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325. Both German and Italian fliers are helped by the permission which is granted to them (and not to the fliers of other nations) to fly over Formosa and the Loo-Choo Islands.
Manchukuo.
326. The Czech Consul in Harbin and a Skoda representative have been conferring with officials in Hsinking, presumably with a view to concluding some sort of trade agreement. It would not be surprising if in the near future Czechoslovakia recognised Manchukuo, especially now that the former is so much in the German orbit.
The U.S.S.R.
327. In a very outspoken address to a congress of munitions manufacturers, the Vice-Minister of War, Lieutenant-General Tojo, who is sometimes regarded as the leader of the young officer" movement, warned his listeners that despite the successes in China the real test is yet to come. Japan must be prepared to fight both China and Russia simultaneously. Against that day she must continue to increase and strengthen her armaments.
Burma.
328. The new highway linking the Burma railway system with Yunnanfu is already featuring in the Japanese press and considerable supplies of arms are alleged to be entering China by this route. These accusations will doubtless increase both in number and virulence.
HOME AFFAIRS.
The China Development Companies.
329. The North and Central China Development Companies opened for business on the 9th November. Both are semi-official organisations designed to supervise, control and co-ordinate smaller companies.
330. The Central China Development Company at the present moment controls seven subsidiaries, the Central China Iron Mining Company, the Central China Electricity Company, the Central China Telegraph and Telephone Com- pany, the Shanghai City Construction Company, the Inland Water Navigation Company, the Central China Marine Products Company, and the Central China Motor Car Company. It is hoped in the near future to start companies to operate the railways and the production of salt.
331 The North China Development Company has but one subsidiary, the North China Telegraph and Telephone Company, but companies will soon be started to develop the following industries: coal, coal-liquefaction, salt, iron, electric power and transportation.
The Social Mass Party.
332. The development of the Social Mass party has been watched with considerable interest, especially by foreigners, since, unlike the two big parties, the Minseito and the Seiyukai, it professed a type of social democracy, appealed directly to the proletariat, and represented Liberal ideas in an age of reaction. Last November, however, under official suasion, it swung violently from the Left to the Right. Its now platform, which was adopted on the 20th of this month, is pure national socialism, with strong emphasis on the nationalism. The Social Mass party is now numerically the largest reactionary party in the Diet.
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The Young Officers' Movement."
C
333. The army's spectacular successes in China have once more brought the young officers into the limelight in internal affairs with their ideas for national renovation." A large number of articles are appearing in the reviews under the name of the official spokesman of the Ministry of War, Colonel Sato, the reactionary violence of which is in inverse proportion to the respectability of the publication concerned. Renovation means the subservience of the entire nation to the military machine which, according to these exponents, is working for the salvation of Asia for the Asiatics.
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334.
Under this pressure, a cautious plan has been drafted by the Govern- ment for the creation of a National Council," which is to be a federation of existing associations of all kinds: its object is to bring the country to take an active interest in State policy. Conservative resistance to radical reforms is still a force to be reckoned with, and the new council is not, at least for the present, to be exploited as a political machine. Nevertheless, it has long been clear that the maintenance or otherwise of the army's prestige through the outcome of the continental policy will be a determining factor in internal political developments in this country.
The Mobilisation Law.
335. Promulgation is expected shortly of a number of Imperial Ordinances under various articles of the National Mobilisation Law. They are all to be characteristically Nazi measures, and provide, amongst other things, for an expansion of productivity, for the training and enrolment of skilled workers, for the expropriation of machines and materials for military purposes, and for far greater governmental control of publications and the press.
336. A first-rate dispute took place about the middle of the month between the Finance Ministry and the Ministry of War over article 11 of the Mobilisation Law, which concerns the disposal of private profits. At one time it looked as if the Finance Minister, Seihin Ikeda, might resign. The military wanted not only to limit profits, but to take away from private initiative the right to dispose of surplus profits. The financiers maintained that the important thing at the present moment was an expansion of Japan's productive capacity, and that any interference in the disposal of profits would achieve the contrary result. Å compromise was reached whereby companies paying more than 10 per cent. are not allowed to increase their dividends any further. The question of Government control of the disposal of funds held by credit institutions has been temporarily shelved.
Profits from the War.
337. Certain sections of the population are undoubtedly doing well out of the war. All workers engaged in industries either directly or indirectly connected with the war are drawing higher salaries, and the amusement trade, far from having a slump, has been enjoying something of a boom. The number of geisha and machini (assignation houses) has increased enormously since the war started, although foreign-style amusements are doing badly. The factory worker and the town-dwelling bourgeois have money to spend. But there is a distinct cleavage between town and country in this matter as may be seen from the following paragraphs-
The Nation and the War.
338. A young
British resident had an illuminating talk early this month with the keeper of a mountain hut, which throws some light on the attitude of the farmers towards the war.
339. The Japanese, who was slightly the better for some sake, was a man of 37 who had been through middle-school and was, therefore, better educated than most Japanese of his class. He said that there was a great deal of discontent among the farmers regarding the war; prices, except those of farm produce, had risen men were being taken for the army and for work away from the farms. Discontent was not apparent because they were prevented from giving voice to it. They had no interest in China. He called the war just annoying the Chinese. The farmers dislike fascism. They want to be as free as possible.
C
340. It transpired that the chief product of the village was silk. The Englishman suggested that if the Americans got too annoyed, they might stop the import of silk, which would be unfortunate for the Japanese farmers.
On the contrary. It might be a good thing as it would bring things to a head."
341. His younger brother had just come home having been wounded in the advance on Hankow. The Chinese troops were much stronger than anyone thought. They had very good Czech machine guns, while the Japanese guns were always breaking down. There was also discontent amongst the Japanese troops. The Chinese troops were much keener about the war.
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