Press translations [Japan]. Editorial Series 0212, 1946-01-07.

Full Translation:

The 1946 budget is of very great significance. Inflation in our country, as already pointed out in this column, has developed into situation equal in seriousness to that of GEREMANY at about the beginning of 1922. Inflation in GERMANY began to show dreadful signs from 1922 on. At that time inflation developed rapidly in a vicious cycle and increased automatically at an accelerating pace. Before 1922, according to many scholars, inflation might have been discouraged by proper measures. After 1922, however, no measure could possibly have been devised as an effective countermeasure.

Inflation in our country must be considered to be reaching the point where no solution is possible, as in GERMANY after 1922. The solution for the present situation depends on the budget for the coming fiscal year. If the budget for the next year shows a deficit amounting to some ten billion yen, a vicious inflation is inevitable according to the above reasoning. No matter how great the difficulty, we must stabilize finance for the next year.

It may be said that the problem of inflation, apart from the rice and coal shortage problem, is beyond solution once it enters a complicated state. Then inflation cannot be stopped until it grows to such an extent that the nominal value of money becomes worthless. Broadly speaking, the future of Japanese economy, now on the verge of collapse, will be decided by next year's budget. Therefore, this budget can doubtlessly be considered of decisive significance.

On 4 January, the Finance Ministry released the new budget which was approved at a cabinet meeting held the same day. The outstanding feature of this new budget seems to be the restoration of the stability of finance. It estimates the amount of revenue at 13,328,000,000 yen and expenditures at 12,812,000,000 yen. The difference amounts to 515,000,000 yen. Indeed, it seems to indicate a balance of revenue and expenditures, and apparently is drafted to conform to a retrenchment policy, leaving no deficit. This budget does not, however, include the expenditures which fall into the following categories: cost of relief for those who will be or have repatriated; subsidies for the readjustment of local finance; the cost of Allied occupation; indemnities to war industries; various expenditures related to reparations in kind which will be paid in 1946; compensation for the assets belonging to companies on individuals in EOKEA, FORMOSA, and other lost territories; cost of reclamation; and cost of social insurance and social relief.

The total amount of these expenses not included in the budget has not been stated, but it cannot be estimated at less then 50,000,000,000 yen. Almost all these expenses are necessary as a result of the defeat. In other words, the new budget does not include the expenditures caused by the defeat. It is a principle of economics that the defected country directly after the war must consume the largest portion of its revenue

EDITORIAL SERIES: 212 (Continued)

ITEM 1 (Continued)

with expenses incurred as a result of the war.

In GERMANY, when World War I had ended, of the total expenditures amounting to 110,000,000,000 marks, that portion chargeable to the defeat amounted to 95,000,000,000 marks, or 86.3 per cent of the total. Moreover, in this estimate of expenditures, the costs of the reparations in money provided for the VERSAILLES Treaty scarcely included. The budget of a defeated nation which does not include the expenses caused by the defeat is absurd.

The announcement of such a nonsensical budget should be regarded as mockery to the people. To meet expenditures expected to amount to some ten billion yen; the budget lists only 7,100,000,000 yen which will be obtained from the surplus of 500,000,000 yen in the general account, resulting from the additional, income of 4,000,00,000 yen in increased taxes, from the raising of tobacco prices, and from the income of 2,600,000,000 yen gained by the sale of the new "peace" and "Corona" cigarettes. The budget drawn up by Finance Minister SHIBUSAWA shows that a deficit amounting to some 10,000,000,000 yen will result and the increased banknote issue to this amount will be carried out. If the matter is neglected, JAPAN will have to suffer the same fate as GERMANY. We must, by all means, make every effort to prevent this budget from being enforced, because collapse of the monetary system will be the inevitable consequence.

As a result of the SCAP directive the old leaders were swept out and new men are expected to appear. A change of personnel alone can do nothing. Economic policy should be fundamentally changed as well. Especially in financial measures, the adoption of drastic measures is desirable. The new budget drawn up after the adoption of new financial measures must be based in the following principles: 1. Suspension of all indemnities to war industries and others? 2. Immediate enforcement of war-profit and property taxes with drastic progressive tax rates; 3. Immediate enforcement of a moratorium in order to prevent the evasion of the new taxes and inflation; 4. Incomes obtained from the two new taxes must first be used to supply the deficit, and the rest for social and cultural equipment; 5. Suspension of the payment of both principal and interest of wartime bonds; and, 6. Fundamental revision of the budget system.

Full Translation:

Those militarists to be removed or expelled by the recent SCAP directive, which will serve to purge politics, resemble somewhat the feudal lords of the TOKUGAWA Shogunate at the time of the MEIJI Restoration. Their past predominance in political circles is thus totally abolished just like those feudal lords, who experienced great changes in their life, losing all the hold they, had established during the 300 years of the TOKUGAWA Shogunate. The only difference between the two is that while thousands of army and navy officers now forfeiting their positions through being disbanded, only to find themselves helpless, are afforded neither pension nor security, the retainers of the TOKUGAWAs or of the feudal lords were all furnished with Government subsidies to ensure their subsistence. To make matters worse, our former political leaders have now been barred from public office. Some of them who held seats in the Diet were shrewd enough to secure some other public office by using their positions and influence. By virtue of these, they tried to use graft which brought them the highest incomes of their lives. An annual allowance of 3,000 yen could therefore be laughed at. These methods of money-making, however, have now been stopped, leaving them nothing. It is therefore probable that some will be reduced virtually to poverty.

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EDITORIAL SERIES: 212 (Continued)

ITEM 2 (Continued)

There was a similar spectacle at the beginning of MEIJI Era. The feudal lords, however were relieved of their embarrassment, through an intelligent administrative measure taken by the MEIJI Government, which made peers of them. This put these lords back on their feet. Now, such aid could never be dreamed of, since the end and aim of the new directive lies in the thorough democratization of JAPAN by purging every militaristic element from our political circles. This is a natural course to follow in dealing with a defeated nation.

In the MEIJI Restoration, which might be considered tantamount to civil war, the politicians of the clans of SATSUMA and NAGAIO were favoured with opportunities for gaining power. Even those unsuccessful in devoted themselves to paving the way for their rise to power, for the establishment of a Diet, and for the promulgation of a Constitution. By contrast, the present throes of revolution could heretofore serve only to expose political evils and to furnish information and material for this great task. The new compulsory reformation is thus entirely different in motive from that of the MEIJI Restoration.

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