Treaties, Laws and Speeches

I have the pleasure, gentlemen, of explaining in this assembly the essential points of the budgetary revenue and expenditure for the 1944 fiscal year and of stating my views on the financial and economic circumstances of our country.

I shall begin by explaining the general budget for the 1944 fiscal year. The revenue estimate is:

The expenditure estimate is:

Comparing the total with the total for the preceding fiscal year, including the supplementary estimate, it is seen that an increase of approximately

¥1,391,000,000 is envisaged.

I need hardly say that the vital point in regard to the operation of wartime finance and economy is to concentrate the total economic strength of the nation, throughout the fields of materials, labour power and capital while maintaining the daily life of the people, in such a way that there should be nothing wanting in the war structure of the nation. In the compilation of the above expenditure estimate, too, we have followed that principle. In regard to the estimates to be included in the expenditure account, the priorities to be observed in the next fiscal year have first been determined so as to provide fresh appropriations only for such projects as are calculated quickly to increase the fighting strength of the nation or to prove effective in maintaining the daily life of the people and also such as have been embodied in concrete plans, refraining entirely from making fresh appropriations for any other purposes. Even in regard to those projects which have been carried over from previous fiscal years, strict re-examination has been conducted to make adjustments suited to the times.

The State Treasury reserves have been considerably increased and adjustments made in the itemization of budgetary estimates. Together with the operation of Wartime Special Cases of the Accounts Law and other measures, additional flexibility in budgetary operation has been sought.

The total amount that has been compiled in accordance with the foregoing policy is of considerable magnitude but the appropriations listed are only such as are absolutely indispensable for enforcing the measures essential to the strengthening of the war structure, besides such obligatory outlays as Government bond expenses, transfers to the Provisional Munitions Expenditure Special Account, transfers to the Provincial Grants Special Account, annuities and pensions.

If we are to enumerate the more important appropriations newly included in the expenditure estimate.

(1) Approximately ¥64,000,000 for strengthening diplomacy and overseas administration aimed at the prosecution of the war of greater East Asia and the total unification of the greater East-Asiatic nations.

(2) Approximately ¥969,000,000 for increasing the production of coal and other important materials and for maintaining the prices of such materials.

(3) Approximately ¥93,000,000 for strengthening and expanding transportation capacity by sea, land and air.

(5) Approximately ¥764,000,000 for the enforcement of measures designed to increase the production of wheat and other foodstuffs and for the maintenance of the prices of such materials.

(4) Approximately ¥68,000,000 for expanding the national physique management system, national health insurance system and other medical and hygienic measures.

(6) Approximately ¥164,000,000 for the expansion of the annuity insurance system, strengthening of welfare work for infants and prospective or actual mothers and other measures for national welfare and increase of

population.

(7) Approximately ¥169,000,000 for providing occupational training facilities for the wounded and sick soldiers and bereaved families and other measures for the welfare of soldiers, sailors and their families.

(8) Approximately ¥34,000,000 for the founding of the Dai Nippon Educational Association and for other educational and cultural measures.

(9) Approximately ¥61,000,000 for strengthened mobilization of scientists and engineers aimed at an increase in the air fighting strength of the nation and other measures for improving and expanding scientific research facilities, and

(10) Approximately ¥73,000,000 for adjustment of air defence equipment and materials and other air defence measures.

Other points to be noted in regard to the expenditure budget are:

(1) The transfers to the Provisional War Expenditure Special Account amount to ¥4,466,000 from the general account and approximately ¥680,000,000 from the various special accounts totalling approximately ¥5,146,000,000 which represents an increase of approximately ¥327,000,000.

(2) The amount of economics [sic] effected in the expenditure already fixed is ¥382,000,000.

I shall next explain the revenue estimate.

The total amount of the sum as it stands is approximately ¥15,415,000,000, which is the same as the expenditure budget. The sum is divided into: regular revenue, including tax revenue, approximately ¥10,913,000,000; balance carried over from the previous fiscal year approximately ¥141,000,000 and amount raised through public bond issues approximately ¥4,360,000,000.

The total amount of tax revenue, which occupies the bulk of the revenue account, is approximately ¥8,578,000,000, including both the ordinary and extraordinary accounts. Compared with the amount for the preceding fiscal year, it shows an increase of approximately ¥988,000,000. This is divided into: spontaneous increase approximately ¥854,000,000 and increase due to increase levy of indirect taxes in the 1943 fiscal year, approximately ¥133,000,000.

In defraying for a war, it is inevitable that a considerable portion of the expenditure should be covered with public bonds but at the same time it is quite important to consolidate the foundations of wartime finance by striving to secure an increase in tax revenue. With this purpose in view, the Government, after careful deliberation in regard to financial requirements and effects on national life and national economy, has decided to increase taxes in order to increase revenue to the State Treasury, to absorb the surplus purchasing power of the people and to effect economies in consumption.

