Press translations [Japan]. Economic Series 0272, 1946-02-07.

Summary:

The aggravation of inflation threatens national life day after day as can be seen in the note issue of the Bank of JAPAN which recorded as much as 58.5 billion yen at the end of January. If this situation continues, the majority of the people will not be able to get along, oppressed by soaring commodity prices. The levying of the property tax gives the people a feeling of hope that commodity prices will be stabilized; yet a prompt decrease in prices can not be expected, and rather a reduction in the purchasing power may ensue from the imposition of these taxes. If great effects can not be expected from the imposition of the property taxes, we must have recourse to other measures. The blockade of the people's deposits has been advocated by some quarters as a measure to repress inflation, and this has become a controversial issue between its advocates and opponents. Whenever the blockade of the people's deposits may be practiced, it will cut into the financial relationship between the people and financial agencies, and will entail a recurrence of inflation in the future, though it may reduce the purchasing power for a while. The matter will become more and more difficult to be solved. Thus, even with the financial measures, the wave of vicious inflation can not be checked. Then the one thing to be done by the Government is to draw up an overall plan by which the increased production of vital goods, especially necessaries for farmers should be strengthened for the improvement of food supply, and the increased production of the exportable goods. If the plan is once put into effect, the people will feel confident, will reduce their withdrawals of savings, and commodity prices will decline by degrees. As one month is sufficient enough to draw up the plan, the Government should take positive steps towards it in March. If the Government leaves the matter any longer in this state, they can not avoid being blamed by the people for incompetence and irresponsibility. The Government should draw up the overall plan without the least delay.

Full Translation:

The total amount of the fourth subscription of fixed time deposits and mutual financing deposits with premiums between December 1945 and last January aggregated 2,670 million yen, according to an investigation conducted by the Ministry of Finance. The amount is understood to have reached the scheduled mark.

Classified into prefectures, excluding those transacted through the agricultural associations, TOKYO ranked top with 273 million yen, followed by OSAKA with 155 million yen, NAGANO with 108 million yen,

ECONOMIC SERIES: 272 (Continued)

ITEM 2 (Continued)

KYOTO with 89 million yen, HOKKAIDO with 87 million yen, AICHI with 82 million yen, GUMMA with 70 million yen, HYOGO with 66 million yen, CHIBA with 56 million yen and YAMAGATA with 52 million yen. The favorable ranking of NAGANO, GUMMA and CHIBA Ken indicates the present situation in monetary circulation.

The number of A class fixed term deposits of one year occupied 65 per cent of the total, and there were a few Ken whose subscription number of deposits exceeded 90 per cent. Classified by organizations which transacted such deposits, the agricultural associations ranked top dealing 70 per cent of the B class fixed term deposits of two years. This manifests the psychology of depositors in urban and rural districts.

The amount of the first subscription of similar deposits totaled l,0l6 million yen, that in the second subscription, 2,064 million yen, and that in the third subscription, 1,446 million yen.

Summary:

I would like to present some points for the readjustment and enlargement of the structure of financial organizations. To meet this demand, the readjustment and enlargement of agricultural financing organs, the establishment of financial organizations for fishery, and the spread and development of similar organizations for the general public, should be enacted promptly.

Financial organizations for the general public in JAPAN made little progress compared with other advanced countries, and many of the public, when in need of funds, have to visit pawnshops or usurers at the risk of high interest rates. This fact is the most lamentable defect in the financing system in our country. Many young newly married families who are not afforded monetary facilities, come to financial difficulties every month toward the pay day, while college students are often unable to return to their homes at the death of their parents because they cannot afford traveling expenditure. When we consider the question of economic reconstruction, the enlargement and improvement of financial organizations for the general public are the matters to be solved immediately.

To accomplish this, it would be a good idea to reorganize the existing organizations. The advancement of small funds toward such classes should be vigorously carried on by large banks, ordinary banks as well as savings banks. Expansion and development of public pawnshops must also be conducted. It is also advisable that post offices engage in similar transactions.

I also hold the opinion that consumers' unions and labor unions should have their own financing organs which will independently advance small funds either at a low interest rate or without interest. It is advisable that labor unions should organize labor banks of their own.

It is useless to repeat the importance of the sound development of agriculture in JAPAN to meet the situation created by the defeat in the war. Now that transfer of arable land on a large scale is about to start as a result of the promulgation of the Agrarian Land Reform Bill, efforts must be made to provide ample funds at a low interest rate in rural districts.

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ECONOMIC SERIES: 272 (Continued)

ITEM 3 (Continued)

As banking organizations in agricultural villages, there are so far the Hypothec Bank of JAPAN, the Agricultural and Forestry Central Bank (NORIN CHUO KINKO), the Agricultural Associations, ordinary banks and mutual financing associations. The Hypothec Bank of JAPAN must be scrutinized first. This bank has long been playing the role of a financial organization for only landlord classes, and it was usually isolated from the peasant classes. Hereafter it must be the bank for the peasant classes in the main, for the realization of which it should have its branches or local offices in every agricultural village. The bank should advance not only long term loans, but also short term loans. The bank, by changing from advancing large funds necessary for such large scale enterprises as land development, to minor funds for agricultural management by poor peasants, through close co-operation with agricultural associations, will be a genuine agrarian banking organization.

As in the case of labor unions, it is most advisable that such financing organizations as the agricultural associations or credit associations in rural districts, which are founded on a mutual assistance basis, should also be expanded and re-enforced to be independent organizations. It is preferable to develope this at present when agrarian villages are most prosperous, so as to be prepared for the possible arrival of a business depression.

Next will be the establishment of banking organizations for fishing industry. The establishment of such organizations has long been discussed, but it has not been realized, presumably due to the peculiar nature of fishery. It is of course risky for ordinary banks to advance large funds for the fishing industry, but there is no other industry than fishing which requires most the advancement of funds. In view of the importance of the fishing industry as well as for the development of the fishing industry, the establishment of special financing organizations is imperative.

Lastly, I would like to point out the importance of elevation of morality. For the financial development of JAPAN, the faithfulness, morality and ethics of those who engage in financial transactions must be raised. Finance is a dealing of money on the basis of mutual reliance. Dealings on credit should start on the basis of mutual reliance and trust, and consequently be transacted with confidence. Contrary to this principle, dealings in credit and debts are usually conducted in an awkward way. Lenders, in anticipation of the possible disability of the borrowers, demand conditions which include provisions against all possible cases, while borrowers, who do not intend to evade payment at the beginning, agree to conditions offered by the lenders for fear of difficulties, possibly to arise in the future. Thus both lenders and borrowers come to entertain unpleasant feelings at the start, and the interest rate is raised. The financial market in JAPAN is quite backward when compared with those in such advanced countries as GREAT BRITAIN and the UNITED STATES.

In order to avoid troubles, I would like to advocate the abolition of the use of seals or chops (HAN). I can not understand why chops are necessary. I have had the experience of visiting a post office without taking a chop. The post office clerk insisted on my bringing my chop, refusing to accept my deposit. It seems that he thinks a chop costing 50 or 60 sen is more valuable than the depositor. On the other hand, he pays even to a thief if he has the deposit pass book and a chop.

There are also many other financial dealings which require renovation and improvement. I earnestly desire that a new and pleasant financial system will be established for the welfare and interest of the nation, thereby contributing toward the economic prosperity of the nation.

DISTRIBUTION "X"

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