New-York tribune., 1920-04-20
Japan Unlikely
To1mp,.ortGold
To.End Panic
Spectators and Profiteers
Hit by Market Crash;
Exchanges Are Closed;
Prices Drop Quickly
Economic Position Sound
Banks Advance Rates in Eff
fort to Check Initiation
and Foreign Purchases


and excessive foreign purchases OF
commodities, but it's underlying econ
omic position is sound, according to
Aklra Den, head of the Japanese Finan-
cial Commission in New York, and
the withdrawal of gold from Great
Britain and the United States is un-
likely.
According to latest advices received
by Mr.. Den, the Atock exchanges in
Toxic, Osaka and Nagoya have been
closed for the second time this month
because of the inability of brokers to
get sufficient banking accommodations
Regarding the report that Japan
would draw in her foreign balances in
New York and London, which are now
kpown to be in excess of $3.50, 100000
Mr.: Den said to The Tribune:
1T is mistaken notion that Japan
will withdraw her balances. If we
wanted to take gold from New York
we could have withdrawn it last June,
wnen the embargo against its export
from this country was lifted. But the
japanese government wants to main
tain good relations with the New York
market 1t does not wish to disturb
the money market by withdrawing gold.
Unless the japanese government and
the Bank of Japan are compelled by
overwhelming need to bring gold to
Japan, l don't think they will take
this step. | do not think the present
disturbance in Japan will change the
governments policy in regard to for
eign balances"
Spectators and Profits Hit
The present depression in Japan, it
\,
and importers chiefly. Late in March,
Mr.. Den declared, the peak of com
modify prices was attained, and since
then the decline has been rapid. One
Japanese banker here said that Sc
curity prices had fallen 20 per cent
from their recent high mark
Because of the important part it
had played in financing imports, the
Masuba Bill Brokers' Bank at Osaka
went into bankruptcy, but it is under
stood a syndicate of other banks is
taking over its liabilities to localze
the trouble. This bank had deposits
amounting to S21 100000
The Japanese government. it is au-
thorltatlvely reported, is taking steps
now to discourage imports. The excess
OF imports over exports for the first
three months of this year amounted to
Sloo,OO 1000. and, according to Mr.
Den, the government transferred dur
ing February and March $50,OOO,OOO of
its foreign balances to Japanese bank,
to meet obligations resulting from this
adverse trade balance. To discourage
further expansion, the Bank of Japan
has raised its discount rate on COM
merclal operations to 10 per cent. COM
pared with Z per cent on January 1.
Credit Becomes Stringent
Sensing the situation. the Japanese
banks, according to official cables to
Mr. Den which reveal the sequence of
events in the present situation. de-
c!lned to lend on speculative opera
tions. Credit became stringent.
Inc general condition was reflected
by declining prices in the stock mar
kets of Japan, where settlements are
made monthly, bimonthly and quarter
~, instead of the day after the sale, as
IN New York. To protect sellers against
the failure of buyers to accept de-
llverles on settlement days, when cur
rent prices may be much lower, the
Stock Exchange authorities required
buyers OR their brokers to put up
guarantees or margins. The brokers'
found that banks would not lend money
Tor this purpose, and accordingly on
April the exchanges were closed to
trading.
Then strenuous efforts were made to
get the Bank of Japan--the central
bank-to step into the muddled situa-
ton and give relief to the brokers. who
were unable to get aid through norm al
channels. To prevent a crisis the Bank
of Japan agreed to give succor, and as
result the three exchanges reopened
for trading on April 13. But the effect
of closing the exchange and the gen
;t,,o f<,.~. -
securities, according to the official
cables, and led to food of selling or
! ders. Individuals scramD Dled to lioui-
date their holdings before they de-
clined still more.
More Margins Demanded
AS result of the further drastic
fall of security quotations the Stock
Exchange authorities required buyers
to add to the amount of their guaran-
tles-~ln effect to put up more margin
rms was to protect the seller against
the contingency resulting from the
possible failure of the buyer in the
mean time or his inability to make
good his part of the contract on settle
ment days. 1t was found impossible to
get further banking accommodations
from the Bank of Japan, and the ex-
changes consequently were closed again
on April Id, and cable sent Saturday
gave no indication as to when they vii,
reopen.
Meantime. Mr.. Den has been advised
that bank depostors, impressed by the
fact that other institutions banded to-
gether to protect the creditors of the
one bank that failed, have been calm.
and run on banks has been avoided.
Farmers Back Government
The economic tangle is expected to be
the most important issue in the jap
anese special election for the Diet.
which will be held on May 10. The
present government is reported to have
the support of the farmers, and it has
been freely predicted in Japan that
they will win by large majority. The
farmers prefer high prices and are not
IN sympathy with the defation pro-
gram which is being agtatcd by the
Opposition party (the Constitutionalist
party, which derives its support main
lly from the industrial classes. The
latter party. unlike the >goVernment,
favors the bringing home of the for
cign balances, which, they assert, make
Tor imitation, since in emergencies pa-
per currency has been issued against
part Of the foreign balances. On De-
ccmber 81 last the Bank Of Japan re-
ported circulation Of 1856, 900, 900
yen f$777 600, ,000), which was obtained
in part by gold reserve Of 062 ,00O, 900
yen (S476,000, ,00o) The largest items
IN the banks account were 1885. 900 900
yen in British coin and 321 900 900 ven
in American coin and 135 O0O OOO ,.o,, il,