had warned against the National Mobilisation Law, which both major parties nonetheless passed unanimously. He delivered from memory the speech he had been preparing since November and had rehearsed by the sea at Kamakura. He spoke for about an hour and a half to packed galleries.

Formally it was an interpellation of the government “on the settlement of the China Incident”. Saitō asked whether the declarations made in 1938 by the government of Prince Fumimaro Konoe – the proclamation of a “New Order in East Asia” and the three principles of peace – had been the best way to end the war. He asked what this “New Order” actually meant, whether in a world ruled by force Japan could bring about world peace through peace in Asia, and whether the planned government of Wang Jingwei would wield any real power. He reminded the house of the sacrifices of soldiers and their families and accused successive governments of having no plan. The most famous passage of the speech ran roughly as follows: “If, hiding behind the fine slogan of a holy war, we forget the sacrifices of the nation, if we utter words as fleeting as clouds – international justice, moral diplomacy, coexistence and co-prosperity, world peace – and thereby miss the chance that comes once in a thousand years and blunder in a plan meant to last a hundred, then the politicians of today will not atone for their guilt even with their deaths.”

Saitō was no pacifist, nor did he call for withdrawal from China. He criticised the government as a conservative patriot and a liberal asking what the war was for and what it cost. He was answered by Prime Minister Yonai, the Finance Minister and the head of the Asia Development Board (Kōain), the retired General Heisuke Yanagawa. The War Minister, Hata, did not speak. Even so, the military reacted at once. According to some historians, the head of the War Ministry’s Military Affairs Bureau, General Akira Mutō, demanded that the member be severely punished. Pro-army groups – the Association for Cooperation in the Current Situation and the Social Mass Party – declared that the speech “profaned the purpose of the holy war”. The Speaker of the House, Shōju Koyama, a fellow member of Saitō’s own party, had roughly two-thirds of the speech, some 10,000 characters, struck from the record. Some provincial newspapers, however, had already printed it in full, and the text also reached the foreign press, especially in China.

Expulsion

Rather than defend their member, the Minseitō leadership persuaded him on 3 February to leave the party, and then pressed him to give up his seat. Saitō refused. The matter went to a disciplinary committee, which sat from 5 February. Meanwhile the Diet was passing the budget: according to the British Keesing’s Contemporary Archives, the ordinary budget was approved on 22 February. On 6 March the committee unanimously recommended Saitō’s expulsion, and on 7 March the House of Representatives, in closed session, expelled him by 296 votes to 7. More than 140 members either did not take part in the vote or abstained. Among the seven who voted against was Hitoshi Ashida, who became Prime Minister of Japan after the war. The Home Ministry forbade the press to praise Saitō or to criticise the House’s decision. On 9 March the Diet unanimously passed a resolution on “carrying the holy war through to the end”, and on 25 March members from various parties formed the League of Diet Members for the Prosecution of the Holy War. The session closed on 26 March.

Saitō’s expulsion showed that the parties would no longer defend even their own members. Saitō himself wrote in his diary that the causes of his defeat were the impotence of the government, the Speaker’s decision to strike out the speech and “the parties’ lack of courage”. The Social Mass Party, for its part, expelled those of its members who had not voted for the expulsion, among them Isoo Abe and Tetsu Katayama, later Prime Minister. The voters took a different view: Saitō received many letters and telegrams of support, and in the election of April 1942, despite lacking the government’s endorsement and despite obstruction by the authorities, he returned to the Diet with the best result in his constituency.

Significance

The 1940 budget and the Saitō affair show the direction Japan was taking at the beginning of 1940. Party government had ended in 1932, but the Diet still approved the budget and could ask questions. The Meiji Constitution, however, did not allow it to cut expenditure arising from the Emperor’s prerogatives, and if it failed to pass a budget the government simply applied the previous year’s. The February session showed that the Diet no longer wished even to ask. The budget went through, and the only member who had asked what the war was for was expelled.

Over the following months the moderate government that had presented this budget collapsed as well. On 30 March 1940 Wang Jingwei’s government was set up in Nanjing, but it did not end the war in China. When Germany defeated the Netherlands and France in May and June, the army concluded that the time had come to reach for the Dutch East Indies and French Indochina. On 16 July the War Minister, Hata, resigned at the demand of the army, which refused to name a successor, and the Yonai government fell. On 22 July Konoe became Prime Minister for the second time. Over the summer the political parties, Minseitō and Seiyūkai among them, dissolved themselves, and on 12 October the Imperial Rule Assistance Association was founded. In September Japanese troops entered northern Indochina, and on 27 September Japan concluded the Tripartite Pact with Germany and Italy.

Military spending went on rising. In fiscal 1941 it exceeded 12.5 billion yen, three-quarters of the state budget, and the special war account through which Japan had paid for the “China Incident” in February 1940 financed from December 1941 the war against the United States and Britain as well. By 1944 its annual expenditure had grown to more than 73 billion yen, covered mainly by bonds bought by the Bank of Japan. The result was inflation and, in the end, economic ruin. Takao Saitō lived to see the end of the war. In 1946 and 1947 he served as a minister in the first post-war governments, and he died in 1949. The excised passages of his speech of 2 February 1940 were not restored to the official record for decades.