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Books of special value and gift books, when the giver wishes it, are not allowed to circulate. •■: Readers are asked to re- port all cases of books marked or mutilated. Do not deface books by marks and writing. Cornell University Library HC 462.U595 The economic situation of Japan :prepare 3 1924 023 440 013 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924023440013 No. AJ. For .^rrr^ F0i2 CONFIDENTIAL GOVERNMENT USE ONLY WAR TRADE BOARD c^ ^ BUREAU OF RESEARCH S^\ <^ "O THE ECONOMIC SITUATION OF/^APAN This report was prepared with assistance from the Division of Planning and Statistics of the United States Shipping Board, the United States Geologi- cal Survey, the United States Tariff Conunission, and the Bureau of Foreign and Domestic Commerce of the United States Dep^ment of Commerce WASHINGTON GOVERNMENT PRINTING OFFICE 1918 No. .4.2.. For FOR CONFIDENTIAL GOVERNMENT USE ONLY WAR TRADE BOARD BUREAU OF RESEARCH // ■ r.N^ THE ECONOMIC SITUATION OF JAPAN This report was prepared with assistance from the Division of Planning and Statistics of the United States Shipping Board, the United States Geologi- cal Survey, the United States Tariff Commission, and the Bureau of Foreign and Domestic Commerce of the United States Department of Commerce 1 ; WA^HII^GTON , ' GOVERNMENT PRINTING OFFICE A.5?1^ZS- LETTER OP SUBMITTAL. Washington, D, C, October 8, 1918. SiK : There is submitted herewith a report on Japan. The report sununarizes the economic resources of Japan and considers in some detail the development of its industries, trade, and shipping during the war. Various members of the Bureau of Research and of the other governmental agencies mentioned in the introduction contributed to me report, which was prepared under the direction of Mr. H. H. Barrows. Special recognition is due Mr. A. N. Young, who carried the chief burden of the work. Mr. A. B. Morton likewise deserves mention. Yours, very truly. Hon. Vancse McCormioe, Chairman War Trade Board. Arthitr E. Swanson, Director Bureau of Beaearch. INTRODUCTION. This study is concerned with the economic resources of Japan and the development of its industries, trade, and shipping during the war. The Bureau of Research has on file more detailed reports relat- ing to many of the topics discussed, any of which will be furnished upon request. The Bureau of Research has received valuable assistance from several other governmental organizations, and desires to acknowl- edge its obligations to the Division of Planning and Statistics of the United States Shipping Board for reports regarding a number of special topics, and particularly for its study of the Japanese ship- ping situation, which is largely reproduced in Chapter VII of the present study ; to the Tariff Commission for access to the manuscript and proof sheets of its forthcoming report on the trade of Japan, and for information relating to a number of the topics discussed ; to the Bureau of Military Intelligence for access to its files; to the Geo- logical Survey for preparing studies of metals in Japan, which are summarized in the present report ; to the Bureau of Foreign and Do- mestic Commerce of the Department of Commerce for access to the unpublished reports of Dr. J. Morgan Clements on Japanese mineral resources and industries; and to the Far Eastern Division of the Bureau of Foteign and Domestic Commerce for aid in the as- sembly of data, particularly those relating to finance. Washington, D. C, September, 1918. CONTENTS. Page. Summary 9 Chapter I. Food production and trade: Summary 15 Bice 15 Wheat...,.,... 17 Beans and jjeaa 18 Vegetable oils 18 Aquatic products 19 Tea 19 Sugar 20 Chapter II. Fuel and power: Summary 21 Coal 21 Mineral oil 22 Electrical power 23 Chapter III. Metal industries: Summary 25 Iron and steel 25 Copper 28 Tin 29 Tin plate 30 Nickel 31 Lead 31 Zinc 32 Aluminum ■. 33 Tungsten 34 Antimony 34 Mercury 35 Chapter IV. Chemical industries: Summary 36 Dyestuffs 37 Matches 38 Camphor 38 Soda ash, caustic soda, and nitrate of soda 40 Sulphate of ammonia 40 Potassium products and iodine 41 Other chemicals 41 Chapter V. Textile industries: Summary 42 Silk 42 Cotton '. 44 Wool 46 Chapter VI. Other manufacturing industries: Summary , , , . . 48 Wood and wood products 48 Paper " 49 Leather 50 Rubber 51 Tobacco - 51 Glass : 52 Earthenware 52 Buttons 53 Brushes 53 Pencils ^ 53 Toys 54 7 8 CONSENTS. Chapter VII. Shipping and shipbuilding: Pag& Summary 55 Growth and present status of Japan's merchant marine. - - 55 Present employment of Japanese ships 59 Shipping agreements between Japan and the United States .... 61 Shipbuil(iiiig-_ /.' i 62 ■Freight rates and the prosperity of Japanese shipping enterprises 64 Chapter VIII. Finance: Summary , 65 Trade balance of Japan.,... .-, ,. .^ f ?.*" 65 Importation of gold...:.'..'.,'.'., ^;.l i'.'.'. . . : .'. 67 Accumulation of funds to- Japan's atcount in foreign countries ■. .-. i 68 Loans and credits granted- by Japan to the alllies 68 Beduction of national debt:.-. 68 ^ International balance sheet. . : ;.... 6? Bates of exchange .;.Vi ..i'J. !".';■ 69 Measures to prevent further depreciation of the dollar. .. - 71 - Currency and banking system of Japan.- 71 Chapter IX. Course of Japan's trade with certain cotintries duriiig the war: ';' ■ , United States 74 '; Great Britain.. ....:..' 75 France : .': 77 Germany '.'.... L ! i ..".'.' 2 1 ............ . 77 Russia ..: J ;•.:'...:..■.....::.•. .- 78 China..... .......^,. ,;..::=:, 79 British India. ...;-..-.-..- l..: 81 Dutch East Indies ... .'::-:.,. 82 British Straits Settlements 1 i 83 Philippine Islands -...;. 84 Australasia 84 Africa: 84 South America ^ 85 Appendix A. Analysis of principal exports from the United States to Japan, January 1 to June 30, 1918, according to value, quantity and -tonnage 86 Appendix B. Analysis of principal imports to the United States from Japan, January 1 to June 30, 1918, according to value, quantity and tonnage .-.' -. 90 Index. : : ::....:. : . . .-. : ' 93 SUMMARY. The influence of the war upon economic conditions in Japan has been similar in a general y?ay to its influence upon economic condi- tions in the United States. There have been similar calls to export food, munitions, and manufactures and to produce ships. The Jap- anese have not failed to take advantage of their opportunities, and have materially enlarged their industrial equipment and expanded their foreign trade. This unusual chance for trade was greatly needed, since Japan probably is the poorest in natural resources of the great nations of the world. Japan, with a population of 76,000,000 in 1916 (includ- ing Korea, 17,000,000, and Formosa, 3,700,000) , has an area less than that of the State of Texas.^ In Japan proper there are 2,000 people per square mile of cultivated land, while the United States has only one-tenth as many, or 200. Japan has per hundred people only 4 cattle, 0.3 of a sheep or goat, 3 pigs, and 2 horses or mules, while the United States has 65 cattle, 49 sheep or goats, 68 pigs, and 29 horses or mules. The poverty of the great mass of the Japanese people is indicated by the fact that Japan's total annual supply of grain per Capita is only 7 to 8 bushels, in contrast with 50 bushels in the United States.^ Japan is poor also in many of the fundamental raw materials. The output of coal (25,000',000 short tons in 1916) ^s less than 5 per cent of that of the United States, and the production of mineral oil less than 1 per cent. Japan's total reserves of iron ore, including both high and low grade, are- only about 60,000,000 tons, which is less than the present annual production of iron ore in the United States, and the relatively small output of pig iron is derived largely from Korean and imported ore. Copper is the only important mineral of which Japan has adequate resources. Practically all the raw cotton and wool required by Japan, and 60 per cent of the leather, must be secured from abroad. Pasturage for sheep or cattle is scanty, because much of the hilly country which can not be used for agriculture is covered with bamboo grasses^ unfit for pasture and almost impossible to destroy. Because of these scanty resources the Japanese must depend upon the import, export, and carrying trade and upon manufacture, if they are to improve materially their economic situation. Eealizing this fact, the Japanese Government promotes industry and trade in every possible way — ^by subsidies, loans, expositions, commissions of investigation, and the importation of experts from abroad. Japan's possession of an efficient merchant fleet has enabled her to take advantage of the conditions favorable to the expansion of Japanese trade which the war created. When Japan found herself cut off from previous sources of manufactured articles, ships made 1 The total area of Japan proper Is 148,756 square miles, of Korea (Chosen) 84,738, of Formosa (Taiwan) 13,944, and of Japanese Sakhalin and a few small Islands 13,30(5, a total of 260,788 square miles. (Stateman's Yearbook, 1918, p. 1042.) ' Yearbook of the United States Department of Agriculture, 1917, pp. 709, 710, 751. 84643—18 2 9 10 THE ECONOMIC SITTJATrON OF JAPAN. possible the securing of the raw materials to produce many of these articles at home. Domestic industries have developed so materially that Japan's dependence on foreign countries for manufactured ar- ticles has in large part ceased. War conditions likewise afforded opportunity for a great expan- sion of Japan's export trade. China, India, Australia, Africa, and South America have been increasingly cut off from their former sources of supply. In the case of. country after country and article after article a continuous decrease in imports from Europe has been paralleled by a corresponding increase in imports from Japan. Among the more ihiportant articles whose exportation from Japan has grown rapidly are zinc, copper, manufactures of copper and brass, cotton and woolen goods, wood products, paper, leather goods, manufactured rubber, and glassware. Even some amounts of tools, hardware, and machinery have been exported to other oriental countries. The total value of Japan's foreign trade has grown from $681,000,- 0001 in 1913 to $1,320,000,000 in 1917, and will amount to $1,736,000,- 000 in 1918 if the volume of trade of the first six months be main- tained. This last sum would represent an increase of 155 per cenb over 1913. However, in judging the growth of Japan's trade it is incorrect to conclude that the growth in volume of trade corresponds to this increase in value. It is unquestionable that the volume of trade has grown materially, but many of the articles constituting this trade have doubled and more than doubled in price during this period. A large share of the world is now in debt to Japan. It is esti- mated that the total balance of payments accrued in favor of Japaii during the war on account of excess of exports over imports and payments for shipping freights amounts to over $1,000,000,000. To offset this sum Japan has received a net importation of gold amount- ing to $140,000,000, has granted to the allied Governments credits totaling about $600,000,000, has reduced her national debt, and Japa- nese banks are reported to hold over $250,000,000 of drafts on for- eign countries. The Japanese yen stands at a premium compared with the dollar, the pound, and the franc. In July, 1918, the yen had appreciated about 8 per cent in the United States. From March to August, 1918, the exchange on Japan (par is $0.4985) rose from $0.5175 to $0.5475. This appreciation was due in part to an adverse balance of trade, which amounted to nearly $35,000,000 during these six months. In part also it was due to the need to meet payments due to Japan on account of shipping services and the purchase of ships. Japan's trade with the United States underwent significant changes between 1914 and 1918. Before the war the imports of the United States from Japan were about double the exports in value. During the past year, because of our increased exports to Japan, the exports have been nearly equal to the imports in value. The growth of exports of iron and steel is by far the most sig- nificant fact regarding the export trade from the United States to Japan. These exports grew from about 200,000 long tons annually in 1912 and 1913 to about 900,000 long tons in the fiscal year 1918. iFor convenience yen are converted Into doUars at the rate of $0.50. though 1 ven actually equals $0.4985. ' THE ECONOMIC SITUATION OF JAPAN. 11 A part of this increase in the exportation of iron and steel was due to shipbuilding undertaken by Japan for the United States and the allies. The two contracts of our Government for ship construction called for about 250,000 tons of steel, a considerable part of which has yet to be shipped. The extent of Japan's dependence upon the United States for iron and steel is shown by the fact that about 60 per cent of its entire consumption is imported from this country. British exports of iron and steel to Japan, which exceeded those from the United States prior to 1914, have decreased steadily during the war and have now practically ceased. Japan would be very seriously affected should the exports of iron and steel from the United States be stopped. Silk has retained its leading position among the articles imported from Japan. For many years silk has constituted from 60 to 70 per cent of the value of these imports. The quantity of unmanufactured silk imported from Japan grew from 20,800,000 pounds in the fiscal year 1914 to 32,700,000 pounds in the fiscal year 1918, an increase of 60 per cent. The increase in value was even greater during this period, from $76,000,000 to $171,000,000. Thus our current trade with Japan is largely a question of iron and steel versus silk. It is surely a striking fact that in the first half of 1918 we exchanged with Japan 400,000 tons of iron and steel for 7,500 tons of silk, and still the value of the silk exceeded that of the steel. The following table ^ presents a striking comparison : Value. Weight (long tons). Exports <)t iron and steel and their products to Japan, Jan. 1 to June 30, 1918. . Imports of silk Irom Japan, Jan. 1 to June 30, 1918 $71,149,000 73,765,000 412,433 7,523 Because of the weight and bulk of our exports to Japan, together with their importance to that country, a situation is present in which exports may be said to control imports. This is contrary to the policy of war-time trade most advantageous to an active belliger- ent, namely, that the volume of necessary imports should determine the tonnage to be assigned to a given trade route, and that exports be no more than sufficient to employ this amount of tonnage. It is estimated that our exports to Japan in the first six months of 1918 weighed 627,259 long tons, while our imports from Japan weighed only 272,812 long tons. An analysis of this trade according to ton- nage is given in Appendices A and B. The shipping discrepancy is much less than these figures indicate, since the combination of iron and steel and raw cotton stows very advantageously. However, on the basis of an estimate of theoretically perfect stowage, it appears that our exports to Japan require materially more tonnage than our imports from Japan. The leading articles other than iron and steel which the United States is exporting to Japan are likewise essential to that country. The following table shows the more important of the commodities which it is necessary for Japan to continue to receive from us, to- gether with the quantities exported in the first six months of 1918: 1 Figures of United States Department of Commerce. 12 THE ECONOMIC SITUATION OF JAPAN. Quantity of essential exports ftent toJap.an, Jan. 1 to June 30, 1918.^ Iron and steel and their products Raw cotton Mineral oils ,.. ; Chemicals (mainly soda ash and caustic soda) Rosin Zinc, rolled in sheets, strips, etc Aluminum, ingot, metal, alloy Nickel.. Total Quantity received Jan. 1 to June 30, 1918. Lon;/ tons. 112,433 86,057 40,605 28,377 0,310 521 486 293 675,082 Value (000 omitted). $71, 149 59,055 2,594 6,552 420 244 530 349 140, 893 1 See Appendix A- The United States is sending to Japan considerably larger quan- tities of most of these commodities than the minimum necessary to maintain the economic life of that country. This is especially true of iron and steel. The United States also is exporting to Japan a large quantity of goods which (1) are not vitally essential, (2) may be secured from sources of supply nearer than the United States, or (3) may be pro- duced in Japan. The following list sets forth the more important of these commodities, together with a rough approximation of the amount of shipping required by this trade : Articles less essptitial to Japan, exported from the United States, Jan. 1. to June SO, 1918.^ Long tons. Dead- weight tons. Value (000 omitted). Wood and manufactures of Paper Lead Sand and gravel Bones, hoofs, horns (unmanufactured) Tobacco (unmanufactured leaf). Malt Wines Wall board (plaster substitute) Tiles {except drain) Condensed milic Eoofmg, etc Paints; colors, etc Cotton rags, except paper stock Salt:..... Abrasives Glass and. glassware.'. Total 20, 810 7,485 3,177 2,663 1,693 987 1,597 1,659 801 1,263 1,106 785 774 196 506 301 404 13,985 5,467 1,849 1,560 1,771 1,721 1,670 1,447 1,165 882 644 501 399 353 245 337 $818 1,273 516 3 178 814 161 187 72 28 402 97 293 31 7 182 166 46,207 33, 986 5,22« 1 See Appendix A. Should intervention in Russia develop on an important scale, it may become necessary by reduction of exports to conserve cargo space on tonnage bound for the Orient. In view of Japan's great economic dependence upon the United States, the small extent of our economic dependence upon Japan is striking. The injury which complete stoppage of trade between the two countries would work to the United States is very small as com- pared with the injury which Japan would suffer on account of the lack of the aforementioned articles and the loss of the greater part THE ECONOMIC SITUATION OF JAPAN. 13 of her market for silk. The really essential imports from Japan are few in number and require but a small fraction of the tonnage now in the Japanese trade. However, it is possible to secure many other useful commodities if trade and shipping conditions permit, notably beans, peas, rice, fibers, and products or potash. Inasmuch as the more essential Pacific trade is likely to be westbound, there will probably be vacant space for the back haul. Our necessary imports from Japan are shown in the following table, together with the quantities required during the second half of 1918, according to the estimates of the Division of Planning and Sta- tistics of the United States Shipping Board. The quantities listed for some of these commodities are estimates, based on the proportion which Japan would normally furnish of the total amount to be im- ported from East Asia. At present the United States is importing considerably larger quantities of some of these articles than its essen- tial needs require. Necessary imports into the United States from Japan? SUk Vegetable and animal oils Tea Camphor Tungsten ore Antimony Copper Copra Total Value of imports, January to June, 1918. $73,765,000 15,007,000 1,321,000 1, 038, 000 ' 624,000 , 173,000 265, 000 133, 000 92,326,000 Quantity imported, January to June, 1018. Long tons. 57,693 3,824 994 483 695 475 1,079 Quantity desired, July to December, 1918. Long tons. 5,800 29,309 4,275 1,473 200 3,000 3,445 700 48,202 1 See Appendix B. The United States also has been importing from Japan many arti- cles of which it is not vitally essential for us to receive any from that country. Some of the more important are shown in the following table : Less essential articles imported from Japan, Jan. 1 to 30, 1918? Value (000 omitted). Long tons. Dead- weight tons. Rice Peanuts Hats, material for Cotton manufectuies Brushes, feather dusters, etc Furs and skins Starch Matting China, porcelain (decorated) Paper Toys Fish Matches Buttons Iron and steel manufactures. Giass and glassware Coal Total S4,123 3,057 2,202 1,818 1,561 1,215 1,095 1,012 981 896 949 594 164 7 50,543 20,381 1,101 32,348 17, 182 1,024 6,641 3,481 4,636 6,474 5,000 949 4,360 1,324 2,220 3,100 997 656 1,500 580 992 874 21, 447 2 94, 135 ! 73, 874 I See Appendix B. 2 Partial total. 14 THE ECONOMIC SiruAHON OF JAPAN. Were the United States to follow its own interest regardless of the welfare of Japan, our trade with Japan could be reduced mate- rially in volume. In view of the pressing need for tonnage in the North Atlantic trade, it would be desirable, if possible, to with- draw a large part of the shipping how employed in the Pacific. However, Japan's economic dependence upon the United States, and the fact that the shipping in question is Japanese rather than American, prevent for the present any such drastic action. But in any case it is practicable for the United States to reduce materially the volume of nonessential exports to Japan in order to conserve tonnage. The adoption or extension of certain trade policies designed to further the winning of the war may be feasible in view of the rela- tionships set forth in the following pages. Some of the more important of these policies are (1) curtailment of the exportation of nonessentials from the United States to Japan; (2) further restriction upon the importation of nonessentials, mainly because of the adverse effect upon the rate of exchange ; (3) the establishment by Japan of sufficient credits to prevent any further dislocation of exchange; (4) restriction of the use of steel in Japan to the more essential purposes; and (5) further control over the employment of Japanese ships. THE ECONOMIC SITUATION OF JAPAN. Chapter I. POOD PRODUCTION AND TRADE. ■ SUMMARY. In the years before the war Japan imported increasing quantities of foodstuffs. In 1913 and 1914 these imports, which consisted mainly of rice from Indo-China, beans from Manchuria, and wheat and flour from Australia and the United States, were equivalent to between 5 and 10 per cent of the amount of food produced in Japan. . During the war, however, exports have slightly exceeded imports. The more important articles of food exported are rice, beans, peas, and vegetable oils to the United States and Great Britain, and wheat flour to China and Great Britain. Prior to 1914 Japan imported a considerable amount of flour, but now has developed a large export trade. In 1917 Great Britain imported 14,000 long tons of wheat flour from Japan. Although the quantities of food exported are not absolutely very great, Japan is aiding liberally in proportion to her meager agricul- tural resources. Besides, Japan has been able by reason of her carry- ing trade to act as a middleman in drawing upon the food reserves of Asia. The Asian food surplus, however, is small, because of the continual pressure of population upon means of subsistence. Under the stimulus of high prices the Japanese have increased somewhat their crops of rice and wheat, but the large exportation of foodstuffs to the markets of the richer western nations has tended to produce a shortage of food in Japan. RICE. A significant aspect of Japan's progress into the industrial stage of economic development is the fact that the importation of rice in- creased steadily during the decade prior to the war. These imports, which were mainly from Bjritish India, French Indo-China, and Siam, never were more than about 10 per cent of Japan's domestic production. There also was a small export of rice. The following table sets forth the main facts regarding Japan's consumption and trade in rice since 1913 : 16 THE ECONOMIC SITUATION OF JAPAN. Japan's consumption and trade in rice, 1913-1918} (Bushels, 000 omitted.) 1914 1916 1918 Domestic production Imported from Formosa Imported from Korea Imported from India, Indo-China, Siam, etc. Gross supply '. ■- Exports, mainly to United States and England Net supply - '. 