I deem it a great honour to explain here a general outline of the 1939-40 Budget for revenue and expenditure and the conditions of economic circles in this country.
In my opinion, the unshakable policy of our nation is to build up a new order ensuring permanent stability in East Asia, and for this purpose we are making it our immediate, concrete objective to work for the replenishment of national defence sufficiently to meet the international situation and at the same time to plan for the
development of economic strength throughout Japan, Manchoukuo and China. In order to attain these two great objectives of replenishing national defence and building up economy, the preceding Cabinet has already carried out various necessary measures, and for the future, we intend by and large to follow the existing policies, amplifying them whenever it is deemed necessary to do so and working for mutual harmony and coordination in these various policies.
With regard to the 1939-40 Budget, the preceding Cabinet completed the general compilation, and therefore we have arranged to take it over for introduction into the present Diet. The amount of the General Budget for the 1939-40 fiscal year is a little more than 3,694 million yen both in revenue and expenditure, which when compared with the budget amount for the preceding fiscal year, shows an increase of a little over 180 million yen.
First of all, I will give a general explanation of the revenue budget. This is made up, in round numbers, of 2,801 million yen from taxes and other ordinary revenue, 84 million yen brought over from the preceding fiscal year as a surplus fund, and 809 million yen as proceeds from public loans. The ordinary revenue just mentioned shows an increase of 294 million yen when compared with the corresponding budget amount for the preceding fiscal year, this estimated increase being largely due to estimated increases in tax proceeds. To be more exact, the income tax proceeds are estimated to increase by some 160 million yen, the provisional profit tax proceeds by 102 million yen, the business profit tax proceeds by 23 million yen, the inheritance tax proceeds by 13 million yen and other items by 23 million yen, totaling more than 323 million yen, while the brewery tax, stock and commodity exchange tax and other tax proceeds are estimated to decrease by a little more than 58 million yen in all. Therefore, the tax revenue as a whole is to increase roughly by 264 million yen, and I am inclined to think that this estimated increase in revenue may roughly be taken to reflect a favourable trend in economic circles.
Apart from the tax revenue, some of the principal increases and decreases in the estimates for ordinary revenue include an increase in round numbers of 15 million yen in forestry proceeds, an increase of 7 million yen in levies on horse races, an increase of 40 million yen in proceeds from the enforcement of the Convertible Bank Note Consolidation Law, a decrease of 13 million yen in the Monopoly Bureau profits, a decrease of 19 million yen in revenue due to the non-payment of Manchoukuo's share of national defence expenses, etc.
Next, I will explain the general outline of the expenditure budget. The Budget for the 1939-40 fiscal year has been compiled so as not only to concentrate all governmental measures for the purpose of attaining the objective of the Affair, as in the preceding fiscal year, but also to consolidate them even more intensively. Naturally we have so arranged as to strengthen all measures connected with the Affair as far as possible, while we have refrained from estimating the other various expenses save for those whose urgent needs call for immediate attention. To be more exact, we have estimated fresh increases totaling a little over 97 million yen for the relief fund for soldiers' families, various expenses for military aids, various expenses for the protection of wounded soldiers and other expenses required for various other home-front measures. We have also estimated other fresh increases at roughly 56 million yen in the expenses relating to the expansion of productive power, 13 million yen in the expenses relating to the adjustment of the supply and demand of commodities, 18 million yen in the expenses relating to the promotion of export trade, 20 million yen in the expenses needed for the execution of the horse administration plan, 23 million yen in the expenses relating to emigrants to Manchuria, 24 million yen in the expenses relating to civil aviation and air defence.
Moreover, in view of the disastrous floods occurring in various places recently, we have seen an urgent need for expenses relating to river conservation, and we have established a basic plan for the prevention of landslides in all prefectures, working out at the same time river conservation plans for the Tone, Yodo and other rivers. Accordingly we have estimated such amounts as will be required during the forthcoming fiscal year for these purposes.
In addition to these, required amounts have also been estimated to cover expenses relating to the remedial measures for those losing employment or forced to change vocations, the expenses relating to the remedial measures for farming villages, the expenses relating to the promotion of medium-sized and small industries, the expenses relating to the enforcement of the compulsory education system at the Seinen Gakko (Young Men's and Women's Schools), etc. Further, the subsidies for local finances are estimated to amount to 130 million yen as in the preceding fiscal year, while, in order to meet the possible necessity of making expenditures in excess of, or outside of, the budget in connection with the Affair or other events, the first reserve fund has been increased by 10 million yen over the preceding fiscal year to 30 million yen and the second reserve fund has been fixed at 60 million yen. Mention may also be made of the
amounts saved by cutting or postponing some of the estimated expenses previously fixed for the 1939-40 fiscal year as well as of the amounts saved due to the departure of some army and navy units and war vessels for the war front. These amounts are spread over all Departments of the Government and total a little over 317 million yen. Consequently the budget contains considerable changes in detail as compared with the preceding fiscal year.
