the war economy of china's guerillas

Institute of Pacific Relations

The War Economy of China's GuerillasAuthor(s): Norman D. HanwellSource: Far Eastern Survey, Vol. 7, No. 23 (Nov. 23, 1938), pp. 265-270Published by: Institute of Pacific RelationsStable URL: http://www.jstor.org/stable/3022011 .

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FAR EASTERN SURVEY

Fortnightly Research Service

AMERICAN COUNCIL ? INSTITUTE OF PACIFIC RELATIONS

129 East 52nd Street ? New York City

Russell G. Shiman, Editor

Telephone: Plaza 3-4700 Cable?Radio: Inparel

Vol. VII ? No. 23 NOVEMBER 23, 1938 sEffa^^00- *?

Contents

THE WAR ECONOMY OF CHINA'S GUERILLAS

Japanese Competition in U. S. Checked by War Ambitious Plans for Mindanao Announced Another European Nation Recognizes Manchoukuo Nickel Output High While U. S. Import Falls Siamese Labor Legislation Tinged with Nationalism France Becomes Indo-China's Best Customer

THE WAR ECONOMY OF CHINA'S GUERILLAS

Norman D. Hanwell

Can the forces of guerilla China hold out against

Japan ? As this question comes more and more to

the fore, the economic aspects, or material base, of

China's growing peasant nationalism take on added sig- nificance. Is this movement just another

AlIRural "false awakening" or does it fore- Life Affected shadow the rise of a resurgent nation?

alism capable of not only maintaining its present existence but even developing into a much

stronger force? It is still too early to gauge the military

strength of the armed resistance to Japan's advance, but

certain facts already visible show that the "guerilla movement" has far outgrown the scope that customary

usage of the phrase suggests. From the traditional inter-

pretation of irregular warfare carried on by independ- ent bands, the guerilla movement in China has come

to connote activities extending into the entire life of the

peasantry. Whether or not military resistance can be

continued will depend on whether a self-sufficient func-

tioning economy can be maintained within the guerilla areas.

The Japanese Army has admitted that three fourths of North China remains in Chinese hands. The one fourth under foreign domination consists primarily of the ports, railways and coastal region. The remaining three fourths encompasses the farmlands of the interior with their great peasant population. Throughout all of the China behind Japanese lines there is a continual

conflict between these two "Chinas," urban China under

Japan versus rural China under the guerillas. Can the latter exist without the former?

Much is made in Western countries of the interde-

pendence of rural and urban areas, and with good cause. For China, however, the severance of the hinterland

from the cities means relatively little change in the standard of living of the rural areas. Agriculture in China is made up primarily of subsistence farming, the Chinese peasant barely producing enough to keep him- self going. In fact the peasant has looked to the world outside of his household and district for very little, and the infiltration of city-made goods into the rural areas has made little headway.

A number of studies made some years ago showed that approximately 60% of the peasants income went

for food, in some cases even more.

City Other demands upon the peasants in- Contacts come have been for clothing, from 7 to NotVital 14%; fuel and light, 6 to 12%; and

rent, 6 to 12%. These figures are only approximations, with decided variations in different

localities, or within the same locality. They do, how?

ever, help make it clear?if corroboration is necessary? that China's agricultural economy is one of subsistence

farming, notable for its low standard of life. The first consideration in any analysis of Chinese

peasant self-sufficiency is its ability to feed the popula? tion. In years past there has been some agitation con-

cerning the unfavorable trade balance of China as

regards certain fundamental food products, rice and wheat in particular. Numerous factors entered in to ex-

plain this apparent food deficiency?transportation, floods, drought, etc. There is no indication of a great scarcity of food crops in China at recent levels of con?

sumption. The Maritime Customs report on China's 1937 trade points out that "as compared with domestic

production in normal years, the quantities of rice and wheat imported have ... been comparatively infinitesimal."