257, 257 8,009 4,042 26,943 291,816 4,236 7,344 14,983 286,078 6,016 14,317 3,390 299, 167 4,681 8,169 2,290 279,769 5,521 7,911 4,181 2 5,492 8 9,764 296,251 1,439 318,379 1,839 309,801 4,675 314, 307 4,843 297,382 5,427 '1,074 316,540 305,126 1 Thirty-third Statistical Beport of Japanese Tepartment of Agriculture and Commerce, 1918; Returns (Annual and Monthly) of Foreign Trade of Japan, 1914-1918; 1917 production figure from Commerce Reports, Mar. 22, 1918, p. 1096; Trade of Japan with Formosa (Monthly Returns) 1913-1917; Trade of Japan with Korea (Monthly Returns), 1913-19M. ' Five months. ' Six months. Since 1914 the prevalence of high prices has stimulated the produc- tion of rice in Japan. Imports fell off from 1915 to 1918, while ex- ports to markets where higher prices prevailed increased. During 1915, 1916, and 1917 exports exceeded imports. During the first half of the present year, on the other hand, when the Government was taking measures to lower the price of rice, imports greatly ex- ceeded exports. Current American statistics show the importation of record quan- tities of rice from Japan, the quantity imported during June and July, 1918, being 74,000,000 pounds, or nearly 2,000,000 bushels. However, it is probaible that a considerable part of these imports actually originated in other oriental countries, and that this rice was reported as froih Japan because it was taken froiri Japanese bonded warehouses to be shipped' to the United States. The following table shows the amounts imported from Japan, 1913 to 1918: Imports of rice into the Vnited States from Japan, fiscal year ending June 30} (Pounds, 000 omitted.) Year. Pounds. Long tons. Equivalent in Bushels. 1913 ,48,833 53,270 90,570. 101,232 86,000 193,457 21,«00i 23 781 40,433 45,193 3S,393 86,366 1,086,000 1,184,000 2,013,000 2,250,000 1,911,000 4,299,000 1914 1915 ■.. 1916 . 1917 1918 ' Figures of United States, Department of Commerce. During the war the price of rice has increased considerably. This advance in price constitutes one of the main economic causes of the recent " rice riots," which in large part were a protest against the higher cost of. living. Advances in the general price level of com- modities tend always to outrun increases in wages and to create new fortunes and inequalities in the distribution of wealth. The riots also were a protest against profiteering and the nouveaitx riches. THE ECONOMIC SITUATION OF JAPAN. 17 In the early part of the gresent year the Japanese Government un- dertpoli to control the pri6d of rice. " Four firms were designated to import rice for sale at fixed prices. Tliis a,ction resulted in the im- portation of much larger quantities than in any year since 1913, and some lowering of prices occurred. Exportatioil of rice, except under license, was prohibited on April 18, 1918. Since that date exports have continued, but in somewhat reduced amounts. ; ' WHEAT. Japan's production of wheat is small, but increased from 27,000,000 bushels in 1913 to 35,000,000 in 1917; but notwithstanding this in- crease, Japan's consumption of wheat has actually decreased. Be- fore the war about 6,000,000 bushels of wheat, and wheat flour equiva- lent to about 2,000,000 bushels, were imported chiefly from the United States and Australia. By 1917 these imports had ceased, and Japan had developed her milling of flour to such an extent that, under the Stimulus of higher prices for wheat in richer markets than Japan, wheat flour equivalent to about 5,000,000 bushels of wheat was ex- ported. Hence Japan's consumption of wheat in 1917 was about 31,000,000 bushels, as compared with 35,000,000 in 1913. As yet Japan secures little wheat from Asia. In 1917 Japan's im- portation of wheat from all sources was only 1,000,000 bushels, 70 per cent of which was from Korea and most of the remainder from China. The striking way in which itaportation of wheat flour has given place to exportation on a much larger scale is shown clearly by the following table: Trade in lofieat flour ^ (Pounds, 000 omitted.) ; Year. Imports. Exports. Excess ol imports. Excess ol exports. 1913 38,152 26,814 4,042 1,908 779 1,461 84 3,611 32,659 41,733 215,384 124,945 38,068 23,203 1914 1915 28,617 39,826 214,605 123,494 1916 . . 1917 1918 2 i Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. 2 Six months. Exports of flour will amount to 250,000,000 pounds in 1918 if they continue at the rate of the first six months. These exports go mainly to China, but about one-fourth is shipped to the European allies. Japan can not hope to develop a permanent export trade in flour based upon domestic production of wheat. However, the trade may be made permanent by developing the production of wheat in Man- churia and importing it into Japan to be milled and exported to East Asian markets. Japan hopes to be able to import a considerable quantity of wheat frona Australia during the remainder of 1918, to aid in relieving the food shortage. 84643—18-^ — 3 18 THE ECONOMIC SITUATTON OF JAPAN. In 1916 Japan had 16,875 milling establishments, whose output in that year was reported as about 800,000,000 pounds of wheat flour.^ Actual production is probably nearly twice this figure, since the 35,000,000 bushels of wheat produced in Japan in 1917, plus the 1,000,000 imported, are equivalent to more than 1,500,000,000 pounds of flour. If need should arise, Japan could mill considerable quan- tities of Australian or Eussian wheat to supply the allied armies in Russia. BEANS AND PEAS. Japan produces annually about 25,000,000 bushels of beans and peas, mainly soya beans, and imports about 5,000,000 bushels, half from Korea and half from Manchuria. There is also a large import of " bean cake," amounting to about 900,000 long tons annually. This bean cake is used mainly for fertilizer, but experiments are under way to treat it for use as human food, to be mixed with rice. Before the war exports of beans and peas from Japan were small, amounting to less than 600,000 bushels in 1913, but this trade has now grown to considerable proportions. Exports in 1917 were about 5,000,000 bushels, while during the first half of 1918 they were at the rate of about 10,000,000 bushels annually. During 1916 and 1917 shipments in order of size were to England, the United States, and France, but now they are mainly to the United States. Our imports of beans and peas from Japan have increased from 400,000 bushels in the fiscal year 1915-16 to nearly 5,000,000 bushels in the first seven months of 1918. Beans and peas are now our largest import from Japan in weight. During the first six months of 1918 they constituted a third of the total weight of our imports from Japan. Also a large amount of oil produced from soya beans was exported from Japan to the United States. Since during the war there has been no material increase of either Japan's production or importation of beans and peas, the growth of exports from 600,000 bushels in 1913 to ten times .that figure in 1917, together with the larger exports of soya-bean oil, can mean only that Japan's. consumption of these foodstuffs has decreased. Japan se- cured large amounts of kidney and soya; beans from Manchuria and Korea during the early part of 1918, but exports to the United States were so unusually heavy that there was no net increase in Japan's food supply. VEGETABLE OILS. Japan is a producer, manufacturer, and carrier of vegetable oils, the most important of which are soya bean, peanut, coconut, rapeseed (or colza), linseed, sesame seed, and castor oils. A considerable part of the raw material from which these oils are manufactured is imported, mainly from China. The chief oils produced exten- sively from domestic supplies are soya-bean and peanut oils. The present world shortage of fats has provided a great stimulus to the exportation of vegetable oils from Japan. Of late, exports to the United States have increased greatly. In the first six months of 1 Thirty-third Statistical Report of Departtaent of Agriculture and Commerce of Jaoan 1918, pp. 292-29.3. ^ ' THE ECONOMIC SITUATION OF JAPAN. 19 1918 the United States imported from Japan about 50,000 long tons of these oils, mainlj^ soya bean, coconut, and peanut. It is desirable that we should continue to import considerable quantities because of the many important uses to which they are adapted. Before the war Japan both imported and exported these oils, the Production of petrolemn 259,000 168,726 365,000 129,070 415,000 132,491 400,000 91,020 411,000 82,037 Importation of mineral oils, mainly kero- Bene . 53,265 Gross supply 427,725 None. 494.070 1,480 547,491 3,680 491,020 22.600 325,037 17,200 Exportation, nearly all kerosene, to China. 5,303 427,723 492,590 543, 811 468,620 307,837 American trade statistics for 1912^1916 indicate exports of oil to Japan which are more than double the amounts imported from the United States as shown in Japanese statistics. The 1917 discrepancy is less. It appears that the Japanese figures do not reveal the extent of their dependence upon this country for oil. Before the war the United States furnished about 70 per cent of Japan's imports of oil and now furnishes about 90 per cent. The 1 Petroleum In 1914, by United States Geological Survey, p. 901. = Production statistics from statement o( Japanese Department of Agriculture and Com- merce, cited In " Petroleum in 1916," by United States Geological Survey, pp. 882-883 : 1917 estimate from Oil, Paint, and Drug Reporter, Aug. 5, 1918, p. 60 C ; trade figures from Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. " Six months. THE ECONOMIC SITUATION OF JAPAN. 23 Dutch East Indies are the main other source of supply. About four- fifths of the imports consist of kerosene. Formerly a third of this came from the Dutch East Indies and the balance from the United States. Now practically all comes from this country. Only about 2 or 3 per cent of the imports are gasoline, most of which comes from the Dutch East Indies. The remainder of the imports consist of lubricating and fuel oil (about 8 per cent) and crude (about 10 per cent) . Japan refines nearly, all her own crude. At present Japan's itaports of mineral oils are reduced to little over half what they were in 1913. The increased demand in other markets and the scarcity of shipping have caused a rise in price which has put them beyond the reach of many purchasers. The use of gas and electricity as illuminants has increased. Since 1914 Japan has become in effect a middleman in the oil trade, exporting to China in competition with the United States an amount equal in 1916 and 1917 to about a fourth of Japan's total im- ports of oil. However, Japan is only a minor factor in this trade, and her very meager resources of oil will prevent her securing any permanent place in the Chinese market except as a middleman. China's importation of mineral oil is considerably greater than Japan's, and has been better maintained since 1915. ELECTRICAL POWER. A study of the industries described in the Thirty-third Statistical Keport of the Department of Agriculture and Commerce of Japan (March, 1918) indicates that in 1916 nearly 1,200,000 horsepower of all kinds were used in the manufacturing plants of Japan. About 300,000 horsepower were furnished by electric motors, 375,000 horse- power by water power, 475,000 horsepower by steam engines, and the balance by gas and oil engines. In addition, the report referred to shows that various Government works used in 1916 over 300,000 horsepower, of which about half was electrical. A rough estimate, based on all these figures, is that the total power developed in sta- tionary plants in Japan is over 2,000,000 horsepower, about half ol which is electrical. One of the most notable features in the recent industrial activity of Japan is the development of electrical power. , The following table, taken irom the Financial and Economic Annual of Japan, 1917, illustrates this: Prod/uction, in 'hllowatts, of Japanese electric light and power companies, 1906-1915. Years. For electric lights. For motors. Total. 1906 25,432 56,551 160,865 190,496 4,063 12,752 51,103 136,918 29,495 69, 303 1909 .... 1913 211,968 327,414 1915 .... . . . ". It is interesting to note that the number of electric lights increased from about 650,000 in 1906 to 8,400,000 in 1915. 24 THE ECONOMIC SITUATION OF JAPAN. According to the Japan Year Book for 1917, the total electrical power in operation in Japan in 1915 was 662,123. kilowatts, with re- serve capacity of 109,461 kilowatts. At that time there were under construction plants to develop 333,286 kilowatts, with a reserve, capacity of 43,821 kilowatts. According to these figures the electric plants in operation and under construction should develop over 1,250,000 horsepower, not counting their reserve capacity. Figures in the Year Book indicate that over half the electric power in operation in 1915 was hydroelectric. This, however, is only a small part of the possible development in Japan. The Japa- nese Government estimates that, the total wkter power available for development is over 5,500,000 horsepower, and has 'already taken iiieasiu'es to utilize at least half of this amount. Chapter III. METAL INDUSTRIES. SUMMARY. The only important metals of which Japan has an adequate do- mestic production are copiier and tungsten. Japan is rather poorly supplied with deposits of tin, lead, zinc, and antimony, and is almost wholly dependent upon foreign sources for nickel, aluminum, and mercury. Japan's iron resources are very jneager. The annual output of pig iron from domestic ore is only about 80,000 tons, or a fifth of 1 per cent of the production of the United States, while the total annual production of pig iron from domestic, Korean, and imported ores is only about 330,000 tons. . During the war Japan's consumption of iron and steel has in- creased materially, and at present amounts to probably 1,600,000 tons annually. Formerly Japan imported large amounts of iron and steel and machinery from England, Germany, and Belgium. Imports from the latter two countries were cut off by the war, and imports of iron and steel from England have now practically cfeased. Japan now secures these articles mostly from the United States, our exports to Japan in the fiscal year 1918 amounting to about, 900,000 tons. At present the United States supplies nearly 60 per cent of Japan's entire consumption of iron and steel. The Japanese realize clearly that Japan would be in a serious situation without access to sources of iron outside Japan, and they are developing a number of important enterprises in Manchuria. Also a considerable expansion of the steel industry in Japan is taking place. IRON AND STEEL. ..Japan is poor in iron resources. The total reserves of iron ore, including both high and low grade, are only about 60,000,000 tons,'^ an amount less than the present annual production of iron ore in the United States. Japan's annual output bf pig iron is about 80,000 tons from domestic ore and about 250,000 tons from Korean and imported ore, as compared with a total production of 40,000,000 tons in this country, all but a very small portion of which is derived from domestic ore. Japan's output of iron and steel from both domestic and imported ore is only about 20 pe.r cent of her consumption. Before the war Japan used about 1,200,000 tons per year; at present she is using probably 1,600,000 tons. Large and increasing amounts of iron ore, 1 K. Inowye's estimate In Iron Ore Resources of the World, Stockholm, 1910. 84643—18 4 . 25 26 THE ECONOMIC SITUATION OF JAPAN. pig iron, crude and semicrude products, and manufactures of iron and steel are imported. Without access to sources of supply other than her own iron-ore deposits, Japan would be in a serious situation. Of the iron ore used in Japan, approximately 25 per cent is pro- duced from domestic mines, 45 per cent is imported from Korea, and 30 per cent from China. The production and imports are shown in the following table: Production and imports of iron ore in Japan.^ (Metric tons.) Domestic produc- tion. Imports— Total imports, including minor items. Year. From China. From Korea. Prom England. 1912 171,140 171,656 136,386 136, 121 158, 815 197,680 280,803 300,305 311,310 282,149 298,772 122,472 . 142,012 181,987 209,883 245,355 2,511 2,012 1,699 667 567 322, 710 1913 424,678 1914 486,096 521,871 1915 1916 528,541 ' Compiled from Annual (and Monthly) Returns of Foreign Trade of Japan, 1912-1918, and from reports of Dr. J. Morgan Clements, of United States Department of Commerce. Japan's imports of pig iron are large. Since 1912 Asia has dis- placed England as the main source of supply. In 1912, 70 per cent came from England and only 3 per, cent from China; in 1916, 14 per cent came from England and 56 per cent from China. The follow- ing figures show the main facts regarding the sources of pig iron used in Japan : Imports and production of pig iron in Japan} (Metric tons.) 1912 1913 1914 1915 1916 1917 1918 2 Imports: England , Rritish India , China Kwantung Province Total imports (including small imports from other countries). Domestic production 157, 039 50,064 7,285 99,430 81,881 59, 945 60,213 31,433 55,188 228,547 237, 694 265,066 240,288 169,092 300, 155 36,329 38,040 82,904 1,684 166,843 317,964 31,615 62,750 102,383 28,472 232,048 385.647 5,462 61,119 109, 768 26,990 232,252 1 Compiled from Annual (and Monthly) Returns of Foreign Trade of Japan, 1912-1918, and from reports of Dr. J. Morgan Clements, of United States Department of Commerce. 2 Six months. Much the largest part of Japan's supply of iron and steel is im- ported in the form of crude, semicrude, and manufactured products. It is impossible to state the exact weight of the imports of manu- factured products, as many are reported in units of value only. How- ever, it is estimated that previous to the war total imports of iron and steel amounted annually to about 700,000 metric tons, and at the present time to approximately 1,000,000 tons annually. Prior to the war Japan imported more than 40 per cent of its iron and steel from England and about 25 per cent from Germany. The rest came mainly from the United States, Belgium, British India, THE ECONOMIC SITUATION OF JAPAN. 27' and Sweden. Since , 1914 England's shipments have decreased rapidly, until at present her conservation program, prevents the ex- portation of any considerable amounts. But our own exports of iron q,nd steel to Japan have grown from about 200,000 tons annually, or about 15 per cent of the total needs, in 1912 and 1913 to about 900,000 in the fiscal year 1918. We now are supplying about 60 per cent of Japan's entire consumption, or practically all her need for iron and steel except as it is met from Chinese and Korean and British Indian iron ore and pig iron. Japan's shipbuilding program is responsible for a considerable part of this increase in our exports of iron and steel. The ships built for the United States under contract I, " a ton of ships for a ton of steel," called for 128,000 tons of steel, most of which has been sent. Contract II calls for 245,850 tons of ships, with steel to be provided by us at the more favorable ratio of 2 tons of ships for 1 ton of steel. Most of the 122,925 tons to be sent under the second agreement is yet to be shipped. Additional ship construction for England and France, as well as for Japan herself, has increased the demand for steel. With our own great shipbuilding capacity, and in view of the shortage of steel, it may be more economical to conserve our steel and build our own ships than to make further large contracts with Japan. As is elsewhere pointed out,^ our heavy commitments of steel across the Pacific amounted to two-thirds of the total weight of our exports to Japan in the first half of 1918. These large exports are partly responsible for keeping in the Pacific a far larger amount of tonnage than our import needs require. The statistics and estimates in the following table serve roughly to summarize Japan's consumption of iron and steel : ■Japan's consumption of iron and steel.' (Metric tons.) Pig iron produced from domestic iron ore (approximate^ Pig iron produced from imported iron ore, including Korean (approximate) Imports of pig iron Imports of crude, aemicrude, and manufactured articles (estimated) Estimated consumption 1913 80,000 210,000 265,000 700,000 1,255,000 1917 80,000 260,000 235,000 1,000,000 1,575,000 The Imperial Steel Works, -located near the ports of Wakamatsu and Moji on the northern coast of the island of Kyushu, now pro- duce about three-fourths of all the pig iron and iron and steel products made in Japan. A considerable expansion of the iron industry is taking place. Large operations are in process of de- velopment in Japan to smelt ores and use pig iron to be brought in larger (quantities from China, Manchuria, anci Korea. The Japanese are rapidly extending their hold upon the rich iron resources of Man- churia, where a number of important iron enterprises are under way. " Annual Returns of Foreign Trade of Japan, 1914-^1918, and figures of Dr. J. Morgan Clements, of United States Department of Commerce. 28 TSE ECONOMIC SITUATION OF JAPAN. An important obstacle to the expansion of the iron industry in Japan, besides the very meager ore reserves, is the absence of good coking coal. The Japanese are well aware of this, and are taldng full advantage of the fact that good coal and high-grade iron ore are found in desired proximity to each other in China. Manufacturing enterprises in Japan would have made even greater progress than has taken place had they been able to secure as much machinery as they desired. Japanese imports of machinery de- clined from $18,000,000 in 1913 to $15,000,000 in 1917, at which time the price per unit was probably twice that of 1913. In the face of this handicap Japan's increase of manufacturing is the more re- markable. In the last two years a number of new companies have been organized to manufacture machinery. Japanese manufacturing has probably suffered more for want of machinery which had previously come from England than from the shutting off of the German supply. Japan had been securing from Germany inotors and heavy electrical equipment, but from England had come most of the textile machinery. Just as the need for the latter increased the supply was reduced. Imports of spinning and weaving machinery from Great Britain in 1916 were but 50 and 20 per cent, respectively, in value, of the amounts imported in 1913. COPPER. Although Japan ranks next to the United States as a producer of copper, its output in 1916 (98,839 long tons) was only a little over one-tenth that of this country (860,647). Its production slightly exceeded that of Chile, which in that year occupied third place among the world's producers. Copper is now the most valuable of Japan's mineral products, and is the most valuable article of ex- port after silk and cotton manufactures. Since 1914 the war demand for copper has stimulated materially both Japan's production and exports. Japan has supplied the allies with large and much-needed quantities of this important metal. The following table shows the main facts regarding Japan's cop- per production and trade : Copper production, trade, and. conmnnptioii} (Long tons.) 1913 1914 1915 1916 1917 19182 Production 59,435 377 69, 205 188 74,069 377 98, 839 2,481 1 90, 660 5,477 N Gross supply 59,812 41,922 69, 393 , 45,107 74,446 o.S, 516 101,320 61,, 520 96, 137 77,485 20 090 Net consumption 17, S90 . 24, 2W 15, 930 39,800 IS, 652 lAimual (and Monthly) Return of Foreign Trade of Japan, 1913-1918; production in 1917 estimated on basis of flgures for 11 months reported in Japan Advertiser, Jan. 13, 1918. 2 Six months. A practice which enabled Japan to increase materially her copper exports in 1916 and 1917 was the large importation of brass from THE ECONOMIC SITUATION OF JAPAN. 29 China, derived mainly from the melting of Chinese coins. Prevail- ing high prices for copper made this profitable. The amounts of brass imported were as follows : Imports of brass, 1913-1917} Year. Long tons. Year. I^ong tons. 1913 1,288 691 5,247 1916 43,925 27,BCO 1914 1917 1915 i Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1917. Due to the depletion of the supply of Chinese coins and lower prices for copper, this supply is now of small importance. In 1916 Japan exported 18,000 tons of brass, mainly to Russia, an amount equivalent to two-thirds of the imports of brass in that year. The great development of Japan's copper industry in 1915 and 1916 was due in large measure to the heavy demands from Russia, which in these years took nearly 50 per cent of her exports. News- paper reports are to the effect that a large tonnage of Japanese cop- per sent to Russia in 1917 is now in Warsaw, claimed to be in storage at that point under agreement by Russian and German authorities. Since the revolution in Russia the exports of copper have gone mainly to England and France. They are transported to Europe mainly in Ja,panese ships and supply a need which would otherwise have to be met largely by copper from the United States, which al- ready must import copper from South America to meet the present demands of the allies. Japan's European shipments should be main- tained. The copper industry of Japan, like that of the United States, is one of the important assets of the allies in the field of raw materials essential for munitions. The growth of the industry during the war has safeguarded copper supplies, which at certain periods have been so low as to be a source of danger. A considerable amount of manufactured copper products has been exported from Japan to England. Small amounts of Japanese copper are imported into the Pacific ports of the United States, but not because of any large demand on the Pacific coast that could not be met by our own refineries. If the conditions continue which cause a surplus of tonnage bound froni Japan to the United States, it may be desirable to. import a small quantity of copper, but the great bulk of Japan's exports should and probably will go to England and France. TIN. In the past the Japanese have liot been large consumers of pig tin. Under present conditions, however, the Japanese will need more tin for alloys. Increased manufacturing in Japan will require more tin for bearing metals, solder, bronze, etc. _ Japan has a small production of tin which has been raised by dili- gent work to 300 tons per year. But most of the tin consumed in Japan is imported from China, the Dutch East Indies, and the Straits Settlements. China now produces about 8,000 tons of tin, 30 THE ECONOMIC SITUATION OP JAPAN. principally in Yunnan. There is no prospect of any material in- crease in Japan's production of tin ; so in the future it will probably remain dependent upon foreign supplies. The main facts regarding Japan's tin production and trade are set forth in the following table : Tin production, trade, and consumption.