The Washington herald., 1921-12-26
ARMAMENT CUT
MAY HELP JAPAN,
SAYS FIvANCIERl
Warns That Nation Is Elk
hausting Wealth Gath
cred During War.
SUGGESTS r EMEDY
Believes There Is Ample OPP
portunity for Economy
And Retrenchment.
SUGGESTS r EN- EDY
Torsign Csrrsspendsacs Of The Washingtsu
and the New York Evening Pest.)

- e.c 80 @We .'~eA.8 &os1J
TOKYO, Dec. s.-The financial
straits which Japan is facing will,
without doubt. have a very decided
bearing on the empires attitude
the Hughes proposal for
abandonment of naval construction.
As matter of fact, II is becoming
fairly plain that. even IL the Wash
tngton conference should be utterly
result. Japan would never
be able to carry out her great
ight-and-eight naval construction
dream by means of her annual rev.
enue. 1t could be accomplished
only by spending thereon her war
savings as represented by the two
billions of gold to her credit in
London, in New York.
Great significance attached to
Baron Takahashi's remark when. as
finance minister. the now premier
said that although the naval esti-
mates in the new budget had been
treated to an additional reduction
of about s,ooo.0o0,ooo yen. the naval
construction scheme would not be
interfered with at present There
can be little doubt that he had in
mind making up such sums as the
general revenue fell short Of from
the big gold surplus referred to.
On the other hand. Japan had felt
the pinch OF poverty for so many
years before the war made her q
rich nation that she will not lightly
venture on a course which will
bring her back to her old state of
penury.
Real Economic Distress.
The present economic distress 10
real enough. but only. a few Of the
most far-seeing fnanciers see the
full extent and meaning thereof.
The full extent OF the situation Is
being obscured by the fact that cor
porations. like individuals, are still
able in many cases TO carry on on
some scale resembling the glad
days OF the boom by drawing on
the money which they accumulated
in these happy days. Thus one still
sees the great Industrial and ship
ping corporations declaring divi-
dends. which, while they are gen
orally not as wonderful as those of
former years, are still quite bo<nti-
full. running often about 12 an Is
per cent. But only small pa1 Of
these dividends comes from present
day earnings. They are paid from
SURPRISES and reserve funds simply
because the stockholders insist upon
Japan Is today living on
her capital, and she has no present
prospect of seeing her earning
power increased.
As a consequence the government,
while II admits that its revenues
are decreasing and voices the con-
that they will decrease still
more next year. has been able to
make fairly satisfactory collections
But, of course. this Is only tenn
porary. As capital gives out and
assets and incomes derived
from dividends disappear revenue
will decrease. Furthermore. the
present fictitious purchasing power
of the people prevents reduction of
prices, which are now rising quite
steadily. and as a result the cost Of
labor remains enormously high
when compared with that OF COM
peting countries. Japan's foreign
trade, which was based. first. on low
la Dor cost, and, second. on the ad-
conditions OF war time.
Is disappearing. and with all her
public utilities running only on the
OF former years ana
needing sadly funds for repairs and
Japan will need
every cent OF her dwindling rev.
enue for the ordinary necessities Of
everyday life, and will have little
to spare for naval construction.
warnings of Eeenomists.
Mr.. Inouye, governor Of the Bank
of Japan, Is without doubt the most
far-sighted economist In Japan.
About twice or three times each
year he takes occasion to issue
survey Of the imam
cial condition Of Japan, with a FORE
cast of the future. but, unfortunate
ly. his voice Is often that OF one
crying in the wilderness. Business
recognizes the wisdom of hia state
ments, but no one Is willing 10 make
the sacrifices which he insists must
be made. II the Japanese had In
cluded the phrase Let George do
II" among their numerous other
from other nations, tnat
would best express the ATTITUDE OF
the Individual industries or trade
Each one. wishes the
other to take the lead. while trying
himself to follow a procrastinating
policy still a while longer.
A few days ago Mr.. Inouye gave
an extremely Illuminating resume
Of the situation before q meeting
Of the bankers OF the Kwansai dis
trfct at Osaka. IT believe" he, SAID,
.that all classes Of people In ia
pan, even the government, must I'M
nediately launch concrete, measures
II retrenchment and economy II the
of commerce.. the re-
iuction Of prices of commodities.
The STERILIZATION of the nations Geo.
nomic life, and q favorable balance
In foreign trade are to be gained
LARGE Excess Of Iimports.
Gov. Inouye. went on to review
the trade results OF recent days,
pointing out that the excess OF I'm
ports was becoming extremely
dangerous. Analysts of the i'm
port trade shows that in such
items as machinery, and raw mate
rails. which may be the articles on
which. future export trade depends,
the increase Is small, while In the
articles which are imported be-
cause Of their comparatively low
cost the increase 10 large. The
Import excess at present Is Of a
most undesirable nature. This inn
port expansion, may be stopped
when Il has satiated the Japanese
and has sqRaii.ed the price