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To meet all these increases in expenses, the war profit tax alone was calculated to be insufficient ; and the income-tax was so adjusted as to yield a larger revenue, at the same time, with a view to effecting a fair distribution of the burden. The sake tax was raised; postal, telegraph and telephone charges were increased ; and a higher price was charged for the Government monopoly tobaccos.

Those revenue measures were rewarded with success in 1918-9, and in the following fiscal year the sums so raised still showed an increase. In 1919-20 the effect of the conclusion of the war was felt in the marked decrease in the returns of the steel foundries. But in all other items, the budget estimates were greatly exceeded. The bourse tax and forest revenues were double the figures of the previous year. Japan had thus emerged from the five years of the World War with her financial position considerably strengthened, though dur- ing 1920-1 the effect was discounted by industrial unrest and eco- nomic depression which reacted adversely on the domestic finan- cial conditions. The budget for 1921-2 contained the estimated expenditure for the eight-to-eight fleet-unit scheme, and it was a question at the end of 1921 how far this might be subject to modification as a result of the Washington Conference. The chief items of revenue and expenditure for 1921-2 are given in Table 4.

Table 4. Revenue and Expenditure 1921-2

Ordinary Revenue: Yen

Land Tax 73,985,325

Income Tax ....'.... 268,099,093

Business Tax 48,670,969

Tax on liquors 171,237,991

Sugar Excise 41,886,037

Consumption Tax on textile fabrics. . . 33,260,882

Customs Duty 69,872,070

Other Taxes 44,452,169

Stamp Duty 90,165,422

Receipts from postal, telegraph and telephone

services 187,177,396

Forests 32,057,000

Profits of monopoly 93,981,954

Other receipts from public undertakings and State

property 17,611,690

Miscellaneous receipts 21,260,434

Transferred from special account for deposits. 43,500,776

Total 1,237,219,208

Extraordinary Revenue: Yen

Proceeds of sale of State property. . . 7,361,888

Receipts from the issue of public loan. . . 54,264,892 Public bodies' contributions to expenses for river,

road, harbour improvements, etc. .. . 16,373,877

Transferred from special account for various funds 8,251,168 Local contributions to expenses incurred by the

State 6,356,400

Surplus of the preceding year transferred. . 193,095,985

Miscellaneous receipts 39,719,379

Total 325,323,589

Total Revenue 1,562,542,797

Ordinary Expenditures: Imperial Household Foreign Affairs. Home Affairs Finance ....

Army

Navy

Justice .... Public Instruction Agriculture and Commerce Communications

Total ....

Extraordinary Expenditure: Foreign Affairs. Home Affairs. Finance. .

Army

Navy

Justice .... Public Instruction. Agriculture and Commerce Communications Total

Yen

4,500,000

18,488,310

40,860,512

223,146,614

183,290,831

144,811,078

27,242,184

33,938,167

19,377,811

207.285,315

902,940,823

Yen

3,130,574 76,426,341

35,271,551

79,853,871

353,826,000

2,426,472

20,672,879

31,303,978

56,690,308

659,601,974

Total Expenditure 1,562,542,797

The National Debt. The National Debt stood at 2,793,000,000 yen (284,800,000) at the end of 191920, of which 1,482,000,000 yen (151,000,000) represented the internal, and 1,311,000,000 yen (133,700,000) the foreign loans. Table 5 gives the figures.

Table 5. Debt 1910-20 (in 1,000,000 yen)