^ (Long tons.) 1913 1914 1916 1916 1917 1918' Production ... - . . . 38 1,156 95 1,289 329 1,176 243 1,086 1,996 ■ 1,563 1,193 1,384 1,504 1,329 J ■ Annual (and Monthly) Eetums of Foreiga Trade of Japan, 1913-1918: production figures from the Tblrty-third Statistical Beport of tlie Department of Agriculture, 1918, p. 519. ' Six months. Up to 1917 Japan imported some tin foil; but an interesting item of export for 1917 is 461 long tons of tin foil, most of which went to China. The valuie of this would indicate a large percentage of lead. TIN PLATE. The Japanese intend to develop the production of tin plate, al- though it is probable that they- have not rolled any as yet. It is re- ported that the Japanese have purchased a secondhand tin-plate mill in the United States, but it is not yet in operation.^ The probabili- ties are that before long Japan will be manufacturing tin plate, which will mean that it will require larger imports of pig tin. The following table shows the quantity of tin plate imported into Japan in recent years, which amount represents roughly Japan's con- sumption: Tin plate — Production, trade, and consumption. , (Long tons.) 1913 1914 1915 1916 1917 19181 British exports to Japan (British statistics) American exports to Japan (American statistics). , 28,222 227 26, 166 1,760 20,660 9,199 14,723 24,210 459 21,869 4 26,649 Total British and American exports to 28,449 26,072 27,926 26,710 29,749 26,289 38,933 38,690 22,328 26,428 26,553 12,91* Total imports into Japan (Japanese statistics) As the table indicates,' most of the tin plate formerly came from Great Britain, but now f fom the United States. The Japanese state their requirements of tin plate for 1918 for food and oil cans alone to be. about 39,000 long tons. In the first seven months of 1918 the United States exported to Japan about 1 statement of Mr. J. A. Babbitt, War Trade Board representative In Japan 2 Six months. "iipau. THE ECONOMIC SITUATION OP JAPAN. 31 29,000 long tons, which should cover their real needs for food and oil cans for 1918. The Japanese have been extremely liberal in their estimate for these purposes, as undoubtedly in the past they havt used tin plate for other purposes than for food containers and oil cans. In recent years the canning of sea foods, especially salmon and crabs, has increased materially in Japanj which, of course, required more tin plate. The larger part of this canned salmon and crab meat has been going to the United States or the allies. The Japanese have also been using cans for both mineral and edi- ble oils. They have sometimes used old kerosene cans for shipping soya-bean oil, and have done quite a business in selling old kerosene- oil cans. In 1917 Japan exported nearly a million of these cans. The Japanese are now making tin cans both for food and oil, and, as mentioned previously, it is only a question of time before they will be rolling tin plate. NICKEL. Japan is almost wholly dependent upon other countries for hei supplies of nickel. Until very recently most of this was imported in metallic form — ^before 1914 mainly from Great Britain and Ger- many, but since then from Great Britain and the United States.- In the first six months of 1918 about 300 long tons were imported, of which slightly more than a third came from Great Britain and the remainder from the United States. That from the United States was produced almost exclusively from Canadian ores, though re- fined in this country. In 1916 a Japanese company began experiments with the smelting of nickel ores from New Caledonia and sent an engineer to the United States to study refining methods. The ore pi-oduced in New Caledonia averages somewhat less than 5 per cent nickel and the matte about 45 per cent nickel. Japanese labor is prominent in the New Caledonian mines. Japanese efforts to, develop the smelting of nickel appear to have been unsuccessful. A recent letter from the Japanese Navy Depart- ment to the War Trade Board regarding the exportation of nickel from the United States indicates that no nickel is being smelted in Japan and that there is a shortage in that country. A tentative estimate of Japan's nickel requirements on the basis of 1917 and 1918 imports is 600 long tons of metallic nickel per year. LEAD. Japan consumes in the neighborhood of 20,000 long tons of lead in normal years, about three-fourths of which is imported and one- fourth produced in Japan from foreign and domestic ores. Imports of ore come mainly from China in normal years, but in recent years, because of the cancellation of German contracts in Australia, some ore has come to Japan from that country. The bulk of the metallic lead imported is in the raw form, as ingots and slabs. The principal sources of these imports were as follows, percentages being based on quantities : 32 THE ECONOMIC SITUATION OF JAPAN. Distribution of imports of metallic lead into Japan} Australia WMted Stales. Others 1916 Per cent. 45 46 9 1917 Per cent. 78 17 7 1918 2 41 1 '.Annual (and Monthly) Returns of Foreign Trade of Japan, 1916-1918. 2 Six months. If a shortage of lead develops in the United States, as seems not improbable in the near future, it may be necessary to curtail largely exports of raw lead to Japan, in which event that country would have to depend almost wholly upon Australia. Imports of lead in first manufactured form have come mainly from Great Britain, and among them tea lead or lead foil and sheets for tea packing have far exceeded all other forms, both in quantity and value. Exports of lead from Japan are not recorded, but have undoubt- edly been large in recent years, especially in the form of munitions. ZINC. In no undertalting has Japan been more successful than in the de- velopment of her zinc-smelting industry during the war. Prior to 1913 Japan had no zinc smelters and exported her zinc ores to Bel- gium and Germany, importing metal from these countries and from Great Britain in return. In 1913 two smelters were established, and the Japanese zinc-smelting industry has since grown with re- markable rapidity, as indicated in the following table : Production of- metallic zinc in Japan.^ (Long tons.) Year. From Japanese ores. Total from Japanese and foreign ores. 1914 .. .. 2,366 3,983 5,808 1915 20,757 1916 38,303 ' Data compiled by Dr. J. Morgan Clements, of Dei)artment of Commerce. As a result of this development and the cutting off of Belgian and German markets, exports of zinc ore have practically ceased and large imports of ores have developed. These imports amounted to nearly 100,000 tons in 1917. More than two-thirds •«vas derived from Australia, and the remainder chiefly from French Indo-China. The Chinese zinc mines, after China declared war upon Germany, canceled their German contracts, and the Japanese have been making a thorough exploitation of Chinese zinc, even going so far as to con- solidate their individual companies in the effort to obtain control of Chinese zin,c interests. Japan continues to import zinc in metallic form to the amount of 6,000 to 8,000 long tons annually, mainly from China, Kwantung TIJE ECONOMIC SITXJATION OF JAPAN. 33 Province, Hongkong, 4-Ustralia, and the United States. Of 'the zinc imports from the United States iji 1915 and 1916 over- half were in in the form of ingots and slabs. Unless these were of especially high quality there would seem to be no real necessity for theijr importa- tion into Japan, inasmuch as far larger quantities of ingots and slabs are exported from Japan. The remainder of the imports into Japan from the United States are in the form of plates aixd , sheets.. As Japan has no rolling mills, these imports of rolled zinc are probably essential. Rolling mills are now under construction in Japan. The exports of zinc ore have been declining persistently since 1913, and ceased entirely during 1917, owing to the development of the domestic smelting industry ; as a result of this development Japan began to export zinc ingots in 1916. The following table shows the exports of zinc ore and metal : Exports of sine ore and metal from Japan. ^ (Long tons.^ Year. Ore. Metal.. Year. Ore. Metal. 1913 27,068 13,844 6,079 None. None. None. 1916 2,172 162 None. 19, 892 1914 1917 36, 182 1915 19132 14,242 I Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1918. ' Six months. The following table shows the distribution of Japan's exports of zinc metal in recent years: Eieports of ^c ingots and slahs from Japan.^ 1917 1918 2 1917 1918 2 G-rflat Britain Per cent. 52 20 16 Per cent. 21 B ritish India Per cent. Per cent. 18 Asiatic Russia .others 12 France 49 1 Annual (and Monthly) Returns of Forei^ Trade of Japan, 1913-1918. 2 Six months. Japan, in short, is energetically developing an industry that be- fore the war was conducted largely in Belgium and Germany. With control of shipping, she can probably retain that trade in large measure after the war. ALUMINUM. Japan is dependent upon other countries for nearly if not quite all of her aluminum. Eecent reports state that a plant for the manufacture of aluminum was in process of construction in Japan in 1917, but no records are available of any domestic production to date. Japan's normal peace-time consumption appears to have been in the neighborhood of 500 long tons annually, but in 1912 and in 1917 it was nearly 1,000 long tons. Experts of aluminum manufac- tures from Japan are small. Japan's imports of aluminum prior to the European War came from Great Britain, Franco, Germany, Austria-Hungary, and the S4643— 18-- — 34 THE ECONOMIC SITUATION OF JAPAN. United States. With the outbreak of the M^ar Germany and Austria- Hungary were, of course, eliminated as sources of supply. During 1916, 1917, and 1918 practically the entire Japanese supply has come from the United States. As either the United States or her allies must furnish Japan's essential needs, it is probably most economical of allied shipping for the United States, as the nearest to Japan, to supply these needs alone, as, in fact, she has been doing since 1916. TUNGSTEN. • " Tungsten is one of the most vital minerals needed for war pur- poses, because of its use for hardening high-speed tool steel. It is estimated that one man and machine can do as much with tungsten steel as five men and machines with carbon steel. Tungsten also is largely replacing platinum for electric intermittent contacts. In tungsten Japan makes an important contribution to the world's needs. Japan's consumption is small, and most of the surplus is exported to the United States. It is necessary that we receive as much tungsten as possible during 1918 and 1919, for supplies avail- able from all sources are much less than our estimated requirements. In 1916 Japan produced the equivalent of about 450 metric tons of 60 per cent concentrates and Korea about 670 tons. This output was about double that of 1915. Japan now cojitrols by license the export of tungsten under a regulation effective July 29, 1916. Japan's need for ferrctungsten in her steel industry was formerly met from the United States, 1,950 pounds of tungsten and ferro- tungsten having been exported to Japan in 1916. But no exports are shown for 1917 or 1918, and although specific information is not available, Japan may be meeting her needs by her OT^n production, since she is known to have been experimenting along this line. ANTIMONY. Japan has some antimony resources, and formerly mined this metal more extensively than now; but since the opening of the Chinese mines in Hunan, about 1897, Japan has been unable to compete with China, aiid the mining of antimony ore iii Japan has become a neg- ligible factor. China, however, has been deficient in facilities for the extraction of metallic antimony from the ores and for its transport to the world's markets. Japan's importance in the antimony trade has rested upon her ability to supply these needs. The distribution of Japan's exports of antimony since 1913 is shown in the following table : Distrihution of antimony exports from Japan} . .1913 1914 1915 1916 1917 TTnftnH RtAt>(; Per cent. Perceni. 47 8 Per cent. 41 2 Per cent. 41 14 3 40 Per cent. Great Britain 51 3 32 1 2 Russia 26 .18 1 56 8. 1 2 S 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1917. THE ECONOMIC SITUATION OF JAPAN. 35 The amount of our imports of antimony from Japan and China is shown in the following table : United States imports of antimony from Japan and China.^ (Long tons.) Fiscal year. Antimony in ore. Matte, regulus, and metal. Japan. Gliina and Hongkong. Japan. China and Hongkong. 1913 . 292 75 3,084 868 933 607 1,588 898 2,600 4,482 2,601 6,928 ''U. 1914 1915 2,164 1916 5,800 1917 4,412 1918 6,213 1 Figures of United States Department of Commerce. ■ Within recent years the Chinese have greatly enlarged and ex- tended their facilities for treating their antimony ores, and while Japan's smelting facilities are now an important aid to China in meeting the war demands, it is probable that when the war ends China will be in a position to supply directly the major part of the world's requirements. Importations of antimony into the United States from both China and Japan should be continued. Deposits' capable eventually of yielding considerable tonnages occur in the United States, but are only slightly developed. A slight econoniy in shipping can and should be made by permitting only the metal to be imported from overseas, and not the more bulky ore. Antimony ore imports have, without regulation, been greatly reduced in 1918 as compared with 1917. Stocks of antimony in the United States are now very large, amounting to about 7,000,000 pounds in bonded warehouses alone, and this factor should be considered in any estimate of our necessary imports. MERCTTRY. Mercury is essential for antifouling paint for the hulls of war- ships and merchant ships, in medicine, and in explosive caps used in blasting and in shells and cartridges. Japan's production of mercury or quicksilver is negligible in com- parison with her requirements, and there is little prospect of material increase in prodi^ction. Her requirements just prior to the war were between 2,000 and 4,000 flasks (of 75 pounds each) annually,. but during the war they have increased from 5,000 to 7,500 flasks an- nually. Imports prior to the war were almost exclusively from Europe (Germany, Austria-Hungary, Great Britain, Italy, and Spain). Since the war began they have come from Great Britain and Italy in Europe, and from the United States and China. Chapter IV. CHEMICAL INDUSTRIES. SUMMAKr. No Japanese industries have developed more phenomenally during the war than the chemical industries. Dr. Alcan Hirsch, who re- cently visited Japan for the Manufacturing Chemists' Association of the United States, reported the following statistics relative to the growth of this industry : Year. Number of new chemical companies organized. Approxi- mate capital invested. Year. Number otnew cbemical companies organized. Approxi- mate capital invested. 143 87 63 $1,500,000 ?od,ooo 1,500,000 1916 " 220 . 282 $7,000,000 '1014 1917 12,000,000 19i5 Dr. Hirsch reported that literally thousands - of different new chemicals are being manufactured, though in most cases on a small scale, and brought to this country a catalogue of articles exhibited at the Japanese. Chemical Industry Exposition, held in the fall of 1917, which shows how great is the diversification of products.^ A writer in the Scientific American, January 12, 1918, mentioned the following as chief among the chemical products the output of which has been developed importantly during the war: sulphate of ammonia, potassium chloride, caustic soda, bleaching, powder, niter, sulphate of potash, potassium carbonate, sodium sulphate, sodium chloride, sodium peroxide, iodine, stearic and other fatty ycids, nitric acid, glycerin, oils, dyes, drugs, fertilizers, disinfectants, and phosphorus. Striking evidence of this progress is furnished by the listing in 1917 for the first time of the following exports : Chemicals listed as exported from Japan for the first time in 1917.'' Article. Quantity. Value. 4cetic acid Pounds. 5,650,000 3.410,000 7,220,000 837,000 3,740,000 27,100,000 3,310,000 2,190,000 1,903,000 1,400,000 375,000 880,000 199,000 11 757 000 Chlorate of potash 1 1Q2 nno Copper sulphate 393,000 317,000 264,000 225,000 TCaki and ^t-^f^T- t.a,TiniTiP; PYtrn/'t.s Zinc dnst Naphthaltn 197 000 Shoe polishes... SO 000 Caustic soda 67.000 28,000 Total .5,568,000 iThis catalogue is on file at the Bureau of Research of the War Trade Board and at the United States Tariff Commission. ' Annual (and Monthly) Returns of Foreign Trade of Japan, 1917. 36 THE ECONOMIC SITUATION OF JAPAN. 37 The following figures, taken from the Thirty-third Statistical Report of the Department of Agriculture and Commerce of Japan, 1918, show the growth in output from 1913 to 1916. Every arti- cle but lacquer shows an increase, and most of the increases are large. Production of certain chemicals in Japan. Article. Sulphuric acid Clearing powder [bleachinB; powder?]. Ainnionlum sulphate Alum (aluminum sulphate) Potassium ehlorido Hydrochloric acid Waxes (unbleached) Caustic soda Beflned waxes Sodium sulphate Potassium chlorate Carbonate of soda Acetic acid Nitric acid , Camphor oil Crude camphor Bosin Aeeton Wood spirit (estimated.) Lacquer Iodine Peppermint oil Menthol crystal Potassium iodide Turpentine Pounds. 413,613,139 33, 114, 094 1,818,658 12,464,338 4,461,967 7,748.555 12,930,000 9,535,621 10,270,000 3,138,682 4, 766, 402 1,077,100 2,237,000 1,296,000 668,000 152,566 273,000 259,000 158,234 Potmda. 781,425,638 42,994,807 36,089,722 23, 819, 020 16,875,534 15,908,361 15,230,000 14,852,735 12,470,000 11,778,579. 7,296,005 5| 719, 090 5,658,171 4,360,706 3,970,887 3,393,322 668, 515 1, 109, 146 1,100,000 660,000 657,708 538,000 469, 000 308,640 292,000 In view of the rapid development of the Japanese cheOiical indus- tries during the last two years, it would be worth while to determine to what extent articles are being manufactured whose importation into the United States would be desirable. DTESTUFFS. Like many other countries, Japan has suffered severely from the shortage of dyes, caused by the cutting off of German supplies. Prior to 1914 Japan imported dyes to the value of about $4,000,000 annually, mainly from Germany. A supply of dyestuffs is essential to Japan because of the importance of her silk, wool, and cotton manufacturing industries. . In 1915 a laM' was passed providing for the granting of subsidies to companies engaged in the manufacture of dyes. The amount of the subsidy Avas to be sufficient to enable the companies to pay 8 per cent dividends upon their capital, and the subsidies were to continue for 10 years. It is reported that three companies are receiving these subsidies under the conditions laid down by the Qoternment, the largest being the Japan Dyestuff Manufacturing Co., with a capital of 8,000,000 yen ($4,000,000).! The number of dye factories, excluding small ones manufacturing an inferior grade, is more than 100, and the total investment is mort than 15,000,000 yen ($7,500,000) . However, the Japanese market is still dependent upon supplies from abroad. During the first half of 1918 the United States exported to Japan 427 long tons of aniline i British Board of Trade Journal, May 9, 1918, p. 1119. 38, THE ECONOMIC SirUATION OF JAPAN. dyes and 306 tons of other dyes. During this period the United States also sent Japan 783 long tons of logwood extract.^ The Japanese Government is now investigating the advisability of protecting the dye industry against foreign competition after the war. Leading manufacturers are anxious that the authorities should erect a high tariff wall.^ MATCHES. Before the war Japan exported large quantities of matches, mainly to China and India. During the war the trade has been maintained at about the same volume, although increased quantities have been sent to India, and a considerable trade with the United States has developed. In 1913 we imported only $11,000 worth of matches from Japan, but in the first half of 1918 our imports of matches were valued at $666,000. This large importation occurred because of the decreased quantities imported from Sweden, caused in large part by the shortage of paraiEn in that country. Japanese matches are of very inferior quality. Special reports re- garding them, prepared by the Underwriters' Laboratories of the National Board of Fire Underwriters and by the United States Bu- reau of Standards ' condemn these matches as being unusually dan- gerous, although almost every one of the brands marketed in this country bears on the box a special claim to safety. The heads of the matches are unusually explosive, and the sticks test from five to ten times as brittle as the minimum standard requires. Japanese producers in furthering their trade in this country have resorted to such close imitations of Swedish and Norwegian trade-marks as to violate flagrantly the rights of the Scandinavian producers. It is reported that the Japanese Government is to prohibit the ex- portation of matches of inferior grade.* American manufacturers are considerably disturbed by the prospect of Japanese competition in this industry, although the quantity of matches heretofore im- ported has been only a small fraction of thei consumption of the United States. CAMPHOR. Camphor is important among the minor commodities having es- sential war uses. It is used in medicine, in the treatment of " trench foot," in the manufacture of eyepieces for gas masks, wind shields, and temporary windows for cantonments, and for other purposes. It is essential in the manufacture of photographic films and cellu- loid. Nearly the entire world's supply of camphor is produced on the island of Formosa. The Camphor Monopoly Bureau of Japan as- sumed jurisdiction over the crude camphor production of Formosa after Japanese occupation of that island. By cheapening the price and making annual contracts guaranteeing the quality, this bureau succeeding in crushing the camphor industry in China. The bureau 1 Figures of United States Departintat of Commence 2 Commerce Reports, Aug. 3, 1918, p. 454. » These documentB are In tUe flies of the United States Tariff Commission • Washington Herald, May 24, 1918. THE ECONOMIC SITUATION OF JAPAN. 39 then changed its method of operation. It now makes quarterly allot- ments of the supply and fixes prices, and there is no redress or ap- peal. Mitsui & Co. and Suzuki & Co. have secured absolute control of the camphor industry, and have erected a factory for the manufacture of pyroxylin (celluloid) as well as a refinery in Formosa. Eesults of this new management are visible in the developnient of a consider- able export trade in celluloid, and in the decrease in the amount of crude camphor shipped and the increase in the amount of refined camphor exported. The advance in price from 50 cents per pound to between $1.20 and $1.50 is due in part to the same cause. The following table shows vividly the' progress of the celluloid in- dustry : Japan's trade In oelluloid} Year. Imports of celluloid. Exports of celluloid. 1913 Pounds. 212,000 30,400 11, .500 250 4 4 Value. $100,000 ■ ■ 15.000 5; 400 ■ 130 30 9 Pounds. None. None. None. None. 960,000 755,000 • Value-. None 1914 '.. . . None. 1915 None. 1916 .' 