MADE IN JAPAN

Cue (NZERS), Issue 34, 31 October 1945, Page 36

MADE IN JAPAN

JAPAN is not (jetting a soft peace. J On the contrary it is going to be a very hard one. It will take many years to fulfil the terms of surrender.” Thus General MacArthur, Supreme Commander in the Pacific, in a recent statement on the occupation of Japan. MacArthur supplemented this categorical pronouncement ( with the hardly surprising information that Japan, industrially, commercially, militarily, and in every other way, was in a state of complete collapse; her food supplies were scant, and she faced conditions that might well become catastrophic.

That, in brief, is the fate of defeated Japan, a fate which she brought on herself. It is the. fate of seventy million Japanese who must now pay the price of the foolhardy war of aggression into which they allowed themselves, not unwillingly, to be led. MacArthur’s statement dispelled many of the uncertainties about the aims and methods of the Allied occupation which had been causing concern in the United States and elsewhere, and at the same time it gave warning of the immense task facing the United Nations and the occupying authorities in restoring order out of chaos in the Far East. For, if it is true that the Japanese must be prepared to , take their medicine, equally true is it that •in varying degrees scarcely a country in the Far East will escape the repercussions from the breakdown of the Japanese economy under the strain of war.

Every effort will have to be made by the occupation authorities during the coming months to save something out of the wreckage of the Japanese industrial machine if a centre of famine and despair is to be prevented from making its appearance in the Far East. That is a matter of primary concern to the Allied nations, as much for their own convenience as for the fact that it can hardly be to the benefit of the impoverished peoples of Asia that they should be deprived of access to the cheap manufactured goods which Japan can still provide in return for their raw materials. To suggest that it will be possible for a breakdown in such supplies from Japan to be made up by an Equivalent quantity of British or American goods is out of the question, and the only alternative to Japanese goods is a much lower level of consumption among the native populations. These considerations have to be taken into account, quite apart from any question of Japan’s own position or the general principles of economic policy to which the United Nations are committed’.

The war has brought wide devastation to Japan’s industrial structure and the peace has brought sweeping controls imposed by the Allied authorities. Stripped of her colonies, including Korea and Formosa, and presumably deprived of all the privileges which have hitherto been hers id Manchuria and China, her political

control will thus - be confined to the main islands, or Japan Proper. It is within that small area —roughly onefifth larger than that of the British Ides-—that more than seventy million people will have to maintain themselves in the next few years, and their land is by no means rich in natural resources.* The Japanese population is likely to grow steadilyone estimate, based on the known fact that a high proportion of the population is at present within the fertile age groups, places the probable annual expansion at a million.

Far-reaching adjustments will have to be effected in the Japanese economy to meet the new situation. To gauge the measure of these adjustments it is necessary to glance at the outstandingfeatures of the economic system of the country as it has operated up to the present. Before the war with China, out of an occupied population cf some thirty-four million about fourteen million were engaged in agriculture and about six hundred thousand in fishing, and from these two industries came the bulk of the foodstuffs which the people consumed. Far from being self-sufficient in her food supply, however, she derived large quantities from her empire. Ten years ago she was importing mostly from Korea and Formosa, a sixth of her consumption of the staple food, rice; while sugar came from Formosa and beans from Manchuria in extensive quantities. For obvious reasons it would be difficult for her to dispense with these imports.

Already the most intensive methods of cultivation are being used on the limited area of arable land available in Japan, and there is little or no fresh land to be brought under cereals. With a holding of less than two and ahalf acres, the average Japanese farming family ekes out its livelihood by various subsidiary employments, such as. the rearing of silkworms, which provide the chief industrial raw material produced in Japan. Reports

recently made available to Allied Headquarters in Tokio by the Japanese Ministries of Commerce and Agriculture shewed that the growing of mulberry trees for the production of silk has been greatly reduced by the mulberry lands being used for rice production in order to offset the Allied blockade. Yet more mulberry-grow-ing land is to be given over to rice growing this autumn and winter, so that silk production next year will be only -ninth of what it was before the' war. The conversion is to be temporary, the mulberry branches being cut back to prevent budding, but the plants left intact.

