Shipping the "Vanguard of Advancing Japan"

Institute of Pacific Relations

Shipping the "Vanguard of Advancing Japan"Author(s): Catherine PorterSource: Far Eastern Survey, Vol. 6, No. 3 (Feb. 3, 1937), pp. 27-32Published by: Institute of Pacific RelationsStable URL: http://www.jstor.org/stable/3021930 .

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FAR EASTERN SURVEY

Fortnightly Research Service

AMERICAN COUNCIL ? INSTITUTE OF PACIFIC RELATIONS

129 East 52nd Street ? New York City

Russbll G. Shiman, Editor

Telephone: Plaza 3-4700 Cable?Radio: Inparel

Vol. VI ? No.3 FEBRUARY 3, 1937 5^?! *2?>

Contents

SHIPPING THE "VANGUARD OF ADVANCING JAPAN"

Japan Faces Pig Iron Shortage China to Develop Strategic Island of Hainan Increased Sugar Exports Mark Commonwealth Gains Manchuria Expanding Cotton Textile Industry

U. S. Film Co. at Odds with Chinese Censors

SHIPPING THE "VANGUARD OF ADVANCING JAPAN"

Catherine Porter

There is a boom in Japan's shipbuilding industry,

and in her shipping. Yards are feverishly busy;

they are booked to capacity through 1938. New fast

Japanese ships are entering the cargo service, challeng-

ing other lines on some of the world's important sea

routes. Services are being increased and extended. On

the run to New York via Panama there are 18 new

fast Japanese cargo boats of an average deadweight

tonnage of about 10,000. New regular services have

been opened to the Pacific coast, to Bombay and other

Indian ports, to Iraq, and to South America. Sailings between Japan and Siamese ports have been increased. The Nippon Yusen Kaisha has started a new express freight service to Europe via Suez, operating five mod- ern vessels of some 9,000 tons deadweight with a maxi- mum speed of 20 knots.

The appearance of these fast cargo boats, which in some instances outstrip mail and passenger ships on the

same runs, was seen as initiating a Clamor for possible speed war in ocean freight car- Subsidies riage; and was regarded especially by

British and American shipping circles as another serious form of Japanese competition in this field. Interested parties in both Great Britain and the United States, aware of the threat to their older established lines of trade, have begun to clamor more loudly and more openly for the kind of government support which they assert has raised Japan to her present posi? tion?direct subsidies for all branches of the shipping industry. A partial answer to Japan's challenge may be seen in the British subsidy to tramp shipping of

?2,000,000 in the last few years; and in America's move from mail contracts to direct subsidies, and her present scheme for a shipbuilding program calling for 40 new

fast cargo liners costing altogether some $60,000,000. All three of these powers, predominant in Pacific

shipping, are not unaware that strongly developed trends toward economic nationalism operate as never before against free and open competition. Rising trade barriers against Japanese goods, for example, are indi-

rectly a threat to Japanese shipping. Yet it is only logical to assume that those services which offer most favorable transportation in terms of regularity or speed or lower carrying costs are in a position to command

business, regardless of nationality. Japan's position in the shipping world is improving.

With some 4,247,000 gross tons of vessels registered in the Japanese Empire at the end of

Japan's August 1936, the country is maintain-

High Rank ing its rank in tonnage after the United

Kingdom and the United States, which it has held since the end of the World War. Thanks to its recent scrap-and-build program, it is exerting every effort to retire old vessels and modernize a larger part of its tonnage. In ocean-going ships of 2,000 or more

gross tons, Japan now ranks second only to Great Bri? tain ; in ships of ten years of age and under, she stands

third, after Britain and Germany, while the United States is sixth; and in ships making 12 knots or over, she again ranks third, with the United States fifth.