1917 ; , $546,000 1918» ., 420,000 • Annual (and Monthly) Returns of. Foreign Trade of Japan, 1913-1918. * Six months. The Japanese celluloid industry developed in pa,rt because of the importation from the United States of units for a complete celluloid plant with an American expert, as adviser. The developnient of the celluloid industry in Japan is responsible in part for the decrease in exports of camphor. The celluloid, exported in 1917 was sent almost entirely to Great Britain. Japan's exports of camphor, in order of size, are to the United States, British India, England, and France. In 1916 and 191Y the United States secured nearly half the quantity exported from Japan. The following table shows the amounts of camphor imported into the United States, nearly all from Japan, since 1913 : Imports of camphor into the United States.' V Fiscal year. Pounds. Long toiu). i Fiscal year. Pounds. I.ongtons. 1913 4.200,520 4; 052, 014 4,899,873 1,870 1,800 2,080 1916 6,440,584 11,148,775 4,828,316 2,640 1917 4,980 1915 1918 2,150 1 Figures of United States Department of Commerce. The reduced imports which took place in the fiscal year 1918 are likely to continue, since production of camphor in Formosa is de- creasing in the face of increased demand. A deficiency in the United States may be avoided, however, because of an abundance of turpen- tine available for the manufacture of synthetic camphor. The esti- mated minimum amount of camphor required is 3,300 long tons an- nually, the greater part of which is for the manufacture of pyroxy- lin (celluloid). 40 THE ECONOMIC SITUATION OF JAPAN. SODA ASH, CAUSTIC SODA, AND NITRATE OF SODA. Soda ash, which is used largely in Japan's glass industry, is not produced on an extensive scale in that countrj^, but the Government has under consideration the grainting of subsidies to further the in- dustry. Imports of soda ash are large, and have grown from about 70,000,000 pounds in 1913 to nearly 100,000,000 in 1917. Until 19l6 England supplied practically the entire amount, but in 1917 the United States sent more than England. During the first five months of 1918 England's exports of soda ash were further reduced. Soda ash is the bulkiest chemical export from the United States to Japan. The 16,000 long tons exported in the first six months of 1918 represented over half the total weight of our chemical exports to Japan. There is no shortage of soda ash in the United States, but the tonnage situation may make necessary a reduction in exports. Although Japan is developing the production of caustic soda, it is not as yet being manufactured on a large scale. Imports of caustic soda increased from 27,000,000 pounds in 1913, nearly all obtained from England, to almost 50,000,000 pounds in 1917, nearly all ob- tained from the United States. This latter amount represented about 5 per cent of our own production. At present exports of caustic soda from the United States are much reduced because of the shortage in this country ; they amounted to about 10,000,000 pounds in the first six months of 1918. According to the present policy, exports to Japan are liinited to 700 tons (about 1,600,000 pounds) monthly. Our own shortage relates largely to the less essential uses, and it is possible tO maintain exports to Japan at the present reduced rate in view of Japan's need. Nitrate of soda is mostly secured from Chile. Japan's imports , of this commodity have more than doubled during the war, and were about 54,000 long tons in 1917. The additional shipping needed to secure nitrates has made possible increased trade between Japan and South America. SULPHATE OF AMMONIA. One of the more important developments in Japan's chemical in- dustry is the growth in the production of sulphate of ammonia from less than 2,000,000 pounds in 1913 to 36,000,000 pounds in 1916. The following report in the journal of the British Board of Trade, January 10, 1918, indicates that production has increased rapidly since 1916 : Owing to the enormous demand in Japan for sulphate of ammonia, and the consequent rise in prices, one Japanese carbide factory, with a capacity of f rora 25,000 to 30,000 tons per annum, is now concentfatirig Its efforts on the produc- tion of sulphate of ammonia, the jimmonla being made from calcium cyanamide produced from the carbide by the fixation of nitrogen drawn from the air. Another large concern, with a total capacity of 5,O0O tons per annum, is also producing sulphate of ammonia by the same process. * * * The essential requirements for the production of calcium carbide at a low figure are an abundance of cheap raw material (charcoal and lime), and cheap power. In Japan conditions are particularly favorable in these respects. Imports of this important chemical, which is secured mainly from England, have decreased remarkably during the war. In 1913 they were about 250,000,000 pounds, valued at $8,000,000 ; in 1917, 33,000,- THE ECONOMIC SITUATION OF JAPAN. 41 000 pounds, valued at $1,500,000. In the first six months of 1918 imports of ammonium sulphate were only 362,000 pounds. POTASSIUM PRODUCTS AND IODINE. Japan's seaweed resources have made possible the development during the war of a considerable export trade in products of potash. In 1913 Japan imported 7,500,000 pounds of chlorate of potash; in 1917 nearly half this amount was exported. In the first six months of 1918 the most important chemicals imported into the United States from Jap?in, other than camphor, were products of potash. During this period we imported 1,266,000 pounds of carbonate of potash, 381,000 pounds of muriate of potash, and 574,000 pounds of other salts of potash. Iodine is manufactured in Japan from kelp, in connection with the production of potash. Exports of iodine from Japan have been irregular, as shown by the following table, but they are increasing remarkably. At the present rate Japan's exports of iodine during 1918 will amount to double the quantity exported in 1917. Easports of iodine from Japan.^ Year. Pounds. Year. Pounds. 19t3 26,800 17,900 4,950 1916 4,040 1914 1917 62,800 56,800 1915 . . 19182 1 Annual (and Monthly) Eeturns ol Foreign Ttade oJ Japan, 1914-1918. ' Six months. In 1917 the United States received 27,000 pounds of iodine from Japan; England, 15,000 pounds; and Asiatic Eussia, 9,250 pounds. We should import as much iodine as Japan can send us, because of its great value for treating wounds. OTHER CHEMICALS. Japan also is exporting large quantities of bleaching powder, mainly to British India and China. Exports of this commodity in- creased from 2,240,000 pounds in 1913 to 14,300,000 pounds in 1917. It is possible that the United States could secure bleaching powder from Japan to alleviate the present shortage, which is due pri- marily to the need, of bleaching powder, or chlorine, which is a closely related substance,, for making poison gases. During the war Japan has increased largely her importation of carboUc acid and morphine. In 1917, Japan imported, mainly from the United States, nearly 5,000,000 pounds of carbolic acid, valued at $2,000,000, as compared with 1,000,000 pounds in 1913. During 1917, 38,000 pounds of morphine, valued at $3,000,000, were imported, nearly all from England, as compared with 5,700 pounds in 1913. ,, 84643—18 6 Chapter V. TEXTILE limuSTRlteS. SUMMAET. Silk is the most valuable export of Japan', which produces prob- ably half of the world's supply of raw silk. Howfever, the relative iinportaiicc! of silk as an export has declined during thiB war. In 1917 silk amounted to 28 per cent of the value of Japan's total exports, as compared with 39 pter cent in 1913. In 1917, 85 pel' cent of Japan's total exports of raw silk were sent to the United States. Thfe amount of raw and waste silk imported into the United States from Japan has grown from 20,800,000 pouhds in the fiscal yfearl914 to 32,700,000 pounds in the- fiscal year 19l8. The value of imports of silt, includ- ing manufactured silk, has grown from $76,000,000 to $171,000,000 during these years. The cotton manufacturing industry of Japan has expanded con- siderably during the war. Due largely to the decline of exports of cotton manufactures from Great Britain and other belligerents, Japan has exported increasing- quantities to far eastern countries. China is the most important market for Japanese cotton manufac- tures. The demands of the Eussian Ai-my f or woolen manufactures stim- ulated greatly their production in Japan. During the war the value of woolen manufactures imported into Japan fell from $6,000,000 in 1913 to $3,000-,000 in 1917. Meanwhile the value of exports grew from $321,000 in 1913 to $16,000,000 in 1915, but fell to $5,000,000 in 1917, due to the reduction of the demand from Kussia. SILK. The silk ind,ustry of Japan, which produces approximately half the world's supply of i-aw silk, is probably the most important single in- dustry in that country, both in point of numbers engaged and income; derived. It embraces the rearing of cocoons, the reeling of the silk filaments, and the production of silk fabrics. Approximately 1,800, J 000 families, or 33 per cent of all the agricultural families, of Japan, are engaged in sericulture. In addition, silk fabrics, including mix- , tures of cotton, are manufactured to a value of ' nearly $100,000,000 per annum.^ While silk is Japan's most valuable export, its relative importance is less than before the war. In 1913 it formed 39 per cent of the value of Jatpan's exports; in 1917, only 28 per cent. Most of the ex- ports consist of unmanufactured silk; but Japan is preparing to play a much larger part in the markets for silk manufactures, the Govern- ment having instituted an inspection of exports to insure quality.' 1 TMrty-thlrd Statistical Report of Japanese Department of Agriculture and Commerce, 1918, p. 228. ' Commerce Reports, Aug. 1, 1918, p. 429. 42 THE ECONOMIC SiTUATION OP JAIpA^. d' The imports into the Upited States of manuil^acture^ silk from Japan have increased fourfold since 1913. • The following table shows Japan's silk exports. Ahout three- f Ourths of the " unmanufactured " is raw silk, and most of the rest is waste. Exports of ,Hlk from, Japan to all countries.^ ITnmanufactured. Manufactured. Pounds. Value. : Tissues. other 'manlifoeture'; (value). Total value. 1913 39,334,514 29, 326, .533 33; 124, 491 42,565,372. 50,241.921 24,230,117 tl01,658,172 84,860,387 ; 801631,143 , 141,308,6.58 191, ,307, 059 87,707,500 »19,673,664- 17,011,-42& 21,609i,724> 25,315,889 31. 428; 864 24,363,287 S3,24Vj94«t 2,125,601 2,2.58,581 3, 291', 588 3,fie7;916- 2,638,078 ^-hr- 'S124,S79j78Sii 1914 103,997,414 1915 104,499)448''. 1916 .- 169,916,135 1917 226; SOS, 839 ■ 1918* 114,708,86t — r~, — > ' Annual (and Monthly) Returns of Foreign Trade of Tapan, 1914-1918. ' Six months. The United States now uses over half the world's production' of raw silk. The following table shows the estimated world production of raw silk, the total exports of raw silk from Japan, the imports of the United States from Japan, and the total imports of the United States. The figures of world production are incomplete, piufticularly because of the lack of adequate statistics of Chinese production. World production — Japan's exportation and United States' importation of silh.^ Year. World pro- duction of, raw silk. Japan's total exportS'Of'un- manufac- '• tured silt (cal- endar years). Total impotrts IntoUnlted States from Japan of saw and waste silk (fiscal years). Total importi int*) tlnitsa States of raw and^HstesillE (fiscal years). 1913 Pounds. 60,230,000 48,986,000 52,172.000 66,647,000 Pounds. 39,334,514 29,326,533 33,124,491 42,565,372 50,241,921 Pounds. 17,686,048 20,770,818 19,034,684 25,462,133 28,420,128 32,708,823 Pounds. 31,943,213 1914 34,544,416 1915 . 31,001,179 1916 : 41,728,224 1917 40,289,367 191S 43,030,919 1 World production figures from Yearbook of the Department of Agriculture 1917, p. 706; Japanes* export figures from Annual (and Mqnthly) Returns of Foreign Trade of Japan, 1914^1918; Umted Statet figures from Department of Commerce. The United States is Japan's best ciistpmer, and American. prps:. perity is largely, responsible for the continued growth of the.JaPr, . anese silk industry during the war. , Although we have increased, oUr total imports of unmanufactured silk ^y. a third since 191^,, thje amount imported from Japan has inqri^ased by;pearly 60 per cent. The share of the United States in Japan's exports has largely in- As elsewhere pointed out, a chief feature of pur imports from, Japan is the great importance of silk in the total value. The fol- lowing table shows the value of our imports of silk from Japan, com- pared with total imports : 44 THE ECONOMIC SITUATION OE JAPAN. Total imports frmn Japan and. imports of silk (unmanufactured and manufaa< tured) from Japan, 1914-1918.'' Fiscal year. Total value ol imports from Japan. Value of silk imports from Japan. Per cent of total value. 1914 $107,355,897 98,882,638 147,644,228 208,127,478 284,945,439 $75,982,124 64,221,344 96,419,524 138,191,904 170,804,688 70.8 1915 65.0 65.3 1917 , 66.4 1918 ■■ 60.0 ' Figures of United States Department of Commerce. Silk, although largely used as an article of luxury, is to some ex- tent a substitute for wool, and has some importance in the military program. It is used for parachutes, surgical sutures, neckerchiefs, sewiiig thread, for balloon and aeroplane fabrics, but mainly for the manufacture of cartridge cloth. Unlike other textiles, silk does not leave a spark after combustion, a property absolutely necessary for the cartridge cloth covering the charge of a big gun in order that the danger of explosion may be avoided when the next charge is in- jected. COTTON. Japan, like Great Britain, has developed a large cotton manufac- turing industry, notwithstanding dependence on foreign supplies of raw cotton brought from overseas. Raw cotton is in value the most important single import of Japan, amounting to a third of all im- ports. Formerly Japan produced an appreciable part of her require- ments of raw cotton, but production now is negligible. However, the Government is undertaking, by means of subsidies, to promote the growing of cotton. It also is encouraging cotton growing in Korea. Japan's imports of raw cotton have been as follows : ^ Year. 500-pound bales. Year. 500-pouiid bales. 1913 1 1,741,017 1,630,429 1,926,294 1916 2,197,533 1,861,399 1,126,910 1914 : 1917 1915 1918 2 . . . About 65 per cent of the cotton imported by Japan comes from India, about 25 per cent from the United States, and most of the bal- ance from China. There have been no important changes in the sources of Japan's imports of raw cotton during the war. The Indian cotton is short-staple cotton and that of China an even lower grade. The Japanese need long-staple American cotton to mix with that from India and China. They have developed great skill in this process. At present. the Japanese are reported to have on hand abnormally large stocks of raw cotton.' Toward the end of June, 1918, the 1 Annual (and' Monthly) Returns of Foreign Trade of Japan, 1914-1918. 2 Six months. ' Information secured through censorship Interception of letter from Mitsui Bussan Kalsha (Ltd.), Japanese importers. Research Bureau confidential file 4932. THE ECONOMIC SITUATION OF JAPAN. 45 Japanese warehouses contained nearly half a million bales of cotton, or more than that contained in the warehouses of the chief cotton centers in Great Britain, France, Spain, and Italy combined. In view of this it may be practicable to reduce for a time cotton, ship- ments to Japan, which would conserve a considerable quantity of tonnage, since cotton is a bulky article to ship, even if compressed. That large shipments are being planned is indicated by the follow- ing excerpt from the Japan Chronicle of June 28, 1918 : * The cotton merchauts and the Nippon Yusen, Osaka Shosen, and the Tayo Kisen Kalsha have agreed to fix the freight for the shipment of next season's American cotton at $2.15 per 100 pounds. At this freight three steamship companies are to ship 200,000 bales between September 1 and September 15 of next year — the Nippon Yusen Kaisha 60,500 bales, the Osaka Shosen Kaisha 103,400 bales, and the Toyo Kisen Kaisha 36,100 bales. The total consignments of American cotton to Japan are estimated at 500,000 bales, of . which 200,000 bales are covered by the contract made by the cotton merchants and the steam- ship companies. With regard to the shipment of the remaining 300,000 bales, they have further agreed that the Nippon Yusen, Osaka Shosen, and the Toyo Kisen Kaisha should be given priority in undertaking transport at the same freight at which 200,000; bales are to be carried. ' Japan's exports of cotton manufactures are hardly less in value than exports of silk. The growth of the cotton manufacturing in- dustry in Japan during the war has been rapid. This is clearly re- flected in the statistics of exports, in the increase in working spindles and looms, and in the high rate of profit netted by manufacturers. The exports of cotton manufactures increased in value from $58,- 822,147 in 1914 to $122,780,141 in 1917, an increase of over 100 per cent. In the first six months of 1918 the exports of cotton manu- factures amounted to $84,904,000, an increase of $32,893,500 over the corresponding period in 1917. Increase in quantity also has been striking, though not quite as great as the increase in valiie. In 1917 the exports of cotton manufactures were equivalent to 73 per cent of the total imports of raw cotton; in other words, only 27 per cent of the imports were used for domestic purposes. There has been a decline in Japan's imports of cotton goods dur- ing recent years. In 1914 the total imports of the principal cotton manufactures amounted to $2,881,000; in 1917 to $2,028,000. Over 90 per cent of the imported cotton goods have been obtained from Great Britain. The principal market for Japanese cotton goods has been China, including the province of Kwantung and Hongkong. Due largely to the decline in the exports from Great Britain and other belligerent countries, Japan has succeeded in extending largely her exports of cotton manufactures to British India, Dutch India, French Indo- China, Arabia, Australia, Hawaii, and other far eastern countries. In 1914 the exports of cotton manufactures to China, including Kwantung; and Hongkong, amounted to over 92 per cent of the total exports of cotton goods from Japan. In 1915 the exports to China fell off to a little less than 90 per cent, and in 1916 the percentage de- creased to somewhat less than 80, though the actual imports into China increased somewhat in 1916. The exports of all kinds of cot- ton manufactures from Japan to British India and the British Straits Settlements amounted to 3 per cent of Japan's total annual exports of cotton manufactures in 1914; in 1915 the ratio increased to 4.6 per cent, and in 1916 it increased to 10.8 pei^ cent. 46 THE ECONOMIC SirUATTON OF JAPAN. One of the effects of the war has been to increase the Japanese ex- port trade in higher grade yarns. In 1914 the total exports of yarn over No. 20 from Japan amounted to $7,000,000 ; in 1917 they had in- ' creased to $17,000,(X)0. Before the war the eastern countries re- ceived their supplies of higher grade yarn principally from Great Britain and the United States, and Japan has extended her market in |the Orient at the expense of English and American trade. A con- siderable increase is also shown for the export of drills and twilled shirtings. In 1914 the total exports of these classes of goods from Japan to all countries amounted to $5,500,000; in 1917 they were $13,000,000. Similarly, exports of gray shirtings and sheetings in- creased, from $6,000,000 in 1914 to over $20,000,000 in 1917. Japan is anxious to continue after the war her present domination of the markets where the exigencies of the war have enabled her to secure a strong foothold. In harmony with the general policy of controlling the market in the Far East, Japanese merchants recently have inaugurated a far-reaching program of conditioning com- modities destined for export trade. The object of this method of control is to provide goods to -^rhich foreign customers will be at- tracted by their superior quality as compared with goods imported irom other countries. In short, Japan is securing a hold upon oriental markets for cot- ton manufactures from which it will be difficult for competition to dislodge her after the war. WOOL. Japan's production of raw wool is insignificant, amounting to only about 15,000 pounds per year. Japan possesses only 3,000 sheep, and the bamboo grass prevents the grazing of sheep on a large scale. At present the Government , is considering ways and means of de- veloping the domestic supply of wool. Agents have been sent to various foreign countries, including the.United States, to study sheep raising. It is proposefi to import high-grade sheep from America and Australia to^he number of 5pp. to. 1,500 annually for seven years. Good breeding sheep will be distributed at cost to farmers willing to undertake this industry. The Japanese also contemplate develop- ing the sheep-raising industry in Manchuria and other parts of China. Students are being trained in the work of supervising model slieep farms. .Immediate results on any considerable scale, however, are not to be anticipated, and it is unlikely that Japan will become an extensive producer of wool. During the war Japan's importation of wool has doubled, as indi- cated in the following table: Imports of wool into Japan, 1913-1918.^ Year. Pounds. Year. Pounds. 1913., 1914., 11916. 28,668,912 24,287,012 68,702,774 1916... 1917... 1918 8.. 47,964,927 63, 863) 629 30.907,672 1 Annual (and Monthly) Beturns of Foreign Trade ol Japan, 1914^1918. a Six months. THE ECOlTOMIC SITUATION OF JAPAN. 47 If imports should continue throughout the year at the rat© of the first five months, they would amount to 67,000,000 pounds; but this may not take place in view of the seasonal movement of wool from Australia, South Africa, and South America during the first half of the year. The distribution of Japan's wool imports, according to source, is shown in the following table, the percentage being based upon quantity : Sources of Japan's imports of raw wool.^ 1913 1914 1915 1916 1917 China Per ct. 5.0 31.6 61.5 Per ct. 21.9 22.1 54.8 Per ct. 23.0 2.5 70.9 Per ct. 10.2 1.1 88.3 .03 .01 Per ct. 4.7 Great Britain .7 26.2 C^pe Colony and Natal 40.4 19.8 5.3 Ot^or countries . . . . 1.9 1.2 3.6 .,36 2.9 iTotal 100.0 100.0 100.0 100.0 100.0 'Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1918. During 1915 and 1916 Japan was largely dependent upon Aus- tralia. The striking decrease in Australia's share in the imports for 1917 was due to the action of the British Government in buying the entire Australian clip. However, after extended negotiations re- cently concluded. Great Britain agreed to allow the release to Japan of 24,600 bales of Australian merino wool, equivalent to about 8,000,000 pounds. In 1917 large imports from South Africa, and some from Argentina, made up for the decreased supply from Australia. Japan's woolen manufacturing industry has developed remark- ably during- the war, which excluded Japan from her former sources of "woolen manufactures, and at the same time created a great de- mand for woolens in Kussia. Before the war Japan imported con- siderable quantities of woolen manufactures, mainly from Great Britain, but these imports fell from $6,000,000 in 1913 to $3,000,000 in 1917. Japan has become an exporter of woolen manufactures on a consid- erable scale. In 1913 the value of exports was only $321,000; in 1915 it was nearly $10,000,000. Exports during 1915 and 1916 con- sisted largely of woolen cloth and blankets sent to Russia. Exports in 1917 fell to $5,000,000, but this represents nearly twenty times the value of exports in 1913. The quality of Japanese woolens has not reached the highest standards, as evidenced by the fact, that the Rus- sian Government rejected a considerable part of its purchases; how- ever, the Japanese are striving to improve the quality. Of late Japan has imported a considerable quantity of textile machinery from the United States. Thus Japan has changed from an importer to an exporter of gpoolen manufactures and. is in a fair way to secure control of the Asjs-tic market. Chapter VI. OTHER MANUFACTURING INDUSTRIES. SUMMARY. Japan is now producing and exporting a great variety of goods the Foreign Trade of Japan, 1917, shows a long list of exports which appeared for the first time in 1917. Japan has greatly reduced her dependence upon- Europe and America for manufactured goods. In this chapter some of the more important of these developments not mentioned in the preceding chapters are described. To a considerable extent the progress of these industries has been made possible by increased domestic production of the raw materials. But for a number of important raw materials, such as hides, rubber, and soda ash, Japan remains mostly dependent upon foreign sources of supply. WOOD AND WOOD PRODUCTS. Japan has extensive and rather varied forest resources. The State maintains a large degree of control over forests and derives a con- siderable income from their exploitation. Japan's imports of wood and wood products consist for the most part of wood pulp for manufacturing paper, logwood extracts, and tanning material, which are considered elsewhere in this study. Eosin and lumber also are important imports. Japan's imports of rosin increased from 7,000 long tons in 1913 to 12,000 long tons in 1917. Most of this rosin comes from the United States. During the first half of 1918 we shipped to Japan 6,310 .long tons of rosin. Japan's domestic production of rosin is small, amounting to only 300 long tons in 1916.