f . Sinilar attention may be given to other commoditieB shown on 

 Plates 16 and 17 for the purpose of determining Japan's place in world 

 economy as a producer of certain basic commodities. 



g. Another fruitful approach to Japan's future economy is 

 through study of its foreign trade, the country's very life-blood in tha 

 past fifty years. For reasons peculiar to Japanese economic and political 

 development, the domestic market for manufactured goods has been modest 



at best. Japan concentrated her efforts, and successfully so, on foreign 

 markets. Within three decades (1911-1939) foreign trade increased six- 

 fold and trade with colonial possessions more than twenty-fold. This in 

 turn shaped the type and size of Japan's industrial fabric. 



h. What are Japan's foreign trade prospects now? In this regard 

 one must mention Japan's loss of Korea, Formosa, Manchuria, Southern 

 Sakhalin, South Sea Mandated territories, and its former privileges in 

 Manchuria and China. This colonial trade, which was conducted in circum- 

 stances favorable to Japan, will now become foreign trade. Even if 

 allowed to buy and sell on equal terms with other nations in her former 

 colonial territories, Japan, will no longer be able to mold the economy of 

 those territories to its special advantage. The net effect will be still 

 greater dependence upon foreign trade to pay for industrial raw materials 

 and imported foodstuffs. 



i. What are likely to be the responses of Japan's economy to 

 these foreign trade prospects? Japan will doubtless attempt to reduce 

 her food imports to a minimum by devoting more manpower to agricilture 

 and fishing than before the war. In reality, hov/ever, the return from 

 application of additional labor in these fields will be small. It seoas 

 probable then that the only solution left to her will be that of retracing 

 part of the course followed in the two decades before the war, that of 

 concentrating resources on consumer-goods industry. An accompanying 

 effort woiild be the revival of export trade in those goods sufficient for 

 the purchase of needed raw materials and food. But to 'succeed in that 

 attempt Japan would have to create an export of these commodities far 

 greater than she had before the war, for her population has grown and 

 other sources of income (from colonial and foreign investments and 

 merchant marine) will no longer be available. 



j. Japan will be faced with most serious obstacles in her 

 efforts to revert to the former industrial structure, partly because raw 

 silk has lost its former pre-eminent- position in international trade, and 

 partly because of the fear of Japanese competition on the part of Western 

 industries. The most that now appears likely is a modest participation 

 in international trade, and rehabilitation a.long similar lines in tra- 

 ditional manufacturing industries. That much was guaranteed by the 

 Allied Powers when they made it clear in the Potsdam Declaration that 

 they would allow Japan eventually to participate in international trade. 

 The United States repeated this in thp "U.S. Initial Post-Surrender Policy 



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