Japan experienced the deepest economic downturn in modern history during 1930-32.
Explanation:
1. Internally, the Minsei Party government deliberately adopted a deflationary policy in order to eliminate weak banks and firms and to prepare the nation for the return to the prewar gold parity. The policy of deflation and return to gold was strongly advocated and implemented by finance minister Inoue.
2. Externally, Black Thursday of October 1929 and the ensuing Great Depression in the world economy had a severe negative impact on the Japanese economy.
In the 1930s, political and intellectual thinking gradually shifted from economic liberalism toward more economic control under state management.
As Japan began heavy industrialization in the 1920s and 1930s, the free economic system inherited from Meiji was inappropriate and had to change. The war provided a good excuse for this change. But even without the war, Japan had to adopt a new system anyway.