^ It appears necessary that we should continue to supply Japan with rosin. Japan's imports of timber consist mainly of fir from the United States. In the first half of 1918 we sent Japan 15,626 long tons of fir. Considering the demand upon shipping bound for Japan, which may increase materially in the near future, it would seem desirable to discontinue these exports. If necessary, we could send Japan saw- mills instead. The most significant development in Japan's exports of wood and wood products during the war is the growth of a big export trade in shooks. These are being sent chiefly to India and the Straits Set- tlements. The growth of exports of shooks, which did not commence until 1915, is indicated in the following table : Exports of shook.i from Japan.'' 1915 $1,164,270 I 1917 $4,219,187 1916 1,383,272 | 1918 (6 months) 2,198,925 1 Thirty-third Statistical Report of the Department of Agriculture and Commerce of Japan, 1918, p. 770. 2 Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. 48 THE ECONOMIC SITUATION OF JAPAK. 49 Other wood products exported are railway ties and poles and char- coal, which go mainly to China, and bamboos and bamboo manufac- tures, sent largely to the United States and Great Britain. PAPER. During the war Japan's paper industry has largely reduced its dependence upon foreign supplies of paper pulp. The total imports of paper pulp into Japan have been as follows : Paper pulp imports into Japan} Year. Long tons. Year. Long tons. 1913 ... 47,109 44,991 53,642 1916 57,720 1914 1917 ; 14,334 1915 1918 2 11.891 ' Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. 2 Six months. Prior to the war about half of this pulp was secured from Ger- many, and most of the remainder from Sweden and Norway. Small but increasing amounts were obtained from Canada and the United States. Large imports from the Scandinavian countries continued ill 1916, but with the growing scarcity of shipping dropped off to pra,ctically nothing since that year. During 1917 and 1918 Canada has supplied the larger part of Japan's imports of paper pulp. In the first six months: of the present year the United States sent to Japan 1,647 long tons of wood pulp. A remarkable growth of the wood-pulp industry of Japan has rendered Japan at present practically independent of foreign sources of supply. The output of paper pulp, which is manufactured largely in Karaf uto and the islands of Hokkaido and Formosa, increased from 101,000 tons in 1915 to 150,000 tons in 1917.^ Japan is both an importer and. exporter of paper, but imports are tending to decrease and exports are increasing rapidly, as indicated in the following tables : I}tiports of paper pulp and paper into Japan." (Long tons.) 1913 1914 191S 1916 1917 1918 » 47, 109 19,436 2,846 4,477 44,991 11,856 2,179 3,464 53,642 5,210 925 2,739 87,720 6,632 1,760 3,655 14,334 2,117 757 2,135 11,891 3,638 810 1,468 Total 73,868 62,490 62,516 69,667 19,343 17,807 1 Japan Economic and Financial Monthly, March, 1918, p. 9. 2 Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. » Six months. 50 THE ECONOMIC SITUATION OF JAPAN. Exportg of paper from Japan.^ (Long tpns.) 1913 1914, 1915 1916 1917 1918 2 PriTlting pq.pp.r 2, .920 5,154 136 4,028 5,322 231 8,924 7;200 449 18,706 13,582 1,055 21,295 12,222 2,277 .4,962 Pasteboard . 11,112 2,^80 Total . . 8,210 9,581 16,573 33,343 35,794 18,654 1 Annual (and Monthly) Betums ol Foreign Trade of Japan, 1914-1918. 2 Six months. These tables indicate clearly how rapidly Japan has developed her paper industry. The exports of printing paper, of pasteboard, and of pacldng paper now are much greater than imports. Most of the exports are sent to China, and some to India. During the first half of 1918 the United States sent Japan nearly 1,000 long tons of print paper. The above statistics indicate that it is not essential that Japan should receive further shipments of this commodity from this country. LEATHER. Japan is largely dependent upon foreign sources of supply for the raw materials needed in her leather industry. Despite Government encouragement of cattle raising, domestic hides furnish only 40 per cent of the total consumption. The domestic leather is not of the best quality. The sole feather absorbs water, and the upper and strap leathers are thin and stretchy. The imports of leather are derived mainly from China and Korea, and show a large increase since 1914. The imports from the United States, which were a main factor before the war, have been ma- terially reduced. Tanning materials are obtained in nearly equal amoimts from the Straits Settlements and the Dutch East Indies. The great growth of the Japanese leather industry during the.war is indicated in the following table : ' Leather industry — Size and output.^ Year. Number of factories. Number of employees. Total value of production. 1912 .- .'....' 914 891 853 960 966 3,345 3,680 3,345 3,780 4,019 12,841,186 3,664,955 4 571,754 9,844,138 30,405,808 1913 1914 : 191S 1916 I Thirty-third Statistical Report of Department of Agriculture and Commerce of Japan, 1918, p. 309. This remarkable growth is due largely to the stimulus given by large orders from Russia in 1915 and 1916. The value of exports of footwear from Japan increased from $300,000 in i913 to nearly $2,500,000 in 1916. Japan has taken an increasing part in the orien- tal markets for leather and leather products. Exports of leather to China and exports of boots and shoes to the Dutch East Indies and THE ECOJ^OMIC SITUATION OF JAPAN. 51 the Philippines, have increased materially. Japan >also is manufac- turing and expqrting qonsiderable quantities of otli.er manufactures of leather, such as belts and belting and portfolios. Thus Japan more than supplies her own requirements, but the industry remains dependent upon hides and skins from China,, tan- ning materials from the Straits Settlements and the, Dutch East Indies, and machinery from the United States. RUBBER. * Japan produces no crude rubber. As compared with the importa- tion of rubber into the United States (181,000 long tons in 1917), the quantity imported by Japan is small, but there has been a rapid in- crease since 1913. The following table indicates the more important facts regarding the development of the rubber industry in Japan : Rubber and rubber manufactures — Imports and exports.^ Imports of crude rubber (long tons). Imports of rubber manufac.- tiires. Exports of rubber manufactures. Year. Gum tires. other manufac- tures of rubber. Total. 1913 1,190 1,025 1,735 2,940 3,720 2,952 $423,000 343,000 347,000 250,000 None. $543,000 1,706,000 2,038,000 2,042,000 1,067,000 None. None. None. None. $307,000 289,000 1914 $543,000 1,706,000 2,038,000 2,349,000 1,326,000 1916 1916 1917 I6IS2 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. 3 Six months. At present Japan's principal exports of rubber goods are. tires for bicycles and rikishas. Most of these tires were exported to China and the Ea§t ,Indies, but over ,$3QO,000 worth of , them, were sent to Great Britain in 1917. The exports of other manufactures of rubber, which are shown for the first time in 1917, consist of toys, piping, surgical goods, and other miscellaneous products.^ The chief mar- kets for other manufactures of rubber are. China and India;. but in I917 Japan exported to Great Britain rubber products valued at $25,000, not including tires. TOBACCO. The production of tol?acc,o in J^apan amounts to about 10P,0O0,OO0 pcTiiids annually, or about one-tenth pf ,that of the United States. Tobacco manufacturing and trade is a Government monopoly, which has been instituted mainly as a soijrce of revenue. During the war Japan's importation of leaf tobacco, which is mainly from the United States, decreased from. 2,000,000 pounds in 1913 to a third of that anapjiiit in 1917! Meanwhile, exports of Igaf tobacco grew twentyfold, from, less .than 500,000, poimds in 1913 to 10,600,0^ pounds in 1917. I'rior to the war the exports of le^f 1 British Board of Trade Journal, May 30, 1918. 52 THE ECONOMIC SirUATION OF JAPAN. tobacco were maifily to China, but of late considerable quaiitities have been sent to the United States. In 1917 the United States ob- tained 34 per cent of Japan's exports of leaf tobacco, Egypt 35 per cent, and China 26 per cent. The shortage of leaf tobacco for " Turkish " cigarettes led American manufacturers to import the Japanese article to blend with other leaf. The exportation of cigarettes, which go mainly to China, is not very important in amount amd has not increased since 1913. GLASS. Prior to, the war Japan enjoyed a considerable trade in the ex- portation of manufactures of glass, mainly to China and India. These exports consisted largely of bottles, flasks, and looking- glasses. During the war the glass industry has made rapid headwa,y, a considerable diversification of products has taken place, and the value of the export trade has increased materially. Imports of glass, which consisted for the most part of sheet and plate glass, have decreased since 1913. Before the war these imports were secured mainly from Belgium ; during the war from the United States and Great Britain. The following table shows the general nature of this development: Japan's trade in glass.^ Vi Year. E3£ports. Imports. 1913 ...; . . 11,659,428 7,230,129 tl, 703, 673 900,891 1917 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1913, 1917. The most striking feature of the trade in glass is the decrease in imports of sheet glass from over $1,000,000 in 1913 to $125,000 in 1917, and the appearance in 1917 of an export of sheet glass amount- ing to over $1,500,000. The main markets to which Japan exports glassware are China, India, and Australia. Exports of glass from the United States to Japan have increased during the past five years. The more important articles which Japan now secures from the United States are plate glass and photographic plates; but the progress of the Japanese in manufacturing plate glass indicates that they soon will be able to provide for their own needs. The Japanese have instituted governmental inspection to insure a higher quality for their exports of glass. EARTHENWARE. The value of Japan's exports of pottery has more than doubled since the beginning of the war, and amounted to over $7,000,000 in 1917. Pormerly most of this pottery was marketed in the Orient, but during 1917 the United States imported about $2,500,000 worth of pottery from Japan. THE ECONOMIC SITUATION OF JAPAN. 53 BTTTTONS. Japan's exports of buttons have tripled since 1913, and the quan- tity imported into the United States has increased more than thirty- fold, as indicated in the following table : Buttons-Japan's total exports, and exports to the United States^ Year. Total export of buttons. Value. Bjcports of buttons to United Stat^. Vilue. Percentage of total quantity taken by United States. 1913. 1914. 1915. 1916. 1917. 1918 2 Gross. 7,347,434 6, 119, 716 9,169,649 16,470,834 22,993,397 10,753,586 11,655,000 1,363,000 2,004,000 3,758,000 5,129,000 2,609,000 Qroas. 287,437 746,315 1,010,524 3,883,217 9,293,386 156,725 188,011 235,426 820, 886 1,048,101 620, 163 3.9 12.2 11.0 23.5 40.4 lAnuual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. ' Six months. Although the United . States is the largest importer of Japanese buttons, they find a wide market, being sent in considerable quantities to Great Britain, British India, China, and Austrq,lia. The shells and bones from which most of these buttons are made are produced in Japan, but considerable quantities are imported from Australia, the Dutch East Indies, and India. BRUSHES. The value of the exports of brushes from Japan has increased from $1,000,000 in 1913 to $3,000,000 in 1917, and exports for the first five months of 1918 indicate a further increase. These brushes are mainly hair-brushes, tooth-brushes, and clothing-brushes. At present the United States receives nearly two-thirds of Japan's exports of these articles. PENCILS. Since 1913 Japan has developed a considerable trade in pencils, as indicated by the following table : Pencils — Exports from Japan} Year. Gross. Value. Year. Gross. Value. 1913 56,922 215,691 124,000 95,000 1918 1,173,567 1,817,413 552,729 1624,000 1914. 1917 1,052,000 1918" 410,000 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. 2 No export. ■» Six months. 54 TJit ' eOonOmIc srttr ation o:^ ' jAI'an'. About half the pencils exports lA'lSlT went to Great Britain, and most of the remainder were marketed in the Orient. TOTS.'' In 1912,.the l^^t year for which German tradg,sjtg,ti|ities are, avail- able, exports of toys from Germany to the United States amiounted to abbui:^7,dOU,OaO" and Wall" countries ■to'>,bout'%18,00"0;000> Japan has.iiiBreased hei-. exports of toys from $1,240,000 in 1913 to over $4,'0OOj600 in 1917; In 1913 Japaii tex^bttM to the United States toys valued' at $400,000, while in 1917 they were valued at nearly $2,0d()ltl06. > Commerce Reports, Aug. 13, 1918, p. 586. Chapter VII. SUlPPlN^C^ AM) SHtPBttlLDli^G. StTMlIAEY. Japan's merchant marine has increased continuously during the war in spite of enemy action and the sale of ships to the allied Gov- ernments. The total tonnage as of January 1, 1918, amounted to 2,339,562 gross tons, nearly 90 per cent of which consisted of steamers. Less than 20 per cent of Japan's tonnage is touching at European ports, about 25 per cent is plying between the west coast of America and Japan, and most of the remainder is trading in Asiatic waters. The representation of flags other than the Japanese in the Pacific has decreased greatly during the war. In 1913 British and American ships represented, respectively, ^50 and 5 per cent of the total tonnage entering Japanese ports, but in the first five months of 1918 they represented, respectively, only 10 and 2 per cent. Meanwhile the Dutch tonnage in the Pacific has increased nearly fourfold. During the war Japan has built over 750,000 gross tons of ship- ping. The production in 1917 was nearly 300,000 tons, and in the first half of 1918, 177,875. Over half the vessels completed in Japa- nese yards between April 1, 1917, and March 31, 1918, were sold out- right to Great Britain (148,605 gross tons), France (23,229 gross tons), and Italy (5,600 gross tons). Japan has contracted to build and deliver to the United States about 250,000 gross tons of ships. It is estimated that an aggregate of over 425^000 gross tons has been sold or w'ill be delivered to the allies between April, 1917, and July^ 1919. Tlie vessels chartered to the United States bring the total Japanese tonnage, which has or will come under allied control, to 525,000 gross tons. The present annual capacity of Japanese shipyards is estimated to be 600,000 gross tons. It is reported that in March, 1918, there were 113 shipbuilding slips, eaqh capable of holding a ship of 1,000 tons or over. The chief limitation upon Japanese production of ships is the lack of steel and machinery. Japanese shijpping enterprises have prospered greatly during the war. It is estimated that freight rates have increased from 500 to 1,000 per cent, and the leading shipping companies are declaring extra dividends, which amount to very impressive totals. GROWTH AND PRESENT STATUS OF "JAPAn's MERCHANT MARINE. Japan's attitude toward shipping has undergone a marked change since the days when the construction of ships larger than 50 tons was prohibited in order to prevent the inhabitants from leaving the country. Earely has any Government taken a more active part in furthering shipbuilding and shipping by subsidibs than in Japan. In 1916 subsidies arid bounties of over $3,500,000 were paid to 11 companite, the most important being the Nippon Yusen Kaisha, which has over 100 merchant vessels, amounting to over 600,000 gross tons. The subsidized lines have prospered greatly in recent years, and would willingly for a time at least relinquisJi their subsidies to escape governmental restraint, but the control which the Government 55 56 THE ECONOMIC SITXJATION OP JAPAN. holds through subsidies, particularly over freight rates, it is unwill- ing to relinquish'.' Japan's merchant marine has grown continuously during the war, notwithstanding war losses and the sale of ships to other countries. The figures for 1914-1917, as reported by the Japanese Department of Communications, are as follows:, Merchant marine of Japan, 191.'i to 1917, as reported 6{/ Japanese Department of Communications. Year ending Dec. 31. Number. Gross tons. Year ending Dec. 31. Number. Gross tons. ALL VESSELS, 1914 2,576 2,591 2,730 3,260 1,085 1,096 1,729,941 1,759,871 1,870,815 2,063,378 1,528,024 1, 557, 757 STE.iMERS— continued. 1916 1,114 1,123 1,491 1,495 1,616 2,137 1,649,475 1, 779, 452 1915 1917 . . . 1916. ... SAILING VESSELS. 1914 1917 201,917 1915 ' 202, 114 1914 1916 221,340 283,926 1915 1917 The figures for steamers only as reported in Lloyd's Register are as follows: Japanese steamers reported in Lloyd's Register, 191Jr-1918. Year ending June 30. Number. Gross tons. Year ending June 30. Number. Gross tons. 1914 1,109 1,1,58 1,158 1, 732, 440 1,846,313 1,847.713 1917 1,195 1, 197 1,896,399 1, 947, 610 1915. . . 1918. 1916. It will be noted that the number and tonnage of the Japanese steamers reported by Lloyd's as of June 30 are in every case larger than the figures reported by the Japanese Department of Communica- tions for December 31 of the same year. In order to throw light upon this discrepancy the steamers reported in the two lists were checked up, name by name, and it was found that the steamers listed by the Department of Communications as of December 31, 1917, but not in- cluded in Lloyd's Register as of June 30, 1918, aggregated only 63,171 gross tons, while those appearing in Lloyd's but omitted from , the official Japanese list totaled 260,848 gross tons. Thus the Japanese merchant marine is actually considerably larger than Japanese official statistics indicate. It is predominantly the larger ships which are omitted from the official Japanese list. The 70 steamers of more than 1,000 gross tons not mentioned in the offi- cial Japanese figures average nearly 3,000 gross tons. On the other hand, only 10 of the officially listed steamers not appearing in Lloyd's are of over 1,000 gross tons, and these average only 1,760 tons. In order to determine the actual size of Japan's merchant marine as of January 1, 1918, it accordingly is necessary to add 287 steamers of 276,184 gross tons to the official Japanese list, making the total 1,410 steamers of 2,055.636 gross tons and the grand total for all vessels 3,547 of 2,339,562 gross tons. 1 The Financial and Economic Annual of Japan, 1917, pp. 1S6-157, gives tlie names of these companies and the amounts of the subsidies in 1916. THE ECONOMIC SITUATION OF JAPAN. 57 The following table shows the distribution according to size of steamer of the Japanese merchant marine. The relative nuniber of the larger vessels has shown a steady increase during recent years. Japanese steamers, reported hy Lloyd's and the Department of Communications, distributed by size groups as of Jan. 1, 1918. Gross tons. Number. Per cent. Gross tonnage. Per cent. 100-999 862 417 131 61.1 29.6 9.3 298,506 972, 106 785,025 14.5 1,000-3,999 47.3 i>000 and over. ... ?j 38 2 Total.. '- ' ' ' 1,410 100.0 2,055,636 100.0 Three steamship lines in Japan lead all others by a wide margin in number and tonnage of vessels. These are the Nippon Yusen Kaisha, with 116 steamers of 512,437 gross tons; the Osaka Shosen Kaisha, with 79 steamers of 286,344 gross tons ; and the Toyo Kisen Kaisha (Oriental Steamship Co.), with 11 steamers of 91,869 gross tons. There are a number of other companies of lesser importance and a large number of tramp steamers. The continuous growth of Japan's merchant marine during the war is significant in view of conditions which have reduced the world's total tonnage (excluding that of the Central Powers) from approximately 42,500,000 gross tons to an estimated total at present of 35,000,000 gross tons. The main reasons for Japan's ability to maintain and evien increase her merchant marine during recent years are (1) relatively small losses on account of enemy action, (2) pur- chase of foreign ships, and (3) increased domestic construction of ships. Japan's trade has been and still is very largely outside the wat zone. Most of the vessels lost were in the Mediterranean, and Japan has put old and less valuable ships in that trade area. From the beginning of the war to June 30, 1918, 27 Japanese vessels of 105,819 gross tons have been officially reported by the British Admiralty as sunk by submarines, mines, or cruisers. These vessels represented only 6.2 per cent of Japan's total tonnage in 1914, a loss which is small in comparison with the losses due to enemy action sustained by other countries. Up to June 30, 1918, Great Britain lost 34.3 per cent of her merchant marine, France 36.4 per cent, and Italy 49.8 per cent. Taking account of the tonnage constructed by Japan and sold to other countries directly from the shipyards, sales of ships are con- siderably greater than acquisitions. But sales of ships ~from the ac- tive merchant marine of Japan are materially exceeded by purchases made from other countries. The Japanese took advantage of the rush to sell British ships at the beginning of the war, before British orders in council prohibited such sales. Also the Seaman's Act, which discouraged ship owning in the United States, gave Japan oppor- tunity to acquire a number of American vessels. Very high prices were paid :^pr the vessels, but the investment has been most profitable. The steamers purchased by Japanese shipowners or companies dur' ing the war (excluding ships less than 200 gross tons) amounted to 38 vessels of 123,382 gross tons, an amount more than sufficient to re- 58 THE ECONOMIC SITUATIOK OF JAPAN. place the war losses as given above. Fourteen of these ships, of 47,232 gross tons, were purchased from Great Britain, and eight, of 40,677 gross tons, from the United States. The 21 steamers sold from Japan's merchant marine were of 81,908 gross tons. Five of 20,816 gross tons were sold to Great Britain, five of 20,238 gross tons to Italy, and five of 20,095 gross terns to France.^ From 1914 through the first half of 1918 Japan built more than 200 steamers of over 750,000 gross tons. Of the 72 vessels of 333,841 gross tons (practically all steam vessels of over 1,000 tons) which were completed in Japanese yards during the fiscal year from April 1, 1917, to March 31, 1918, as reported, in the Chiigai Shogyo, of Tokyo,^ over half were sold outright to Great Britain, France, and Italy, the tonnage being distributed as follows : Gross tons. Great Britain 148, 605 France -- 23, 229 Italy 5, 600 Total - 177,434 Besides the steam vessels just mentioned, Japan has sold to for- eign countries about 90 fishing vessels, valued at $7,500,000. The total contracts for sales to America, of which delivery is just com- mencing and which will not be completed before June 30, ! 1919, amount to 375,000 dead-weight tons, or about 250,000 gross, making an aggregate of over 425,000 gross tons sold or contracted for de- livery to the allies from April, 1917, through June 30, 1919. The ves- sels chartered to the United States bring th© total Japanese tonnage which has or will come under allied control up to 525,000 gross tons. A summary of the foregoing facts is given in the following table : Number and, tonnage of Japanese steamers as reported hy Lloyd's for June SO, 1914,, ond as obtained from our analysis for June 30, 1918, together with a statement of additions and losses. Japanese steamers. Gross tons. Lloyd's Register, Jane 30, 1914 . Orsi analysis, June 30, IMS This increase is explained as tollows; Additions, total. New construction over 200 gross tons Vessels under 200 gross tons Purchased foreign vessels Old vessels registered later In Japanese Department ol Communication list, not in Lloyd's. . Not registered th Lloyd's but among war losses j . . . . Losses, total.. Enemy action Marine risk ^. .,. .. Sold to foreigners . B roken up , Dropped from Lloyd's. . . Unlocated... Change ^ measurement. 