For long after the Pacific war the economy of the Northern
Marianas remained stagnant and by the early seventies the administrative
headquarters of the Trust Territory of the Pacific Islands on Saipan
dominated the island economy as the principal employer with only twenty-two
percent of the work force  employed in the private sector. Prior to 1973
there was little hope for a tourist industry as the Japanese Government,
preoccupied with their own recovery, had imposed currency restrictions on
foreign exchange which limited  the amount of money a Japanese citizen or
firm could take out of the country to the equivalent of only U. S. $742.
per year. By 1981, with the exception of a small but growing tourism
sector, the economy had experienced little development.
       In the years immediately following the conclusion of World War Two
the destroyed economies of the former belligerents, and those of the
territories on which the war was fought, were reconstructed.  By the early
sixties many had become virtual cornucopias  producing  wide varieties of
goods and services.  The reconstruction  of the economy of Saipan, however,
was long in occurring with the result that the area was the last of the
former battlefields to recover from the devastation.  This process  did not
really start until around 1978 some 33 years after the termination of World
War Two. Indeed, it was the introduction in 1969 of jet aircraft to Saipan,
and Continental Air Micronesia in particular, that was probably the single
most important factor in the future development of what were once remote
and isolated islands in the Pacific.
     The CNMI's fascinating history is largely unknown to many otherwise
knowledgeable people in the United States and elsewhere. The islands'
history in many instances is far more interesting and intriguing that the
history of some states in the Union as the islands have played a
significantly more prominent role in world affairs and geopolitics than
many individual states.  As the 50th anniversary commemorating the entry of
the United States into World War Two came to a close in November, 1995, one
is struck by a strange irony - United States Government expenditures within
the Northern Marianas aside - large private American investment is somewhat
conspicuous by its absence in the islands. It is something of a paradox
that it has been largely private capital from a  former defeated adversary
rather than the wealth from the victor that has resulted in the
reconstruction of Saipan's economy. Considering that the Japanese presence
in the islands extended for a period of only 30 years as compared to almost
one half century for that of America, it is surprising that the geographic
and economic ties between these islands and Japan were reforged in the
seventies.  On any given day in the Commonwealth there are more Japanese
present than non-indigenous Americans. It must be said, however, that it is
the stability  assured by the American Flag and the U.S. rule of law that
provided the safe business environment for Japanese and other foreign
investment to flourish in the Commonwealth.The great boom period in Japan
from 1985 to 1991 fueled Saipan's economic growth. Throughout the last half
of the '80's, Japan registered huge annual trade surpluses, had an ever
strengthening currency and one of the lowest interest rates in the
industrialized world. Japanese banks overflowed with money, much more than
they could accommodate by relending in Japan itself. It was this money that
went abroad and around the world to finance a myriad of projects. Millions
were invested in the Northern Marianas to launch the islands on the road to
a thriving tourism industry.
     By the early nineteen nineties America's economic slowdown and Japan's
growing financial problems  acted to discourage Japanese investment at
previous levels in both the continental United States and the various
affiliated Pacific islands. By the end of 1995 Japan faced tighten credit,
sagging real estate values and a plunging stock market. The decline in the
stock market, combined with the property "bust" in Japan, significantly
eroded capital and reduced Japanese bank's ability to lend at previous
levels and terms. Today, the Commonwealth's economy  functions between two
economic forces - as  a political entity affiliated with the United States
a  thriving U. S. economy and a strong dollar is desired -  but the reverse
is true with respect to the area's tourism based economy since a strong
dollar erodes the competitiveness of the area's Japanese based tourist
industry there-by making the Commonwealth more expensive for the visitor
when an increasing amount of Yen is required to purchase the dollar.

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