Again, the estimated proceeds consequent upon the legislation of the China Affair Special Tax Law and other circumstances total some 351 million yen, showing an increase of 34 million yen as compared with the preceding fiscal year. These proceeds are to be entered in the special account for military expenditures as a financial resource for the provisional war expenses as originally planned. And, if the amount of this estimated entry were left out of calculation, the total amount of revenue and expenditure would be a little over 3,342 million yen.
The deficit in the General Account during the 1939-40 fiscal year will be made good by public loans, which will total roughly 809 million yen including 4 million yen from the Post-Quake Remedial Bonds, 8 million yen from the Road Bonds, and 795 million yen from the Revenue Supplementing Bonds.
Next, a few words on the Special Account Budget. The revenues and expenditures in the five special accounts for Chosen, Taiwan, the Kwantung Leased Territory, Karafuto and the South Seas Mandatory Islands, are all estimated to increase considerably in comparison with the budget figures for the preceding fiscal year. Of these estimated increases, those in revenue are mainly due to increases in tax proceeds, while those in expenditure have been estimated specially to cover such expenses as are deemed urgently necessary in view of the prevailing situation. The other special account budgets have also been compiled in line with the policy followed in the compilation of the General Account Budget.
For transference to the account for emergency military expenditures, 32 million yen has been estimated in the special account of the Chosen Government-General, 16 million yen in that of the Taiwan Government-General, 7 million yen in that of the Kwantung Bureau, 4 million yen in that of the Karafuto Government, 40 million yen in that of the Imperial Government Railways and 16 million yen in that of the Communications Department, totaling 116 million yen.
As for the amounts of public loans to be floated during the forthcoming fiscal year as estimated in the various special accounts, their total is given as 273 million yen, including 164 million yen for the Chosen Government-General, 6 million yen for the Taiwan
Government-General, 80 million yen for the Imperial Government Railways and 22 million yen for the Communications Department. If the amount of 809 million yen estimated for public loan in the General Account as stated before, is added to the figures just given, the grand total of projected public loans will amount to 1,028 million yen.
Further, as regards the military expenses relating to the Affair, an additional budget for the special account for emergency military expenditures is expected to be laid before the Diet shortly for legislative approval.
As for the projected general reform of the central and local tax systems, the project has been shelved temporarily following the outbreak of the conflict. Now as the Affair has entered a stage of long-term construction, it is deemed necessary for us to effect re-adjustments in the tax systems, and therefore we are thinking of pushing careful investigation with sufficient attention paid to the future developments of the situation. In the meantime, however, with a view to increasing the tax burden on industries which are gaining in earnings and at the same time helping in checking consumption, we have planned to effect revisions and increased collections of the temporary profit tax, commodity tax and other similar levies. Accordingly we are now making necessary preparations for the introduction of legislative bills for that purpose to the Diet during its current session.
Next, I take this opportunity to make brief mention of the conditions of economic circles in our country with reference to the situation with which the nation is now confronted.
Since the beginning of the China Affair, huge amounts of Government money have been poured into the financial market, and the Government has made it its basic policy to work for the appropriate and smooth accumulation and movement of capital by such means as encouraging savings and adjusting the supply of capital. Thanks to the understanding and cooperation on the part of the people, these measures are attaining notable results. Meanwhile, the Government is also giving careful thought to the question of when a public loan may be floated or Government money paid out for better results.
Thus, the financial market is making favourable progress with the supply and demand of capital adjusted properly on the whole, and quiet prevails in financial circles. During the year, the average issue of convertible bank notes amounted to 1,919 million yen, which is an increase of 384 million yen as compared with the year before last. But, in view of the fact that this increase was
partly due to special causes, I think there is nothing particularly extraordinary about this increase in the issue of convertible bank notes if the recent economic conditions of our country are taken into consideration.
With respect to the people's savings, increases have been notable, bank deposits having increased by 3,370 million yen and postal savings by 689 million yen during the past year. Meanwhile, the call money market has continued to make favourable progress since the early part of last year. In the debenture market, too, considerable activity has been witnessed since its reopening in February last year, the company debentures newly issued totaling 1,160 million yen by the end of the year.
Furthermore, the Temporary Capital Adjustment Law has also continued to be operated smoothly, and the capital invested in industrial equipment during the past twelve-month period exceeded 2,800 million yen, such investments having all been so calculated as to meet the purpose of expanding productive power of most immediate necessity in our country. In the future, too, the demand for capital is expected to continue to rise more and more for the expansion of industrial productivity and other purposes in view of the prevailing situation, and the Government makes it its policy to work for the accumulation of capital by further encouragement of savings, on the one hand, and effect appropriate regulation of capital so as to make the supply of capital for necessary purposes smoother than ever before, on the other.