Japan's shipping, of which the registered total is far lower than that in the United Kingdom and the United

States, has suffered less during the last five or six years than its important competitors. In 1931 tied-up ton?

nage in Japan reached the high point of the period, 9% of total tonnage; whereas the high point for the United States and Great Britain, reached in 1932, was

27% and 18% respectively. The general situation has

?27-



28 Shipping the "Vanguard of Advancing Japan99 February 3

improved since then, but comparatively faster for

Japan which has now half of one per cent of its registered tonnage tied up; a part of this, for the last few

years, represents vessels to be scrapped under the new

ship improvement plans. In addition, 450,000 tons of

foreign vessels are under charter, indicating that Japan is not concerned at present with the question of surplus tonnage.

Why Japan should be enjoying her present favorable

position in the maritime world is not difficult to dis?

cover, in the light of her earlier history after emergence from isolation in the latter half of the 19th century, and in the light of more recent events. In the first

place, the same natural stimuli operated in her case as in the case of Great Britain centuries earlier. Her island position, poverty in natural resources, over-

population, and her industrial development on the basis of imported raw materials to be exported as finished

products, all combine to make her ocean communica? tions of utmost importance. Secondly, the series of wars which made excessive demands upon her shipping facilities at the end of the 19th and beginning of the 20th centuries gave an added impulse to the develop? ment of these facilities, and led to government aid. But it is the whole long series of government aid in one form or another to the various branches of shipping that has helped to bring the industry through recurrent

periods of slackness and that is in large part responsible for the leading position of the Japanese industry today.

It is inevitable, perhaps, that the present activity in

Japanese shipping should be linked with the military program and the drive for expansion

Link with both on the mainland of Asia and in

Military the waters to the south. Witness the

Program recent statement of the Japanese Min? ister of Communications, when he char-

acterized the industry as the "vanguard of advancing Japan," describing its development as important to "national economy, national defense and the improve? ment of the country's international accounts."

Given the natural impulses for trade and maritime

expansion, national defense was the primary factor in the rapid development of Japan's merchant marine. Wars with Formosa, China and Russia resulted in the government's acquisition of foreign tonnage and stimu- lation of shipbuilding at home, in order that the small and slowly growing nucleus of trading vessels might be

adequately supplemented for wartime needs. After the Formosan War in 1875, vessels which had thus been

bought abroad were turned over to the Mitsubishi Co., with a subsidy of ?250,000 annually. A few years later the government encouraged a combination of several other companies, in which it became a shareholder, to purchase foreign vessels which would be available for governmental purposes in time of need. To prevent competition between companies, both subsidized and

both losing money, a further combination with the Mitsubishi Co. was formed and the Nippon Yusen Kaisha was born, in 1885, with a capital of ?11,000,000 and a government guaranty of 8% on the capital for 15 years. The Osaka Shosen Kaisha, organized a year earlier, was a combination of many individual enter-

prises, likewise equipped with foreign tonnage and

largely subsidized. These two companies are today the most important in Japan, and the most highly sub? sidized.

Recurrent disturbances, demonstrating the increasing need for an adequate merchant marine, strengthened

the country's attitude in favor of sub-

Early sidized shipping. In 1896 a Navigation Government Law was enacted, designed (1) to pro- Support tect the merchant service by granting

subsidies to Japanese - owned metal

steamships according to specified speeds and mileage, including foreign-built ships under five years of age, and (2) to encourage shipbuilding, by granting con? struction subsidies to Japanese companies establishing shipyards and building ships, using exclusively domestic materials except in cases where special permission had been given. Provisions for navigation subsidies, ostensibly for mail services, amounted to nearly ?5,000,000 annually. Subsequent subsidies in 1899 and 1910 were designed to increase speed and size of

operating vessels, to encourage more and more the use of Japanese-built vessels, and to eliminate as far as

possible foreign-built and antiquated ships. Expanding trade in the early part of the 20th cen-

tury fostered the growth of shipping; new vessels were built at home and bought abroad; new companies were

formed, new services inaugurated. Even before the turn of the century, the N.Y.K. had started a service to Seattle, one to Europe and one to Australia; the O.S.K. expanded toward Asia. The Toyo Kisen Kaisha was organized and opened a line to San Francisco.

