[Enclosure]
Report by the Commercial Attaché in Japan
(Williams)
[Tokyo, November 10, 1941.]
Japan’s economic structure cannot withstand the present strain very
much longer. For three months no supplies of oil, copper, iron,
steel, aluminum and other essential products have been received from
abroad. No exact data is available on present stocks of these
commodities but from unofficial reports and personal studies of
Japan’s economy over a period of several years it is firmly believed
that on the average the volume of these stocks, with the exception
of fuel oil for the Navy, is relatively small—probably adequate to
maintain the already unbalanced level of production and consumption
for from ten to twelve months. The Navy’s supply of fuel oil is
generally estimated at sufficient for two years’ wartime
consumption.
To assure any substantial degree of success in the execution of
declared wartime policies Japan’s vast economic structure must be
continuously nurtured. Her industries must be supplied with
innumerable kinds of materials, her people must be fed, her national
defenses must be substantially extended and strengthened, her
transportation facilities must be improved and maintained, domestic
business must be carried on and public utilities must be operated at
full capacity. All of these activities demand materials and
supplies, and more materials and supplies, and these in an
uninterrupted flow. Japan has never even moderately been
self-sufficient in these essential materials and supplies but has
always leaned heavily upon contributions from the United States and
the British Empire. Today these supports have been completely
removed and this nation left entirely on its own. Extensive
geographical areas have been added to Japan’s sphere of influence
during the past ten years but these have proven very small donors of
vital resources and have permitted only a slight reduction in the
nation’s dependency upon the United States and Great Britain.
That strenuous efforts have been and are being made to remedy this
dangerous situation is all too obvious. It is equally apparent that
little real progress has crowned these efforts. Given a period of
another ten years some measure of success might be achieved but
unfortunately for Japan her problems must be solved immediately.
No nation can erect a wall around its national defense structure.
Every phase of national economy must contribute heavily to its
development and maintenance. Japan in her present economic position
cannot long continue without replenishment the consumption of such
large quantities of essential materials in efforts to create a
defense force sufficient to withstand the self-inflicted encircling
pressure from the United States and Great Britain. The bottom of the
barrel is
[Page 591]
plainly in
sight. She must have access to foreign supplies of oil and other
vital products in order to keep her industrial wheels turning. If
she cannot obtain these supplies she must accept the inevitable or
fight, and the writer firmly believes that the military leaders of
Japan decided months ago that it would be far better for the
Japanese Army to go down fighting a major power than to withdraw
from China for any other reason.
Stripped of all pretense the glaring fact is that Japan has steered
her course to the point where she now must choose one of three
routes. She must either, (1) Curtail production of all types of
goods, conserve her supplies of materials and drift with the current
of international developments, or (2) Make an all-out effort to
establish her Greater East Asia Co-Prosperity Sphere and finish the
China Affair, or (3) Reach some definite understanding with the
United States. The first route would mean that in another twelve
months Japan’s economy would be so weakened she would be unable to
forcefully resist any demands imposed by the United States. The
second road leads to war and national suicide. The third to the
preservation of her Empire, the security of her people and the
continuation of her existence as a major world power—but the
probable loss of a certain amount of “face”.
It appears, therefore, that Japan’s present position briefly is this:
On the one hand she can exist for say another twelve months on
material now in stock and new supplies available within the Empire
and her “sphere of influence”. At the end of this period, however,
the nation will be a weakling from both a military and economic
standpoint. On the other hand by pooling her entire resources and
taking a desperate gamble on victory in a short “blitzkrieg” she
could, from an economic standpoint, wage what might be termed a
fairly efficient war for a few months, at the end of which time she
would be economically bankrupt. The remaining alternative is to
forego her aggressive action in the Far East and “make the best out
of a bad bargain.”
There are definite signs that most Japanese leaders and very large
segments of the people have conclusively abandoned the first
alternative. This leaves only two moves, i. e., war or an agreement
with the United States. A decision must be made in the very near
future. On this decision rests the nation’s destiny.
