The Press WEDNESDAY, JULY 30, 1941. Economic Sanctions Against Japan

Press, Volume LXXVII, Issue 23394, 30 July 1941, Page 6

The Press WEDNESDAY, JULY 30, 1941. Economic Sanctions Against Japan

The Netherlands East Indies Government has now joined with the Governments of the United States and the British Commonwealth in throwing an economic noose round Japan; how tight it will be drawn seems to depend on the course of Japanese policy. In the meantime, Japanese official spokesmen and newspapers are endeavouring to keep up the courage of the Japanese people by assurances that, since Japanese trade with the democracies has been dwindling for several years, there is no need to fear that the new restrictions will have catastrophic consequences. Up to a point, this is true. Ever since the beginning of the war in China, trade between Japan and the democracies has been declining, partly because of boycotts and moral embargoes, partly because the democracies are short of many commodities Japan needs, and partly because war has adversely affected Japan’s capacity to trade. Though it is likely that this process of restriction will now go on at an accelerating pace, it is unlikely Japanese trade with the democracies will be completely cut off unless Japan commits another act of aggression. Already, before the present crisis, restrictions imposed by the United States Government covered more than half of United States exports to Japan as they had developed between 1936 and 1939, the most important commodities affected being iron * and steel scrap, aviation petrol, munitions and war equipment of all kinds, non-ferrous metals, and machine tools. Moreover, Japanese imports from the American continent generally had been indirectly restricted by the United States Maritime Commission’s embargo on the chartering of American tankers and by an export embargo on the steel drums in which oil used to be shipped for lack of tankers. From November, 1940 (when the embargo on iron and steel scrap was imposed), until February, 1941, United States shipments to Japan were down 60 per cent, by comparison with the corresponding period of the previous year; in the first two months of 1941 shipments were less than 50 per cent, of the total for the first two months of 1940. Since the restrictions have tightened since February, it seems possible that by this time Japan’s imports from the United States have shrunk to about a third of what they were last year. The major weakness in Japan’s war economy is, of course, her dependence on imported oil supplies. Japan produces only about 5,500,000 barrels of oil domestically and in territories under her control; and even this meagre supply is insecure since part of it comes from the island of Sakhalin,-the northern , half of which is Russian territory. Total consumption, heavily increased in recent years by the war in China, is probably about 35,000,000 barrels. Imports, which come almost entirely [ from the Persian Gulf, the Netherlands Indies, and the Pacific coast of the United States, have lately averaged about 40,000,000 barrels a year, out of which there has been established a reserve of about 15,000,000 barrels, Japan’s processing plants will be able to meet her' relatively small requirements of aviation spirit for [ some time to come; nor is it likely that the i navy need fear a shortage for a year or more, r 'But it is: abundantly clear that, if the demo- \ cracies make the oil embargo absolute, Japan will.not be to engage in extensive land, sea, and air operations for more than a few i months at the outside. On the side of exports, it is Japan’s silk trade which will be most seriously affected by the.new restrictions; and according to the cable news the Japanese Government has been compelled to intervene to - prevent a panic fall in prices. Here again, howthe effect of restrictions is not nearly as ' severe as it would have been several years ago. For a decade, and particularly since the outbreak of the war in China, the Japanese Gov-' ernment has been discouraging the growing, of silk, which is regarded as a luxury, in favour of foodstuffs. Moreover, Japanese silk growers > have long been reconciled to the prospect of | their overseas mairket being steadily curtailed - by the development 6f substitutes. i