Steamship tonnage increased from 26,000 in 1873, to

1,116,945 in 1906, at the conclusion of the Russo-

Japanese War. Japan's steady development during the

following years is evidenced in her increasing trade

figures, and the growing share of her own imports and

exports carried under her own flag. Before the Sino-

Japanese War, only about 10% of her total trade was carried in her own ships; just before the commence- ment of the World War, this share had increased to

nearly 50%. Shipbuilding, which had been under government

management before 1880, was thereafter undertaken by private enterprise, but facilities were lacking for con? struction of large ocean vessels, which had to be purchased abroad. TheActof 1896 resulted in the formation of several new building companies, but construction was small and losses were heavy in spite of subsidies. With the amendment of subsidy laws to increase boun-



1937 Shipping the uVanguard of Advancing Japan" 29

ties to home-built ships, greater progress was made. In 1880, the 40 steamships built (the largest number in

any year up to that time) totalled only 3,000 tons. In

1899, the 53 built in that year totalled 18,000 tons.

Shipbuilding progressed after the Russo-Japanese War, in spite of the renewed purchase of ships from abroad for the military needs of 1905-06; and in the period from 1904 to 1913, Japanese yards turned out nearly 4,000 ships of over 630,000 tons, of which over 1,000 were steamships averaging over 400 tons. The largest mercantile vessel had a tonnage of 7,460 tons, the fastest a speed of 17.7 knots.

The boom enjoyed by Japan during the World War was due only partly to governmental encouragement,

for the multiple requirements for ton- World War nage and goods, plus the great contrac- Boom tion of normal shipping services soon

after the outbreak of the War, gave an enormous impetus to Japanese shipping, which had

already been acquiring considerable momentum. Japa? nese lines were being extended to all quarters of the

world; ships flying the Japanese flag carried an increas-

ing share of the Empire's exports and imports, reaching between 80% and 90% in the last years of the war.

Shipyards were working to capacity. In 1913, only 5 companies had facilities for building ships of 1,000 tons and over; in 1918 this number had increased to 52. In 1914, a total of 642 ships of 93,000 tons was built; in 1918, the totals were 2,574 ships, of 875,239 tons. Of the latter, 531 were steamships, totalling 688,659 tons. Japanese writers point with pride to the com-

pletion of a 5,800-ton vessel in 23 days at the end of 1918?a task that had formerly taken three months. And not only was Japan building a large part of her own fleet, but toward the end of the war she was build?

ing 45 ships for the United States, under the terms of a special contract. By 1922, her total registry com-

prised a tonnage of 4,202,300, almost double that of

1913; and of this total, steamship tonnage had in? creased from 1,528,000 to 3,241,300.

Yet early in this period a German authority, acknowl-

edging Japan's striking progress, warned against over-

rating the importance of Japanese shipping. It was too early to foresee the vast changes that were to be

brought about. One of the serious handicaps to Japanese shipbuild?

ing was emphasized as a result of the War's deflection of trade. Great Britain, the United

Handicapped States and Germany had been the chief

by Iron suppliers of iron and steel during pre- Shortage War years. At that time Japan was

totally dependent on the outside world for her iron, as she still is, and for most of her steel. The exigencies of war greatly diminished British ex?

ports and practically shut off those from Germany, leaving the United States in first place after 1914. In

April 1917 Great Britain prohibited the export of steel; India followed, and later the United States. China, the only other important source of iron, could not pos- sibly fill the growing needs of the years after 1916. Faced with a serious steel shortage, Japan entered into a contract with the United States to build for her 45 new steel vessels, with a gross tonnage of some 370,000, an important provision of the contract being that

250,000 tons of steel were to be furnished to Japan between 1918 and 1921.

