Before the earthquake, Japan's economic stability depended upon her gold reserve of Y. 1,830,000,000, of which 1,215,000,000 was held Japan, the remainder being in the United States. The possession of this gold reserve was an object of great pride to Japanese because it definitely stabilize ed exchange on the yen and -it kept Japan independent of foreign loans. Japan was not a debtor nation. Far-sighted statement have for some time, however, been realizing that this gold reserve was slowy being wiped away by unfavourable bank balances, which Mr. Ozaki Jukio estimated at an average of Y. 300,000 annually for the past two years. This year it was much larger.
Japanese industry was in an unfortunate condition financially, and its products were not able to meet competition in any important markets. Fundamentally, the whole of Japan's industry was functioning mmproperly. Wages were high; yet there was no efficiency of production. 'Ube -practical effect of the la-hourers' attitude was that Japan was in a permanent state of ca' canny. The workmen refused to produce beyond a given quantity matter what wages were paid them, and to force production the employers were constantly increasing wages, only to find that the increase did nothing more than to raise the price of living. Wherever one went in Japan during July and August one heard that the most serious problem before the Government was to salva this problem or Japanese industry would become bankrupt and the government would have to use the gold reserves to meet unfayourable balance of trade.
Another serious defect in the economic world of Jiapan was the holding of enormous stocks of goods purchased at peak prices during the war years and held for high markets. The Japanese did not follow the example of British and American houses of taking losses following the war, wiping them off the books, reorganizing and starting afresh. They waited for the situation to right itself, and all the time they were carrying charges which were bringing wp the prices of all com-Jnodities. The result was that prices were so high that in spite of high wages the workers were' dissatisfied and really found it difficult to live. This condition was one of the principal sources of discontent and radical propaganda in the country.
Text read from the printed page and cleaned; old type leaves the occasional error.