The Daily Alaska empire., 1937-10-09
JAPAN'S WAR AND FINANCES

Speaking in the name of the Emperor General Matsui Japanese military leader has issued pro- clamation which is considered by observers in the Orient and by the Chinese tantamount to formal declaration of war In substance the war chief pointed out that Japan has settled down to an ag- gressive campaign to conquer China
 It costs money to wage war and it is estimated that it is costing Japan in the neighborhood of Sl50000000 month to carry on it's present advance against the Chinese If it is to be formal war with full military strength drive it probably will into much larger figures Thus finances become matter of first importance in Tokyo and may be one of the factors causing Japan the most concern.
 An enlightening view of the Japanese financial picture as it wages war and the difficulties that coun try may run into given by Burton Crane, financial expert writing in the New York Times. Pointing out that even a brief war means vast financial adjust ment for the Japanese MT. Crane says that with an extended campaign in prospect Japan's problem di- vides naturally into two parts-raw materials and finance. Commenting further he says
 The situation with respect to materials is fairly good. Japan has all the coal it needs even without drawing Manchukuo Only quarter of its iron-ore supply comes from areas under control of Ranking. Moreover the military replenishment campaign" of 1932-37 has certainly piled up war stores sufficient for the next three four months.
 
 construction and non-miltary industries can be rationed
 Even though Japan supplies less than 10 percent of it's own petroleum needs, the mark kets of the Pacific Coast and the Dutch East Indies are still open. If either should be closed the army could probably struggle along with the other Even if both should be closed the situation would not be hopeless from Japan ese point of view, for large plants for the eX- traction of oil from soft coal and shale are n existence and could be duplicated rapidly.
 But war of any kind costs money Ex- perts set the cost of that in China at $l50,- 100000 a month-over and above anything Japan would spend in peacetme And, unless Japanese spending habits are changing, third of that will go abroad for purchases of war supplies Those additional foreign pur- chases of $50000000 a month are going to exert pressure on the yen.
 If Japan wishes to maintain the yen at about its present level it will have to continue the export of gold, for even before the Chin ese trouble broke out this proving neces- sary From March to the middle of Septem- Der Japan shipped $170800000 in gold to the United States and on September l, counting both Bank of Japan reserves and the stabii- zation fund, it had not more than $3l2OO0000 left
 Until Japan has exhausted every other pos sibty it will not wish to cut gold coverage for its note issue below 30 percent Possibly it will not go so low that but if it does it has $152 100000 in gold to spend starting with September l This figure, of course, would be lowered if banks here and in Lon- don were to call the loans they have made to the Yokohama Specie Bank. No figures on the size of these loans are public.
 Thus Japan seems to have enough gold to protect the yen until some time in November.
 Even without further pronounced de- cline in the yen the present fighting is apt to bring about important readjustments ln the