New-York tribune., 1908-06-22
JAPAN'S DEBT PAYING.

| 1t is really debt paying and not militarism
| which Is imposing the financial burdens under
which Japan is staggering The imperial gov
| eInment has committed itself to the eItraOrdi-
| nary programme Of discharging its entire In
! debtedneSs in the course of q single generation
without In the mean time contracting any new
! loans for any purpose Whether this is wise
| course to pursue is a matter OF opinion on
! which men will differ. There may also be some
question as to Japan's ability TO carry it out.
OF the present resOlute determination to do so
there can be no doubt.
The process thus far has been marked With
shrewd financiering, If not with what has been
called sharp practice, and with some "blufflng.
though it has probably involved the abandon
ment of an expedient of doubtful propriety
which was adopted years ago. AT the time of
! the war with China, in 1894 and 1898, large
domestic debt was contracted which the cred
itors supposed would be paid off with the IN
demnity e1acted from China. When that indem-
nifty was used for other purposes the market
price of the war loan bonds fell very low.
Thereupon the government secured Parlla-
mentary permission to pay on as much or the
debt as it could. Instead of calling in bonds
by lot and paying them In full, however, 1t
simply sent into the market and bought what
it could at the lowest prices and cancelled
them. This performance was sharply criticised
by many as q pfdcuCai DTeScH OIL ldltb, Dut LHc
Japanese government did not regard 1t in that
light 1t held that IT had good right TO
buy In its bonds at whatever price they were
offered at as anybody else had to buy them,
and 1t persisted in the practice to It's consid-
erable gain, until the present year.
Early this year the government decided to
begin paying off at once a war loan Of $50
100000 which did not fall due until about the
end of the year. in order to relieve the cur
rency stringency. But instead of calling In
bonds by lot 1t invited bondho!ders to COM
pete for redemption by offering their bonds at
a practical discount, or at least by renqushing
the interest which would be due on them In
December next. Moreover, 1t informed them
that if they preferred to rewrite their bonds
they might dc so on exceptionally favorable
terms. This caused much dissatisfaction, the
market price of bonds sharply declined and the
financial stringency increased rather than
relieved. Many people held that the offer OF
/ rewriting was made to induce bondholders not
to seek repayment and was a practical cOnfes-
sion that the government not able to re-
deem all the bonds which might be offered, and
not a few who had no need Of ready cash de-
clined to SELL preferring to wait until next De
cember and then get the full years interest.
Finally SO strong a protest made by bank
erS and capitalists against the governments
methods that it was deemed prudent to aban-
don the system of bond purchases which had
been adopted at the close of the Chinese war
and resume the plan of redeeming by lot.
The salient feature of the whole situation is
that some $SOOOOOOO of war taxes are still re-
taned and apparently are to be retained i'll
the yearly levy. The government could abolish
/ them and let the debt indefinitely
other nations have done or it could retain them
and pay off the debt. 1t has chosen the lat
ter course 1t continues to collect the $50,
/ 100000 of war taxes. and Of that sum 1t uses
500 1000 for service and liquidation of the
war debt, which will thus be extinguished in
thirty four years, and $20,OO0O0O for the
vice and payment of the old debt which existed
before the war and which will thus be disposed
of in thirty years. The margin which is left,
added TO the yearly surplus Of the ordinary
budget, is expected to obvate the need of any
new loans for public works or other purposes.
This is an heroic programme, but 1t is sub
jecting the present generation Of Japanese to
an enormous strain.