I also take this opportunity to comment briefly on the invocation of Article 11 of the Law for National General Mobilization. The Government has, after necessary deliberation by the National General Mobilization Council last December, decided to put the provisions of the said article into operation, and is now preparing the drafts of relevant ordinances. In my opinion, in order to carry on long-term construction, it will be necessary to expand the productive power of required materials throughout Japan, Manchoukuo and China. The Temporary Capital Adjustment Law has been put into operation as a means to this end, and in order to meet future developments in the situation, we have deemed it necessary further to improve industrial operations and at the same time to take appropriate measures for active supplies of industrial capital. For this purpose, we are planning to provide appropriate restrictions on company dividends and also have the Government authorized to issue necessary orders to the Japan Industrial Bank regarding advances of capital. We expect these measures, coupled with the operation of the Temporary Capital Adjustment Law, to
contribute toward the expansion of productive power and the consolidation of industrial foundations in the future.
Smooth absorption of public loans is a matter of pivotal importance for the operation of State finances, and the Government is paying close attention to this fact. In this connection, it is a matter for congratulations that, thanks to the cooperation of the people, loan absorption has made favourable progress, as approximately 3,800 million yen of public loans have been absorbed during the past year. However, the public loans estimated for flotation during the 1939-40 fiscal year are expected to amount to a gigantic total, and it will be extremely important to effect smooth digestion of them. Under the prevailing situation, this digestion of public loans as well as the projected expansion of productive power throughout Japan, Manchoukuo and China depends largely on the people's savings for necessary capital, and for this reason, we intend to push our studies of various measures, and means to popularize public loans in particular, with the movement for the encouragement of people's savings as their axis.
Next, as regards foreign exchange, I think it most appropriate to maintain the existing exchange standard in view of the internal and international economic situation. In this connection it will be of extreme necessity to strive for improvement in international receipts and payments and for the replenishment of resources to make payments abroad, the latter of which, it is needless to say, will depend largely on the promotion of the export trade. During last year, the foreign trade of our country amounted to 2,896 million yen in exports and 2,836 million yen in imports, totaling 5,732 million yen. In the trade balance, there was left an export excess of a little over 60 million yen, which was a notable improvement as compared with the import excess for the year before last amounting to 635 million yen. However, we are required to make strenuous efforts to develop our export trade from the viewpoint of the desired acquisition of capital in foreign currency, and for this purpose the Government has already earmarked a portion of the specie reserve of the Bank of Japan to create the foreign exchange fund and is also taking other appropriate measures, which we intend to improve and expand after making sufficient studies.
It is natural that expansion of productive power should have its emphasis on what are known as heavy industries, and it is also of great importance to promote such industries as are connected with the export trade as well as to maintain industries urgently needed for the livelihood of the people. Therefore, the Government is planning to provide appropriately for assuring supply of materials
and for the smooth operation of financing for these branches of industries.
In order to balance the international receipts and payments favourably, it is needless to say that we are required to work for increased production of newly-mined gold and concentration of gold simultaneously with endeavouring for the promotion of export trade. Having formulated its plan for the increased production of mined gold at an early date, the Government has been working for the increase of newly-mined gold through various measures, and is determined further to render efforts for the realization of the said plan. Meanwhile, the concentration of gold existing within the country is also going on with satisfactory results with the cooperation of various circles, and we are feeling really reassured in the interest of our nation. In this connection we are prepared to make further efforts for the future concentration of gold which is still being held in private circles.
Furthermore, distribution of materials and control of consumption as well as regulation of commodity prices are all bound to condition the operation of the Budget, promotion of the export trade, stabilization of the people's livelihood, and other matters, and for this reason the Government is planning to render further efforts with the full cooperation of the people for these purposes in the future.
It is also regarded as extremely necessary in view of the prevailing situation that the three nations of Japan, Manchoukuo and China should supply each other's deficiencies and effect interdependent existence and prosperity through close cooperation maintained between themselves. And now, Manchoukuo has grown greatly in economic strength and her relations of mutual aid and cooperation with our country are becoming closer than ever before. In China, too, the three régimes of the Provisional, Renovation and Mongolian Governments are each making steady growth, while we have already witnessed the organization of the North China Development Company and the Central China Promotion Company, and are convinced that we can hold out great hopes for the future development in these regions with the expected stabilization of peace preserving operations there.
In recent years, the economic circles of our country have attained remarkable progress, and I think it a matter for sincere felicitations for the benefit of our country to see all economic activities going on quietly and steadily instead of showing uneasiness in connection with the current Affair. However, our nation has now launched itself on its way for long-term construction looking toward an unprecedented fulfilment of our national destiny, and in order to
accomplish this task, I think it necessary further to amplify our economic resources and mobilize them all for the single purpose of attaining the desired objective. In other words I think it necessary to adjust and mobilize all production and consumption for the purpose of attaining this national objective.
In the situation now prevailing, I am of the opinion that it is extremely important for us to be firmly determined voluntarily to brave all hardships and privations and endeavour for the cultivation of national strength by using our creative ability to its best advantage. Having in the past overcome many a difficult situation with undivided cooperation and a genuine sense of loyalty, our nation will undoubtedly be able to effect perfect solidarity today. Even if the projected long-term construction be a task difficult of accomplishment, I am convinced that there is no cause for apprehension concerning its ultimate completion.
Before closing, I request that you kindly accord your legislative approval to the budgetary bills introduced by the Government after due deliberation thereon.