It was in the textile industries that Japan began her industrial career, and in 1929 her economy was highly specialised in two- branches of that group, cotton goods and raw silk. Although raw silk production declined during the

next ten years, the cotton industry continued to expand and there was also a rapid develcipmcnt of new textile trades such as rayon. It was in the engineering- and metal trades,

however, that the greatest advance was made, in line with improved technical methods and Japan’s rearmament programme. Expansion was also observed in the manufacture of such products as rubber, paper, glass, pottery, chemicals and a number of miscellaneous consumption goods. To feed her in dustrial machine she had. to import most of the necessary raw materials, such as iron ore, pig iron and scrap, non-ferrous metals and ores, pulp, rubber, vegetable oils and hides and skins.

Japan paid for her imports up to 1929 by a highly specialised export trade, sending her raw silk to America and her cotton textiles and a few other manufactured consumption goods to Eastern Asia, India and the South Seas. Raw silk exports fell sharply with the American slump, and thereafter Japan concentrated on exports of manufactured, goods. She gained markets for other textiles, especially woollen and worsted and rayon goods, and at the same time there was a great expansion of exports other .than textiles. As a result the standard of life increased in Asia, where impoverished peoples soon came to depend increasingly on the cheap manufactured consumption goods which Japan sent to them, and had the Japanese economy not been distorted by preparation for war the development would doubtless have been carried even further.

With the loss of her colonies, Japan will be faced with the need for obtaining essential foodstuffs from areas outside her own political control and currency system. In other words, what was previously her colonial trade will now become foreign trade, and even if she is allowed to do business on equal terms with other nations she will no longer be able to mould the economy of those countries to her own special advantage. To obtain raw materials Japan must have a big export trade, but in addition she may try

to reduce her food imports to a minimum by devoting more manpower to agriculture and fishing than she did before the war. However, in view of her already intensive cultivation and the likelihood of Russia denying her access to the fishing grounds in the northern seas, it would seem that the only solution left to her will be that of retracing part of the course she has followed since 1929, of concentrating her resources to an increasing extent on the consumption goods industries,

and of attempting to build up an export trade in those goods sufficient to enable her to buy the raw materials and food she needs.

In that connection there is one main fly in the ointment —nylon. About two—fifths of Japan’s exports in 19211 consisted of raw silk, a trade unique in that it does not depend on imported raw materials. By 1937, however, silk imports had greatly diminished, and in view of the probable competition of nylon it is hardly likely that they will regain their former position. Thus, if Japan is to obtain foodstuffs and raw materials from abroad she will have to export

much greater quantities of wholly manufactured goods, such as cotton, rayon, staple fibre, woollens and worsted, rubber manufactures, hosiery, pottery and toys, than she did before the war.

In the period from 1930 onwards Japanese competition greatly affected certain Western industries. If Japanese industry is resuscitated now and again placed on a workable basis of operation it may not be many years before the Japanese will be competing even more vigorously on markets in Asia, the Pacific and elsewhere than they did before. The problem is a tremendous one. There will be many who will lean to the view that Japan should now be Left to the fate she brought upon herself and that she should not be given the opportunity of disturbing the economies of the victor nations. At the same time, it is obvious that the matter cannot be dismissed so lightly. It has to ire remembered that the peoples of Asia are

in urgent need of the cheap manufactured consumption goods which Japan can produce, and that other countries, including America and Britain, would not' be in a position for many years to cater for the markets of the Far East.

Japanese industry, as General MacArthur has pointed out, is in a state of collapse. Clearly it is not in the interests of the United Nations that she should be allowed to remain an economic burden on the victor countries when, by a process of adjustment, she can be used to fill a gap in the world supply problem which must be acute for years to come.

There can be no question of sympathy for Japan or the Japanese; they must be made to learn their lesson, and learn it the hard way. But the responsibilities of the Allied Powers are global in their aspect, and if by harnessing Japanese industry the future can be made easier for the native populations of Asia the Japanese must be set to work.