Japan's Armaments and Finance

Press, Volume LXX, Issue 21334, 29 November 1934, Page 8

Japan's Armaments and Finance

The Japanese Minister for Finance, Mr Fujii, it was reported from Tokyo yesterday, has resigned, the reason given being that he is ill, the reason believed being that he is opposed to the financial demands of the army and the navy. There is no need to doubt the second explanation, or its threatening corollaries. At the end of last month the " Asahi" reported that the War Olfice and the Navy Department were insisting that their requirements of new expenditure, reduced by the Finance Department, should stand. The army had demanded 246,000,000 yen; the navy 249,000,000 —amounts cut down by Ml - Fujii's department to 130,000,000 and 170,000,000 yen respectively. Mr Fujii's objections were easy to understand. To satisfy the militarists, without yielding a yen of increase to the demands of other departments, would have raised the next budget to 2,170,000,000 yen; 30,000,000 more than the current budget; but agricultural relief and special aid to districts which have suffered natural disasters must, it is estimated, absorb 60.000,000 yen, so that the budget would be inflated to 2,230,000,000 yen. But the revenue estimate for next year is only 1,380,000,000 yen, so that Mr Fujii would be obliged cither to cover the enormous deficit of {150,000,000 yen by raising yet another loan from an exhausted public, or to increase tux--1 ation. He is known to have feared j the inflationary effects of constantly ! balancing the budget by loans and, I before he became Minister for 1' inance, to have favoured higher taxation; but his pledge to follow Mr j Takahashi's policy and repeated pubj lie statements by the Prime Minister I made it politically difficult or impossible to obey his own preference. Mr Fujii's best and perhaps his only line, therefore, was to resist and reduce proposed new military and naval charges on the budget; and if, as seems obvious, lie has failed and been defeated, the victory of the militarists sounds one more alarm in the East. They have within the last year or two put forward estimates which would have consumed the total expectable revenue; but it is part of their dangerous philosophy that financial and economic prudence, as generally defined, is nonsense. If Japan is powerful enough, her economic problems will be solved by jjower, and will be solved no other way—not, for instance, by the Japanese manufacturer's' peaceful penetration of the world's markets, and not by successful diplomatic negotiations, such as the sale of the Chinese Eastern Railway to Manchukuo. When the Japanese Foreign Office came to terms with Russia, and so dismissed or diminished one risk of war, the Japanese War Office, so the " Econo- " mist " reports, immediately issued a pamphlet declaring that the Russian air force and the American navy both menaced Japan and projecting a race for superiority over both; and " the argument that such " a policy would break the back of " the present Japanese economic " system" was forestalled by the challenge, in effect, "So much the "worse for Capitalism! If Capital- " ism cannot meet Japan's military " needs, then Capitalism must go!" Since moderate opinion in Japan and the world's statesmanship seem equally helpless, it remains to be seen whether economic law and economic facts are, after all, so easily defied and too weak to generate restraining and punitive consequences.