JAPAN AND TIIE WORLD III: THE EXPORT BOOM

By A SPECIAL CORRESPONDENT

COMING back to Japan after an absence of two years, one is surprised to see how greatly the range of manufactured goods has been expanded, and how obviously the average quality of Japanese goods has been improved. Recent industrial progress can be clearly perceived. Japan's full mastery of most branches of the cotton industry seems to be established. The same is true with regard to artificial silk. Her woollen materials may still be in some respects less solid and less elaborate than those of Yorkshire, more fit for mass-consumption than for selective tastes, but they seem to have greatly improved. Her electrical goods may be less durable than those made in Britain, yet for the most part they seem to serve their purpose, at least for some time. Many other things are still decidedly inferior in quality, if one looks at them from a middle- class consumer's point of view, yet many of them seem to give real value and pleasure to those who have to live on a very small budget. One is no longer astonished at the large range of present-day export goods which are said to be flooding the world from Japan ; one can easily imagine the degree to which it could—and will— be expanded in future.

At the same time prices, low though they have generally been before, seem to have been reduced for many classes of articles, so much so that in many cases your shilling would be worth decidedly more in Tokyo than in London, even if your yen were bought at the old sterling, or even at gold, parity. Shirts at less than a shilling, and of better quality at two or three shillings ; socks at a penny or two ; pullovers from about one shilling ; electric irons from ls. 6d. up ; children's leather shoes at Is. 6d. ; bicycles at a guinea or 80 shillings ; china ware, brushes, pencils, fountain pens, often at merely nominal rates ; hardware, aluminium and enamelled goods, rubber shoes and many other articles at prices that would make the crowds rush into any London bargain basement— all this seems to dispose of allegations that Japan's export prices indicate dumping in the true sense of the word.

Nor does it seem to be so easy to establish a clear case of what is called " social dumping." Let us look at the retail prices of Japanese staple food in the com- paratively expensive big industrial cities. What one finds in the shops, converted into pence at the current rate of exchange, is this :

1 lb. of polished rice, for many a luxury, lid.

1 lb. of onions or potatoes, id.

1 lb. of sweet potatoes, id.

1 lb. of barley, ld.

I lb. of red beans, lid.

I lb. of cabbage, cucumbers, tomatoes, eggplants, Xc., id.-1 1 lb. of fresh fish, good quality, from lid.

1 lb. of salted salmon, 2d.

(10 smokable cigarettes, Id.)

One cannot be far wrong in stating that the average food of the lower classes of townspeople—containing a somewhat poor yet not quite inadequate proportion of the different criteria of food value, though traditionally deficient in fat—costs them roughly 1Id. for one pound of quantity. (In Great Britain, according to the specimen family diet made up in the famous Report of the Com- mittee on Nutrition of the British Medical Association of 1933, even the unemployed, in order to keep fit, would have to spend an average of 2d. on every pound of food consumed.) Now let us confront the current Japanese wage-rates Tokyo, October. with these food-prices. The following wage-rates are given in the Factory Statistics of the Japanese Department of Commerce, which have just been published. Though they apply to the year 1982, they can still be considered as very near the present level, as the rough average index of' wages shows little change between then and now. Hourly wages, converted into pence at the present rate of exchange, are :

Cotton spinning ..

Cotton or silk weaving ..

Knitted goods .. Porcelain and cloisonn6 Enamelled iron ware .. Leather working .. Vacuum bottle manufac- ture ..

d. 1.30 1.02 1.45 1.74 2.61 2.81

1.88 Silk spinning ..

Wool mixed weaving Dyeing, finishing Glassware • • Button making ..

Brush making ..

Fountain pen making

• • • •

• •

• •

• • • •

d.

1.18 1.45 1.88 2.32 1.45 2.03 2.03

At these wage-rates, the number of daily working hours is from 8 to 9 in the big concerns, which are of course still almost entirely confined to cotton, artificial silk, and certain other branches of the textile industry ; but there must also lie taken into account bonuses and expenditure' on social welfare, which are difficult to estimate ; these factors are especially important in the case of the " dormitory girls " of the big cotton concerns, who make up about two-thirds of the total of employed workers in the cotton industry. In other businesses, the smaller the concern, the longer the hours-10, 11, often 12 hours a day ; and in family businesses, which are outside the field of factory legis- lation, the working hours, according to Far Eastern Social Information, published in Tokyo, are frequently as much as 15 or 16.

Food is actually the main item of expenditure ; the daily rent of a cheaply-produced, practical Japanese house, sheltering a big family, usually with several contributing members, amounts, say, to 5d. or 6d. per day ; cotton clothing in the Japanese style, with wooden footgear, is very cheap and lasts a long time ; and most extra expenses are in keeping with the price-level of foodstuffs. Although the lower-paid classes of the working population do not consume any great quantity of the " modern " goods to be seen in the big stores, still in their traditional way of life, which has been very little changed, they lead an existence which can hardly be called more miserable than that of the less for- tunate classes of the Western industrial population ; and it is necessary to bear these Western workers clearly in mind if one wants to make social comparisons in Japan.

Japanese export trade has, of course, been greatly assisted by low wages and by the external depreciation of the yen which I have already noted (65 per cent. against gold, 40 per cent. against sterling), while in Japan itself the currency has lost none of its former purchasing-power. But these factors alone arc certainly not enough to explain the increase in Japanese exports. Extreme rationalization of the strongly concentrated modern industry of " new Japan," and intense competi- tion in the overcrowded small concerns of " old Japan," combine to keep overhead charges unusually low, as in their fundamentally different ways they contrive to make as intensive as possible a use of their available capital. Although actual subsidies are confined almost entirely to heavy industry and shipping, and are smaller than is commonly supposed, state co-operation plays its part with every imaginable form of trade promotion.

But the most important factors are the adaptability of the Japanese to the needs of foreign customers ; their intelligent, enthusiastic employment of any opportunity to open up a market, however small ; and the material and patriotic pressure which acts as a powerful source of strength to bring the whole economic system of this overpopulated nation to the highest possible peak of efficiency, and produces the effect of a concentration of energy which sweeps aside colossal obstacles : these are the factors which make the success of Japan's cheaply- run but by no means inferior civilization so embarrassingly great, in its competition with a Western civilization which appears to be more expensive to run than its achievements seem to justify.

At the same time, it is a striking fact that even today Japan contributes only three per cent. to the export business of the world. And if the increase of her export business is quantitatively measured, by adjust- ing the amounts of yen according to the price index, the following tabulation of development results, on the basis 1914=100; 1920 .. .. 120.8% 1932 .. 199.5% 1925 .. 179.0% 1933 .. 220.6% 1930 .. .. 172.8% 1934 .. 225.5% 1931 .. .. 159.4% As compared with 1925, then, in which year no one complained of Japanese competition, Japan today is exporting only a third more in quantity ; and she is receiving, in terms of money value in yen, 15 per cent. less for her record exports of today than she received in 1925. And since Japan has to import a great part of her raw materials, since her balance of trade is continually un- favourable, she can use, and does use very shrewdly, the argument : " You must buy our manufactured goods, if we are to buy your raw materials." This argument is a valuable weapon, in playing off the dis- tressed raw-material countries against exporting countries which compete with her. The more partners she can find for barter transactions, the more she can expand her exports. She herself, as regards her internal situation, is not only able to do so ; she is compelled to do so. The hope of the West must be that this develop- ment fulfils itself within the framework of a simultaneously growing world trade.

[Next week: The Naval Question.]