JAPANESE TRADE.

King Country Chronicle, Volume XXVIII, Issue 4527, 5 April 1934, Page 6

JAPANESE TRADE.

(To the Editor.)

Sir, —I gather that you imply from the Japanese budget that she ii receiving morj in terms of money and goods than she is exporting in terms of money and goods, showing a budget deficit that is owed to overseas interests. As you know, now we are off the gold standard, overseas debts can only be met by the export of goods. Therefore it follows that a? long as Japan exports sufficient goods, it does not matter what her inside currency may be. To say that "it means further inflation, until the time would come when Japanese currency would be practically worthless in other countries" is, I think, a misconception of international exchange; no money is of any use outside its country of origin. Did we by depreciating our currency in terms of sterling by 25 per cent, alter our purchasing power in England? Obviously not. As far as my information goes, I believe that Japan's budget deficit is due to internal debts owing to subsidies for exports and shipping, for the following reasons: I know of no great Japanese overseas borrowing lately, and she could not have imported a great excess of goods—measured financially—over her exports, without such a credit. Also, we know that her exports have increased by 54 per cent, in the last year, and that means a greater increase of paid-for goods, if she has used those extra credits, i.e. 54 per cent. It is well known that she fought her war with China without an outside loan. I also have reason to believe that she is issuing subsidies in the form of State credits that have their origin in the State, and not in a private trading company (bank debt). This debt that the State owes itself could be periodically written off, and any redundant money that might cause inflation could be written off, by taxation, for example. As far as standards of living are concerned, I doubt if Japan's standard is lower than India, and even India cannot compete with her. To quote Sir H. McGowan, chairman Imperial Chemical Industries, Ltd.: "In going through Japanese factories I found no outward sign of either malnutrition or lack of physical energy or a discontented people." Is not contentment the aim of all of us? The fact, is the costless Government export subsidy is the secret of Japanese trade success in the main. With regard to Japan feeling herself in a position of a dangerous industrial future, let me quote the "Mainichi," in reference to the cotton negotiations: "Japan is well preared for the consequences. We must expect more barriers. A strongpoint in our favour is that we can boycott Australia's wool if the Empire boycotts Japanese. If Britain fights harder we only have to step on the gas." That does not sound like a debtor nation. As far as the orthodox economists are concerned, our present position is greatly due to their theories, and now they contradict each other on every possible occasion. Whom should one believe?I am, etc., HEATH MASON.

. (We have deleted a portion of our correspondent's letter, as it is not our policy to publish criticism of the private policy of other papers.— Editor.)