1,732,440 2,098,064 752,766 545,920 3,195 123,382 13,781 63,171 3,316 387, 141 105,819 112,794 81,908 8,544 4,464 37, 735 35,877 1 These statistics are compiled from a study of Lloyd's Register and Supplements, 2 Cited in United States Commerce Reports, May 14, 1918, p. 597. THE ECONOMIC SITUATION OF JAPAN. 59 PRESENT EMPLOYMENT OF JAPANESE SHIPS. It is possible to account for the distribution according to trade routes of nearly 1,500,000 gross tons of Japanese shipping, or more than two-thirds of the total merchant marme. The following state- ments are derived in part from a report by Ambassador Morris, showing operations of the Japanese merchant marine as of December 31, 1917, and in part from the confidential monthly statement issued by the British Ministry of Shipping, regarding the employment of Japanese vessels for June, 1918. The latter, which is more complete than any other information available, is as follows : Monthly statement of employment of Japanese vessels, June, 1918. [British] Ministry of Shipping, Requisitioning Branch, June SO, 1918. Total. Number. Gross tons. Per cent. Gross tons. 1. Liners berthed to United Kingdom i 2. Allied mterests: France and India. , France and Japan French Mediterranean trade Italy and U. S. A. (Atlantic) - Italy and South America :...: Italy and India l... Italy and Japap ;..'.. Italian and Mediterranean trade '1 Jbpan and allied Mediterranean (destination un- known) 3. Trading in ea.stem seas: Japan and India India and west coast of America India and U. S. A. (Atlantic) India and Suez ■ In Indian waters (local trade) , ' Jiapsn and Australia , , , Japan and west.ooast ot America * Japan and U. S. A. (Atlantic) ( ; Japan and South America (Atlantic) Coasting Japan, China, etc i Japan and Polynesia Japan and Africa 4. Miscellaneous: Laid up . . .- '. No recent information : Formerly engaged in Indian trade Formerly engaged in trans-Pacific trade Formerly engaged In coastmg Japan, etc Formerly engaged m Australian trade No record of previous trade .- Repairing New vessels Total 28 10 2 9 4 14 72 9 5 1S4 2 2 133,934 5,801 29,118 3,224 6,961 6,523 14, 648 6,919 3,294 64,046 110,913 44,599 12,539 38, 128 8,835 56,391 391, 875 49,970 33,286 373,329 5,642 6,305 4,170 182 1,840 49,818 2,739 99,274 2,855 5,900 1,573,068 4.5 .5 1.6 .5 .5 .5 .9 .5 .2 3.6 6.2 2.2 .5 2.0 .9 3.1 16.1 2.0 1.1 34.4 .4 .4 .2. .2 .4 5.1 .2 10.7 .2 .4 100.0 8.5 .4 1.9 .2 .4 .4 .9 .4 .2 4.1 7.0 2.8 .8 2.4 .6 3.6 24.9 3.2 2.1 23.7 .4 .4 .3 .1 3.2 .2 6.3 100.0 1 These vessels call at allied Mediterranean or South African or American ports. en route. These statistics show that 58 ships of 274,468 gross tons, or 17.4 per cent of the total, were plying between the European ports of the allies and other poTts, principally oriental; that 11 ships of 62,509 gross tons, or 4 per cent, were trading between Atlantic ports of the United States and the Orient; that 72 ships of 391,875 gross tons, or 25 per cent of the total tonnage, were trading be- 60 THE ECONOMIC SITUATION OF JAPAN. tween the west coast of America and Japan (plus 10 ships of 44,59f; tons to India) ; and that most of the remainder, 297 ships of 799,60'? tons or more than half of the total, were trading in the eastern seas, The Japanese tonnage not accounted for in the preceding statement is composed mostly of tramp steamers. These are chartered to the regular lines, or to individuals for specified periods, or are_run by their owners. No analysis is available for this group of* vesseh later than that 6f the Japanese Department of Communications, as of June 30, 1917, which accounts for the distribution of a total of 803,232 gross tons of steamers of over 1,000 tons. This total, which evidently overlaps in considerable part the steamers shown in the previous table, was distributed as follows according to trade areas: Tram-p steamers as generally distribtitecl in trade areas, as of June 30, 1917.'- Number. Gross tons. Per cent. 220 15 47 2 4 10 7 478,503 55,961 191, 500 7,524 11,571 31,380 26,793 59.7 6.7 North America 23.6 .9 l.S India 3.9 South Seas 3.4 Total 305 803,232 100.0 I Japanese Department of Communications, June 30, 1917. Analysis of the bunker applications granted by the War Trade Board from March 1, 1918, to August 10, 1918, shows that 75 Japa- nese steamers of 423,316 gross tons, not under charter to American citizens or the United States Shipping Board, were trading at American ports. Of these steamers, 71 of 397,408 gross tons were trading between American ports and East Asia, and the remainder were engaged in Indian or South American trade. The Japanese vessels under charter to citizens of the United States or to the United States Shipping Board, in addition to the Japanese vessels not under charter touching United States ports as showr^ above, were operating in the following trade regions on August 1 1918: Trade area. South American — west East Asian Navy Army Not yet delivered (Ide Mam) Total 104,87 ' Figures from confidential report by Division of Planning and Statistics, United States Shipping Boarc There are four additional Japanese vessels of 17,727 gross tons chartered to foreigners, which are operating under charters approvec ; by the United States Shipping Board. Three of these ships are trad ■ ing with the west coast of South America, and the fourth is in the trans-Atlantic service. THE ECONOMIC SITUATION OF JAPAN. 61 The statistics which have been cited show that less than 20 per cent of Japan's tonnage is now touching at European portSj that about 25 per cent is plymg between the west coast of America and Japan, and that most of the remainder is trading in. Asiatic waters. Japan's ships are attaining a greater and greater predominance in the Pacific, In 1913 Japanese ships represented ; only half the ton- nage entering Japanese ports, but in the first gix ^onthSf* of 1918 they represented 78.3 per cent. Meanwhile the proportion of British ships has fallen from 30 to less than 10 per cent, and of American ships from 5 to 2 per cent. The only country other than Japan whose share in Pacific shipping has increased materially is Holland. In 1913 only 180,015 gross tons of Dutch ships entered Japanese ports, but the total for 1918 would be 700,000 at the rate of the first six months of this year. The following table shows the tonnage and nationality of steam vessels entering Japanese ports in 1913, 1917, and the first six months of ,1918. These statistics show a falling off in total tonnage of about 20 per cent between 1913 and 1917, and a further slight de- crease for 1918. steam vessels enterinff Japanese ports from foreign countries^ Flag. 1913 1917 1918 8 Japanese . . . Grass tons. 12,529,552 ' 7, 228,460 1,679,104 1,330,694 723, 163 411,980 180,015 153,062 148,120 113,261 108,340 65,233 Gross toils. 14,178,552 2,620,796 Gross tons. 7,163,785 S79, 992 BMtish (iRrmt^Ti , , 475,522 712,099 271,330 765,795 178, 308 Kussian : '. 305, 085 Frencli . 43,791 349, 873 Dutch Norwegian . , - - . 207, iii 32)475 110^966 42,203 76, 315 22,391 52 369 Danish Other . . . ■ 84,745 Total 24,658,874 19,406,869 9,156,655 ' Annual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. 2 Six months. SHIPPING AGREEMENTS BETWEEN JAPAN AND THE UNITED STATES. Three shipping contracts have been entered into between Japan and the United States. Two of these provide for the purchase of ships by the United States and the other for the charter of ships. Contract number I provided for the purchase of 12 vessels of 100,000 dead-weight tons at $245 per ton. Four vessels had been delivered up to tnily 1 on this contract, and the remainder are due before October 1, 1918. Contract number II provided for thp pur- chase of 30 vessels of 246,200 dead-weight tons to \>e, delivered in the first six months of 1919. The ptirchase price was $175 per ton. An interniediate contract was also signed for 3 vessels, totaling 27,000 dead-weight tons, at $212.50 per ton, for delivery in November and December, 1918. Contract number III called for the delivery of 23 chartered steamers of 147,882 dead-weight tons, for use between July 1 and December 31, 1918. This requires payments approximating $9,122,000 during the six months July to December, 1918. With the exception of one vessel, the Ide Maru, all of these vessels are now chartered 62 THE ECONOMIC SITUATldN OF JAPAN. to the United States. By the terms of the agreement the Japanese Government is, in effect, contributing approximately $9,000,000 to the cause of the allies. AH of the ships are owned by private com- panies, which have chartered them to the Government at the rate of $20 per ton per month, and the Government has rechartered them to the United States at the regular rate of charterage set by the Allied Maritime Transport Council, which is about $10.50 per ton per month. SHIPBUILDING. Japan's progress in shipbuilding since 1914 is clearly shown by the figures in the following table : Construction of vessels of 1,000 gross tons and over in Japan, 19Uf-1918 Year. Number. Gross tons. Source. 1914 19 10 49 70 53 80,959 43,847 159, .568 291,155 177,875 Glasgow Herald. Do! Bureau of Navigation, Commerce. British Admiralty. 1915 1916 1917 Department of 1918 1 201 753,404 1 First six months. According to the Glasgow Herald, there were, at the beginning of the war, not more than 6 or 7 dockyards in Japan capable of build- ing ships of 1,000 tons and over. But by September, 1917, there were 28 yards, with a total of 74 building ways completed, 3 under con- struction and 14 contemplated, a total of 91. Three months later the total, counting ways under construction and contemplated, was 110. The largest of the new enterprises is that of the Asano Shipbuilding Co., of Tsurumi, near Yokohama, which by September, 1917, had 7 building ways completed, with 3 new ones building. This would put this company almost in the lead in Japan, although the greatest pro- duction in the past has come from the two Mitsubishi yards and the Osaka Iron Works. The Office of Naval Intelligence reports that by March, 1918, there were 113 shipbuilding slips, each capable of holding a ship of 1,000 tons or over, owned by 42 different firms. It is estima.ted that these building ways, which vary from 1,000 to 10,000 tons, average a ca- pacity of 4,000 tons. Hence, if all were working at once, 400.000 gross tons of shipping would be under construction at the same time. Taking the average time for the construction of a ship as six months, these docks working at full capacity could turn out 800,000 gross tons a year. But if, for instance, a 5,000-ton dock were used in build- ing a 3,000-ton ship, there would be a capacity loss of 2,000 tons. Hence it is necessary to allow 20 to 30 per cent for this loss of ca- pacity. But if materials were freely available, Japan could build 600,000 gross tons a year, or about 900,000 tons dead-weight. Since Japan completed 21 vessels of 63,678 gross tons in May, 1918, an estimate of 800,000 gross tons as the annual capacity does not seem unduly large. Certain Japanese shipyards have contracted to produce 250,000 dead-weight tons of ships for the United States alone during the first six months of 1919, which amount is said to THE ECONOMIC SITUATION OF JAPAN. 63 be half the possible production of these yards. This gives 500,000 dead-weight tons as the capacity for six months for a limited group of yards. The Office of Naval Intelligence reports that 11 of the principal Japanese steamship owners have contracted for 61 new vessels of 451,250 tons. Nineteen of these vessels of 182,850 tons are for the Osaka Shosen Kaisha and 10 of 73,000 tons for the Nippon Yusen Kaisha, That Japan appreciates the need for speed in construction is dem- onstrated by the rapid completion of the Tf ow Council by the Kawa- saki Dock Yard Co. This 9,000-ton vessel was launched on June 6, 1917, two months and twenty -seven days after the laying of her keel, and in ten days after launching was given a successful trial trip. This broke all previous records. The problem which has faced the Japanese shipbuilders constantly has been to secure an adequate supply of steel, boiler plates, and machinery. The Kawasaki Dock Yard Co., one of the leading dock companies, has its own steel works, and builds marine engines, boilers, and railway locomotives in addition to ships. However, its annual capacity a year ago was not over 30,000 tons of angles and bars. Since then it has been working on mills for the manufacture of boiler tubes, gas pipes, and ship nlates, and these mills are now in op- eration. According to the Office of Naval Intelligence the iron foundries of Japan have not been able to supply over 35,000 tons of steel, so that projects have been set on foot for enlarging the Waka- matsu Iron Foundry and for the increase of the iron supply in the interior of Japan by the newly organized Toyo Iron Works Co. It is still necessary, however, that Japan should obtain steel from the United States if capacity production is to be approached. The negotiations undertaken in September, 1917, resulted in having the American steel embargo relaxed. The release by the United States of 127,000 tons of steel for the ifirst purchase of bottoms from Japan and of nearly 123,000 tons more for the second purchase has relieved the situation, and will allow as rapid a production as the present facilities are prepared for, provided the steel is shipped from this country on a sufficiently rapid schedule. For each ton of steel from two and a half to three dead-weight tons of ships can be constructed. The following are the approximate amounts of steel imports re- quired by Japan and China for ships being built for the United States : Tons.' 1918— July f 50, 000 August 50, 000 September 40, 800 October 46, 310 November. 47, 360 December 15, 960 Total, 19] 8 250, 430 1919— January 13, 710 February 6, 940 Total, 1919 : 20, 650 1 Figures from a confidential report by Division of Planning and Statistics, United States Shipping Board. 64 THE ECONOMIC SITXJATTON OF JAPAN. FREIGHT RATES AND THE PROSPERITY OF JAPANESE SHIPPING ENTERPRISES. Trans-Pacific freight rates have advanced with startling rapidity. Comparative figures which arie available for January, 1915, and May, 1918, show that-raites at the latter date were from five to ten times as high as at the former. J^ This statement does not taike into account the very large increases which took place in the early months of thfe war, prior to January, 1915. The only restraining influence has been the control exerted by the Japanese Government over subsidized lines. During the first two years of the war the Ministry of Communications allowed them two advances, one of 20 jper cent and a second of 25 per cent. The sub- sidized lines, however, have control of only part of the cargo space, and this is contracted for as far ahead as they care to make agree- ments. Japanese shippers and Japanese ports have been given preference in these contract prices. Furthermore, the rates on Japanese ships for cargo from Pacific ports to Japan are much higher than those quoted for exports from Japan to the United States. Ill this manner the Japanese Government is discriminating in favor of its own nationals, and is helping with the subsidies to foster Japanese trade. The returns in this trade reflect the success that has attended the Government's policy. The whole situation has been immensely profitable to the owners of vessels, and companies which prior to the war were scarcely able to meet their running expenses are now able to declare enormous dividends. The Toyo Kisen Kaisha had been forced to face a deficit for a number of years, but the rapidity with which profits rolled up is shown by the fact that at the close of 1915 this company, in addition to paying a 15 per cent dividend, set aside a surplus of profits amounting to half a million dollars. At the beginning of 1915 it carried a debt of $3,799,740; at the end of that year it esti- mated that it could clear $199,200 on one trip of a steamer of the Tenyo class (13,500 gross tons) on the traiis-Pacific run. The dividends declared by the Nippon Yusen Kaisha and the Osaka Shosen Kaisha in 1918 are typical of the p;-ofits that owners have been able to reap. The accounts of the former for the six months ended March 31, 1918, show a regular dividend of 10 per cent and an extra dividend of 40 per cent to have been paid. The last dividend of the Osaka Shosen Kaisha was likewise for 50 per cent. During the fiscal year 1916-17 the Nippon Yusen Kaisha earned nearly twice the amount of its capital stock. Its total capital- ization is $13,750,000, and during that year its earnings were $21,000,000. ^ The rates referred to are taken from the Fortnightly Price Cun-ent and Marliet Report, published by the Hongkong General Chamber of Commerce. Chapter VIII. FINANCE. SUMMARY. Japan, like the United States, has been able to strengthen greatly her financial position because of conditions created by the war. The balance of trade, which was against Japan before 1914, has been strongly in her favor. It is estimated that the total balance of pay- ments accrued in favor of Japan during the war on account of excess of exports over imports and payments for shipping freights amounts to more than $1,000,000,000. As offset to this sum Japan has received gold to the net amount of $140,000,000, and has granted to the allied Governments credits totaling $593,000,000 up to the middle of 1918. Japanese banks now hold over $250,000,000 of drafts on foreign countries. The Japanese Government has lately issued $50,000,000 of three-year notes for the purpose of taking part of the supply of drafts off the Japanese market. The shipments of gold and the measures taken to meet with credits the larger jjart of the balance due to Japan have not pre- vented some depreciation of the dollar, the pound, and the franc as compared with the yen. In July, 1918, the yen had appreciated about 8 per cent in the United States. The rise in exchange on Japan during July and August was particularly rapid. In the latter month the balance of trade against the United States was the largest on record, imports exceeding exports by $17,000,000. It is difficult to see how a further rise in exchange can be prevented without the arrangement by Japan of a substantial credit in favor of the United States. TRADE BALANCE OF JAPAN. War conditions, which caused a great expansion in the value of Japan's foreign trade, have likewise caused a shift in the balance of trade. Prior to 1914 Japan's trade returns showed a considerable excess in value of imports over exports. Since 1914 Japan has be- come a creditor nation. The growth in value of Japan's trade and the shift in the balance of trade are shown clearly by the following figures : Japan's imports, exports, and balance of trade, 1912-1918.^ (Millions of dollars.) Year. Total im- ports into Japan. Total ex- ports from Japan. Excess of imports. Excess of exports. 1W2... 1913... 1914... 191S... 1916... 1917... 1918 2.. 309.5 364.7 297.9 266.2 378.2 517.9 419.9 263.5 316.2 295.6 354.2 563.7 801.5 448.5 46.0 48.5 2.3 88.0 185.5 28.6 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1912-1918. 2 Six months. 65 66 THE ECONOMIC SITOATION OF JAPAN. A combination of factors caused the growth of Japan's exports to outstrip the growth of imports, the more important being (1) sales at high prices of ships (whose sale or purchase Japanese statistica show as exports and imports), munitions, and supplies to Eussia, England, France, and the United States; (2) largely increased ex- ports of silk to the United States ; and (3) arapidly growing demand for Japanese goods in the Orient as substitutes for European and American articles. At present the greatly reduced trade balance for the first half of 1918 is causing considerable discussion in Japan. The value of trade has indeed been considerably greater than in any half year in Japail's higtoryi but it is being realized that these growing values more and more reflect inflated prices rather than a rleal growth in volume. The chief causes of the small, excess of exports in the first half of 1918 are (1) reduced exports to Europe on account of tonnage difficulties and import restrictions; (2) the raj)id growth in the valiie of Japan's imports from the United States, particularly iron and steel and cot- ton; and (3) higher prices for raw cotton, wool, and other articles which it is necessary for Japan to import in large quantities. Prior to 1918 American imports from Japan were considerably in excess of exports. The figures are shown in the following table : Balance of trade between the United States and Japan, li)t2-191S} (Millions of dollars.) Calendar year. Imports into the United States from Japan. Exports from the United States to Japan. Excess of imports. 1912 87.4 98.9 106.7 108.3 182.1 253.7 227.1 ,57.5 62.5 41.8 45.7 110.4 186.4 208.4 29.9 1913 36.4 1914 63.9 1915 ; 62.6 1916 71.7 1917... 67.3 19182 18.7 ' Figures of United States Department of Commerce. 2 Nine months. During tlie first 11 months of 1917 the excess of imports into the United States was over $80,000,000; but a shift came in December, due to heavy shipments of iron and steel and cotton, and in that month the valup of our exports to Japan exceeded that of our imports by $16,000,000. In the first seven months of 1918 the excess value of our fexports was $12,000,000. In August, however, the total value of our imports from Japan was $32,000,000, larger than ever before, and the adverse balance of trade, $17,000,000, was the largest on record. Imports during September were even greater, amounting to $34,- 000,000, while the adverse balance was $13,000,000. Japan's favorable balance of trade, which amounted to $613,000,000 between August 1, 1914, and June 30, 1918, does not constitute the only item of payments in her favor. It is necessary to consider the earnings of the Japanese, merchant marine in carrying freight for the people of other nations. Since the tonnage of Japan's merchant fleet has increased by 15 or 20 per cent during the war, and since freight rates in the Pacific have increased by more than 500 to 1,000 per cent, Japan has been to THE ECONOMIC SITTJATTON OF JAPAN. 67 an, increasing extent a creditor with respect to freight payments.- It is difficult to determine the indebtedness of the United States to Japan on account of freights, but it amounted to about $15,000,000 on the imports during the first half of 1918.^ Also, payments due from the United States for ships chartered to the Shipping Board and for purchases of ships during the half year from July to Decem- ber, 1918, amount to about $9,000,000 and $20,000,000, respectively. ' War conditions have placed a large share of the world in Japan's debt. The debt has been settled through the shipment of gold to the net amount of $140,000,000, through the piling up of funds to Japan's credit in London and New York, through purchase by Japan of the securities of the allied Governments and other securities, and through buying back a part of Japan's foreign debt. IMPORTATION OF GOLD. The net quantity of gold imported into Japan from July. 1914, to June, 1918, amounted to $140,000,000. The following table shows Japan's imports and exports of gold : Japan's imports and exports of gold, lSlJf-191S} (Millions of dollars.) Imports. Exports. Excess ol imports. Excess of exports. 1914 (July-December) 3.6 12.1 50.0 193.5 .2 13.0 20.3 11.2 75.3 9.4 1915 ^ ■' ' 8.2 1916 38.8 118.2 .2 1917 . . . 1918 (January-May) Total . .... 259.4 119.8 139.6 ■ 1 Amiual (and Monthly) Returns of Foreign Trade of Japan, 1914-1918. Large imports of gold began during 1916, but the greatest quantity was imported from April to October, 1917. During 1916 and 1917 the United States sent to Japan $195,000,000, or nearly 80 per cent of the total importation of gold during these two years, and Kussia sent $40,000,000, or 16 per cent. , Prior to September, 1917, Japan reex|)orted a large share of this gold, about two-thirds of the exports going to India and nearly all the remainder to China. The large shipments to India were due to the difficulty of settling for Indian cotton through London on ac- count of the restriction on the sale of council bills, and the remittances to China represented to some extent the large Japanese investments in China which took place during this period. The drain of gold from the IJnited States to Japan was stopped by the American embargo in the early part of September, 1917. Japan replied immediately by prohibiting exportation of gold, except under license (decree of September 12, 1917) , thereby making possible the conservation of the maximum quantity of the newly acquired gold. Sinfee September, 1917, exports of gold from Japan have been negligible in amount. 