? 265-



266 The War Economy of China's Guerillas November 23

Even taking the years of the greatest imports of rice or wheat, the picture is still one of practical food self-

sufficiency for China as a whole. In Food Self- 1931, when China's wheat imports Sufficiency bulked large because of the great

Yangtze River flood and the American wheat loan, imports of wheat were in the ratio of one to twenty when compared with China's own wheat

production. In the case of rice imports the contrast is even more startling. The year of greatest rice import, 1932, showed approximately 3 billion pounds of rice

being imported. A rice deficiency in South China ac? counted for these rice imports. But for the five years 1931-35, the average annual rice production was more than 116 billion pounds. These figures certainly do not indicate much dependence upon foreign nations by China for her major food needs.

Not only do we find food imports infinitesimal during the period of greatest imports, but there has been a considerable reduction in the amount of imports in re? cent years. Imports of rice were cut almost three fourths from 1933 to 1937; wheat imports fell in quantity to less than one twentieth of the 1933 figure; and wheat flour imports to about one sixth of the 1933 figure. It is true that wheat flour imports have increased greatly during 1938, imports largely required to feed Japanese- occupied cities cut off from interior supplies. But they still do not account for a substantial portion of China's food consumption.

Another factor is the increasing conversion of cash

crop land, such as cotton and tobacco land, to the pro? duction of more necessary food supplies, a result of the trade dislocation caused by the hostilities. This practice means an increase in China's food self-sufficiency.

Particularizing the food problem, what of the areas

occupied by China's guerillas? With millet, kaoliang and soya bean crops harvested in Sep-

Adequate tember and October throughout the

Crops for northern provinces, and a heavy winter Guerillas wheat crop harvested around June and

July, it is now evident that there is a

year-round food supply adequate enough to feed the

major guerilla areas of North China. Close to two thirds of China's winter wheat crop is to be found in the five

provinces where guerilla activity is at present promi- nent: Hopei, Shansi, Shantung, Honan and Kiangsu. Four of the northern provinces, Hopei,Shansi, Shantung and Honan, account for about two thirds of the summer kaoliang and 80% of the summer millet crops of China. In sum, China's guerillas should be able to ob- tain the necessary primary foods required to feed both themselves and their population.

Two other factors are important in this assessment of the ability of these areas to maintain food self-

sufficiency. During the Japanese advance through large sections of North China, great demands were made

upon the countryside for provisions for both men and animals. As an interior foreign correspondent records, "whole villages had their complete stores of grain taken

by invading armies for the feeding of their animals. Thousands of one time well-to-do villagers were re? duced to gathering leaves and weeds for food." De? mands were also made by sections of the retreating Chinese army. With the withdrawal of the major armies of both nations, leaving only Japanese garrisons in a few large cities, the Chinese peasant has once more returned to the tilling of his soil; hence crops continue to follow one another. Most crop areas are in the

guerilla-controlled rural sections. Renewed invasion in-

volving crop confiscation would constitute a problem for peasant food supply, but such confiscation would also involve renewed antagonism by the Chinese peasantry toward the invader.

Secondly, and more favorable to the peasant in re?

spect to food self-sufficiency, is the guerilla-enforced boycott of Japanese garrisoned cities. Japan has been

compelled to import large quantities of wheat for the cities. The refusal to send much of the domestic crop to the cities means added stores for the country.

The omission thus far of any consideration of meat

supply is not accidental. This is a question which troubles the Chinese peasant very little,

Meat Never for he has for years done largely with-

Important out meat. For the average Chinese fam- Item ily, meat is reserved for banquet occa-

sions and in most cases even then it is of a type which would not be accepted at the average American table, as the writer can attest from first hand

participation. One recent study of the type of food con- sumed by the Chinese peasant states that only 1% of

his food budget is spent on animal products. The animal in China is far more important from the standpoint of farm cultivation and transportation of produce than as an item for the Chinese table.

