The Korean War poured billions of American dollars into the Japanese economy

Tuesday, March 23rd, 2021

In Japan, the Korean War was always close, T. R. Fehrenbach says (in This Kind of War), but always far away:

While the Korean people were inevitably the real losers of the war, the Japanese became the true winner. The Korean War poured billions of American dollars into the Japanese economy.

Millions of Americans passed through Japan, moving to and from the combat zones. These had money in amounts unbelievable to the Nipponese — and the Japanese, among the world’s most industrious people, soon found Americans would spend it for almost anything, if given the opportunity.


All Americans, passing through, found that good Canadian whisky was $1.50 a fifth, and drinks a quarter U.S. a throw. As one officer said, happily, “At these prices I can’t afford to stay sober!”


The Japanese could not be blamed for turning their nation into a huge red-light district, for what the customer with money wants, he always gets.

The big money, and the prosperity that flushed the Japanese economy, however, came from American arms expenditures. American military procurement officers found Japanese industry — far more capable and efficient than it is generally given credit for — could produce almost anything needed at the front — and much cheaper than it could be made in the States and sent across the Pacific.

Thousand of American military vehicles, damaged or worn out in Korea, were rebuilt in Japanese shops, some as many as three times, far more cheaply than they could have been replaced. The Japanese, under contract, could manufacture ammunition, tools, equipment, almost anything. They could produce millions of tons of food for Koreans and Americans in FECOM. All in all, the Japanese economy hummed. They made big money.

The benefits did not all accrue to the Japanese, however.

Without its solid industrial base in Japan, in privileged sanctuary from the battles, the United States would have found it as difficult to fight the Korean War as it would have been to land on Normandy on D-Day, had Britain not been there.

(This Kind of War was originally published in 1963.)


  1. A Wild Goose says:

    One can certainly see the seeds of the ’80s Japan boom in this episode.

  2. Bruce says:

    Yes, MacArthur’s occupation of Japan was a lot more popular for the Japanese after we poured Korean war spending in. Military Keynesianism works great, civilian Keynesianism goes straight to corruption.

  3. Kirk says:

    Military socialism works really well, too… But, it takes a healthy and prosperous civil economy based on traditional economic exchange in order to support it. Just like all other forms of socialism, from nuclear families to wannabe global hegemonies like the Soviets–Who would have collapsed on numerous occasions, absent some idiot “capitalist” bailing them out.

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