894.00/670½
Memorandum by the Chief of the Division of Far Eastern Affairs (Hornbeck)
At intervals since 1931, observers of economic and political developments in the Far East have come forward, here and there and now and then, with the thesis that there is approaching a breakdown of Japan’s internal and/or external economy. Likewise, at intervals, officers of this Department concerned with Far Eastern relations have given consideration, in the light of such predictions, to the facts in the situation; and, at intervals, we have expressed the view that the facts available give no evidence of a crack in or an impending cracking up of Japan’s economy.
During the past year the affirmation has repeatedly been made that Japan’s foreign trade has reached or is near to its peak and that there may be expected soon a leveling off or even a decline in the figures of that trade. Officers of the Department are at present studying the evidence with regard to this affirmation. It may be some time before we are ready to submit an expression of our views in that connection.
Meanwhile, however, it may be worth while to give thought at this time to certain of the political implications of recent developments in connection with Japan’s foreign trade. During the past five years Japan’s trade, both in exports and in imports, with a perfectly logical relationship between those two elements, has increased by leaps and bounds. With an amazing coordination and with consequent great comparative efficiency, the Japanese have shown themselves able to make large purchases from abroad of raw materials, to produce manufactured articles, to export these articles and to sell them abroad at prices which have created a substantial demand for [Page 265] the Japanese product. This has brought the Japanese products into successful competition with similar products of other countries both in the home and in the export markets of the said other countries. In consequence, the producers and the sales agencies of other countries have demanded of their governments protection against the newly developed Japanese competition; and there have been raised all over the world various obstacles to the free and natural flow of Japanese exports.
At the same time, Japan’s population has gone on increasing; the Japanese are, like other peoples, resorting to labor-saving devices; the demands of the Japanese population for the essentials of livelihood constantly increase; this population looks more and more to manufacturing and sale of manufactured commodities for its livelihood; Japan’s capacity to produce and to export increases. The more the exports of Japan are increased, the greater the fear abroad of Japanese competition and the more the steps taken abroad to protect home industry against the lower-in-price Japanese products.
Thus, while the economic pressure outward of Japan is constantly increasing, there is being developed by other countries an economic iron ring in opposition to that pressure.
At the same time, in the political field, the Japanese militarists have embarked, on behalf of the nation, on a course of imperialistic expansion the principal instrument of which is armed force. In this field, as in the field of trade, the Japanese effort has met with initial successes. But, it has aroused fear—not alone among Japan’s immediate neighbors but all over the world. China, the Soviet Union, the British Empire, the Netherland Empire and the United States have viewed with anxiety the military moves and the excessive efforts to create a superior army and a superior navy in which the Japanese have engaged. The Soviet Union has established defensive land, air and submarine forces in the Far East, which forces might readily on occasion be turned to offensive purposes. China is making every effort of which she is capable toward armament, now for defense against Japan, but which might on occasion be turned at some time in the future to offensive purposes. Great Britain and the United States, confronted with the refusal of Japan any longer to be bound by naval limitations constructed on the principle of equality of security, are looking earnestly to the perfection of their armaments. In the cases of China and the United States, the policy of armament flows principally from solicitude in the presence of evidence of predatory inclinations on the part of the Japanese. In the cases of the Soviet Union and the British Empire, the policy of armament flows partly from solicitude with regard to situations and problems in Europe and partly [Page 266] from solicitude with regard to situations and problems in the Far East. The great military establishments at Vladivostok, at Singapore, and in the Hawaiian Islands, however, are establishments which relate primarily to the problem of defense against Japan. And now General MacArthur81 and President Quezon82 are arming the Philippines, for defense against Japan. Thus, it may reasonably be said there has been created and there is being hardened a military “iron ring” around Japan.
Both in the economic field and in the military field there exists the phenomenon of a nation that is crowded, dynamically energetic, convinced that it must expand and making every effort to expand, and a world that is limited in area and is filled with other sovereign nations most of which are fearful of that nation’s expansion, convinced that they must resist it, and taking steps to resist it.
In such a situation, the obvious question is: Will the forces of expansion prove greater than the forces of resistance? If so, when and at what point will the former break through?
The weakest points in the economic and military rings around Japan are to the south westward and the southward: China and the Philippines (and the Dutch East Indies).
There was a time when China’s natural resources were rated as comparatively limitless and China’s military strength as negligible. But, in recent years the estimates of China’s resources have been revised downward and China’s efforts in the direction of military preparedness have made some impression. The old ideas of China as a potential Eldorado no longer prevail. Meanwhile, estimates of the natural resources of the Philippine Islands and portions of the Dutch East Indies are constantly being revised upward, and there is not within these areas themselves any substantial organization for resistance to possible pressure from without. If and when the aegis of American authority and responsibility is withdrawn from the Philippine Islands, there will lie to the southward from Japan a point in the ring the resources of which will invite pressure from Japan and the power of resistance of which will be comparatively weak—perhaps the weakest point in the whole ring.