8
THE HONGKONG Telegraph, SATURDAY, AUGUST 5, 1939.
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Sinews of War
Although
the
sympathies.
of
the democratic countries are whole- heartedly with the Chinese people in Japanese struggle against their domination, it is a deplorable fact: that the democracies are making it possible for the aggression to gʊ un. Japan lacks nearly all the raw materials essential for carrying on a modern war, They are supplied by the countries whose untionals she in- sults and whose interests she destroys. Nearly half the goods Japan pur- chases in the free markets of the world are told to her by the United States and another quarter by the British Empire. Altogether, some- thing like 50 per cent. of Japan's pur- clases abroad are from the democra- cles.
war.
B
soipe Wh
Another Far Eastern Problem.-How to twist the lion's tail again.
Tientsin-what
Japan
that
OTH the Japanese army leaders and the Japanese Government have stated Britain must be forced to "co-operate " with. Japan in the construction of their new order in East Asin," by withdrawing our aid from the
Chinese Government.
The army has specifted in par- tlcular that Britain must
ccuse
to support Chinese dollars at the expense of Federal Reserve Dunk notes." In this demand is to be found the key to the situation.
For two years Japan has been 1 waging an undeclared war China.
war of arms was but this Preceded, and is aren
accompanied, by a currency war. As it has become more and more apparent to the Japanese that they cannot crush Chinese resistance, and as Japan's own financial position has grown more and more desperate, this cur- rency war has become of para- mount importance.
per
arc
Is in this war of the Similarly is the democracies
ven against the guanë” more than eighty which take
that foreign interests cent. of Japan's exports and thereby
directly involved; and it Anancial re- provide her with the
in in this war that Britain and of the United States have rendered sources to purchase the sinews
the substantial ald, to China, the time, the At
same
former by the action of British democracies (and especially Britain)
banks in China, and by the are supplying a considerable part of
guarantee given by the Britints March of Government last the additional tonnage required by
£5,000,000 to the Chinese Stabili- Japan for the carriage of her war
sation Fund; and the latter by its supplies.
continued purchases of Chinese silver at a high price.
This is indeed a lamentable state froin of affairs, whether viewed
new
is
i menace
a moral or a material point of view. For Japan is not therely an aggressor setling the civilised world at deflance; she
to democratic Interests the world over. If Japan wins her war and subdues the Far East, aggressive militarism will take in- heart everywhere. The terests of Britain, of France, of America require that she shouki lose it. It is foolish to pretend otherwise, One of the most direct and Jeust dangerous means of bringing about n Japanese defeat would be to cut: her trade life-line. If that could be done decisively in a single stroke the war would be as good as over.
Unfortunately, it is not as cusy as that. Trade benefits all parties to it, and the loss of trade horms all parties. For some of the British Dominions, Japan is a vital market; for some of the democratic industries she is a vital source of supply.
.
But two things can be done at once. One is for the democracies to place a ban on those imports from Japan which can just as easily, if a trifle mure expensively, be bought eise- where.
The other is for the democracies to make every effort to redirect the channels of their trade. To some extent that is being done elsewhere: the pollileal agreements will Poland and Rumenin have been followed by trade arrangements.
In a world one half of which is
for beliuose it is necessary
those countries which are jointly seeking peace to search for new and friendly sources of supply, and new friendly markets.
and
This aid has been given to China because only thus could we hope to protect our trade and Investments.
is after
by FREDA UTLEY
the well-known writer who has travelled extensively in the Far East.
In this secondary war within a to Japan has been trying war force her own unbacked paper cur- rency upon the Chinese in North China in order to bring this area within the "yen bloc," and thus be able to squeeze out of the country every ounce of those raw materials which she needs, and be able to herself all the appropriate to foreign exchange derived from the sale of North China products on the world market.
Her efforts have been frustrated partly by the confidence of the Chinese in their own currency, and by the activities of the Chines ruerilia forces, which control more of North China than the Japanese armics; and partly by the action of the British banks at Tientsin, and in general by the support-Britain-has-given-to-the. Chinese currency.
The British banks have simply refused to have anything to do with the dollars issued by Japan's puppet Federal Reserve Bank.
Naturally, every Chinese prefers to sell for money in which he has confidence, and which can be ex- changed for nice, reliable Engilsh pounds or United States
dollars at the foreign bunks in Tientsin, stead of accepting à bit of incon- vertible paper which can only be exchanged for another bit of in- convertible paper, the Japanese yen. Moreover, this inconvertible
GRIN AND BEAR IT
SALESMEN NIFTY NUT Co,
By Lichty
SALES MANAGER
"Orders! Nothing but orders! Don't you EVER bring back some good stories!"
