Moving Money: Japanese Repatriation and Currency Smuggling during the American Occupation of Korea, 1945–48

With the Japanese surrender in August 1945, U.S. occupation forces in Korea and Japan sought to disassemble the Japanese Empire’s East Asian economy as a preparatory step toward establishing two sovereign nation-states and separate national economies in Korea and Japan, thus, halting all trade between the two countries and further outlawing the circulation of Japanese yen in Korea as well as Chosŏn (Korean) yen in Japan. Yet, a massive repatriation movement across Asia, initiated by millions of Japanese and Koreans repatriates, challenged such American occupation policies.

Although American authorities allowed Korean and Japanese repatriates to exchange limited amounts of currency on returning to their home countries, many of them engaged in creative methods of smuggling money and other goods as they were repatriated. Despite authorities’ attempts, smuggling by repatriates and professional smugglers created new, unofficial economic connections between Korea and Japan. This episode highlights the tensions of decolonization, specifically economic decolonization, from the perspectives of both Japanese colonizers and Korean colonized. Such a decolonization process was fraught with political, economic, and social obstacles due to its unfolding in the contexts of the American military occupations of Korea and Japan, as well as the rise of Cold War tensions.

Furthermore, the process of decolonization was hardly limited to official government actions and occupation authorities’ public policies. It evolved through clandestine and secret movements of people and goods, as well. While the total amount of goods and currency smuggled in the process of repatriation may never be known, the smuggling itself illustrates the tension between American occupation policies in Korea and Japan and the remnants of the imperial Japanese regional economy at the time when the postwar economic order in northeast Asia was being reconfigured into a system of sovereign nation-states.