Evening star., 1939-06-20
Financial Problems
OF japanese Acute,
Officials Here Told
China Campaign Seen
Likely to Bog Down
For Lack of Funds
BY JOSEPH H. BAIRD.


server in the Far East reported to
Washington today that unless Japan
receives financial aid soon its
Chinese campaign will bog down.
completely within a few months be-
cause of lack of nancy to finance
It's vast military operations.
Tokio's acute monetary problem,
It was said. partially explaines its
present effort to gain control of
foreign concessions in such Chinese
cities as Tientsin and Shanghai
where the Chinese government has
q quantity of silver coin In safe
deposit vaults.
No accurate estimate of the total
amount of such funds was available
from American sources. They were
understood to be almost entirely in
the form of silver, as virtually all
gold has been withdrawn from the
Far East.
In addition to the actual cash in
the concessions, however, there are
Chinese properties In the form of
manufacturing plants, jewelry and
raw materials which would total
hundreds of millions of dollars.
Some of the wealthiest Chinese
merchants live, or have lived, in
the foreign concessions, particularly
In Shanghai
Position Growing Wealthy.
Possession Of the concessions, too.
1t was pointed out, would give the
Japanese an even firmer strangle-
hold on the business life of China
than they now enjoy, although they
have already gained control of the
majority of customs revenues and
dominate the main transportation
routes of the country, such as the
Yangtze River.
Despite the oft-repeated Japanese
assurances that the open door" of
commercial opportunity for all
powers will be maintained in China.
reports to Washington say that the
Japanese now are sending goods into
China without the payment of anv
DUTY. Naturally these products
undersell those of other nations.
Japan's financial position at the
Time its conquest of China began was
Tar from strong, observers pointed
out, and 1t has constantly been grow
Ing weaker, as % months of large
scale warfare has provided a con-
slant drain on the treasury.
Military experts pointed out, too.
that although Japan has won
series OF victories in China's coastal
cues and has pushed far up the
Yangtze, its military position is far
from satisfactory. Gen. Chang Kai-
shek, from his headquarters in the
interior. is directing a total force
estimated at approximately 1000, 900
men. This includes about 10000
troops OF the regular army and some
100000 gueriilas which are harass-
ing the Japanese Army-staging
quick and unexpected attacks and
retreats-in all parts of the country
Army Problem Difficult.
Against these forces Japan has
an army in China estimated to
number 600 900 men. In addition it
has some $4,000 well-trained troops
In Manchuria-thes so-called "Kwan-
tung Army" the cream of the
Japanese military forces. According
to military experts, it can hardly
transfer these latter forces to China
proper so long as Japanese Russian
relations remain tense, as they face
an equally large number of Russian
troops across the Amur River.
The technical efficiency and fight
Ing strength of the japanese forces,
man for man, is much superior to
those of the Chinese, observers say.
They have better artillery, tanks
and other materiel. That accounts
for their series of victories along
the China coast. But as the Jap
Anese forces move further into the
interior, their transport and COM
munication problem grows daily
more serious and their technical
efficiency counts for constantly less.
These two factors-Japan's short
age OF money and its increasingly
acute military problem-account for
what American observers regard as
Tokia's present "panicky" move to
take over the foreign concessions.
Hull Concerned.
If that policy is successful, it
should aid Japan in two ways.
First, directly and financially. Sec
ond, psychologically. because il
Great Britain, France and the
United States yield to Japan's de-
mands they will lose face" in the
eyes of the Chinese, who will have
little reason to expect any further
financial or other material help
from the western powers, and may
decide then that further resistance
Is futile.
State Department officials today
could add nothing further to Secre-
tary Hulls statement that the
United States was concerned" with
the nature and development of
Japan's present activities lin their
broader aspects"
Mr.. Hull, usually restrained in
speech, is reliably understood to be
much more alarmed about Far East
ern developments than his state
ment would indicate. State Depart
ment officials we'll realize that if
Japan is successful in bringing the
British to terms at Tientsin, Tokios
next move undoubtedly will be
against the great International Con-
cession at Shanghai, In the admin
1stration of which the United States
shares. Shanghai is the headquar-
ters of virtually all the large Amer
lean business corporations operating
In China.