What of the ability of the guerilla areas to clothe themselves? There is substantial evidence to indicate that rural China has relied very little upon foreign or

city produced textiles for her cotton garments. Profes? sor J. Lossing Buck, in one of the most thoroughly documented studies of China's land utilization yet made, demonstrates very well that more than two thirds of the raw cotton produced in China is retained on the farm for household or handicraft industry. The same point is made in an earlier report by H. D. Fong and H. H. Pi of Nankai University, who brought out that the handloom-weaving industry of China is still

responsible for four fifths of the cotton yarn consump? tion in textile production in China.

Despite the rapid industrialization of a few urban centers on the coast and inland, as more than one Chinese economist has pointed out, the major portion of China's industrial production is still being carried on in



1938 The War Economy of China's Guerillas 267

the rural districts. Now with the shutting off of the

rural guerilla areas from the larger garrisoned cities, there is less dependence upon imports

Isolating Aids of foreign and treaty port textiles. This Handicrafts break hurts city industries far more

than the rural areas for it closes the

existing market and forces the remainder of rural China

to a dependence on the rural handicraft industries.

With this change in emphasis, textile handicrafts in the

countryside are even experiencing a trade revival, which should insure that the fall of living standards

will be slight, if at all. As in all agricultural countries

the Chinese peasant has long been dependent on second-

ary occupations, of which handicrafts are the most im?

portant, to eke out a livelihood above the minimum of

subsistence obtained from his land. Now his secondary vocation has become of fundamental importance.

A visit to any one of a number of rural market fairs in normal times or outside war areas impresses one with

the absence of anything really fundamental brought in

from outside of the locality. There are buttons, flash-

lights, thermos bottles, wash basins, knives, countless

nicknacks, and textiles brought from outside, but none

is basically important save textiles. And in this latter

case, added production by home and handicraft indus?

try can readily provide that substitute cloth which is

already in general use by the majority of Chinese peas? ants. Any other products from outside the locality normally fall into the luxury category as far as most Chinese are concerned. Guerilla economy does not call for the production of luxury goods. As to the importance of rural market fairs, some figures furnished in the land utilization study directed by Professor Buck are en-

lightening. Only 8% of all farm products are sold to a distant market. Of the balance one third is sold to the hsien city and two thirds to the nearby market towns or within the same village. This is indicative of the rela? tive unimportance of the distant market, and even of the larger hsien city, in the economy of rural China.

The same figures also indicate the relative unimpor? tance of the highway and railway in China's guerilla

economy. In the area covered by Modern Professor Buck's study "only two

Transportation localities reported transportation to

Unnecessary the local market by truck and none

by rail." By far the greater amount of transport was by means of pole over the shoulder, with cart and junk next in importance. Highway and

railway are much more important to the Japanese- controlled cities.

Mention has already been made of the conversion of land formerly devoted to cash crops to the production of food. The meaning of cash crops to the Chinese peas? ant has often been misunderstood. There are, however, certain cash crops which have been sold off the farm. Cotton has already been referred to, little more than

one third of its production going outside of the district. The fall in China's cotton crop from 3,400,000 bales

(of 500 pounds) in 1937 to an estimated crop of about

2,000,000 bales for 1938 is indicative of an increasing trend away from cotton as a cash crop. The cotton

grown now is intended primarily for home consump? tion.

From the standpoint of percentage sold off the farm, tobacco stands as the major cash crop. This is particularly true of certain areas in Central China where more than three fourths of China's tobacco crop has been sold off the farm. The combination of a war-disrupted market and a deliberate policy has resulted in a drastic reduction in Chinese tobacco acreage. In Shantung, for

example, the tobacco acreage has been reported as less than 20% of the 1937 acreage, with an estimated 1938 tobacco yield of not more than 30,000,000 pounds, to be

compared with 110,000,000 pounds in 1937. Reduced

plantings are also reported from other areas of China. The question of opium, a cash crop in many out of the

way places in China, is not involved in this discussion inasmuch as the guerilla area is not a center of opium poppy growth. It might be noted, however, that opium poppies have been reported as growing along the Jap- anese-controlled railway in Shantung.

