JAPAN: Red Ink Bonds

Like an invisible ectoplasm surrounded by devoted spiritualists, the credit of the Japanese Empire was under scrutiny last week in a hollow square of green-covered tables surrounded by the National Policy Council.

A novelty in Japanese politics, the Council provides an arena less formal than the Cabinet in which the fighting service and civilian ministers, perpetually at cross purposes, can quarrel at their ease for the public weal. The question last week was how many more bonds can the Imperial Government force the nation to absorb in order to meet the continued cost of Japanese penetration deeper & deeper into China?

When a Japanese artist bedded with a humble parlormaid in the early part of Queen Victoria’s reign, the auspicious result was Japan’s greatest politico-financier, His Excellency Korekiyo Takahashi. Last week Finance Minister Takahashi explained that 10,000,000,000 yen is about the limit of internal Government bond issues which Japan can conceivably absorb, and she has now absorbed 8,650,000,000. Mr. Takahashi based his calculations on the fact that Japan’s national wealth is about 110,000,000,000 yen and her national income about 10,000,000,000 yen, or roughly equal to what seemed to him the extreme borrowing limit. With courageous ire Old Takahashi reminded War Minister Hayashi and Navy Minister Osumi that they once promised “to reconsider the situation when Government bond issues have ceased to be absorbed.”

That juncture has now virtually arrived, Mr. Takahashi asserted, recalling that for months Government issues have labored under the nicknames “deficit bonds” and “red ink bonds.” As an example of how the Government could save money, Old Takahashi pleaded with the fighting services to respond to long standing Soviet proposals for a Russo-Japanese peace pact which would permit the two great powers to demobilize nearly 2,000,000 troops which they now maintain to defend their common frontier. As further proof that Japan’s economy is being severely pinched, Fiscal Wizard Takahashi pointed to recent declines in Japanese common stocks of even the most popular munitions companies.

After hearing Old Takahashi out, the War Minister and Navy Minister curtly stated that “the international situation” precludes “economies” in their departments. Sessions of the Council last week were supposed to have been secret, but its proceedings leaked out in such detail that everyone who knows the cunning Finance Minister assumed that he had chosen this astute means of letting Japanese public opinion crystallize around the fact that it is now a case of rule or ruin, triumph or bust. In the suppressed opinion of numerous Japanese economists the further the Empire adventures into China the more fatally she overextends herself and risks economic collapse at home. To this Japan’s militarists stoutly retort: “There is no such thing as an economic collapse. One can always go bankrupt and start afresh.”