Press translations [Japan]. Economic Series 0334, 1946-02-20.

Summary:

There is still pervading a curious belief about the inflation. It is based on the orthodox theory of natural harmony and holds that, though it is destructive, inflation automatically holds curing elements within itself. That is, the diminution of exchange rate encourages exportation, and the increased exportation in turn tends to reestablish the money-goods relationship of a country. It is true that the German inflation of 1922-23 contained within its process an element of economic recovery. However, since the present war was started, the economic order of the world has entirely changed, and now the economic system is under world wide control. In the financial and monetary aspects the same will be seen also in the conclusion of the BRETTON WOODS Agreement, for instance. This international monetary agreement guarantees foreign exchange credit to any member state, but at the same time disavows all forestalling international transactions of any state.

Under such a circumstance JAPAN, even after being allowed to participate in the international trade will not be able to resort to the radical self-healing measures of dumping and the devaluation of yen and so forth. Thus even though we may wish to uphold the capitalistic economic system of the nation, the method of recovery must be greatly different from those that had been used by other countries in the past.

In order to remedy the present monetary confusion, we must first know the causes of it. They are (1) the expansion of the munitions industries out of porportion to the economic capacity of the nation, (2) the budgetary deficit of the Government due to the reckless spending of the army and navy, and finally, (3) the loose extension of credit by banks under government guarantees. Various financial remedies for these developments have been inaugurated. To me, however, the remedy for the present crisis must be based upon the principle that the financial factors must be taken as rather secondary and auxiliary ones.

More specifically, the principle I uphold here is to give special weight to the psychological will of the producers, i. e., the industrial workers and farmers who are directly concerned with production, and the finance must be taken as a factor just to assure the industrial activities of the above factors. In short, it is a reverse of the old view which considers finance as the primary factor and the workers as rather far remote factors of economic activities.

In my opinion, the processes of production should be arranged, in the order of importance, as follows:

ECONOMIC SERIES: 334 (Continued)

ITEM 1 (Continued)

(To be continued).

Summary:

The first and second shipments of imported wheat are due to arrive at YOKOHAMA by the good offices of the Allied Authorities.

Our unloading capacity holds the key to the import of wheat or other staple foods. The Ministry of Transportation, therefore, is speeding preparations at the ports of NAGOYA, YOKOHAMA and ODARU, for the unloading of the wheat to be imported. OKOHAMA's port is expected to land 10,000 tons of wheat from a Liberty ship in four days, for which suction pumps of the NISSHIN Milling Company are to be made ready. The Ministry has been informed that NAGOYA's port will be able to unload 5,000 tons of wheat in lots by barge in three days. An official has been dispatched to ascertain how ready the port of ODARU is. Although the matter is still under consideration, 10,000 tons of wheat are expected to be unloaded in a week.

Summary:

In view of the big influence the Government's new emergency economic measures have on the people's life, the Ministry of Finance authorities have been summoning representative of business, financial institutions, and other various economic and financial organizations since 17 February in an effort to direct and guide them with regard to the operation of the new measures. As a matter of fact, some local banks and post offices are at a loss as to what to do with the new composite ordinances, as no authoritative and detailed instructions have reached them as yet. So that new yen-notes and necessary official instructions may reach financial institutions in outlying localities before 25 February, when exchange of the new yen-notes with the old ones begins, air mail will be made use of with the aid of the Allied Forces. On the other hand, in order to avoid misunderstanding on the part of the general public, the Finance Ministry will publish explanatory information on the new measures within a day or two.

Moreover, it is announced that the Ministry of Finance has set up today an inquiry office to give due guidance to the general public on the subject, and in ease of need, expert officials will be dispatched to street and neighborhood association. It is also

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ITEM 3 (Continued)

scheduled that Finance Minister SHIBUZAWA will make a tour of OSAKA and NAGOYA to drive home to those concerned the purport of the new measures.

Having been hurriedly drawn up, the new measures contain many imperfections which are to be revised and solved as the occasion demands. The following are explanations of some practical questions:

(1) Salaries and wages to be paid in February.

Complying with Article 15 of Ordinance Number 13 relative to the new yen, all salaries, wages, and allowances are to be paid in the old yen notes in February. Neither the Government offices nor civilian, organizations can postpone pay days for the purpose of paying in the new-yen note. If the payment is made from deposit s of new notes, this rule does not apply.

(2) Living expenses of farmers and fishermen.

Farmers and fishermen are free t o obtain cash, as they are treated as "entrepreneurs". The money the farmers have received already for rice delivered is made a restricted deposit, but the money they will receive after 2 March for rice to be delivered hereafter is made free deposit. Additional payment for rice at 150 yen per koku due to the rise of the Government purchase price will be made in new yen notes. It is held reasonable to freeze half of the amount to be paid for rice to be delivered hereafter. As for fishermen, some part of the proceeds of sales may be frozen.

(3) Doctors, retail dealers, etc.

Being treated as independent "entrepreneurs," these people are free to obtain cash. Remunerations for writers are also paid in the new yon after 3 March. However, if the remuneration is of the kind to be paid periodically in set amounts, it should receive the same treatment as salaries and wages.

(4) Exceptions to cash limits of salaries and wares.

When salaries, wages, and allowances are paid by the withdrawal of restricted deposits, they should be within a limit of 500 yen per person per month. However, under the present regulation, no limitation can be put on payment of these items if they are paid from cash on hand. Such an event may happen in the case of large retail businesses such as department stores where large amounts of cash can he accumulated. Due steps should be taken for suppressing such an event.

(5) Small currency.

One step should be taken to prevent small amounts of currency from being hoarded.

(6) Exchange of the new yen notes for the old ones.

Exchange of the new notes for the old ones is to be handled by the Bank of JAPAN, civilian banks, credit associations, and other financial institutions specified by the regulation. During the period from 25 February to 2 March the notes will be exchanged within a limit of 100 yen per person. The Government hopes that

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ITEM 3 (Continued)

the exchange of this period will be made through neighborhood associations for convenience. Deposits of the new yen may be registered in the same pass book as other deposits but they should be distinguished from others in some proper way.

(7) Prize money of lotteries.

Prize money of lotteries after 3 March is to be paid in the new yen notes.

DISTRIBUTION "X"

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