Another cash crop, peanuts and its derivative, peanut oil, are closely connected with food and light. Over 60%

of the peanut crop has hitherto been Peanut Oil sold off the farm, and peanut oil exports for Light to the United States have been reported

in recent months. Use of the peanut and its oil can, however, be directed towards assisting the

completion of the guerilla economy. The peanut is a

food, of course, and that part hitherto sent abroad can be retained as an addition to the Chinese diet. Lighting in China has for the most part continued primitive, elec?

tricity being confined to a relatively few cities and homes. Though important in the Western world it is

by no means a necessity to the Chinese. Even the kero- sene lamp, encouraged by Western oil companies, has not been as widespread as believed. With the general impoverished condition of rural China, the Chinese continue to rely upon native vegetable oils where any light is needed. Tung or wood oil is used in many sec? tions of China, but there is little of it available in the areas under consideration. There is, however, peanut oil which may well satisfy what little need the Chinese

peasant has for light. In general the cash crop in China under present social

conditions, although occasionally advantageous to the

peasant growing it, has led to a deterioratton of the

peasant's standard of living. A good price, plus govern- mental decrees of compulsory cultivation (in Shansi) and the supply of free seeds by modern industrial con-

cerns, has caused many peasants to turn to the cash

crop, at the expense of land hitherto devoted primarily



268 The War Economy of China's Guerillas November 23

to a food crop. These various inducements have led in short order to the production of huge cash crop har-

vests, a process accompanied by a fall in prices. The fall in price in turn is responsible for a reduced income for the peasant, particularly unfortunate in that he has not been able to maintain his food self-sufficiency. Therefore it would appear that the new tendency towards returning to a more self-sufficient economy will mean an improved standard of living, such as it is.

What of the availability of fuel? Here again the Chinese peasant can rely upon the by-products of his

farm and need not depend upon fuel Farm transported from long distances. There

By-products are the old stand-bys, though probably for Fuel not the world's best fuel, kaoliang and

corn stalks, wheat straw, bean straw, cotton stalks, tobacco stalks, and so on, the greater part of which goes to fuel purposes. Chinese use of

fuel is primarily for cooking, little going to the warming of a house. The Chinese method is rather to dress

warmly, where economically possible, than to warm a

room. With some of the greatest coal areas of China in

guerilla territory it is not unlikely that a noticeable

percentage of needed fuel will come from that source.

Small native mines in Shansi, for example, are so nu?

merous and scattered that it would be too costly for

Japan to garrison them all. As to matches, the Chinese tariff had already cut

down the import?though much continued to be smug- gled in?even before the outbreak of hostilities. With the present cutting off of supplies, the guerillas have

regained the match market for their own local product. Matchmaking in China has for years been farmed out for home production with the resultant abuses inherent in such a system. Under the guerillas it is possible that the worst features of these abuses have been amelio- rated.

The importance of salt in the Chinese economy is often overlooked. The taxation of salt through the Chinese Salt Gabelle has for centuries provided a large section of the government's revenue. In more recent decades the salt taxes have provided necessary security for foreign loans to China. Its importance to a rural

economy is shown in the fact that one reason given for the removal of China's "Red Army" from southern

Kiangsi, where it had long been in control, was an in?

creasing inability to penetrate the salt blockade. In the

north, however, the sources of salt are numerous; the

sea, salt wells, salt lakes, and, in South Hopei, the possi- bility of getting a crude salt through treatment of the soil itself. The probable removal of restrictions on a

general production of salt by the peasantry (it has hitherto been a monopoly) should furnish an adequate amount of this commodity. In addition, its production may provide an added source of income to many, thus

favorably affecting the peasant's standard of living.

Arms and ammunition constitute one of the most

important items in the guerilla war economy. Can China become self-sufficient in this respect?

Small In general the answer is "almost."

