Economies of Japan, US before and during WWII

By William H. Stewart
Military Historical Cartographer

At the time Japan invaded China in 1937 and Amelia Earhart was attempting her around the world flight, America had been in the grips of the Great Depression for almost a decade. This national economic disaster resulted in a high degree of unused industrial capacity within the U.S. economy. Many workers were either unemployed (10 million in 1939) or underemployed, and the nation’s industrial base as a whole had far more capacity than was needed at the time. In economic terms, the United States use of the country’s full industrial capacity was very low. To an outside culture, particularly a militaristic one such as Japan’s,

America certainly might have appeared to be “soft” and unprepared for a major war. Further, Japan’s successes in fighting far larger opponents (Russia in the early 1900’s and China in the 1930’s) and the fact that Japan’s own economy was “superheating” mostly as the result of unhealthy levels of military spending—28 percent of national income in 1937, probably instilled within the Japanese military mind a misplaced sense of economic and military superiority.

However, at the time a dispassionate observer would also note a few important facts. America, even in the midst of seemingly interminable economic doldrums, still had nearly twice the population of Japan; 17 time’s Japan’s national income; 5 times more steel production; 7 times more coal production and 80 times automobile production.

Furthermore, America had some hidden advantages that didn’t show up directly in production figures. For example, U.S. factories were, on average, more modern and automated than those in Europe or Japan. Additionally, American managerial practice at that time was the best in the world. Taken in combination, the per capita productivity of the American worker was the highest in the world. In addition, the United States was more than willing to utilize American women in the war effort—a tremendous advantage for the nation, and a concept which the Axis Powers seem not to have grasped until very late in the conflict. The net effect of all these factors meant that even in the depths of the Depression, American war-making potential was still around seven times larger than Japan’s, and had the “slack” been taken out in 1939 it was closer to nine or ten times as great! In fact, according to author Paul Kennedy, (The Rise and Fall of Great Powers), a breakdown of total global war making potential in 1937 as a percent looks something like this: United States—41 percent; Germany—14.4 percent; USSR—14.0 percent; UK—10.2 percent; France—4.2 percent; Japan—3.5 percent; Italy—2.5 percent; Seven Powers (total)— (90.5 percent).

When the Japanese attacked Pearl Harbor in December 1941 the majority of America’s war-making potential was slated for use against Germany which was by far the most dangerous of the Axis foes, again for reasons of economics. By mid—1942, even before U.S. force of arms was being dramatically felt globally, American factories were beginning to make a material effect in the war’s progress. The U.S. produced seemingly endless quantities of equipment and provisions which were then funneled to not only our own forces, but to those of Great Britain and the USSR as well. By 1944 most of the other powers in the war, though still producing furiously, were beginning to reach the maximum capacity within their economies, that is to say, that their production was peaking. This resulted from destruction of industrial bases and constriction of resource pools (in the case of Germany and Japan), or through sheer exhaustion of manpower (in the case of Great Britain and, to an extent, the USSR). By contrast, the United States suffered from none of these difficulties, and as a consequence its economy grew at an annual rate of 15 percent throughout the war years.

By the end of the war, the United States was really just beginning to get “warmed up.” It is perhaps not surprising that in 1945 the U.S. accounted for over 50 percent of total global GNP.

By 1944 when Navy Task Force 38 or 58 (depending on whether Halsey or Spruance was in charge of the main American carrier force at the moment) came into play, they could be counted upon to bring nearly a thousand combat aircraft with them. That kind of power projection capability was crucial to winning the war—we could literally bring more aircraft to bear in an attack than any island air-base could put up in its own defense, as the neutralization of both Truk and the Marshall Islands attests.

Remember, Japan was then—and remains today—an island nation totally dependent on maintaining open sea lanes to ensure her raw material imports. This dependence required a navy to protect the sea lanes with sea power brought to bear to protect these trade routes. To wage offensive warfare a navy must have sufficient power to close off the trade routes of any adversary. These units must have a secure base preferably near or within the sea lanes they are to protect. Before the Second World War both the United States and the Japanese appreciated this concept very well. But by 1945 the Japanese navy had drowned and the U.S. Navy was larger than every other navy in the world combined. Japan’s fleet rested at the bottom of the Pacific while its military stationed on island garrisons were isolated and starving.

