Press translations [Japan]. Economic Series 0162, 1946-01-14.
Date14 January, 1946
translation numbereconomic-0763
call numberDS801 .S81
Persistent Identifier
ECONOMIC SERIES: 162
ITEM 1 The Reparations Problem - Magazine: Zaisei (Monthly) - Dec 45 Issue. Translator: N. Yagiu.
Summary:
According to the Allied policies towards Japan issued last September, "properties
in the lands other than those which should
belong to Japan" are to be taken over as the first reparations. JAPAN's properties
both abroad and in the territories to be
ceded would come to such a vast amount that I believe most of the reparations will
be filled by them alone. The statement of
the Allied policy also points out that besides the properties abroad what goods are
not needed for a peacetime economy and for
the occupation forces will be take over. We might say that munitions are mainly meant
here. This constitutes a difference from
the reparations in World War I when the Allied [illegible]ations took over everything indiscriminately.
Still, if the munitions factories which could be switched over to peace industries
with a slight reform should be removed, our
ability to pay reparations would be much reduced. No doubt the burdens we are to shoulder
cannot be light. Unless freedom of
trade and credit be granted we should be put into a difficult plight.
The purpose of reparations has been changed in the course of time. Formerly it was
a means of penalty and the defeated nation
was fined properly. Later it came to signify compensation for every loss of the victorious
country, including its war
expenditures. The very change of words from indemnification to reparation shows its
change of purpose. This time reparations
seem to have taken on another meaning; the Allied Nations are considering the problem
with a view of doing away with the
munitions industries to eliminate German and Japanese war potential. Accordingly,
indemnification for the loss suffered by the
Government and the people becomes of secondary importance. Establishment of democracy
is undoubtedly the chief intention of
the Allied nations.
That Germany did not perform her duties concerning reparations after World War I
is due to the lack of co-operation on the
German side as well as the unreasonably colossal requirements by the Allied nations.
It is easy to imagin that the reparations
to be imposed on our country today would be predicated on a reasonable basis taking
every economic situation into
consideration. Consequently, it is up to us to fulfill our duties at all cost and
establish international trust and respect as
soon as possible.
ECONOMIC SERIES: 162 (Continued)
ITEM 2 Japan's Future International Economic Relations by NODA, Uichi - Magazine: Zaisei (Monthly) - Dec 15 Issue. Translator: H. Nakamura.
Summary:
By the time the war ended, JAPAN's foreign trade, which had fluctuated greatly during
the course of the war, had dwindled to
almost nothing. When hostilities began, trade with the Allied Nations, as well as
with Italy, Germany, and even the Soviet
Union, all but came to a halt. Even within the Greater EAST ASIA Co-Prosperty Sphere,
because of her great shipping losses and
the adverse progress of the war, JAPAN's trade had practically disappeared by the
time the war came to an ended. Today, as a
result of her defeat, JAPAN is an economically isolated nation.
In re-opening our foreign trade, our first duty is to carry out faithfully the provisions
of the POTSDAM Declaration. Our
future economic development depends in large measure upon the execution of this Declaration,
the amount of reparations which
will be required, and upon the decision as to what industries will be removed as reparations.
It must be remembered, however,
that no matter how severe the demands may be, the primary purpose of the POTSDAM Declaration
and the Allied Powers is not to
run and enslave the Japanese people, but to abolish militarism and to establish democracy
in our land. Consequently, much of
the reparations will consist of military equipment, munitions industries, and war-making
facilities. Furthermore, the
Declaration provides that JAPAN will be allowed to obtain abroad the raw materials
necessary for supporting her economy and
for facilitating the payment of reparations.
In restoring our foreign trade, our first and most urgeant task is to import food
stuffs. Such imports are imperative if we
are to secure the peoples livelihood, upon which the payment of reparations as well
as the achievement of the POTSDAM
Declaration's democratic ideals in the long run depends. Recognizing this fact, SCAP
recently directed that the Government be
allowed to import food, cotton, oil, and salt. Because of the shortage of both funds
and ships, the task will be difficult. We
must do our best with what we have, however, by quickly repairing all usable ships,
and by requesting such goods as can be
used as collateral for imports.
The importation of foodstuf is a pressing need which must be met immediately, no
matter what difficulties may stand in the
way. Ultimately, however, if we are to acquire funds and goods from abroad and establish
normal international trade, we must
stabilize our own domestic economy. Essentially, this means that we must secure the
rate of exchange by establishing price of
internal commodities. Until we do so, the restoration of normal foreign trade will
be impossible.
It is probable that the major portion of our trade will be with the countries of
EAST ASIA. For the most part this trade will
be in every day necessities; later, with the increase of production and the improvement
of techniques, this trade will include
luxury goods as well. There are vast markets in CHINA and the Southern areas —— markets
where the competition of the UNITED
STATES will be relatively slight. As far as the UNITED STATES will be relatively slight.
As far as the UNITED STATES is
concerned, we shall export raw silk, tea, and luxury goods. JAPAN in turn must borrow
capital and import capital goods,
without which her economy cannot be rebuilt.
