Tuesday, December 10, 2013

Kurt Schuler Should Stick to Banking and Treasury

I occasionally visit the site “Free Banking,” as I sometimes find posts of interest on the topic of free banking – as regular readers here are aware, I land strongly in this camp as opposed to a non-market derived gold-standard or non-market enforced ban on fractional-reserve banking.

Today I took a peek, a lo and behold found an article on Japan, Pearl Harbor, and World War II.  The article is written by Kurt Schuler.

Who is Kurt Schuler?

Kurt Schuler is an economist in the Office of International Affairs at the U.S. Treasury Department. In his spare time he edits Historical Financial Statistics (a free, noncommercial online data set) for the Center for Financial Stability. He has written a number of publications about the history of free banking and about other monetary systems. Because the Treasury Department discourages employees from commenting publicly on current policy issues within its purview, he refrains from discussing such issues here. His views represent no official Treasury Department position. As befits a bureaucrat, he has chosen to remain faceless, hence we have posted no photo of him.

Schuler might be familiar with concepts of free banking; however, as befits a bureaucrat, he has a firmly planted mainstream view of Japan and Pearl Harbor.

Quite a few libertarians of my acquaintance have trouble thinking straight about World War II in the Pacific. The recent anniversary of Pearl Harbor brings them out with their arguments that U.S. government provoked the Japanese government into starting the war.

It isn’t only libertarians that “have trouble thinking straight” about this; numerous historians make clear that the US provoked Japan.  Apologists for FDR write books on this, suggesting that it was an action he had to take to get an American public opposed to the war involved in the fight.

Let’s review the facts, with a complementary glance at Japanese colonial monetary arrangements.

Schuler then goes on to the numerous atrocities and acts of aggression committed by Japan in the period beginning at the end of the nineteenth century.  China, Korea, Russia, Manchuria, Mongolia, Indochina.  Not one time does he mention an act of war committed against the United States.

That is the background to Pearl Harbor. For more than 40 years Japan had pursued a policy of aggression and conquest. In each case it was the aggressor.

I don’t recall reading a single comment from any libertarian author on this subject defending Japanese military policy during this period.  Schuler seems to believe he has found big news: a government is bent on imperialism, and is acting aggressively in order to achieve its aims.  WOW – STOP THE PRESSES.

So what does the United States government do in response to never being attacked or even threatened by the Japanese?

The 1940 U.S embargo of certain materials frequently used for military purposes was intended to pressure Japan to stop its campaign of invasion and murder in China. The embargo was a peaceful response to violent actions.

An embargo, an act Schuler describes as peaceful. 

There is nothing peaceful about an embargo.  It is an act of government force stepping in between willing buyers and willing sellers.  It is an act that results in depravations for the population of the country being targeted, with far less if any impact to the objectives of the government being targeted.  It is an act that harms non-belligerents while doing little to injure the belligerents.

What can be said about this embargo?

In 1940, in an effort to discourage Japanese militarism, these Western powers and others stopped selling iron ore, steel and oil to Japan, denying it the raw materials needed to continue its activities in China and French Indochina. In Japan, the government and nationalists viewed these embargoes as acts of aggression; imported oil made up about 80% of domestic consumption, without which Japan's economy, let alone its military, would grind to a halt. (emphasis added)

The domestic economy would grind to a halt.

For libertarians to claim that the embargo was a provocation is like saying that it is a provocation to refuse to sell bullets to a killer.

No, it isn’t about bullets and killers.  The domestic economy would have ground to a halt.  Countless thousands would have died – thousands who never raised a single hand against the United States

There is nothing peaceful about an embargo.  It is an act of war.

Back to Schuler:

With that history in mind, how can anybody think that the United States could have made a durable peace with Japan?

What threat was Japan to the United States? 

Nothing since its emergence as a major international power suggested a limit to its ambitions.

How about common sense? Military reality?  What evidence is there that Japan – an island with no resources – could maintain an expansive empire, let alone attack the United States more than 5000 miles away?

Does Schuler have even the slightest comprehension of the logistical impossibility of such a scheme?  The naval capabilities necessary?  The manpower? 

It gets worse.  After defending whole-hog the actions of the US government in provoking Japan, he then talks the party line on dropping the nuclear bombs:

Even as Allied forces retook territory, Japanese fanaticism was such that the government did not surrender until after the U.S. military dropped two atomic bombs.

Suffice it to say, it doesn’t take much effort to learn that Japan tried to surrender through numerous channels several times beginning as early as April.  The possibility of the bombs actually prolonged the war, as Truman wanted to keep up the fight long enough to find out if the technology would work.  Once Truman got the thumbs up, he dropped the bombs.

To ignore the long pattern of Japanese aggression as quite a few libertarians are wont to do is not just historically ignorant but dangerous… 

No libertarian that I have read has ignored the Japanese aggressions.  The point is that the Japanese aggressions – not being directed against the United States – were not any of the business of the US government.

…because it closes its eyes to the hard truth that some enemies are so implacable that the only choice is between fighting them and being subjugated by them.

Japan was no enemy of the United States prior to the embargo.  There is not one shred of credible evidence that Japan had schemes to fight the United States.  Even if such evidence exists, the logistical realities precluded the possibility from becoming reality.

Schuler has earned his pay as an employee of the US government with this post.  For the sake of proponents of free banking, I hope his posts on monetary topics are based on reality.  His posts on history certainly aren’t


  1. Excellent history lesson, BM. I too find that I often find people I might otherwise agree with on 96% of everything still default to defending the "company line" on World War II and the provocation of Japan. Maybe it's something about learning about it in school that makes it feel holy and untouchable, along with George Washington's cherry trees and Abe Lincoln's slave freeing.

    But I digress....going to toss this one up on Lions.