The post-War depression in shipping circles was in-

evitable, in view of the greatly increased tonnage now available for greatly decreased peace-time cargoes. Ship construction fell off rapidly, from 674,500 tons in 1919 to 203,000 in 1921; and such figures as these rep? resented largely a carry-over from the boom period. Average yearly ship construction fell to only 50,000 or

60,000 tons in the following years. A slight recovery was experienced as a result of the increasing popularity of Diesel engines, with their lower operating costs, coupled with the need of the leading Japanese lines for new tonnage, as much of theirs had been acquired dur?

ing the War and was even then old. In 1929 new ton?

nage jumped to 167,000, to be followed by another

depression. The return after the War of British and American

services, particularly to the Pacific, led to a reduction of Japanese services; the N.Y.K. removed larger ves? sels from its European routes, the T.K.K. suffered from renewed competition, but the smaller unsubsidized

companies were the hardest hit. Their war expansion had been due to natural demands; now, with surplus tonnage for which they had paid exorbitant prices in

many instances, they found themselves unable to meet the competition of subsidized Japanese lines and for?

eign ships. Only four or five years ago, the upturn began which

has led to the current shipping boom. The depreciation of the yen and the expansion of Japan's

Beginning foreign trade have given Japanese ship- of Current ping an advantage in lowered freight Boom rates which have brought the greater

part of her tonnage into use and even necessitated the chartering of foreign bottoms. To fill the demand, to rejuvenate the fleet, and to provide employment, the government embarked on a new pro? gram of subsidies in 1932. The First Ship Improvement Plan which went into operation late in that year pro? vided for the scrapping of 400,000 tons of old ships and the building of 200,000 new. Ships to be scrapped were to be 25 years old or more, and larger than 1,000 gross tons. New ships were to be steel, more than

4,000 gross tons, with a speed of 13.5 knots. Subsidy was at the rate of ?50 for each new ton.

This Plan was to have extended over three years, but in slightly over two years 31 vessels, totalling 198,695



30 Shipping the "Vanguard of Advancing Japan" February 3

tons, had been completed; and 94 vessels, mostly of

foreign origin, of over 399,000 total tonnage, had been

scrapped. The total subsidy amounted to ?11,000,000. A Second Plan, operative from April 1935, provided a

budget of ?1,500,000 for 1934-35; 50,000 gross tons, with a subsidy of ?30 per ton, to be built in place of

the same amount of tonnage scrapped. Scrapped ships were to be 25 years old or over, registered in the Em-

pire. This resulted in scrapping 13 ships, of a total

tonnage of 57,778, and the construction of 8 new ships,

totalling nearly 50,000 tons. The Third Plan, effective

June 1, 1936, repeated the provisions of the Second

and called for a subsidy of ?1,500,000. The Japanese Communications Department has now

prepared, for submission to the Cabinet and the Diet, the most ambitious scheme in its his-

Ambitious tory to aid foreign trade and improve Plans for shipping. For shipping and shipbuild- Future ing subsidies, an expenditure of nearly

?150,000,000 in the next five years is

planned. The building of superior fast vessels; the

abolishment of the scrapping clause which has figured in earlier improvement plans; and the extension of

banking and credit facilities for shipping concerns are

the major items. Smaller shipowners are thus in a

better position than they have been under the last plans. According to the latest figures for Japanese ship-

yards, which had increased in number from 430 in

1930 to 559 in 1933, vessels (of over 100 tons) launched in the last three years (1933-35) totalled 439, of 380,581 tons; in the first eight months of 1936, 141 of 158,417 tons; and at the end of August, there were under con?

struction 108 vessels, of 212,384 tons. The upturn in world shipbuilding which is being

witnessed has reawakened in many quarters the fear of surplus tonnage comparable to that after the World War and during the recent worldwide depression, for

reviving world commerce has not until very recently shown promise of keeping pace, in any degree, with

shipping developments. But gradually a large part of tied-up tonnage is returning to service; from a high point of 14,000,000 to 15,000,000 gross tons in 1932-33, the world total of tied-up tonnage has been reduced to

3,752,000 as of July 1, 1936. In 1936, Japan claimed supremacy in tonnage on

three important routes?the New York, Indian and Australian runs. On the New York

Australian run, although there is no direct sub-

Dispute sidy, Japanese ships are said to carry Settled the lion's share of freight. One Aus?

tralian authority was quoted as esti-

mating that Japanese vessels carry five times as much

cargo as British-owned ships between Australia and the Far East. This lucrative trade had been threatened

during 1936 by the new Australian tariff legislation which operated to limit imports of Japanese textiles.