Arsenals China, first to know gunpowder, has for

Operating centuries used the explosive hand gre- nade in warfare, one of the most useful

weapons for guerilla attack. At present there are small

arsenals throughout the area and one who has seen

them reports that in June they were each producing 200

hand grenades per day at small cost. Repair work is

done at these arsenals and trench mortars and sub-

machine guns are turned out. Gunpowder can be made

out of local materials. In addition, a large stock of

potassium chlorate was seized early in the war while

crossing through guerilla territory. The limitation re?

ported by one observer may have been overcome by this time, namely, that "all the raw materials necessary for guncotton and fulminate exist in the area, and a

first-class chemist might turn them to good account, but the present experts have only an undergraduate training in chemistry." Grenades, according to another

report, are manufactured from old iron kettles and homemade black powder. Machinery taken from inte?

rior factories has also been used for this purpose. Most reports in referring to the arms of the guerillas

seem to agree that they are well armed. To quote one,

"they have good modern rifles, excellent light and heavy machine guns and pack artillery as well as trench mor?

tars carried on mule back." When they occupied the

Peking power station, this correspondent reported that

"they considered the arms not worth taking . . . and

so destroyed them before they left." From whence come their arms ? Some are made within their own territory. Some of the equipment is that left behind when the Chinese armies retreated from the north. Much of it

is obtained through raids on Japanese garrisons and

through cutting off Japanese supply convoys. In an

area so little controlled by the Japanese it is simple, also, to bring equipment from regions not in Japanese hands. Though very little has apparently reached the

guerillas from the Soviet Union (despite reports of

mythical Russian-led guerilla units), it is not impos? sible that such goods may be received in the future. At

any rate, in carrying on guerilla warfare, greatest de?

pendence is upon the lighter equipment, a type of equip? ment more readily obtainable than the heavier items demanded by positional warfare.

Radio equipment in many areas is reported adequate for maintaining contact not only with guerilla head-

quarters but with the Central Govern- Radio ment. Prior to the war some districts

Equipment were acquiring wireless facilities, much Available of which must now be in guerilla hands.

A recent Japanese embargo on the im?

port of radio equipment into North China indicates



1938 The War Economy of China's Guerillas 269

another source. The embargo was probably intended both to prevent the reception of Chinese radio propaganda and, more important, to prevent the equipment from falling into the hands of anti-Japanese forces. Guerilla purchasing agents have undoubtedly obtained much equipment, including radio parts, from large Japanese-controlled cities such as Peking and Tientsin.

The social and economic program of the guerillas is also playing a fundamental role in the protection, even in the rise, of the rural standard of living. In addition, it has been vital in rallying the peasant to the cause of resisting Japan. The enthusiasm of the people for the guerilla regime, reported by many Westerners who

have visited the areas under their control, can be traced

partly to the successful propaganda and the organiza? tion of the people, and partly to their efforts in wiping out the curse of banditry and introducing progressive economic measures.

Banditry in China has always been primarily an economic problem. It has risen and fallen seasonally, its

most active period appearing when the Bandit cover has been best (in particular when

Problem kaoliang stalks were high enough to

Tackled conceal the bandits), and before the new harvest when many peasants no

longer have food nor the wherewithal to purchase it. Most Chinese bandits have been merely "hungry Chi? nese." With the disruption of all Chinese local adminis- trative machinery immediately following the Japanese advance, the bandit problem increased enormously,

leaving the peasantry with a serious problem until the

guerilla movement set about dealing with it. The old method of tackling banditry was negative in

character. It involved simply the use of military and

police pressure in putting it down. Often this meant

only the driving of bandits from one district into the

next one, the process being reversed by the head of the other district. Under the guerillas the process has be? come much more positive; it has sought to remove the causes of banditry and to recruit the would-be bandits into the general anti-Japanese movement. "Chinese must not fight Chinese."

The retarding influences against economic progress in China have usually been divided into two main catego- ries: the imperialistic foreign penetration, and the in? ternal feudalistic remnant control. Many Chinese feel that these two are inseparable, being so intertwined that they must both be uprooted if China is to achieve

independence. Because of this, an attack upon the reac-

tionary feudal forces is bound to strengthen national resistance against Japanese invasion. The three most

important structural causes of rural bankruptcy in China were listed in a study of "Rural Bankruptcy in China" in this magazine over two years ago. These are:

first, the system of tenancy in China whereby, "the

peasant class has had to support both itself and the

unproductive landlord class"; second, "the assessment of all kinds of exorbitant taxes and tolls"; and third, "the system of usury practiced by the merchants and landlords." These three factors are "three different manifestations of the feudal forces" operating in China.