Considering that in the spring of last year the tax increase was principally in the field of indirect taxes, the emphasis this time has been laid on direct taxes but, at the same time, an increase has also been decided in respect of indirect taxes. Other tax measures aimed at expanding productivity, accumulating capital and other purposes important in wartime have been adopted and legislative bills have been presented to the Diet to implement

them.

The increase in revenue to be secured through these measures is about ¥2,200,000,000 in the initial year and about ¥2,500,000,000 in the regular year. This increment will be added to the revenue increment secured through a raise in the price of tobacco already enforced and included in the supplementary budget to cover the provisional war expenditure. The present tax increase is of an unexampled magnitude and the burden on the people will accordingly be heavier but I hope that the 100,000,000 people of this country will renew their determination to endure and preservere [sic] and will push their campaign of service to the nation through tax-payment.

Revenues from sources other than taxes amount to ¥2,335,000,000 odd, showing an increase of ¥180,000,000 over the budget for the last fiscal year.

Revenues from public bonds, as I have said, reach ¥4,360,000,000 odd, a gain of ¥841,000,000 over the previous year. In addition to these bond revenues which are included in the Ordinary Account, there are Special Account revenues reaching ¥1,468,000,000 odd, made up of investments by the Governments of Chosen and Taiwan and also of incomes from the Imperial Japanese Railways and communication undertakings.

Aside from the source of revenue for the Extraordinary Military Expenditures, the scheduled amount of public bond issues for 1944 as a source of revenue is set at ¥5,829,000,000 odd.

As in the case of the Ordinary Account Budget, care has been taken so that the Special Account Budget includes only those items which are indispensable for the bolstering of fighting strength. Principal among these items are ¥611,000,000 odd for boosting wartime land traffic, ¥125,000,000 odd for an increased output of iron, coal and other key mineral products, ¥108,000,000 odd for foodstuffs productivity expansion, ¥56,000,000 odd for the perfecting of air-defence equipment and ¥30,000,000 for the inauguration, or preparations for the inauguration, of the conscription system in overseas territories.

In regard to the military expenditures connected with the war of greater East Asia, a Supplementary Extraordinary Military Expenditure Budget Bill will be submitted shortly.

I shall now dwell on the economic and financial situations.

Last year, our financial circles, while filling the enormous demands entailed by the unprecedented war, remained quiet and thus served to maintain the economic order which is the foundation for the bolstering of fighting power.

With the sharp increase in war expenditures, the circulation of Government funds swelled. Thanks, however, to close co-operation between the Government and people, these have been steadily absorbed and our financial structure remains stabilized.

The average issue of the Bank of Japan notes for last year amounted to ¥7,069,000,000 odd, an increase of ¥1,813,000,000 over the previous year. This is seen as reflecting an expansion of our financial and economic scales

incident to the operation of the phenomenally swollen war finance.

In regard to funds accumulation, funds accumulated at banks, excluding fixed deposits, ran up to about ¥9,530,000,000, while postal savings totalled ¥5,039,000,000 odd. Together with other funds, the total accumulation showed an increase of approximately ¥27,000,000,000.

Funds for new industrial enterprises were raised satisfactorily, with the new company debenture issue totalling ¥2,627,000,000.

In regard to shares, new paid subscriptions exceeded ¥4,493,000,000, and their value remains stabilized.

The total national bond issue for last year was ¥18,299,000,000, a gain of as much as ¥4,978,000,000 over previous year. These were digested to the extent of ¥17,076,000,000 or 93.3 per cent. of the total issue, which may be regarded as satisfactory.

Our war finance has now ramified throughout greater East Asia. At the same time, the restoration of peace and order and economic developments in the occupied areas have progressed apace and the peoples of greater East Asia as one solid unit are concentrating their total energy on the bolstering of fighting potentialities with the object in view of crushing our common enemies, the United States and Britain. This is a matter for congratulation.

A review may be made of economic developments in greater East Asia. To begin with, Japan's investments in Manchoukuo and China for last year totalled about ¥1,750,000,000, which brings the total investments since the occurrence of the China affair to ¥9,000,000,000. As the result, the abundant resources in these countries have been steadily developed and contributed substantially toward the war presecution [sic]. Particularly noteworthy in this connection is the steady increase in the funds raised on the spot, a fact which speaks of the improvement and progress of the economic potentialities on the spot. This is highly encouraging.