•
new dollar has been decreed by the Japanese to be worth 1. 2. whereas the reliable and convert- dollar had been ible Chinese allowed to find its natural level at Jd.
So the Chinese were expected to exchange their Chinese dollars for Federal Reserve Bank dollars at a discount of 40 per cent, but in practice the Chinese money cam- imanded a premium of 30 per cent. over Japan's Federal Reserve Bank over Jap dollars.
Naturally, also the foreign trader buying with the convertible ad. dollar got the lion's share of the trade wherever there were no Japanese soldiers to force the Chinese to sell to the Japanese. The Japanese merchant, forced to trade with a 1s. 2d. dollar which "To"one-wanted-to-Eccept-found himself undercut on the world market and able to secure, very little to sell in Japan.
E
VEN the new regulations promulgated by Japan last March prohibiting all exports not proved to have been bought with Federal Re- serve Bank notes could not give Japan what she wanted, because the Tientsin Customs are in the French Concesión.
The Japanese Army and Govern- ment were furious to see the foreign exchange they so desper ately needed flowing into the foreign banks.
What was the use of hating ex- pended so much "blood and treasure trying to conquer China ir even within the territory they have occupied they could not monopolise trade?
of
course, the
the Japanese can, and do, mete out the most drastle
to punishment any Chinese found dealing in the "outlawed "Chinese money. But there are many mil- Hons of Chinese in North China: they cannot all be shot.
the towns on the main lines of communication
Jupanese troops.
garrisoned
by
were
If these guerilla forces unable to buy supplies with the Chinese dollar their position would
be very much weakened.
con-
The guerilla forces are stantly harassing the Japanese, cutting their lines of communica- tion, making it impossible for them to set up local puppet udministra- tions, and, in fact. controlling a far larger part of North China than the Japanese armies.
T
the
HE Issue at Tientsin' is
опе clearly
involving not
right only of foreigners to trade in North China-and if we give way the same issue will very soon be raised at Shanghal-but the whole ques- attitude towards tion of Japan's attempted conquest.
If we surrender to Japan at Tientsin we simll not only abandon our right to trade in North Chinn, but shall also greatly weaken the forces of Chinese resistance by auch...a
our
practical recognition of Japan's conquests.
are
Mengre as has been the help
have which we given to China, it has not only maintained the stabi ilty of her currency and so helped 10
her united; it has also ксер made the Chinese feel that they not altogether friendless. Moreover, the currency question itself is of paramount importance that Japan Is In such desperate financial straits as to be risking a real conflict with Britala and the United States in order to get hold of new sources of supply of foreign exchange,
now
R
ECENTLY, a temporary moratorium Was de- clared by the Chinese banks as a result of the run
on them these last few days. The sudden loss of confidence by the attitude depositors is due
to
of the British Government.
Mr. Chamberlain's failure make a firm stand, and the Im- punity with which the Japanese are attacking us and subjecting British subjects to Indignity, has aroused a natural suspicion that we shall surrender to Japan.
on Japan, Economic exercised in coloration with tho United States.
cs, could save British Interests in China and the Chin- ese people. But tite British Gov- instead of trying to ernment. secure American co-operation by widening the issue at Tientsin to include the whole question of foreign rights in China, Japan's Power violation of the Nine Mr.
To force a whole people to accept inconvertiblo and practically worthless money, in place of e comparatively sound and freely convertiblo currency. is a task be- yond the capacity of the Japaness Army, at least so long as the foreigners have any rights left in
China.
If the Japanese could force Brl- tain to recognise their conquest of
and. make North China 'Chamberlain's Government with- draw. they would also have a bet- ter chance of suppressing the Chinese guerilla forces, which ́at. present prevent them from ex- tending their authority beyond
Treaty, and her war of aggression is making such.co- on China, operation impossible by pretending that the blockade of our Conces- slon at Tientsin la merely a "local tasuo" between Britain and Japan.
SAHARA SETS A
"TEASER"
Charles Wayne Trevor, noted African explorer, is preparing to futfl his life's ambition-to chart the Sahara. A trip straight across the desert would be bozardous enough, but Trevor's contemplated Journey will be doubly dangerous because of the necessity of his travelling clr- cuitously to pass through certain areas and make observations.
One of his problems is equipment. For his specially built car he buyn hent-resistant tyres, each warranted to last 12,000 miles.
It is extremely important that he does not load his car with more weight ihan la absolutely necessary. He determines to 'rely completely on the guarantee.
The problem is: What is the least number of tyres Trevor must buy to carry him through his 27,000-mile Journey?
The answer is in the box on Page Nine