1 Estimate of Mr. C. S. Duncan, of the United States Shipping Board. 68 THE ECONOMIC SITUATION OF JAPAN. ACCtTMULATION OF FUNDS TO JAPAn's ACCOUNT IN FOREIGN COUNTKIBS. The funds held abroad by the Japanese Government and the Bank of Japan have increased by $280,000,000 during the war. At the end of July, 1914, these funds amounted to $109,560,000, held mainly in London and New York. By May, 1916, this sum had increased to $184,000,000; by December, 1916, to $243,000,000; by December, 1917, to $321,000,000; .and by July 15, 1918, to $389,000,000.^ It is a striking fact that these accimiulations of funds abroad should increase during 1916 and 191T, while Japan was drawing so actively upon them, for imports of gold. These funds are often referred to in Japan as accumulations of " gold." But with gold controlled as it now is in England and the "United States these holdings are tied up indefinitely. LOANS AND CKEDITS GRANTED BY JAPAN TO THE ALLIES. The Financial Commission of the Japanese Government, with headquarters in New York, issued a statement early in August, 1918, which was prepared by the Japanese Department of Finance, show- ing that to date Japan has advanced to the allies $593,000j000. Of this sum Great Britain received $371,000,000, Russia $127,000,000, and France $78,000,000.^ This statement gave details of only the transactions with Great Britain. It showed that $252,000,000 had been invested in British bonds and treasury bills and that Japan had bought back or re- deemed Japanese Government and other securities amounting to $119,000,000. An official statement of the Japanese Department of Finance, cited in Commerce Reports, Septeml>er 27, 1918 (p. 1183), states that the bonds issued in Japan for the purpose of giving financial assistance to the allies amount to $289;000,000. The funds which Japan has invested in British and other govern- mental bills and securities apparently include a considerable part of the funds accumulated abroad. REDUCTION OF NATIONAL DEBT. Japan was able to reduce her foreign debt by about $80,000,000 in the first three years of the war. The national debt on March 31, 1914, amounted to $1,292,061,253, of which $764,744,326, or 59 per cent, was the amount of foreign loans. On March 31, 1917, the total debt had been reduced to $1,233,850,969, while the amount of foreign debt had been reduced to $685,103,780, or 55 per cent of the total.^ Since March, 1917, further reductions of the foreign debt have occurred, and at present it is over $100,000,000 less than it was before the war. This reduction of Japan's foreign debt is also apparently counted in the aforementioned statement as a part of the financial aid ren- dered to the allies. 1 Commerce Reports, July 9, 1917, p. 81, and Aug. 17, 1918, p. 649, and confidential report ^^of Commercial Attache Rutter, received July, 1918, "Rate ot Exchange with tffl.pS.ll. « statement entitled " Japan In the War Finance of the Allies." This statement, which was prepared by the Japanese Department of Finance, Is printed In the Commercial and Financial Chronicle, Aug. 10, 1918, p. 550. ='>-'<" nuu 'Seventeenth Financial and Economic Annual of Japan, 1917, pp. 30-81, and Commer- cial Attach* Rutter's confidential report on "Rate of Exciiange wUh Japan," July, igili THE ECONOMIC SITUATION OF JAPAN. 69 INTEENATIONAL BALANCE SHEET. The total balance of trade in Japan's favor from August 1, 1914, to June 30, 1918, was $613,000,000. The aforementioned statement of the Japanese Depiartment of Finance estimates that the non- tradal balance, which is mainly for freight payments, amounted to Sfi431,000,000 from August- 1, 1914, to April 30, 1918. The basis for this estimate, however, is not indicated. The total balance of pay- ments accrued in favor of Japan during the war, according to these figures, would be $1,044,000,000. As an offset to this sum Japan has received net imports of gold ainounting to $140,000,000 and has granted to the allied Govern- ments credits amounting to $593,000,000, a total of $733,000,000. This total falls short by over $300,000,000 of equaling the above balance in favor of Japan. The bulk of this last sum is held by banks in Japan in the form of drafts upon the United States and other countries. A statement of the Japanese Finance Department, cited in Commerce Reports, September 11, 19i8 (p. 953), estimated that the drafts bought and possessed by banks dealing in exchange amounted to at least $260,- 000,000 on August 1. To facilitate the purchase of these drafts by the banks, the Bank of Japan has increased its note issue, adding to the existing inflation. Although the merchandise balance of trade in favor of Japan is small at present, the volume of payments for freight is constantly enlarging the balance due to Japan. In order to prevent further depreciation in the price of drafts sold in Japan on foreign coun- tries, with the resulting detriment to export trade, the Japanese Government has announced the issue of three-year exchequer bonds to the amount of 100,000,000 yen ($50,000,000) . These bonds are to be used to provide additional funds for the purchase of drafts by banks dealing in exchange. RATES OF EXCHANGE. The depreciation of the dollar and the pound in Japan is con- siderably less than their depreciation in most of the South American countries and European neutrals. This is due in large part to the financial measures taken to absorb with credits a large part of the balance due to Japan. The following table shows the movement of exchange rates in Japan : Movement of exchange rates in Japan, 1913-1918.^ [Demand bills at Yokohama.] Average in 1913 Average inl914 Average in 1915 Average in 1916 February, 1918 July 6, 1918 Per 100 yen, New York. Dollars. 49.52 49.34 48.98 50.16 51.00 51.375 Per yen, London. s.d. 2/0.4 2/0.3 2/0.6 2/1.3 2/1.75 2/2.0 Per yen, Paris. Francs. 2.57 2.55 2.70 2.186 2.96 2f.99 Per 100 yen, Bombay. Rupees. 152. 29 152. 14 154. 65 157. 52 147.00 143.00 Per 100 dollars, Hongkong. Yen. 98.34 92.39 88.76 101. 28 139.00 148.50 Per 100 yen, Shanghai. Tael. 74.62 81.87 87.82 71.03 49,25 46.25 1 Figures quoted by Yokohama Specie Bank. 70 THE ECONOMIC SITUATION OF JAPAN. At the rates of July in Japan the dollar was depreciated 3 per cent from par, the pound 6 per cent, and the franc 15 per cent. On the other hand, the Indian rupee had appreciated 6 per cent because of the heavy imports of Indian cotton into Japan, which could not be offset by the purchase of council bills on India in London because of the British restriction upon their sale. The rates of exchange on .Japan in the United States show a considerably greater depreciation of the dollar than the rates on this country in Japan. In normal times this dislocation would be corrected through credit transactions. The following table, which was furnished by the International Banking Corporation, shows the course of rates for cable transfers : EsBGhange rates (n N&iv York on Japan, 1915-1918. Month. 1915 1916 1917 1918 January - $0.49625 .4950 .4950 .4945 .4950 .4940 .4950 .4925 .49125 .4925 .4950 .50125 $0.50375 .5050 .50375 .50375 .5025 .5050 .50625 .5050 .5075 .50875 .51 .51 $0.6090 .51 .51125 .51125 .5125 .5125 .51125 .51 .51 .5125 .51625 .5175 $0.5175 ^ r, .6175 March .5175 April .. $0.51875- .52 Mr. : .5225- .5250 .52625- .5275 July , .53 - .63875 August .53875- .5475 SeptembBr December The rise of exchange rates on Japan during the present year has been particularly rapid. During the first three months the value of the Japanese yen stood at 51.75, at which figure the dollar was depreciated about 4 per cent from its par of 49.85. At present (Sep- tember 13, 1918) the rate is close to 55, a depreciation of nearly IQ per cent. The depreciation was especially rapid during July and August. The statistics of the total value or imports and exports are of in- terest in connection with this depreciation. Balance of trade hetween Japan and United States, January to August, 1918.^ (Millions of dollars.) Month. Janilary... February. . March April May June July August September Imports into United States from Japan. 19.0 17.4 19.0 27.7 23.9 28.1 21.4 32.1 33.7 Exports from United States to 'Japan. 32.2 33.5 18.9 27.1 24.5 15.8 21.0 15.2 20.2 Excess of imports. 0.1 .6 4.4 12.3 .4 16.9 13.5 Excess of exports. 13.2 16.1 1 United States Department of Commerce. Thus, the rise of rates of exchange on Japan was coincident with the shift from an excess of exports from the United States to an ex- cess of imports from Jaj^an. The large adverse balances in August and September were due in considerable part to the large importation of silk, which amounted to $43,000,000 during those months. THE ECONOMIC SITUATION OP JAPAN. 71 A further important cause of the present rise of rates is the heavy balance of payments against the United States on account of the purchase and charter of ships from Japan and payments of freight. During the second half of 1918 it is necessary to pay to Japan about $20,000,000 for ships to be delivered from Japanese shipyards, and about $9,000,000 for ships under charter of the United States Shipping Board. It is difficult to determine with exactness the total amount due at the present time to the Japanese steamship companies for freights, but preliminary estimates indicate that it amounted to about $15,000,000 on the imports during the first half of 1918.1 Summing up these figures, we find that the merchandise balance of trade between Japan and the United States will be adverse to the United States to the amount of at least $30,000,000 during the second half of 1918, if present tendencies continue, and that payments for charter of ships, purchase of ships, and freight will total probably $45,000,000. Thus, there is in prospect during the second half of 1918 a balance of payments in favor of Japan of perhaps $75,000,000. It is necessary to take strong measures to prevent further depreciation of the dollar. MEASURES TO PREVENT FURTHER DEPRECIATION OF THE DOLLAR. Under existing conditions there are three sorts of measures adapted to control the sijtuation — ^to limit imports, to increase exports, and to arrange credits in Japan. Limitation of imports is desirable in order to save tonnage and to reduce the purchase of nonessentials by Americans, as well as to control exchange. The total value of our necessary imports from Japan is much less than the value of our present imports, and it is possible to impose more drastic control than has yet been undertaken. Expansion of exports is likewise desirable where it does not inter- fere with conservation of articles of which a shortage, exists in this country, and where ,it does not make large demands upon shipping. But it hardly is probable that we can increase our exports of steel, mineral oil, caustic soda, and raw cotton, which are the chief articles now desired from us by Japan, and which amount to 90 per cent in value and 85 per cent in weight of our exports. On the .contrary, it will be vitally necessary to cut down considerably our exports of steel, and probably of mineral oil and caustic soda as well. This curtailment of exports will, of course, affect exchange adversely. The cotton, which we could spare with less difficulty, occupies 130 cubic feet to the ton, and is very bulky to ship, though the new process for compressing cotton reduces the stowage figure to a minimum of 80 or 90. The remaining method to control the exchange is through the ar- rangement of credits in behalf of this country by Japan. Without this it is doubtful if a further rise in exchange can be prevented, because of the large balance of payments adverse to the United States. CURRENCY AND BANKING SYSTEM OF JAPAN. Japan's monetary system is based upon the gold yen, whose value in American money is $0.4985, and which contains 0.75 gram of 1 statement of Mr. C. S. Duncan, of the United States Shipping Board. 72 THE ECOJIOMIC SITUATION OF JAPAN-. pure gold. The standard gold coins are of 20, 10, and 5 yen. The silver coins of 50, 20, and 10 sen contain, respectively, 8.1, 3.24, and 1.62 grams of pure silver. The leading banking institution is the Bank of Japan, which is closely affiliated with the Government. In addition to more than 2,000 banks doing a general banking business, there are several strong financial institutions of a special character. The Yokohama Specie Bank, ;with a paid-up capital and surplus of over $25,000,000, is an old and well-established institution which deals in international finance. The Hypothec Bank of Japan concerns itself with long- time domestic financing. The Industrial Bank of Japan specializes in business concerned with' securities. The banks of Formosa and Korea are concerned with the development of these lately acquired possessions. The Bank of Japan, which is the central bank of the country, was established in 1882. Its present capital is $18,760,000. The bank's functions are — 1. To manage treasury receipts and disbursements and, in general, to act as the financial agent of the Government. 2. To discount or purchase Government bills, bills of exchange, and commercial paper, 3. To deal in gold and silver bullion and foreign exchange. 4. To receive deposits. The Bank of Japan has the exclusive privilege of issuing bank noises. The law requires the bank to hold as reserve against notes an equivalent amount of gold and silver coin and bullion. The value of silver coin and bullion must not exceed one-fourth of the total reserve. Actually no silver reserves are indicated in the statements of the bank for the 10 years prior to 1916, and it is unlikely that any have been held since 1916. In addition to the notes issued, yen for yen, against specie, the bank is allowed to issue notes to an amount not exceeding 120,000,000 yen ($60,000,000) against other reliable securities or commercial paper. The bank may issue notes in excess of those issued against specie and the 120,000,000 yen of securities, with the permission ' of the Minister of Finance, against other Government or private securities, provided that a tax at the rate of not less than 5 per cent per annum be paid upon the amount so issued. The. largest issues of bank notes come at the end of the year, at which time it is customary to make a lai-ge number of settlements. The following table shows the note issue, reserves, and securities held against notes of the Bank of Japan since 1914 : Vote issue, reserves, and securities of Bank of Japan, '191Jf-1917.^ Notes Issued. Gold reserve. Securities held against notes. Year. Public securities. Other securities. Total securities. 1914 4192,794,548 216,069,006 300,612,206 414,000,000 5109,118,500 124,208,900 205,259,500 324,000,000 $24,911,305 9,640,000 7,650,000 $58,764,743 81,320,106 87,702,706 $83,676,048 90,860,106 95,362,706 90,000,000 1915. 1916 . - . - 1917 I Seventeenth Financial and Economic Annual of Japan, 1917, pp. 134-135, and Commercial Attach^ Butter's confidential report on Rate of Exchange with Japan. THE ECONOMIC SITUATION OF JAPAN. 73 Japan realizes the importance of promoting credit facilities abroad for encouraging growth of trade. The branches of the Mitsui Bus- san Kaisha at Amoy, Antunghsien, Bankok, Bombay, Canton, Cal- Stta, Changchun, Chefoo, Foochow, Hankow, Harbin, Hongkong, anila, Mukden, Newchang, Rangoon, Shanghai, Singapore, Sura- baya, Swatow, Sydney, Daireri, Tientsin^ Tiehling, Tsingtau, and Vladivostok, and of the Yokohama Specie Bank at Liaoyang, Pe- king, Port Arthur, and Tsinan, as well as at most of the above points, indicate clearly the trend of Japanese trade expansion. Other finan- cial institutions, such as the banks of Formosa and Korea and the Industrial Bank of Japan, are likewise opening new branches in the East. The Exchange Bank of China, whose capital stock is said to be owned by a group representing nearly all the substantial banks of Japan, has recently opened its head office at Peking. This bank ex- pects to engage in financial operations of a broad character.^ With the rapid development of Japanese trade with South Amer- ica has come the entry of Japanese banks in that field. In May tl^e Yokohama Specie Bank opened a branch at Buenos Aires.'^ Japanese banks also have branches in London and in New York, San Fran- cisco, and Seattle. 1 Journal of British Board of Trade, June 6, 1918. ' Commerce Reports, June 24, 1918, p. 1146. Chapter IX. COURSE OP JAPAN'S TRADE WITH CERTAIN COUNTRIES DURING THE WAR. UNITED STATES. The following outline of the development of the trade between the United States'and Japan is only a brief statement, since a fuller account of this development with respect to our current trade with Japan is given in the summary of this report and in connection with the studies of commodities contained in the preceding chapters. Before the war the imports of the United States from Japan were abouit double the exports in value. Chief among the articles im- ported was silk, which amounted to about 70 per cent of the total value of the imports in the fiscal year 1914. The following table shows the more important articles imported from Japan in the fiscal year ending June 30, 1914: Leading articles imported into the United States from Japan, fiscal year endiiiy June 30, l&U^ Value, dollars (000 omitted). Per cent of total value. Value, dollars (000 omitted). Per cent of total value. Silk Tea Hats, material tor. Bice Copper Earthenware 76,002 7,171 5,198 1,931 1,760 1,360 70.9 6.7 4.8 1.8 1.6 1.3 Hatting Camphor other articles. Total... 1,280 1,073 11,159 1.2 1.0 10.7 107,356 ' Trade of the United States with the World, 1914-15, Department of Commerce, 1916. In addition to the articles mentioned in this list, imports of coal were important, 85,000 tons being imported in the fiscal year 1914. It was profitable to import coal from Japan to the Pacific coast be- cause of the relatively high price of coal in that region, and because ships frequently had empty cargo space on the trip toward the west coast of Amierica, owing to the relatively greater bulk of the cotton which the United States exported to Japan. The more important changes in our import trade from Japan dur- ing the war have been the following: (1) an increase of one-third in the quantity of silk imported, and an increase in value from $76,- 000,000 in the fiscal year 1914 to $171,000,000 in 1918 ; (2) a great increase in the amount of foodstufFs imported, particularly beans, peas, rice, and vegetable oils; and (3) a considerable diversification of our imports, due to the purchase by Americans of a large amotmt of manufactured articles produced in Japan. Our important exports to Japan in 1914 were few in number. Kaw cotton, iron, steel, mineral oils, wheat, and wheat flour repre- sented 90 per cent of the total value of our exports. The following 74 THE ECONOMIC SITUATION OF JAPAN. 75 table shows the chief articles exported from the United States to Japan in the fiscal year 1914 : Leading articles exported from the United States to Japan, fiscal year ending June 30, 1914^ Value, dollars (000 omitted). Per cent of total value. Value, dollars (000 omitted). Per cent of total value. Cotton... 24,146 9,105 5,472 3,955 47.2 17.8 11.1 7.7 Wheat Hour 3,046 5,482 5 9 Iron and steel and their Other articles 10.3 Total . 61,206 100.0 ■Wheat > Trade of the United States with the World, 1914-15, Department of Commerce, 1916. The most significant change in the trade between the two countries since 1914 is the great growth of exports of iron and steel, and manu- fuctures of these. In the fiscal year ending June 30, 1918, the United States exported to Japan about 900,000 long tons of iron and steel, as compared with about 200,000 tons in 1914. Discussion of this topic is found in the section of Chapter III relating to iron and steel. Ejxportation of chemicals to Japan has increased materially since Japan has been cut off from Germany, and more and more from England. Caustic soda and soda ash are the most important chemi- qals exported to Japan. Another important change in the trade has been the cessation of exports of wheat and flour to Japan and the development of a much increased importation of foodstuffs from Japan. GREAT BRITAIN. During the war the balance of trade between Great Britain and Japan has been completely reversed and the character of the trade radically altered. Before the war Japan bought from Great Britain goods to the value of four times her exports to that country ; in 1917 British imports from Japan were valued at more than three times. British exports to Japan. This reversal in the balance of trade is shown in the following table : Balance of trade between England and Japan, 1912-1918} (Millions of dollars.) Year. 1912 1913 1914 1915 1916 1917 1918 (6 months) . Exports from Japan to -England. 14.9 16.4 16. S 34.2 51.3 101.3 34.8 Imports from England to Japan. 58.1 61.4 46.2 29.0 40.8 31.7 16.4 Excess of exports to England. 5.2 10.5 69.6 18.4 Excess of imports from England. 43.2 45.0 29.7 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1912-1918. T6 THE ECONOMIC SITUATION OF JAPAN". The shortage of tonri&,ge aftd England's need to conserve essential articles have led Japan to turn to other countries for many things which formerly were imported from Great Britain. Japan is now de- pendent upon the United States for ,iron and steel ind machinery; which fornierly were secured mainly from England. British exports of these articles have fallen off greatly, while the United States is exporting to Japan considerably larger quantities than were for- merly received by Japan from England. Other iihportant commodi-^ ties which Japan now secures from the United States instead of frqin iGrr.eat Britain are caiistic soda, soda ash, and nickel. British exports of wool were cui't4iled early in the war. Japan then' turned to Australia for wool in 1915 and 1916, and is now secur- ing it chiefly from South Africa. Many articles which formerly were imported from Great Britain are being produced in Japan. In 1913 ^apan imported from Great Britain over 100,000 tons of sulphate of ammonium, valued at $8,- 000,000, while during the fii-st five nionths of 1918 Japan's imports of this chemical were insignificant. Japan imported large quantities of woolen and cotton manufactiires from England before the war, but the growth of the Japanese textile industry has i-enderied Japan independent of imported textiles and even inade possible the exporta- tion to England in 19i6 of underclothes valued at $5,000,000. Other articles formerly imported but now manufactured in Japan are cer- tain metal products, chemicals, and paper. . Japan al^o is importing directly many articles formerly sent from allparts of the world to the London market to be sold and reexported. The increase of England's imports from Japan by over 500 per cent between 1913 and 1917 was caused chiefly by tKe purchase of ships and by increased imports of foodstuffs, starch, clothing, and metals. The Japanese include purchases aiid sales of ships in their trade sta- tistics, whicjh shpw; tjiat in, 1917 the British purchased frpm Japan 16 steam vessels, valued at $32,000,000. No purchases of ships are indi- cated for 1915 or 1916. , The great growth of England's imports of food froin Japan is sHown in the following table : Exports of food from Japan to England.^ Article. Long tons. Value. , 1917 ■ UJ I Long tons. Value. 1918 (5 months). Long tons. Value, Itice>, S68S Wheat flour. . . Peanuts Bajley.... Canned crabs . Total... 290 206,000 ' '2i'666 73,000 29,800 12,950 20,880 14,020 2 2,060 »2, 110, 000 1,816,000 2,919,000 993,000 125 73,000 i; 142, 000 11,650 4,177 299,685 79,712 9,053,125 (>) S40 1,486,000 (') I Annual {and Mdntiily) Return ot Foreign Trade of Japan, 1913-1918. > No data. THE ^CpNOIiJIC SIipATION OE JrAPAK. 77 . Japa^ expofte^^ l3,rge quantities of starch in ^917, the total amount being 6'0,000 long tons. Over 4P,p6,p tons, v^|iae4 at $4>P,O0jOQO, were exported to England. ■ • < England has purchased large quaritities of metals from Japan. In 1917 Japan exported to England 25,0p0 long tons of copper, valued at $15,321,000; 19,000 tons of zinc, Ingots and slabs, valued at $5,- 489,000 ; apd 4,50p tons of antimony, valued at $1,303,000. During the" early months of 1918 England's imports from Japan were spmewhat smaller than in the previous two years as a result of the shortage of tonnage and restrictions upon' imports. FRANCE. Japan's imports from France amounted to less than $3,000,000 in 1913, while exports to France were over ten times this sum. More than five-sixths of the value of the exports was silk, and copper was the only other itfem of much size. During the war Japan's imports from France have become even smaller. But Japanese exports to France hav^ increased, due to causes simijar to those affecting Japan's trade with (jrreat Britain. The following table shows the balance of trade b,etwe§n iFrance and Japan: Balance of trade between France and Japan, 1912-1918? (Millions of dollars.) Year. Exports from Japan to France. Imports from France to Japan. Excess of exports. ' 1912 . . . 