The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-11-02
FRANCE MAY Be
new EUROPEAN
ALLY OF JAPAN
Nippon Seeking Huge Loan
to Garry on Her Big
ManChurian Venture.
BY WILLIAM PHILIP sIMMS
Soripps-Howard Foreign Editor

Scrlpps-howard Foreign Editor
WASHINGTON, Nov. 2. - In
desperate need Of funds and war
materials with which to carry on
her adventure in Manchuria, Japan
is reported to be seeking a huge
loan, or credits in lieu thereof, in
France.
This had led to rumors that
France soon may replace Great
Britain as the European ally of
Japan, or something closely re-
sembling that.
The Anglo Japanese alliance end
ed a decade ago, as a result Of new
treaties entered into at the Wash
1ngton conference of 1922.
Department of commerce infor-
nation is that the japanese govern
ment plans to expend no less than
half its entire next years budget of
approximately $1,OOO,0Oo,O0 on its
army and navy-the greatest such
peace-time expenditures in the
history Of the empire.
Country's Resources Taxed
The proposed 100000 outlay
beyond question, seriously will tax
the country's resources, coming as it
will, on top Of the $3.50 100000 ex-
penditures of the present year, itself
a colossal sum for a comparatively
poor nation. Last years figures for
the army and navy were only
5000, 100000.
Japan's gold reserves have shrunk
from $425,000000 in July, 1881, to
about $210,O0o,O0O at the present
time.
Recently the government at
tempted to float a domestic loan of
$SO0,0o0,000, or 6OO,OO0,OO0 yen at
par, but this proved too much for
the people to absorb. The Japanese
national bank took over the amount
and new paper money was printed.
Gold Deposits Shrinking
AS result of the situation, the
yen has fallen in value from half
dollar to % cents.
This makes it extremely difficult
for Japan to obtain the necessary
exchange to finance purchases
abroad, and as her foreign gold de-
posts already are small and still
shrinking, an early foreign loan APP
pears urgent.
Approximately two thirds of the
otal of world supply of gold is in
the hands Of the United States and
France.
One or the other of these coun-
tries, therefore, must supply ia
pans needs, if these needs are met.
And for the present, there seems
little likelihood Of a loan in the
United States.
Leaving Manchuria entirely out of
the picture, bankers admit that for
eign loans in this country now are
suspected generally.
French Attitude Friendly
France, however, not only pos
sesses about three times as much
gold per capita as the United States,
but from the beginning has main
tanned an extremely friendly atti-
tude toward Japans seizure of Man
churia. 44F-
Possessing, perhaps the greatest
colonial empire in the world, since
Britain'S dominions became indie
pendent, some of her most cher
ished possessions are within strik-
ing distance of Japan.
Indo- China is particularly i'm
portant to France, and promises
to be increasingly So
Absorbed as she is with her peril
Gus quarrel with Germany, France
has much to gain by an entente
with Japan.
There is talk of a $10O,OO0,O00
French loan to Japan. This figure
is regarded as high by observers
here.
But some sort of arrangement
whereby Japan could obtain cred
its, either in France or in Czecho-
slovakia, Indo-China and other al
lied countries and dependencies,
might serve to tide Japan over.
Japan is said to have placed an
order for $l0,Oo0,o00 worth of war
materials in Czechoslovakia recent
ly, and France likewise is reported
to have received orders for more.