ECONOMIC CRISIS GRIPS JAPAN WAR-BLASTED INDUSTRIAL CITIES

Gisborne Herald, Volume LXXIV, Issue 22416, 25 August 1947, Page 5

ECONOMIC CRISIS GRIPS JAPAN

WAR-BLASTED INDUSTRIAL CITIES

LEADERS HOPING FOR U.S. CREDITS (N.Z.P.A. —Reuter — Copyright.) (By Denis Warner, A.A.F.-Reuter Correspondent.) (10.30 a.m.) TOKYO. August 21. Japan is governed today by a coalition of three parties, Social Democrats, People’s Co-operatives and Democrats, led by the shy Socialist, Tctsu Katayama and the suave ITitoshi Ashida deputy Prime Minister and Foreign Minister, whose diplomatic training, manner and polish arc in marked contrast to the nervous diffidence of his leader. .In opposition, pouncing on the Government’s difficulties and errors is the Liberal Party (Conservative) with Shigeru Yoshidn, the former post-war Prime Minister as its leader. For a moment the Liberals are content to watch the hapless coalition ploughing into a maelstrom of economic difficulties.

Regarded as “Old Gang”

Any attempt to usurp power before the peace treaty would be a cardinal error. The Liberals know they are regarded as the "old gang" and that responsibility in these difficult days would be disadvantageous to their own cause in Japan and a worse internationally . inexpedient. No one could envy Katayama his position. Almost without previous political experience and certainly without administrative knowledge and background, he has an economic crisis on his hands incomparably worse than that now confronting the British Labour Government. A combination of circumstances, by the end of the war. had reduced Japanese industry to a state of helpless inertia and all civilian production had been discontinued to meet the needs of the armed forces. The Superfortress raids had destroyed nearly all Japan’s famous “backyard” factories and had blasted the economic triangle, Tokyo, Nagoya and Osaka into a vast junk heep. Because of the war urgency, those factories and plants that remained had received little maintenance since 1941. There was no international trade upon which industry might have to revive. Nor were there any foreign credits to build shattered plants. Facade of Recovery a Myth

Finally, over all this, depression hung the threat of reparations and the reduction of whatever industry remained. But the Japanese are tireless, if slow workers. Like ants .they crawled out of the holes they used for homes in their devastated cities and began to rebuild. The result today is fantastic. You may live in Tokyo as I do and rarely notice the war damage. Osaka, once completely devastated, will be the thriving centre of private trade. Hiroshima proper, where once you could count only 13 buildings still standing, is now a hustling, bustling frontier town. All this is largely front of course. The houses and shops are flimsy shanties. The whole facade of recovery is largely a myth. „ , , , Stalls along the Ginza, Tokyo s broad main street, are filled with watches, cameras and china toys, but nearly all of it is gimcrack, the stuff that no country today can afford to buy. 'With the development of synthetics, the bottom is fast dropping out of the silk market. The reopening of private trade will help, but there will be many disillusioned foreign traders in Japan in the next few months. Inflation Growing Daily

The yen is a big problem in itself. Before the war, it was valued at approximately four to the gold dollar. With the arrival of the occupation forces, it was fixed—for the occupation forces only— at 15. Later, after the introduction of military script, it dropped to 50. With black market of 150, inflation becomes worse from day to day. The Zaibatsu, the old capitalistic clique, whose wealth was spread by the directive of General MacArthur, has virtually vanished from the industrial scene. ’ Its place has been taken by the new yen millionaires whose source of income is the movie theatre, striptease show, taxi dance .hall and beer garden, and by black marketeers who control rice, wheat, fish and salt in a land staving off starvation only because of the altruism of the United States. The Japanese claim that recovery will be impossible without foreign credits and the relaxation of some of the terms of the Potsdam declaration. By foreign credits they mean dollars. Already the occupation has cost the United States a fabulous sum. Even black marketeering by American troops before the introduction of military script is estimated to have involved the United States Treasury in a loss of some 60,000,000 dollars. Congress M~.y Not Be Enthusiastic Congress may not feel over-enthusias-tic at the prospect of financing a former enemy when many Allies are still in distress. In brief, the nation that the peace conference will consider consists of four main mountainous islands with a population more heavily concentrated per acre of cultivated or cultivatable land than any other country in the world. It lacks raw materials for the production of exportable goods. It is largely destroyed by war. Its industrial towns were gutted by bombing. Its inhabitants are feudal peoples .oppressed by centuries of often harsh overlording and who are thus meek followers of accepted authority. Simultaneously they are immensely hard working and hardy, and have great recuperative ability. Today, they are friendly with the Americans. They prefer the “enemies” they know to the "enemies” who live across the narrow waters of the Tsushima Sea. There is fear in Japan that one day the land may be the -scene of conflict between Russia and the United States. For the moment at least there is also the support of the United States. If General MacArthur wanted a 1,000,000 Japanese to fight Russia and called for volunteers, he would get them in a day, a former Japanese naval officer told me. Dangers Are Obvious

There is the nation that the Canberra conference must discuss. To-day, it is disarmed, demilitarisd and demobilised. It is for Canberra and the conferences that follow to determine what it shall be tomorrow. The dangers are obvious. What the peace-makers must determine is where justice ends and foolhardiness begins. In the Keiji period, the Japanese people revealed themselves as the most astonishingly receptive in the world. From the mists of their self-ordained seclusion. they came in 50 years to occupy a position as a leading world Power, with a powerful army, navy and air force and determination to win by force the breathing space for which, even now, they clamour. Japan must take its place in the economic fraternity of the world. Commonsen.se calls for that, but commonsense demands also that she should not be built up by the peace treaty to a level where she may again threaten the security of the Pacific, nor should she be given opportunities greater than those available for the Allies whose lands she plundered. l r et she must not be left so weak internally that she would be in danger of falling prey to the greed of others. Academically, it will be interesting to watch the peace-makers and their reactions to:

(1) The international situation as it affects Japan. (2) To the realities of Japan’s internal situation. The peace of the Pacific and world may depend upon their wisdom.