To combat them, the guerilla government offers programs which will undoubtedly prove the beginning of a

more fundamental attack upon these General causes of rural bankruptcy. The land

Agrarian program calls for a 25% reduction in

Reforms the extreme rents hitherto demanded,

permitting the peasant tiller a fairer share of his crop. A mild land redistribution is also carried out, through confiscation of the lands of all

"traitors," the giving of public lands to the poor, and the redistribution of the lands of those landlords who

have fled (the landlord retains legal ownership). The

tax program involves a slash in the previous high rates and the abolition of the corrupt collection system and the vicious tax farming system. In its place a system of

progressive assessments is in force, comparable to the

progressive income tax. In addition, the creation of a tariff wall around the guerilla territory has brought in income (at the expense of the Japanese purchaser), thus

easing the burden of the peasant. The anti-usury pro? gram called into force a moratorium on all debts for three years.

The combination of these three interrelated programs is invaluable in helping to raise the standard of living of the peasants and making out of them ardent sup- porters of the guerilla movement. Not to have to pay the high rents, exorbitant taxes, and unbelievable usury rates means the removal of the three greatest economic drawbacks to the peasant's livelihood. It is in this pro? gram that we find the strength of peasant nationalism in China.

The obvious conclusion is that, so far as necessary material resources are concerned, the guerillas are in

a position to carry on their warfare in- Indefinite definitely. They have the food and the Warfare clothes to maintain the extremely low Possible standard of living prevalent before the

war. The simple military equipment necessary for this type of warfare can be replenished. In addition reforms of some of the basic abuses of the

past have had, and will continue to have, a decided influ? ence on bettering the lot of the population of the old

bankrupt areas. Even the severance of the leading cities from the interior by the Japanese themselves have, be? cause of the peculiar nature of China's economy, reacted to the advantage of the defenders. At this date the least that can be said is that the guerilla movement

appears well-rooted and cannot be overlooked in any analysis of China's capacity to resist.



270 Japanese Competition in U. S. Checked by War November 23

PRINCIPAL SOURCES:

Nankai Social & Economic Quarterly; Oriental Affairs; China Weekly Review; North-China Herald; Pacific Af? fairs; Tokyo Gazette; China Maritime Customs, The Trade of China; U. S. Dept. of Commerce, Monthly Trade Report: China; Bureau of Agricultural Economics, Foreign Agricul? ture; Bureau of Foreign and Domestic Commerce, Tobacco Markets and Conditions Abroad, Textile Raw Materials; Peking & Tientsin Times; Peking Chronicle; Japan Adver- tiser; New York Times; Christian Science Monitor; Chi- cago Daily News; Chinese Year Book; Chen Han-seng, "Landlord and Peasant in China," New York, 1936; J. L. Buck, "Land Utilization in China," Chicago, 1937; Inter? national Secretariat Staff, Institute of Pacific Relations, "Agrarian China," Shanghai, 1938; H. D. Lamson, "Social Pathology in China," Shanghai, 1935; G. E. Hubbard, "East? ern Industrialization and Its Effect on the West," London, 1938; Chung-kuo Nung-ts'un (The Chinese Village, in Chinese); Hsin Hua Jih-pao (New China Daily, in Chinese).