Financial Year

INTERNAL LOANS Amount out- standing at the end of the financial year

FOREIGN LOANS Amount out- standing at the end of the financial year

Total

Debt per head in yen

1910-1 1911-2 1912-3 I9I3-4 I9H-5 1915-6 1916-7 1917-8 1918-9 1919-20

1,203-1 1,146-2 1,116-2 1,054-6

991-5 1,028-0 1,097-4

1,159-9 1,268-8

1,482-4

-447-2 ,437-4 -456-9 -529-4 ,514-8 ,461-1 ,370-2 ,338-7 ,3"-i ,311-1

2,650-3 2,583-6 2,573-2 2,584-1 2,506-3 2,489-2 2,467-7 2,498-7 2,579-9 2,793-5

39-1 37-3 36-3 35-6 33-9 33-o 32-1

32-3 33-o 36-4

Foreign Trade. The rapidity with which Japan's foreign trade had developed, both in volume and extent, during the half-century preceding 1920 provides a remarkable record in commercial history. The total value of exports and imports, which in the first year of Meiji (1868) amounted to the insignificant total of 26 million yen (2,650,000), increased tenfold in 1895, a hundredfold in 1917, and l67-fold in 1920. The most striking progress was attained during the World War, when Japan's foreign trade leapt from 1,362 million yen (139,000,000) in 1913 to 4,284 million yen (438,000,000) in 1920; although it should be remarked that these figures do not correctly represent the proper rate of increase in the volume of trade, owing to the inflation of prices. The war first reacted prejudicially upon the foreign trade of Japan, as well as upon other branches of her com- merce and industry, and the figures for the total imports and exports in 1914 indicated the marked decrease of 12-9% on those of the preceding year. The effect of the war in increasing foreign trade first showed itself appreciably in the returns for 1915, when the adverse balance of trade which had obtained for 20 years with the exception of the years 1906 and 1909, when slight excesses of exports were recorded was superseded by a favourable trade balance. The total value of the imports and exports for that year was 1,241 million yen (127,000,000), an increase of 54 million yen (5,500,000), or 4'5 %, compared with 1914, although the value of the total trade for 1913 was not achieved on account of the diminished volume of imports. The favourable tendency in Japan's oversea trade was accelerated in succeeding years, until the excess of exports over imports attained 371 million yen (38,000,000) in 1916 and 567 million yen (58,000,000) in 1920.

This sudden expansion of trade was occasioned by the war both directly, through the great demand by the Allied belligerents for munitions of war, and also indirectly, through the temporary retire- ment of the great industrial Powers of Europe from the arena of world commerce and trade. Soon after the outbreak of the war Japanese goods chiefly consisting of semi-manufactured and finished articles, such as cotton fabrics, leather goods, watches, silk tissues and so forth found their way in large quantities not only to the established markets in the Far East, but to various quarters of the world hitherto but little explored by Japanese traders, viz. the South Seas, S. America and even Africa. The most conspicuous expansion, however, was effected in the exports to China and India, and, until the explosion of the Russian Revolution in 1917, large shipments to Vladivostok of munitions of war and food-stuffs for use in European Russia assisted to augment the volume of trade with Asia. The United States began to buy heavily in 1916, when the figures advanced from 204 million yen (20,900,000) in the preceding year to the substantial amount of 340 million yen (34,800,000), the goods purchased consisting mostly of raw silk, habutai, cotton yarns, cotton fabrics and tea. British America and also Mexico increased their orders from Japan and the S. American trade showed such glowing prospects as to induce Japanese companies to open shipping facilities to Brazil through the Straits of Magellan.

The import trade, which had been on the wane in the early days of the war, commenced to revive in 1916, owing to larger purchases of raw materials and semi-manufactured goods, such as raw cotton, iron, wool, crude caoutchouc, flax and jute. By far the largest volume of raw cotton came from British India, but the United States had doubled her exports to Japan of that article, as well as of iron, in a twelvemonth. Australia supplied Japan largely with wool.

The war situation developed serious vicissitudes in 1917, and in a measure militated against the trend to expansion of Japan's commerce. The entry of the United States of America into the war, with its attendant embargo on steel, iron and gold, temporarily dis- turbed the economic equipoise of the Far Eastern Empire. The Russian Revolution and the subsequent repudiation of all foreign liabilities by the Bolshevik commissaries introduced a fresh factor of discouragement in the export trade of Japan. The internal political feuds in China would also have dismayed Japanese exporters but for the tremendous appreciation in the price of silver, which resulted in maintaining an abundant demand for Japanese articles. But in spite of all, Japan's foreign trade made progress-more or less on the lines indicated before, until a complete change of the situation was brought about by the conclusion of the Armistice in the autumn of