Evening star., 1940-05-26
Chino War Strains
Jopun's Economy
By Frederic J. Hnsktr.

situation in the Orient, the Nan inva-
sion Of Scandinavia and the Low Coun-
tries occupying the center Of the stage,
but the Sino-Japanese war still is a
stern fact, though grown less sensa-
tional because 1t is an old story. Never
theless, things are happening In the
Orient which are of Importance to the
rest Of the world and one of the more
important of these things is the progress
sive exhaustion of Japan and its drift
into totalitarianism.
One has to resort to the less dramatic
reports to learn Of what really Is a
dramatic situation. When the Japanese
began their invasion Of China they ex-
pected fairly rapid conquest, feeling
the Chinese inclined to be passive and
somewhat unconcerned. Harking back
to the quick successes, such as the taking
Of Shanghai, it looked as though the
Japanese militarists might have been
correct in their assumptions. But now,
after three years of immensely expensive
effort, Japan seems little nearer her goal.
Last year the Japanese retired from
Changsha and this year from Pinyang
and even the high command talks now
of war of attyition rather than Of fast
conquest. When one considers that q
population twice that of the United
States so far has not been touched by
the war and that China has armies of
100000 men armed with increasingly
better equipment, it appears that such
war of attrition is going to call for an
enormous further expense of men, mate
rails of war and money. Can the Japa-
neSe people hold out?
Through imitation, there is no scarcity
OF money in Japan, but the scarcity of
goods month by month becomes more
emergent. In a nation which regards its
ruler not merely as the head of the state
but as sort of god, there is little diff
Guilty in imposing and collecting taxes
for the contribution is somewhat COM
parable to the laying Of offerings upon
an altar. There has come time, how
ever, when the money matters relatively
little.
The budget now takes 40 per cent of
the national income and almost all of
the budget is expended upon the army
and the various necessities of the Chi
nese adventure. Although the govern
ment has in hand ample funds, it is en-
barrassed by inability to spend them for i,
what it wants. The raw materials for
the war manufactures needed are not
available, either from domestic sources
or, under existing conditions, by import.
In spite of the important industrial ex-
pansion which has taken place, there is
still a shortage of plant capacity to pro-
duce as fast as destruction takes place.
On the home front the embarrassment
has become acute. Japan had become
the worlds largest producer Of cotton
textiles, yet there is shortage in Japan;
the greatest of rice producers, there Is
shortage of rice. So it goes, because, in
order to create foreign exchange to buy
war materials and more war materials
and to feed the armies on the Asiatic
continent, these staples must be export
ed. Only with the utmost difficulty can
gasoline be obtained for engines or coal
for factories. Infant mortality is mount
ing rapidly because the milk produced
must be made into butter for export.
Copper coins have actually been with
drawn from circulation because the cop
per is so urgently needed for electrical
and other industries. Iron, timber,
chemicals, fertilizers, drugs, pulp, leather
scores of essential products are short
because every pound possible must be
exported.
The cost Of living has risen only IS
per cent because of government price
fixing. But, as in all such cases, there is
constant evasion and violation. There is
practice called yamitorihiki, which
means bargaining in darkness or the
black market. There is constantly dark
or undercover buying and selling at
prices far above the fixed prices in order
that, on the one hand, profiteers may
profit and, on the other, that individuals
what they require.
In the Toxic area alone last year the
economic police found 100000 separate
violations. This does not mean petty
violations. Every one now engages in
yamitorihiki. But short while ago the
managers and directors of some large
rayon mills were arrested, charged with
exceeding fixed prices to the extent of
$4,000 900 yen, which, at normal par ex-
change, is about $7,5O0000.
Wages have followed prices upward
at least part way, but q more important
factor is that, on government contracts
and in essential industries, there has
been great deal Of overtime Generally
speaking, the people have more money
than ever before, but the things they can
buy with their money become fewer and
fewer. For example, 1t is practically i'm
possible to buy rubber boots or leather
Shoes A shoe, made Of cotton uppers
and fiber soles is in common use, costs
about 81 pair and wears only two or
three weeks.
Ofacial trade figures show that Japan
has a large favorable export balance,
but every one In the East knows the fig-
ures are illusory. They include exports
to occupied China and to Manchukuo
and, Of course, old Korea, the present
Chosen. AS these exports are not paid
for In foreign money but in yen there is
no actual realization Of foreign exchange,
no real favorable export balance. On the
contrary, these territories excluded, there
is very heavy adverse balance Of trade
and to meet payments, the Japanese
archipelago itself must be drained Of
H. l.. L-L f..