The weakest points in Japan's armour are its finances and the state of its international balance of payments. Japan has never been able to balance its budget since the occupation of Manchuria. Its national debt, which was about Y.6,000,000,000 in 1931, is now about Y.16,000,000,000 and will exceed Y.20,000,000,000 by 1940. War exigencies and depression in export trade have stripped Japan of almost all its gold, except for a sum of ¥.500,000,000 which is held as a nominal currency reserve, although the currency is actually inconvertible. The trade balance with countries outside the yen bloc is unfavourable to the extent of about Y.500,000,000.
One should not overlook these economic danger signals. But one should not overestimate their importance. Does any one really suppose If Japan is in financial straits, this is true, in greater or less degree, of every large power in the world. M the United States can afford to spend billions of dollars annually for an indefinite period of time to support its unemployed, it is at.least conceivable that Japan can pour out billions of yen, treating the war in China and the economic development of Manchoukuo as a sort of gigantic WPA project. One of the incidental advantages of this arrangement is that it tends to find employment abroad for the restless spirits who might otherwise be killing Cabinet Ministers at home.
To the average Japanese in town and country, the war has brought hardships and deprivations but no suffering so acute as to represent a serious threat to working efficiency or national morale. Official statistics show a rise of more than fifteen per cent. in the retail price level, of less than ten per cent. in the general cost of living, of less than five per cent. in the wage level since the commencement of hostilities. As is usual in time of war, prosperity and distress are unevenly distributed.
University and technical school graduates can have jobs for the asking—a welcome change from the lean years of unemployment. Japan has its booming munitions centers, its Hog Islands and Bethlehems (the town of Yawata, in Kyushu, site of a large steel works, is a good example). Here some skilled workers earn salaries that are fabulous by oriental standards, as much as two or three hundred yen a month. As against this must be set bitter distress in the small handicraft trades, which cannot adapt themselves to wartime production and canna: get their customary raw materials because of import restrictions.
Text read from the printed page and cleaned; old type leaves the occasional error.