Such a reduction in trade as this would have caused over a period of time, and the consequent curtailment of Japan's imports of wool from Australia, her chief

supplier, prompted the transfer of the Japanese ship? ping service from Australian to other waters. The amicable agreement finally reached in December will restore more or less normal cargo for the services which were immediately resumed.

Another bitter dispute directly in the shipping field came to a satisfactory conclusion in 1936, after over a

year of unsatisfactory trade negotiations. This was in the Netherlands-Indian trade, which is now served by one Japanese line, the Nanyo Kaiun Kaisha. This line resulted from a merger of four Japanese companies after the breakup of the shipping conference with Netherlands-India in the spring of 1935. The merger was instituted by the Japanese Government, to prevent competition among Japanese lines in the Batavia ser?

vice, although that very competition had kept freight rates down and attracted a large share of the cargo to

Japanese bottoms. However, with increasing trade restrictions aimed at imports carried in Japanese ships, and with five leading Dutch merchants in Java con-

trolling these imports, by 1936 it was estimated that between 70% and 80% of the cargo was diverted to the Java-China-Japan Lijn, although the Japanese had far more cargo space.

Irritated at the handling of the Japanese-Dutch parley, and at the decline in business suffered by the

N.K.K., in which he was a large share-

Agreement holder, Mr. Ishihara, President of the with Dutch Ishihara Industry Company, resigned

his advisory post with the N.K.K. and founded a new line with the avowed purpose of fighting the Dutch lines and competing with the N.K.K. The chaotic conditions which were feared by some as a result of this were prevented by the passage of the

Shipping Control Bill in May. Shortly afterwards the two governments reached an agreement by which the N.K.K. receives 64.25% of the outward cargo, 60% of the homcward cargo, and the Dutch line the remainder. As the agreement is generally satisfactory to Japanese interests, the new line formed by Mr. Ishihara is to withhold operations.

The passage of the Shipping Control Bill draws atten- tion to the instances in the past when through govern? ment intervention competing lines have been brought together to form a new company or otherwise to adjust their differences. The object of the Bill is to protect regular shipping lines against lower freight rates of

tramp ships, and to eliminate "outsiders" from com?

peting in regular established lines. The Bill authorizes the government to warn operators in case of "undue"

competition and later, if warning has been of no avail, to restrict or prohibit operations. It also provides for government intervention, in case freight charges seem



1937 Shipping the "Vanguard of Advancing Japan" 31

contrary to public welfare. Some doubt has been ex?

pressed as to the complete efficacy of the measure, as it is feared that more freedom may be allowed foreign competition, and that the Bill may actually protect those companies already in existence but will discour-

age the creation of new services and hinder the fuller

development of the country's shipping. Similarly the Ship Improvement Plans have come in

for their share of criticism. It is claimed that the subsidies have benefited the builders rather than the

owners; that the subsidy scheme has been responsible for increases in building costs, which at one time were estimated as at least ?20 per ton higher in Japan than in other important shipbuilding countries. The require- ment that two tons of old be scrapped for each ton of new shipping meant that in some cases companies had to buy ships to be scrapped?at ?12.5 per ton. Many smaller operators, being unable to provide the requisite scrappage, cannot construct new ships. Because much of the tonnage for scrapping had to be purchased abroad, to some extent the Plans were criticized as

forcing Japanese builders to scrap other nations' old

ships, paying them for the privilege of doing so.

