ECONOMISTS AT WAR: How a Handful of Economists Helped Win and Lose the World Wars.

AuthorEaston, Brian


How a Handful of Economists Helped Win and Lose the World Wars

Author: Alan Bollard

Published by: Oxford University Press, Oxford, 2020, 321pp, 20 [pounds sterling].

The outcome of a long war is usually determined by the economic strength of the combatants. But how to present this in a lively and interesting way--battles are so much more engaging?

Alan Bollard successfully solves the challenge by describing the involvement of seven economists in the Second World War. Bollard is, of course, well-known as a former secretary of the Treasury and governor of the Reserve Bank. But he has also published a couple of novels, a biography of economist Bill Phillips, a record of his time at the Reserve Bank and some more technical economics books. In addition to considerable literary competence, his geographic background is also wide. His doctorate was a study of the Cook Islands and after his local top-level stints he went on to five years as executive director of the Asia Pacific Economic Cooperation (APEC) Secretariat. So, while he is well-versed in Western economics, his war focus is not only on the Western Front.

Thus, his account of the Second World War begins with the Japanese invasion of Manchuria in 1931. Enter his first economist, Takahashi Korekiyo, who was the head of the Bank of Japan and Ministry of Finance. (Earlier he had been a prime minister.) At the time, Japanese politics was dominated by its military; their demands for financing their ventures were insatiable. (Bollard reports that in 1944 Japanese military spending was 76 per cent of GNP; New Zealand's was about 51 per cent, similar to the proportion of its allies.)

The military demands required a monetary expansion of a magnitude which would appal any governor of the New Zealand's Reserve Bank. Takahashi resisted. (Earlier he had, according to Ben Bernanke, 'brilliantly rescued Japan from the Great Depression'.) The military overruled him in the only way they knew; he was assassinated in his bed in 1936.

Takahashi was well aware of Japan's economic problem of requiring raw materials but he saw the solution via trade rather than conquest--rightly presaging the success of the post-war Japanese economy. (There is a parallel for Germany.)

The book shifts to Kung Hsiang-hsi, a Chinese minister of finance with many other roles. He was brother-in-law to President Sun Yat-sen and President Chiang Kai-shek (see Jung Chang's Big Sister, Little Sister, Red Sister). In the...

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