In the Southern Regions, reputedly the largest treasure-house in the world, key resources in which Japan is deficient have been steadily developed, funds for which purpose have been accommodated freely by the Southern Development Treasury. With the progress of the economic exploitation in these areas, the interchange of vital resources among those regions has been satisfactorily conducted on a well-planned basis at the hands of the Japan Trade Corporation.

The financial machinery of greater East Asia is being operated satisfactorily, with Japan extending assistance to the various countries in that area, who, on their part, are co-operating positively with us. It is only to be expected, therefore, that the foundation of greater East Asia's finance will be increasingly solidified as time goes on.

The Central Bank of Manchoukuo stands on an increasingly solid basis. The Central Reserve Bank and the Federal Reserve Bank of China and the Bank of Mengchiang are undergoing healthy development.

As regards Thailand and French Indo-China, the economic and financial agreements concluded with them are working satisfactorily, thereby contributing toward the promotion of collaboration among Japan and those countries.

In Burma and the Philippines, central banks are going to be established shortly. Effective financial assistance is being given these countries through the Southern Development Treasury.

All in all, the financial structure of greater East Asia is being steadily perfected with the end in view of establishing a managed currency system built up on spontaneous co-operation among the various areas in this region. In sharp contrast, the postwar currency programme recently proposed by the Anglo-American countries is nothing but a daydream.

A check-up will shortly be made on the enormous enemy properties which have either come into our possession or are placed under our influence. Utilization of these properties will contribute materially toward increasing our fighting strength.

With regard to our economic relations with our allies in Europe, a basis for close collaboration between greater East Asia and the European Economic Sphere under the aegis of our allies was established through the agreement concluded between Japan, Germany and Italy concerning economic collaboration.

Subsequently, a banking agreement was concluded between Japan and Germany under which financial settlements between the two countries are going on smoothly.

The financial settlement agreement between Japan and Italy had to go into temporary suspense following the defection by the Badoglio régime in September last year. With the establishment of the Government of the Fascist Republic of Italy and Japan's recognition of it, however, the agreement is now being operated smoothly.

Six years have passed since the outbreak of the China affair and over two years since the start of the war of greater East Asia. The total Ordinary Account and Extraordinary Military Expenditure Account budgets during this period have reached ¥114,000,000,000 odd, while expenditures for productivity expansion during the same period total ¥44,000,000,000 odd, making a grand total of over ¥159,000,000,000.

Although such an enormous amount of money has been paid out to meet the demand, the Japanese economic foundation has not been shaken even to the slightest degree. The real economic condition has progressed satisfactorily and strongly. All this is attributed to the fact that the people behind the guns have been solid and are resolved to surmount all difficulties, being intent to fulfil their obligation in tax payment and savings. The total revenue in taxes and others since the outbreak of the China affair till the end of the 1943-44 fiscal year is estimated to reach more than ¥33,000,000,000. The amount of increase in the national savings by the end of the present fiscal year is estimated to reach more than ¥100,000,000,000. It is this satisfactory tax payment and savings that have enabled Japan to meet the enormous wartime demand without any interruption at all. The economic order, too, was maintained well because of this.

It is natural that the demand for the extraordinay [sic] war expenses and other military demands increase with the progress of the war situation.

Naturally, the taxes and savings increase enormously. As regards the estimates of taxes to be borne by the nation for the next fiscal year, I have already explained. The goal of savings will be fixed on the decision of the supplementary war budget. It goes without saying that the amount will reach an unprecedentedly high figure for this country and that will occupy the majority of the national income. However, we must fulfil our obligation of tax payment and go over the limit of savings, because we must win this war. The necessity at present is growing space with the need to increase Japan's fighting strength.

To fulfil the obligation of tax payment and to increase the savings, a country needs the enforcement of a strong financial policy by the Government. A mere increase in figures does not mean anything. An increase in the productive power of materials which are to be bought with funds and that in transportation must be realized. After all, the increase of total productive power is essential. It is not enough to see the total productive power increased. This power must be based on the total productive power in which all that is required by the war situation is concentrated. To realize this, the national consumption will have to be lessened. The same can be said of factories, namely unnecessary consumption must be possibly avoided while efforts must be made to realize the maximum effects on the minimum consumption.

That the Imperial Japanese fighting officers and men are loyal and brave, being really unparalleled in the world, needs no emphasis. The key to victory or defeat depends essentially on the increase or otherwise to productive power of materials behind the guns. It is incumbent upon men, therefore, whether the material productive power can be increased or not. Anyway, we must win this war by increasing the productive power. And the spiritual power is the very fountain head of human strength. We, the Japanese, have a history of 3,000 years and the conviction of sure victory and indefatigability prompted by Japan's polity unparalleled by any other nation. And we must elevate this conviction all the more, enliven the indomitable spiritual power and carry through the objective of this sacred war with redoubled efforts and great perseverance.