Although details of expenditures in connection with the Plans are not available, it is not probable that they,

nor that increased incomes from ship- Labor ping, have affected to any marked de-

Improvement gree the wages of those employed in

Lags dockyards and in general shipping ser? vices. Cheap labor has been considered

one of the important factors in the development of

Japan's shipping, and it has helped in large measure to make up for the greater costs of building materials which have to be imported from abroad. S. Uyehara's statements on the post-War condition of shipping, in his Industry and Trade of Japan, are in many respects pertinent today: in brief, that war profits went into

expansion of establishments instead of into research for improving the industry; that great expansion dur?

ing the War would have been inevitable, even without various shipbuilding subsidies; that the large profits earned by companies went into prodigious dividends to

shareholders, while the country in general was paying for the protective policy; and that the paramount aim of the government's policy seemed to be to preserve high dividends.

The days of enormous war profits are past, when

Japanese shipping companies were able to pay over

100% dividends. In 1930, only the N.Y.K. declared a dividend, of 5%, for the first half of the year; and it was not until the end of 1933 that such payments were resumed by any of the companies. At the semi- annual meeting of N.Y.K. shareholders held last May, a profit for the half-year ending March 31st was an-

nounced, and a dividend to shareholders amounting to

5% annually. Items of note were increased trade and

improved freight earnings; and at the same time higher expenses, including higher prices for fuel and other materials. The president of the company, whose statement was reported in indirect summarized form, con- cluded that rigid economy continued to be observed

by the traditionally loyal collaboration of the ship and shore staffs, and the directors were glad to be able to report to the shareholders the net profit stated. Fre-

quently in the past, companies were able to show profits only because of subsidies.

Whether or not subsidies are wise in the long run, they have been given enough official cognizance of late

to give them entree into polite society International through the front door rather than

Rivalry through the basement. The United Keener States, in altering the former system of

mail contracts to one of direct aid to

shipping, has shown its concern in renewing American

tonnage and putting its merchant fleet on a better

competitive basis. And now Great Britain, after a

long record of comparatively small aid to her vast

shipping industry, is witnessing a determined drive on the part of some influential groups not only at home but in her Pacific Dominions, in favor of direct sub? sidies or other forms of aid. The shipping of the United States in New Zealand trade, and of Japan in that of

Australia, are shown as undermining the British in that area. And the competition of Japanese subsidized

shipping in other ports of the Far East has been growing almost steadily stronger. It is estimated that of the traffic between Bombay and Japan, for instance, which was entirely British not so many years ago, 80% is now Japanese. Last month it was reported that British and Japanese lines in the Indian, Straits

Settlements, and China trade had negotiated for a division of trade; the Japanese companies at first claimed 61% of the business, and it was later sug- gested that the British lines would be willing to accept even a smaller percentage, about 25%, in order to effect a compromise.

A form of protectionism now under fire is that of

reserving coastal and intercolonial trade to national

shipping. The United States has practiced this for a

long time, Japan since 1910. Great Britain was able to abolish this form of aid in the middle of the last

century; but the present situation in New Zealand

shipping has caused some agitation for reserving inter- Dominion trade for British ships. New Zealand has now passed a shipping bill designed to favor British

shipping as opposed to foreign shipping either subsi? dized or belonging to countries not extending free ship? ping privileges in return; but it is at present unlikely that Great Britain will act to reserve such trade in

general to British ships. As world trade stands at

present, it is thought that she might lose rather than

gain by such measures.



32 Japan Faces Pig Iron Shortage February 3-

Whatever steps may be taken to control or to im-

prove the Japanese industry, it is apparent that for a

country like Japan shipping services

Japan's must be maintained, even though some

Dependence of the early pressures on ocean trans- on Shipping portation have been relaxed. No longer

are ocean mail routes as vital as they were; the net of cable, transoceanic telephone, and radio communication has altered the value of postal service, and the establishment of regular clipper flights across the Pacific has opened new avenues for both

passenger and mail service. But for the carriage of

heavy cargo, the ocean liner will probably remain indis-

pensable to international trade. And ships must con- tinue to ply in and out of Japanese harbors, bringing in the great bulk raw materials for domestic industries?

cotton, iron ore, petroleum?and carrying away to

widely scattered markets the finished products with which Japan pays for her imports.

