Silver and Gold: Sino-Japanese Competition in Manchuria during the 1930s World Depression

The World Depression was crucial both for the histories of China and Japan and for the relationship between the two countries. This study of Manchuria examines how a side effect of the Depression—changes in the value of silver-based currencies in relation to gold-based ones—influenced the relationship through competition between Chinese and Japanese enterprises. To begin with, the decline in the value of silver increased the competitiveness of a series of new Chinese enterprises established with the support of the regional warlord regime. In political terms, the intensified competition exacerbated Sino-Japanese tensions and contributed to a perception of crisis among Japanese nationalists, providing a pretext for demanding a more assertive policy in Manchuria, thus influencing at least the timing of the Japanese occupation of the region. From 1932, the silver-based currencies began to rise against the yen, and the earlier mechanisms were reversed, though other more powerful factors were also at work.