JAPAN AND SOCIAL CREDIT

Press, Volume LXXII, Issue 21706, 13 February 1936, Page 17

JAPAN AND SOCIAL CREDIT

T 9 ts» »wm or tbs pass". Sir,— l Should like to point put to "Nippon*' that the rationalisation of industry has for its objective increased production, with-less. labour costs and under the existing system of bankaontrolled finance, it can succeed only i£ export credits are created to buy the surplus which is unsaleable in the home market. Most countries are trying to comply with this canon of fin-

ance, but as the first requisite for the successful operation of the system is to find a. country willing to import more than It exports,- there seems to be a universal deadlock. Mussolini is using cannons to support the argument • for the canons of finance.”

“Nippon" has not profited by his reading of Douglas’s works or he would know that, under the rational system of finance proposed by Douglas, interest-free credit would be applied, to all capital works, and the credit would be cancelled only at the rate at which the works depreciated. It would appear that the country which adopts the rationalisation of finance will have no difficulty in proceeding with the rationalisation of industry.—Yours, etc., W. B. BRAY. ' February 13, 1936.

TO TH* EPITOR or THB PRESS. Sir,—l am afraid "Nippon" discloses a lamentable disposition to score, even though scoring means running completely off the rails. The discussion is whether Mr Barolay-Smith is justified in making the statement that the success of Japanese exports is due to an understanding of money-power. There is no evidence, direct or otherwise, that Douglas credit, as advocated by Douglas, has been put into operation in Japan. Nobody said it had. The claim is that part of the technique suggested by Douglas for the purpose of reaching a certain objective is being used by the Japanese to reach a different objective to the one proposed by Douglas. Both Douglas and his supporters have frequently referred to the Japanese methods as an inverted form of social credit. The statement that Douglas has little to say about rationalisation and planning depends for its correctness on what is meant by “iittie.” Douglas refers to these matters in his books, “Economic Democracy," "Credit Power and Democracy," "The Control and Distribution of Production," and "Social Credit." The subject has no bearing on the particular aspect of Japanese economics under discussion.

I did not cite the Chechoslovakian boot industry in support of mass production economy—as such. On the contrary, I cited it as a case on all fours with Japanese industry as con* oeived by '‘Nippon,” yet failing to capture world markets on the Japanese scale because the dominant element of control of finance was lacking. I do not dispute the statement that cheap labour and sweated conditions exist in Japan: but Japan is not alone in that. What is disputed, is the assertion that Japanese labour conditions are the dominating, or even an important factor in her capture of world markets, Moreover, the practices and conditions to which we all object have been in existence in Japan for centuries, and are consequently not sufficient to explain her sudden capture of markets- “ Nippon" says, “Mr Davie is more to the point. His assumption is probably right' that the military party has forced the government to pay the large exporting combines subsidies derived from crushing taxation."

This is no doubt a slip of the pen for I certainly did not say or imply “derived from crushing taxation.” The suggestion is, on the face of things, absurd, because taxation high enough to subsidise all Japan’s exports would have crushed every taxpayer out of existence long ago. The subsidy is paid out of newly-created money; the sort of thing that I would imagine “Nippon” would say cannot be done, or if done, would create inflation and chaos. The answer is that it is being done and there is no inflation and no chaos.—-Yours, etc., D. C. DAVIE. February 12, 1936.

TO THE EDITOR Of THE PRESS, Sir,—When one differentiates between wealth and income, the vital importance of the distribution of income as the connecting element between production and consumption is obvious in the planned economy of any nation. The non-compliance with this principle is seen in the paradox of Japan, a great modern industrial organism and a great feudal state. The concentration of wealth and its Investment in capital goods has resulted in production capacity being maintained by the barter system to expand foreign markets. Take textiles as the leading Japanese industry. No nation can sell raw cotton to Japan for any length, of time without admitting Japanese products directly or indirectly to its own markets. India, for example, has found it necessary to take 400,000,000 yards of Japanese cloth in order to sell 500,000 bales of raw cotton. The significance of Japan as a buyer of cotton and as the largest consumer of export cotton, thereby dominating the world market, is not generally realised. The Japanese threat to British economic supremacy m Africa is bearing on the above, and figures fairly prominently in the present diplomatic jam in Europe and pedestrian gait of negotiations, While the tremendous scope of the textile Industry in Japan may give rise to absorbing speculation on her political future, the silk industry has already exerted a powerful Impetus in this direction, Japan now finds herself burdened with enormous responsibilities towards millions of her medieval silk farmers who have been exploited by Mitsui monopoly and Mitsubushi usury, and the political reaction has resulted in scorn of the business man, and reverence of the sword. To those who believe that whatever is physically possible must be financially possible, the experiment in state socialism in Manehukuo by the Japanese army should be of more than perfunctory interest, The Mancbukuoan movement has only begun to suggest Its eventual result. Tne army has put all commerce and industry under, a grand economic council, half Japanese and half Mancbukuoan, and over this council presides General Jiro Minaml. Although Japan is developing Mancbukuo’s resources primarily for military reasons, the political significance and influence of Mlnami’s appointment cannot be overestimated: and although his clique may not possess a clear understanding of the fundamental economic forces which govern continuing economic progress, the force of circumstances may make this fusion of the extreme left and extreme right something more than a political connotation—’Yours, etc., ’ WHITE WATERS. February 12, 1938.