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ECONOMIC SERIES: 162 (Continued)
ITEM 2 (Continued)
Until Japan's position is clarified, we cannot say how long it will he before normal
trade relations are
re-established—-whether it will be one year or two, or even more we do know, however,
that American merchants are eager to
resume trade; they are especially looking forward to obtaining Japanese ceramic wares,
silk and industrial art.
In the new world economy which is rising up from the ruins of war, international
co-operation is replacing the previous
nationalistic competition which characterized trade during the years preceding the
war. The Bretton Woods monetary agreement,
which provides for international currency management, will greatly facilitate international
trade in the post-war world. In
time JAPAN too will be able to join such a system, and, as a member of the family
of nations, contribute her share to world
economy.
At the moment, then, though the path before us is hard and the way is long, our hopes
are high and we shall set ourselves with
renewed determination to the advancement of the bright future which lies before us.
ITEM 3 The Sanger Involved in Deflation by Ishibashi, Lanzan - Magazine: Zaisei (Monthly) - Dec 45 Issue. Translator: Echigo.
Summary:
Unless drastic steps are taken to counter-act it, a very grave deflation lies in
wait for us. Unfortunately, the trend of
public opinion appears to be moving the other way; newspapers have repeatedly warned
us against an approaching inflation, and
the Government is trying its utmost to work out anti-inflationary measures. Hence
it is a matter of extreme importance that
the problems of inflation be clearly placed before the public for deliberation.
According to a view which generally prevails, inflation means an increase in the
amount of currency (purchasing power) as
compared with the amount of purchased goods, while deflation means the opposite. The
distinction is sound as far as it goes,
but it does not tell the whole story — it does net make clear the material difference
between the two. We should recognize,
for instance, that deflation means low prices, business depression, decreased production,
and unemployment. It is in the
direction of deflation, not of inflation, that our economy appears to be drifting.
If, under such circumstances, the
Government adopts a deflationary policy, it will only serve to aggravate the deflation
which is already underway.
My primary reason for insisting that we shall be confronted with deflation is this.
Now that the war is over, our national
expenditures will be sharply reduced. According to figures made public by the Government
last spring, our government
expenditures in 1945 amounted to 65 billion yen an our industrial fund in the same
year came to 13 billion yen. These vast
sums were needed to meet the enormous wartime needs of our financial world. Now that
the war is ended, these expenditures will
inevitably be reduced. Industrial expenditures may be expected to continue, of course,
and public disbursement for such
purposes as demobilization will continue for a short while. Soon, however, the special
war expenditures, which totaled no less
than 55 billion yen annually, will no longer be necessary. Even though industrial
expenditures continue, it seems inevitable
that this vast shrinkage in public disbursement will result in a severe deflation.
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ECONOMIC SERIES: 162 (Continued)
ITEM 3 (Continued)
Those who favor a deflationary policy point out as probable inflationary factors
the cost of the Allied occupation and the
payment of reparations. It is my opinion, however, that these costs will not be excessibe,
and that our financial structure is
strong enough to bear these burdens without undue difficulty. (TN. The article which
follows is a reply to the above).
ITEM 4 A Criticism of the Deflation Argument by Kimura, Kihachiro - Magazine: Zaisei (Monthly) - Dec 45 Issue. Translator: Echigo.
Summary:
I have seized every chance to warn that, unless bold and decisive steps are taken,
our post-war inflation will assume a very
grave aspect. Nevertheless there are some who insist that a deflation is ahead of
us, a view dismetrically opposed to ours.
Ishibashi, Louzau is one of the foremost exponents of this view. Frankly speaking,
his is an erronous view—-a view which fails
to recognize the real situation of our finance and our national economy.
First of all, Ishibashi insists that deflation lies in wait for us because government
deficit financing will decrease in
amount as a result of the ending of the war. The truth of the matter is, however,
that our inflation has already reached
dangerous proportions. Even a small addition to the national debt may be the "last
straw" for our shaky financial
structure.
Ishibashi overlooks two factors which cause inflation. One is the existence of our
dormant purchasing power, which amounts to
loo billion yen; the other is the rapid increase in the circulation of the Bank of
Japan notes, which has already swollen to
more than 47 billion yen.
Ishibashi insists that our financial system is powerful enough to bear the burden
of paying the interest for national bonds,
which amounts to only 3.5 billion yen per year. However, this interest payment may
be a heavier burden than he supooses,
especially since productive capacity is likely to show a sharp decline during the
coming fiscal year.
Through the withdrawl of various restrictions, more and more commodities have come
to appear in the market. As a result, black
market prices have dropped slightly. In Ishibashi's opinion, this limited drop is
a sign of coming deflation. But this is
clearly no more than a transitional phenomenon. Now that inflation has gained a free
hand, it is likely to go forward faster
than ever, and the time may soon come when even the tightest control will be unable
to check its vicious rise.
DISTRIBUTION " X "
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