Dodge Line

The Dodge Line was a financial and monetary contraction policy drafted by Joseph Dodge for Japan to gain economic independence after World War II.[1] It was announced on March 7, 1949.

Hayato Ikeda meeting Dodge (right) in 1948

It recommended:

  1. Balancing the national budget to reduce inflation
  2. More efficient tax collection
  3. Dissolving the Reconstruction Finance Bank because of its uneconomical loans
  4. Decreasing the scope of government intervention
  5. Fixing the exchange rate to 360 yen to one US dollar to keep Japanese export prices low

Dodge had the Reconstruction finance bank, which was a major conductor of inflation-financed subsidies, shut down. He took important steps to restore Japan's foreign trade to private hands. The terms of all transactions were determined at the unchanging official exchange rate of $1 = 360 yen.

References
  1. Savage, J.D. (2002-06-01). "The Origins of Budgetary Preferences: The Dodge Line and the Balanced Budget Norm in Japan" (PDF). Administration & Society. doi:10.1177/009539902400387191.


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