21.9 30.1 15.6 21.1 32.0 48.9 36.8 2.7 2.9 2.2 1.9 2.2 2.2 0.5 19 2 1913 27.2 1914 ... ; 13.4 1915 , J 19.2 1916 29.8 1917 46.7 1918 (6 months) 36; 3 ' Annual (and Monthly) Beturns of Foreign Trade of Japan, 1912-1918. Silk is still the most valuable article which France imports from Japan. The value of the silk imported in 1917 was about the same as in 1913, but the quantity was smaller, due to the higher prices. The more important articles other than silk which France secured from Japan in 1917 were 18,000 long tons of copper, valued at $11,000,000; 6,600 tons of zinc, valued, at $1,800,000; and 5 ships, valued at about $5,000,000. GERMANY. Germany's imports from Japan were small in the prewar period, the more important articles being silk, fish oil, menthol, and copper. An interesting item, in view ot Germany's reported shortage of anti- mony, is the fact that nearly 1,000 tons were imported from Japan in 1914. 78 THE ECONOMIC SITUATION OP JAPAN. Japan's imports from Germany amounted to four or five times the exports, as indicated in the following table : Japan's trade with Oernmny, 1912-1918.^ (Millions- of dollars.) Year. Exports from Japan to Germany. Imports from Germany to Japan. Excess of imports. 1912 6.7 6.6 5.0 30.5 34.2 22.5 3.0 2.0 1.3 1.2 23.8 1913 27.6 1914 17.5 1916 3.0 1916... r . 2.0 1917. 1.3 1918 (6 months.) , 1.2 1 Annual (and Monthly) Returns ol Foreign Trade of Japan, 1912-1918. Prior to the war Japan's imports from Germany consisted largely of iron and steel and machinery, in the sale of which Germany com- peted with England and the United States in the Japanese market. Apart from these commodities, the chief import from Germany was dyestuffs. Dyestuffs formed the bulk of the small imports from Geritnany in the years 1915-1918. ETJSSIA. Japan's trade with Asiatic Eussia changed more fundamentally between 1913 and 1915 than the trade between Japan and any other country. In 1913 the trade between the two countries was very small. Japan's principal imports from Russia were small quantities of food- stuffs, fertilizers, and ores, and the chief exports were other kinds of foodstuffs and 65,000 tons of coal. The following table shows clearly the expansion of this trade which the war caused : Japan's trade toith Asiatic Russia, 191S-1918?- (Millions of dollars.) Year. Exports from Japan. Imports Japan. Excess of exports. 1913 , 2.1 5.2 39.1 58.8 37.1 4.7 0.4 .5 1.8 .9 1.9 .9 1.7 4.7 37.3 57.9 35.2 3.S 1914 1915 1916 1917 1918 (6 months) 1 Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1918. The table which follows shows the more important articles which Japan exported to Russia in 1915, 1916, and 1917. Hardly any of the articles listed were imported in important quantities before i914. THE ECONOMIC SITUATION OP JAPAN. 79 Leading articles exported from Japan to Asiatic Russia, 1915-1911} 1915 Copper (ingots and slabs).. long tons. Copper (plates and sheets) do. . . Copper wires do. . . Insulated eleotrio wire do . . . Brass and yellow metal (plates and sheets) ". do. . . Brass and yellow metal (bars and rods) do . . . Brass mantifactures : dollars. Zinc long tons. Antimony do . . . Surgical instruments and parts thereof dollars. Electrical machinery and parts thereof do. . . Telephones and parts thereof. ..: do . . . Lathes , do . . . Machinery (parts and accessories of) do. . . Sulphur long tons. Sulphuric acid do... Iodine do. . . Iodide of potash do. . . Chlorate of potash. do. . . Bleaching powder do. . . Camphor do. . . .\11 other drugs (chemicals and medicines) _. .dollars. Explosives long tons . Matches gross. EaU and other tanning extracts long tons. Leather do . . . Boots and shoes pairs. Other leather manufactures dollars. Woolen cloths and serges yards. Sugar (refined) long tons. 29,536 903 33 53 35,243 103 17 125 4,443 70,502 4,746 17,375 10,785 35 973,327 11,935 3,420 113,600 167,246 406,559 174,903 5,277 904 1,229,971 27,530 10,096 20 ioo' 183 716,757 " '8,924' 21 527' 264 3,111,338 10,767 103 196 77 10,095 1,237 2,463,978. 7,250 306 103,040 120,724 65,531 74,680 142,099 3,636 497 4 15 110 1,871,128 1,261,597 '6,'62i,'s36' 109 442,310 822,442 1,949,988 1,717 409,260 77 2,211,811 1,161 288 422,399 396,499 671,309 8,610 ^ Annual (and Monthly) Returns of Foreign Trade of Japan, 1915-1917. Copper, brass, and manufactures of these constituted about 40 per cent of the total value of the exports from Japan to Russia in 1915 and 1916. Japan's remarkable development of the zinc industry made possible the exportation of large quantities of zinc during 1916 and 1917. Next in importance after the metals were chfemicals, the more important being sulphur and sulphuric acid and potash products. In 1916 Eussia imported from Japan about 30,000 tons of phosphates, which formerly had been secured from Germany. Other important articles exported from Japan during this period were boots and shoes and woolen manufactures. The Eussian demand for these urgently required war supplies was one of the main factors in stimulating the progress of Japan's in- dustries. As a result of this development Japan is in a position to render far more important aid in military operations, or to assist economically, in Eussia. Japan now could send to Eussia con- siderably larger quantities of these articles, if need be, and could furnish many additional articles as well. The most important mate- rials which the United States will need to supply, if the intervention in Eussia develops on an important scale, are iron and steel. CHINA. Japan's trade with China is second in total value only to Japan's trade with the United States. China is a source of raw materials for Japan and a market for manufactures. China's riches comple- ment the limited resources of Japan's small islands. Japanese statistics show separately the trade with China proper, the port of Hongkong, and Kwantung, the lease to which Japan took over from Eussia following the Eusso-Japanese "War. The 80 5?HE ECQNOMiq SITUATION OF JAPAN. chief importance of Kwai),tung Province is dye to the fact that the port of Dairen is a terminus of the South Manchuriah Kailway. The trade of Kwantung represents mostly the trade of Manchuria. The following table shows Japan's trade with China, Kwantung Province, and Hongkong combined. The larger part of this trad® is with China proper. The excess of exports irom Japan represents in large part investments which the Japanese arp' making in China. Japan's trade with China, Kwantung Province, OMd Hongkong, 1913-19X8.^ (Millions of dollars.) Year. Exports from Japan. Imports to Japan. Excess of exports from Japan. 1913 109.0 109.0 S5.4 132.4 220.6 119.9 46.7 45.2 57.6 71.8 94.1 76.3 62.3 1914 6^.8 1915 37.8 1916 60.6 1917 ■ 126.5 1918 (6 montlis), 43.6 > Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1918. The most valuable import which Japan secures from China is oil cake, which is used principally as a fertilizer. In 1917 Japan im- ported more than a million long tons, of oil cake, most of whidi came from Kwantung Province. Second in value is raw cotton, of which Japan secures about 200,000 bales annually from China.; China's cotton, however, constitutes less than 10 per cent of Japan's total imports of raw cotton, and the quantity imported from China has shown no tendency to increase in the last five years. During the War Japan has secured increasing supplies of pig iron from China. In 1912, 70 per cent of Japan's ijnports of pig iron came from England and only 3 per cent from China ; in 1916, 14 per cent came from England and 56 per cent fi'om China. The quan- tity imported grew from 7,285 metric tons in 1912 to 109,768 in 1917. An iinportant part of this development has taken place in Manchuria, Japan's imports of pig iron from this source increas- ing from less than 2,000 tons in 1915 to nearly 30,000 in 1916. Japan also is beginning to import some of the cruder forms of iron, imports of bars, rods, and plates amounting to 8,000 tons in 1917. Japan imports about 600,000 tons of coal from China, but exports about 2,000,000 tons, a large part of which goes to Hongkong for the coaling of ships. Other important imports from China are foodstuffs, hides, and wool. Japan's imports of foodstuffs from China, however, are not large and have not increased during the war. In 1917 Japan secured about .4,000 tons of hides from China, a considerable increase over the prewar importation, but somewhat of a reduction from the quan- tity imported in 1916. More than 13,000,000 pounds of wool were imported from China in 1915, but in 1917 less than 3,000,000 pounds. An unusual import from China during the war has been copper and THE ECONOMIC SITUATION OP JAPAN, 81 brass. The increased price of copper made it profitable for enter- prising Japanese to collect and melt down Chinese copper cash. Cotton manufactures constituted about half of Japan's exports to China, Kwantung Province, and Hongkong in 1913. In 1917 their relative importance was slightly less. Although the value of Japan's exports of cotton manufactures to China was more than doubled during the war, the increase in quantity has not been proportionate. The most significant development has been the increased exportation of a better grade of cotton fabrics. The Japanese are securing a large degree of control in the Chinese market by virtue of the fact that their prewar competitors, notably England, have been unable to maintain their shipments. After cotton manufactures, refined sugar is the most valuable ex- port from Japan to China. Japan has increased somewhat the ex- portation of refined sugar to China on account of the considerable development in the Japanese refining industry. Since 1914 Japan has developed a considerable exportation of wheat flour to China, the quantity exported in 1917 amounting to 120,000,000 pounds, as com- pared with about 15,000,000 pounds in 1916. Exports of mineral oil from Japan, which are mainly to China, began in 1914, and in 1916 and 1917 were about 20,000 tons annually. Other important exports are copper ingots, aquatic products (prin- cipally cured and preserved fish), paper, matches, wood manufac- tures, and glassware. The development of Japan's trade with China during the war, on the whole, has not been great. This is due in large measiife to the continuous political disorders of China. Another important cause has been the great fluctuation of the silver exchanges, due largely to (he changes in the price of silver. The price of 100 Hongkong dol- lars averaged about 92 yen in 1914 and 89 yen in 1915, but rose to nearly 150 yen in July, 1918. This great rise in exchange has tended to discourage importation from China, since the Japanese importers must pay increasing prices for their drafts. Correspondingly, this has tended to encourage exportation of goods from Japan to China. BEIIISH IXDIA. Japan's imports from India are normally much larger than ex- ports, due to the large quantities of raw cotton which Japan imports. In 1913 raw cotton amounted to 83 per cent of the total value of Japan's imports from India, and in 1917 to 91 per cent. During the war the quantity of cotton imported by Japan from India, which constitutes about two-thirds of the total amount of cotton imported into Japan, has increased about 12 per cent, but the value has in- creased nearly 50 per cent. The following table shows the total values for exports and im- ports. It will be noted that the balance "in favor of India is rela- tively considerably less than it was before the war. In 1913 and 1914" Japan's imports from India amounted to about six times the exports ; at present they are not much more than twice the exports. 82 THE ECONOMIC SITUA.TIO'S OF JAPAN. Japan's trade with British India, 1913-1918.^ (Uillions of dollars.) Year. Exports from Japan. Iinports to Japan. Excess of Imports. i;i3 14.9 13.0 21.1 35.8 50.7 42.3 86.6 80.2 73.8 89.7 112.0 86.9 71.7 I3l4 67.2 1915 52.7 1916 53.9 1917 61.3 1918 (6 months) 44.6 'Annual (and Monthly) Returns of Foreign Trade of Japan, 1913-1918. Before the war Japan imported a considerable quantity of rice from India, but the present importation is insignificant. The most important other article which Japan obtains from India is pig iron, of which 60,000 tons were imported in 1917. Japan's imports of pig iron from British India have been irregular in amount since 1912 and have shown no pronounced tendency to increase or decrease. The most significant change in Japan's trade with India has been the increased volume and growing variety of goods exported. The Japanese are very anxious to increase their trade with India and have maintained frequent steamship service to Indian ports and established branch banks. The most important articles now exported to India from Japan are cotton goods. The value of this trade has increased fourfold during the war. However, British cotton goods still constitute much the larger part of India's imports of cotton manufactures. Other important articles exported to India are silk habutae, matches, copper, refined sugar, camphor, wood and wood products, paper, glassware, and metal manufactures. The trade in most of these articles has developed rapidly since 1914. Japan has been anxious to increase exportation to India to offset the adverse balance of trade. Formerly this was settled through London by the purchase of council bills upon India. When the Brit- ish Government restricted the sale of council bills the Japanese yen depreciated relative to the Indian rupee. In the effort to prevent this depreciation Japan exported over $50,000,000 gold to India during ] 917. In July, 1918, 100 yen would purchase only 143 rupees, as com- pared with a par of about 154, a depreciation of about 7 per cent. DUTCH EAST INDIES. The Dutch East Indies are an important source of raw materials for Japan. Prior to the war sugar constituted 85 per cent of the value of Japan's imports from the Dutch East Indies, and mineral oils were most of the remainder. In 1917 the importation of sugar had fallen to 20 per cent of the amount imported in 1913, because o± the rapid development of the sugar industry in Formosa. Also the quantity of mineral oils imported has decreased, and a larger share of Japan's imports has come from the United States. Other important articles which Japan secures from the Dutch East Indies are paraffin wax, tanning extracts, and quinine. THE EOONOMIO SITUATION OF JAPAN. 83 The increase of Japan's exports to the Dutch East Indies is sig- nificant. They grew from less than $3,000,000 before the war to $18,000,000 in 1917, and will amount to more than $30,000,000 in 1918 at the rate of the first six months. Exports to the Dutch East Indies now exceed imports, as shown by the following table : Japan's trade with Dutch East Indies, 1913-1918.^ (Millions of dollars.) Year. - Exports from Japan. Imports to Japan. Excess of exports. Excess of imports. 1913 2.6 2.7 4.2 8.7 18.1 15.2 18.7 11.0 8.1 7.1 8.7 7.0 16.1 1914 8.3 1915 . 3.9 1916 1.6 9.4 8.2 1917 ... . . ' Annual (and Monthly) Returns olthe Foreign Trade of Japan, 1913-1918. The greatest expansion of Japanese exports to the Dutch East Indies has been in cotton goods. A considerable variety of other products, mainly manufactures, is being exported, some of the more important being metal manufactures, pottery, gum tires, matches, beer, and flour. BRITISH STRAITS SETTLEMENTS. Japan secures 80 per cent of its imports of tin and 70 per cent of its imports of crude rubber from the British Straits Settlements. Imports of the former from the Straits Settlements have doubled in quantity during the war, while imports of crude rubber have increased nearly fourfold. At present ' considerable amounts of copra are imported into Japan from the Straits to be reexported in the form of coconut oil. Japan's exports to the British Straits Settlements have grown materially during the war. About 400,000 tons of coal annually are shipped to the Straits for coaling ships. Japanese coal has be- come more important since the exportation of coal from Great Britain has been curtailed. Japan also exports to the Straits a considerable variety of manufactured articles, including cotton goods, wood manufactures, matches, glassware, rubber manufac- tures, fish, and wheat flour. The following table shows the value of Japan's trade with the Straits Settlements : JapOM's trade loith the British Straits Settlements, 1913-1918.^ (Millions of dollars.) ' Year. Exports from Japan. Imports to Japan. Excess of exports. 1913 i 1914 1915 1916 1917 1918 (6 months) 5.0 4.6 6.3 9.2 14.0 11.9 2.6 2.0 2.7 5.4 7.5 6.5 . 2.4 2.6 3.6 ' . ■ 3.,8 6.5 5.4 lAnnual (and Monthly) Returns of Foreign Trade of Japan, 1913-1918. 84 THE ECONOMIC SITUATION OF JAPAN. THE PHILIPPINE ISLANDS. Coal is the most important article which Japan exports to the Philippine Islands, the exportation amounting to about 350,000 tons annually. Japan also sends a considerable quantity of cotton manu- factures to the Philippines, and small quantities of foodstuffs. The chief imports into Japan from the Philippines are manila hemp and raw sugar. There has been no material change in the sugar trade during the war, but imports of manila hemp have tripled, at present amounting to more than 35,000,000 pounds. AUSTRALIA. Before 1914 Japan secured wool in approximately equal amounts from Great Britain and Australia. During the war imports fronr Great Britain have practically ceased, and in 1916 Japan imported more than 40,000,000 pounds of raw wool from Australia, which is equal to three times the quantity imported from Australia in 1913. In 1916 about 90 per cent of Japan's supply of raw wool was ob- tained from Australia. In 1917, when the British Government pur- chased the Australian clip, imports of wool from Australia were much reduced. The deficiency was made up principally by turning to South Africa. Before the war Japan imported considerable quantities of wheat from Australia, but this trade has now ceased. The chief other arti- cle which is imported from Australia is lead. Japan's exports to Australia have grown somewhat in value dur- ing the war. The more important articles exported from Japan are textiles, sulphur, glassware, pottery, and manufactures of wood and metal. APEICA. Before the war Japan had little trade with Africa other than the purchase of about 40,000 bales of Egyptian cotton per' year. The chief developments since 1914 have been (1) the purchase of large supplies of wool in South" Africa, and (2) the development of an export trade in goods formerly exported to Africa from England, Germany, and other countries. When England purchased the entire Australian wool clip in 1917 Japan secured nearly 25,0d0,000 pounds of raw wool from South Africa. Prior to 1917 Japan imported hardly any wool from that country. The quantity imported in 1916 was only 15,000 pounds. Japan's exports to African countries, principally Egypt and Cape Colony, grew from $920,000 in 1913 to over $10,000,000 in 1917, and to nearly $13,000,000 in the first six months of 1918. These exports include many articles, some of the more important being manufac- tures of cotton, wool and sUk, wood products, glass, and rice. The growth of Japan's trade with Africa is shown by the following figures : Japan's trade with Africa.^ 1913 1917 1918 (6 months). Exports - . . Imports Total $900,000 3,600,000 $10, 400, 000 19,900,000 $13,700,000 12,800,000 4,600,000 30, 300, 000 26,500,000 1 Annual (and Monthly) Returns of Foreign Trade of lapan, 1914-1918. THE ECONOMIC SITUATION OF JAPAN. 85 SOUTH AMERICA. Japan's trade with South America is small, but is growing rapidly. The trade in the first six months of 1918 was more than equal in value to that of the ^nl;ire year 1917. The following table shows the growth and distribution by countries of Japan !s South American trade: Japan's trade with South America^ 1913 1917 1913 (6 months). Exports to— Peru t58,880 65,746 7U,284 {335,658 1,186,749 1,745,958 232,264 243, 135 1312,238 932,605 2,605,216 347,082 135,251 Chile Argentina... .. . . Brazil Others : Total 835,910 3,793,764 4,332,391 Imports from— Peru '. 9 1,386,694 3,761 68,177 4,863,612 1,574,263 23,033 713,778 169,660 3,066,965 3,583,643 11, 600 Argentina . . . Brazil Others 4,577 Total 1,390,464 7,242,363 6,836,345 » Annual (and Monthly) Returns of Foreign Trade of Japan, 1914^1913. In 1913 nearly all of Japan's imports from South America con- sisted of nitrates, and in 1917 two-thirds. In the latter year 120,- 000,000 pounds of nitrates were imported from Chile, which was more than double the quantity imported in 1913. The most of the re^ mainder of Japanese imports consists of raw wool, which is chiefly secured from Argentina. Japanese exports to South America consist of a great variety of commodities. The most important articles ex- Ijorted in 1917 were manufactures of cotton and silk and rice. The Japanese are very anxious to extend their trade with South America and have sent many of their business agents to open up new lines of trade. In May, 1918, the Yokohama Specie Bank opened a branch at Buenos Aires. -The people of South America, who have suffered so extensively from being cut off from their former sources of supply in Europe and America, have welcomed eagerly the en- trance of the Japanese into their markets. APPENDIX A. Analysis of principal exports from the United States to Japan, Jan. 1 to June SO, 1918, according to value, quantity, and tonnage. (Figures of United States Department of Commerce.) NoTB. — ^AU exports In excess of $100,000 In value or weighing more than 100 long tons are Included. Because of the Importance of Iron and steel, all the Items of Iron and steel and manufactures thereof are Included. The calculations of dead-weight tons are made upon the unit cargo basis, e. g., assuming that cargoes were not mixed and consisted of onl; a single commodity. In the case of the exports this method exaggerates the total tonnage required, since It takes no account of the fact that the two principal articles exported, iron and steel and raw cotton, stow together advantageously. The total dead-weight tonnage. in continuous service required to. carry the exports amounts to 471,764, on the unit cargo basis, hut on the basis of a calculation of the total cubic feet of ship space required for these articles It is estimated that the amount of dead-weight tonnage required Is 341,088. Article. Value . (000 omitted). Quantity. Long tons. Dead- weight tons. Iron and steel and their products: Pig iron, another Ferro-alloys: Ferrovanadlum Crude iron and steel products — Scrap and old, for remanufacture Bariron , Wire rods All other bars or rods of steel Billets, ingots, and blooms •- . . . Galvanized iron and steel sheets Iron sheets and plates Steel plates Steel sheets Tin plates, terne plates, and taggers tin. Total, Semicrude iron and steel products — Bolts, nuts; rivets, and washers.. Car wheels and axles Castings, n. e. s Chains Hoop, band, and scroll Cut nails Wire Wood screws - All other nails and wood screws, including tacks. Cast pipes and Sttings. . Wrought pipes and nttings Railroad spikes Rails of steel Switches, frogs, splice bars, etc Ship and tank plates (punched and shaped). Structural Iron and steel Barbed wue All other wire Wire rope and cables Woven wire fencing All other manufactures of wire Total.. Tools and cutlery- Table cutlery Axes Augers, hits, and drills. . Files and rasps Hammers and hatchets. . Saws Shovels and spades All other tools, n. e. s Total. 86 $184 2,853tons 13 5,482 pounds. 2 507 1,149 16,314 21 360 926 6,485 6,761 8,117 40,642 492 751 39 122 501 1 1,252 249 44 767 1,629 58 3,763 298 706 2,913 13 1,947 14 6 66 . 15,611 3 2 171 37 30 147 2 197 48 tons 9,846, 639pounds... 26,597,683 pounds.. 298,543,337 pounds, 287 tons 3,562,836 pounds... 9,969,490 pounds... 63,361,581 pounds.. 70,300,322 pounds.. 59,469,109 pounds- 5,890,157 pounds.. 5,986,929 pounds.. 8,008 pounds 21,897,554 pounds. 769, 929 pounds... 433,989 pounds... 17,841,086 pounds. 22,038,826 pounds. 1,043,092 pounds.. 57,312 tons 7,664,i751 pounds.. 20,025 tons 234,672 pounds... 30,573,071 poimds. 2,472., 2,853 2 48 4,396 11,874 133,278 287 1,590 4,451 28,286 31,384 26,549 242,143 2,630 5,867 181 257 2,673 4 9,776 339 194 7,965 9,839 466 57,312 3,174 3,422 20,025 105 13,649 32 42 141 138,093 2 6 87 63 55 196 4 262 675 1,660 1 28 2,657 6,911 77, 568 167 925 2,590 16,462 18,266 15,452 140,925 1,631 4,436 105 160 1,556 2 5,690 197 113 4,636 5,726 271 33,366 1,847 1,992 11,665 92 7,944 19 81,431 4 4 61 37 42 251 THE ECONOMIC SITUATION OF JAPAN. 87 Analysis of principal exports from the Unites, States to Japan, Jan. 1 to June SO, 1918, occorMng to value, quantity, and io»ni,