No longer does the country rely on imported foods; she has become self-sufficient, even a small exporter. No longer must she rely on imported steel; she has built up an industry which can practically furnish her normal requirements. But she must import the iron and other ores, and some of the coal, to keep that

industry fed (see p. 32 below). To maintain the active flow of this trade in times of peace and of war is vital to the Empire. It is not possible to store up enough raw materials within the confines of Japan to ensure her independence for even a short period of

emergency. It is beyond the scope of a summary such as this to

inquire whether such a policy of state subsidies as

Japan has built up in connection with her shipping operates in the best interests of the country or of the

general industry concerned. It is easily apparent that there are other considerations involved, and that the statistics of commercial shipping in terms of tonnage,

mileage, dividends, wages and so on cannot be the sole basis by which to judge an industry with which a nation's political and military policies are so closely identified.

Unfortunately the commercial shipping conflict of

today seems to be following the course of the conflict for naval supremacy, and can not be

Restraint vs. entirely dissociated from it. The ques- Cutthroat tion whether in the long run the game Competition is worth the candle even for one indi?

vidual country's national economy does not enter the picture. One nation?in this case Japan ?subsidizes its shipping to the point where other na? tions feel that without similar aids they cannot meet the competition. It is hardly to be expected that their entrance into the subsidy game on a wider scale will

guarantee a correction of certain evils, such as surplus tonnage and traffic rates lowered far out of proportion to operating costs. An international conference on

shipping in the near future might offer some solution or at least a respite, such as was introduced to fore- stall the not unrelated danger of cutthroat monetary depreciation. In the meantime, the players in the

shipping game are raising their antes.

PRINCIPAL SOURCES:

Lloyd's Register of Shipping; E. G. Mears, Regulation and Promotion of Pacific Shipping, New York, 1933; Financial and Economic Annual of Japan; Mitsubishi Economic Research Bureau, Japanese Trade and Industry, London, 1936; G. B. Sansom, Economic and Commercial Conditions in Japan, 1936, Dept. of Overseas Trade, London, 1936; Japan Year Book; U. S. Dept of Commerce: Shipping and Shipbuilding Subsidies, Washington, 1932; and Government Aid to Merchant Shipping, Washington, 1925; K. Yamasaki and G. Ogawa, The Effect of the World War upon the Commerce and Industry of Japan, New Haven, 1929; S. Uyehara, The Industry and Trade of Japan, London, 1926; J. E. Orchard, Japan's Economic Position, New York, 1930; Oriental Economist; Foreign Shipping News, U. S. Dept. of Commerce; Trans-Pacific; Japan Weekly Chron- icle; New York Times; New York Herald Tribune, Jour- nal of Commerce.

SIGNIFICANT DEVELOPMENTS

JAPAN FACES PIG IRON SHORTAGE

Despite record achievements in output, Japan now faces an acute shortage of pig iron owing to the unpre- cedented demand for steel products from the munitions and other industries. The scarcity of pig iron has

brought to a head an already unsatisfactory situation in the iron and steel industry, complicated by dissatis- faction with the government's efforts to extend its con? trol over this strategic industry, and with the existing relationship between the Japanese industry and that of Manchoukuo. As a result, early modification of the

government's iron policy seems probable, in the form of temporary suspension of the tariff on pig iron and

strengthening of the Iron Industry Encouragement Law.

The remarkable expansion of iron and steel produc? tion in Japan, described in the Far Eastern Survey of

January 30, 1935, has continued with unabated vigor. But although great progress has been made toward

self-sufficiency in steel and its manufactures, such as

machinery, this very process has necessitated a huge increase in imports of the raw materials?ore and pig iron. Imports of iron ore have increased 68% since 1934 (on the basis of ten months' figures), and those of pig iron have gone up 78%. Imports of scrap, in



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Shipping the "Vanguard of Advancing Japan"