Organized Panel Session
The institutionalization of public finance is often taken as one of the hallmarks of modern states. From Schumpeter’s notion of the fiscal state, numerous scholars have examined the ability to balance debt and taxation as a prerequisite to political and economic development. Yet, this view of public finance is complicated when the state in question is not a sovereign entity. In the case of Korea, many of the hallmarks of the “modern” state emerged under Japanese imperialism, including taxation. Yet, as a colony, its fiscal policy was shaped as much by the politics of Japan as it was by conditions in Korea, leading to the development of alternative sources of government finance.
This paper examines multiple sources of government finance that developed in parallel with taxation and public debt. While many accounts of the colonial economy focus on questions of extraction, this paper looks instead at the distribution of various sources of funding for colonial projects, in particular irrigation investment within the Program to Increase Rice Production. I examine both central and local government spending as well as the significance of land-collateralized private debt, to argue that colonial policy mobilized private debt as a source of public investment when other fiscal avenues were constrained. While this model shares surprising parallels with contemporary public-private partnerships as a source of government finance, it also proves a cautionary example as increased private debt exacerbated the impact of the great depression in the 1930s, leading to the large-scale transfer of land from indebted rural households.