JAPAN'S WAR EXPENDITURE

Dominion, Volume 32, Issue 143, 13 March 1939, Page 8

JAPAN'S WAR EXPENDITURE

An opinion has been expressed in London that hostilities in China will last for at least three more years and are “almost certain to end in a stalemate.” The speaker was General Chiang Kai-shek s confidential adviser, Mr. George Shepherd, who is visiting England. Possibly the wish fathers the thought, for the Chinese strategy is based on a policy of prolonged, elastic resistance; nevertheless the view is one that is widely shared, and it raises afresh - the question as to Japan’s ability to maintain her present war expenditure without serious damage to her economic structure. Since the beginning of the year there have been numerous reports from Tokio of heavy military budgeting, severe increases in taxation and all-round national economies. The year opened with messages from the Premier and the Foreign Minister to the people, emphasizing the necessity for severe restrictions in the cause of “the emancipation of the Far East from Communism and Western bondage.” They announced that the Government planned a new issue of national bonds valued at £291,000,000, and that taxes would be increased so as to provide a further £11,000,000 for war spending. In Febiuary it was disclosed that a third of the approved Budget expenditure of £215,000,000 was to be spent on the army and navy, and that in addition a special war Budget of £77 ,000.000 had been authoiized. At that time the Tokio newspaper, “Asahi Shimbun,” said it was probable that no less a sum than £600,000,000 would be required for general military purposes. It was also reported that as a consequence of her preoccupation in the China campaign Japan s exports last yeai had declined by £24,000,000 to £170,000,000, and that her imports had been reduced to £160,000,000 —a drop of £65,000,000 To see these figures in true perspective a comprehensive review of the Japanese economy would be required, but standing alone they serve to indicate that the burden imposed on the nation by its militarily ambitious rulers is an extremely heavy one. On the other hand it is to be recognized that these same rulers have prepared a careful, spartan economic programme, calculated to sustain the nation till such time as the newly-acquired territories may be exploited and their valuable resources drawn upon. Measures have been adopted for the strict control of production, consumption, foreign trade and the foreign exchange market. In spite of the heavy commitments the value of the yen has been maintained by drawing on gold reserves, and so far is in a position to reboriow the amounts spent. Thus it is contended; and not without justification, that in the past two years Japan's economic system has been placed on a sound war footing. And one of the lessons of the Great War was that when a modern nation has done this she is capable of pursuing an effective campaign for years, and in the face of colossal expenditure, without a breakdown. In the latest of a number of works on economic problems m relation to war, Dr. Paul Einzig, foreign editor of the Financial News,” has this to say about Japan: In forming’a judgment about the effect of the Chinese war upon the Japanese economic system, it should be remembered that the war is far from engaging the full resources of Japan. Though the size of the army that is operating in China is considerable, it does not necessitate anything like general mobilization. Indeed, the younger classes have been retained in order that they shall be in readiness in the event of war with Soviet Russia. Thus the economic requirements of the Chinese war, though materially larger than those of the Abyssinian war, are by no means as heavy as would be those of a war with lirst-class Powers. Japan herself is not expecting that there will be peace in China for a long time to come. Her leaders have told the people as much, and for the past two months the army in China has been constructing barracks intended to accommodate troops at certain commanding points for an indefinite period. This and the substantial budgeting for future war expenditure suggest that General Chiang Kai-shek s intention to continue the struggle, if possible or necessary, for at least three years, will not dismay the Japanese. They are playing with thoroughness and confidence a strong and well-thought-out hand.