RELATED ARTICLES IN PREVIOUS ISSUES:

"Yen Bloc Fails to Meet Japan's Coal Quotas," Oct. 26, 1938; "Chinese Guerillas Spike Japanese Raw Cotton Hopes," Aug. 24, 1938; "North China and the United States Cotton Trade," May 18, 1938; "Japanese Enterprises in North China," May 4, 1938; "Japanese Begin Exploiting Chinese Coal Reserves," Apr. 6, 1938; "North China Battle- ground Rich in Economic Resources," Nov. 5, 1937; "Co- operatives as a Panacea for China's Ills," Mar. 31, 1937; "Chinese Government Promotes Domestic Rice Trade," Mar. 31, 1937; "The Call to Reconstruction in China," Dec. 2, 1936; "Chinese Reconstruction in Practice," Dec. 19, 1936; "Record Harvests Bring New Menace to Rural China," Nov. 18, 1936; "Cotton Production in China Doubled," Oct 21, 1936; "Rural Bankruptcy in China," Oct. 8, 1936; "Japan Developing North China Cotton Industry," Aug. 12, 1936; "North China Smuggling Demoralizes Customs Regime," May 25, 1936; "Reforms Increase China's Salt Revenue," Apr. 8, 1936; "Merchant Capital and Usury Capital in Rural China," Mar. 25, 1936.

SIGNIFICAWT DEVELOPMENTS

JAPANESE COMPETITION IN U. S. CHECKED BY WAR

One striking consequence of the Far Eastern war has been to lay the ghost of increasing competition by Jap? anese goods in the American market?for the time

being, at least. A rough indication of this is afforded by examining the trade figures for the first eight months of this year. Total imports from Japan have declined by 47% from the 1937 level. However, imports of silk have fallen only 27%, while imports other than silk? which takes in all the items that compete with Ameri? can products as well as some which do not?have gone down by 63%.

A large share of the absolute decline in American

purchases from Japan must, of course, be ascribed to

the depression in the United States, which reduced

imports from all countries by 47% in the first eight months of 1938. The silk trade has borne up fairly well, and the present outlook is on the whole encouraging (see Far Eastern Survey, Oct. 12,1938, p. 238). Imports of Japanese manufactured articles have, however, suf? fered in comparison with similar imports from other

countries. This is illustrated in the case of specific commodities (figures are for January-August 1938, by value):

Percent change from 1937

Value of imports Imports from Japan Imports from (in $000) from other

1937 1938 Japan countries Canned tuna fish. 1,733 630 ?64 +158 Canned crabmeat. 2,275 1,565 ?31 ? 34 Sneakers . 159 111 ?30 ? 11 Cotton cloth, bleached. 2,664 637 ?76 ? 63 Cotton rugs . 1,468 518 ?65 ? 46 Silk fabrics. 2,357 1,705 -28 - 32 Chinaware. 2,109 1,228 ?42 ? 13 Earthenware . 1,268 551 ?57 ? 9 Electric bulbs. 610 255 ?58 0 Dolls . 257 101 -61 - 8 Other toys. 1,291 470 ?64 ? 24 Brushes . 556 270 ?51 ? 24

The fact that Japan has suffered more than some other suppliers in the general decline of United States

imports may be laid to two principal factors, both re-

sulting from her war against China. One is Japan's economic mobilization measures, which have borne with

particular severity upon industries which manufacture

foreign raw materials for export, the cotton industry being the leading example. Their supplies of raw ma? terial have been drastically reduced by the rigid import control which gives preference to war industries in

allotting foreign exchange for purchases abroad. In

addition, economic mobilization has tended to raise

production costs in Japan, although the figures for a number of leading commodities show that the value of

imports from Japan has fallen about as much as the volume?which would indicate that no extensive price rise had occurred. The other factor is the American boycott, which has apparently had some success against manufactured products easily identifiable as "made in

Japan," though as pointed out in a previous issue it has been largely ineffective as against silk.

It is impossible to say how much weight should be ascribed to each factor. That both have been at work

may be inferred from an examination of the figures on specific commodities given above. Thus the very sharp decline in shipments of cotton manufactures is

certainly due in large part, and might be due entirely, to rising costs and particularly to the inability of Jap? anese manufacturers to acquire enough raw material to fill orders. But articles such as china and earthenware, dolls and other toys, brushes, and canned tuna fish are

largely made of domestic materials. In such cases, it is difficult to account for the drastic decline of Japanese relative to other imports except on the ground of discrimination by consumers in this country, or the cau- tion of wholesale buyers fearing such discrimination.



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