The Pacific War was also a war of merchant shipping in that practically everything needed to defend and/or assault the various island outposts of the Japanese Empire had to be transported across vast stretches of ocean. Japan also had to maintain her vital supply lanes to places like Borneo and Java in order to keep her industrial base supplied. A look at the relative shipbuilding output of merchant ship production by1945 between the two antagonists is revealing: United States—34.0 million tons; Japan—4.1 million tons.

The United States built more merchant shipping in the first four and a half months of 1943 than Japan put in the water in seven years. There was no noticeable increase in Japanese merchant vessel building until 1943 by which time it was already too late to stop the hemorrhaging.

The Japanese were operating under a tragically flawed national strategy that dictated that the war with the United States would be a short one. Again, the United States had to devote much of the merchant shipping it built and launched to replace the losses inflicted by the German U-Boats in the Atlantic. But America was literally building ships faster than Germany and Japan could sink them, and still there were enough vessels left over to carry mountains of material to the most desolate stretches of the Pacific. As certain Polynesian cargo cults will testify, it was American merchant vessels by the thousands which delivered the majority of seemingly divinely produced largess to remote islands which had probably never seen so much as a can opener before.

Finally, no examination of the Pacific War would be complete without taking a look at air power. For all the talk of the Pacific War being a “Carrier War”, an aircraft carrier is really nothing more than a vehicle to deliver an airplane to an area of operations. While airplanes certainly couldn’t take and hold islands by themselves, air supremacy was vital in ensuring that such bastions could be reduced and captured. The total aircraft production of the two nations was: U.S. 324,750—Japan 76,320.

Again, a staggering difference. As author Paul Kennedy points out, the Allies were not only producing an ever greater number of aircraft, but many of them were of newer design as well, such as the new F4U Corsair and F6F Hellcat fighter aircraft. Japan, on the other hand, relied on variants of the Zero fighter throughout the war. The Zero was a brilliant design in many respects, but by 1943 had clearly been surpassed by the newer American models. This pattern was repeated across every category of airplane in the two opposing arsenals.

The final evidence of this economic disparity lies in the development of the Atomic Bomb. The Manhattan Project required an enormous commitment on the part of the United States. And as Paul Kennedy states, “…it was the United States alone which at this time had the productive and technological resources not only to wage two large-scale conventional wars but also to invest the scientists, raw materials, and money (about $20 billion) in the development of a new weapon which might or might not work.” In other words, the American economy was so dominant that our leaders knew we could afford to fund one of the greatest scientific endeavors in history largely from the surplus of our war effort. Whatever one may think morally or strategically about the usage of nuclear weapons against Japan, it is clear that their very development was a demonstration of unprecedented economic strength.

In retrospect, it is difficult to comprehend how Japan’s leadership managed to rationalize their way around the economic facts when they contemplated making war on the United States. After all, these were not stupid men. Indeed, internal Imperial Navy studies conducted in 1941 showed exactly the trends in naval shipbuilding described earlier. In the end, however, the Tojo government chose the path of aggression, compelled by internal political dynamics which made the prospect of a general Japanese disengagement in China (which was the only means by which the American economic embargo would have been lifted) too humiliating a course to be taken. Consequently, the Japanese embarked on what can only be described as a suicidal venture, against an overwhelmingly large adversary. However, their greatest mistake was not just disregarding the economic muscle which lay partially dormant on the other side of the Pacific.

In actuality, their chief error lay in misreading the will of the American people. When the American giant awoke, it did not lapse into despair as a result of the defeats that Japan had inflicted upon it. Rather, it awoke in a rage, and applied every ounce of its tremendous strength with a cold, methodical fury against its foe. By July, 1945 the U. S. air offensive alone would see 2,000 aircraft in the air dropping bombs at the rate of 40,000 tons a month. In fact the U.S. was running out of Japanese targets. The grim price Japan paid—1.8 million military casualties, the complete annihilation of its military and almost a million civilians killed, and the utter destruction of practically every major urban area within the Home Islands—bears mute testimony to the folly of its militarist leaders.

Author’s note: Much of the above was researched on the internet, unfortunately the principal author’s name remains unknown for appropriate acknowledgement.