Evening star., 1920-07-06
END OF FINANCIAL
! CRISIS IN JAPAN
i. IS STILL DISTANT
Governor of State Bank Con-
vinced, However, Busi-
ness Will Recover.
BY JUNIUS b. WOOD.
by Cable to The Star and Chicago
Daily News. Copyright, 1920.


TOXIC. Japan. June 30.-An early
end to Japan's present economic de-
preston is not anticipated by Junno-
suke Inouye, governor of the Bank OF
Japan. However, the head of the gov
ernment institution, which is the
backbone of the nations finances, is
convinced that business has not re-
ceived a fatal blow from what he
characterizes as the present "reac-
tionary period"
Mr.. Inouye represented Japan's in
terests in the recent successful con-
sortium negotiations and is well
fnown in financial circles in America
and Great Britain.
Owing to the favorable condition of
our foreign trade during the war. he
said. which continuously showed an
excess of exports over imports, the
business affairs of this country gen.
orally were very active. Consequent
ly, in addition to numerous new en-
terprises which were launched. the
capital of existing establishments was
remarkably increased. Naturally, this
state of affairs gave rise to luxury
and extravaganza among the people
and also to enormously higher prices
for commodities. Despite this en-
hanced cost of production the output
of commodities as well as the num-
Der of business transact. ms tended to
increase largely along almost all
lines. This led to overcredit and over
speculation.
Exports Began to Decrease.
after the armistice was signed our
exports began to decrease and the ac-
tual economic conditions became to-
tally different from those which pre-
vailed during the war. However.
driven by the momentum of the pros
perity of former days. credits and
transactions continued to augment to
an abnormally large extent. At this
Juncture the central bank twice
raised Its bank rates and gave warn
ing that further accommodation with
funds for speculative purposes would
be refused.
Notwithstanding all these efforts
OF the central bank, the reaction had
ITO come finally. Mentioning the ex-
tent to which prices of commodities
and of securities have fallen recently
explains to a large degree the pres
ent reaction. Raw silk, one of the
most important home productions,
was quoted at 1850 yen (s2,175) per
100 kin (about 130 pounds) in Janu-
ary of this year. but in recent trans
actions the price has been 1850 yen
'fs625). The quotation of cotton yarns
fell from 1000 yen s3,5OO) a bale in
1919 to $50 yen (s140) at present. A
remarkable fall was shown in the
prices of almost all commodities due
to the decline of both exports and
home consumption. In the stock mar
kets the slump was far; greater than
in the other markets.
Factories suspend Operations.
I'm consequence of such depressing
conditions of business certain firms
and textile and other industrial fac
tories were obliged to suspend opera
tions.
Under these circumstances the
money market suffered greatly from
the difficulty of securing credits
while business circles generally be-
came uneasy over the situation Some
of the banks which had been indulg
ing in careless investments during
the prosperous days by allowing
credits to an undue extent, locking
up their funds in real estate, etc,
have been obliged to announce their
temporary closing, the deposits hav-
ing sbeen Withdrawn to large ex-
tents' =,
Mr.. Inouye speaks English f1uently
and dictated the interview, which he
approved after it was written.