Devastation during WWII
Japan was devastated during World War II (1941-45). The human loss mounted to 1.85 million (about 4% of
the entire population) and 680 thousand injured or missing. The material loss mounted to about 25% of
national wealth excluding military stock (Economic Stabilization Board report of 1949). Another estimate of
the death toll was 2.8 million (Heibonsha Encyclopaedia, 1989).
Industrial production dropped just after the war to one-tenth of the pre-war level (24% of the pre-war level in
consumer products and only 8% in industrial input products). An increase in budgetary expenditure such as
veterans’ payment and compensation for the war damage, together with a commodity shortage, caused
hyper-inflation.