Sect, ii ADJUSTMENT AND REVIVAL 101
impossible, with the yen at its gold parity, for her to sell as much as
she required to pay for her essential purchases, the exchange col-
lapsed, and with it the internal cost system. The lowness of Japanese
wages, calculated in other currencies, measured not so much her
capacity to export as her need to do so.
Undoubtedly, there was a more subtle urge besides this economic
necessity. Like the Manchurian adventure, Japanese commercial
aggression sprang from psychological motive as well as material
requirement. The World Economic Crisis found Japan in a mood
of fermenting nationalism. In expanding exports, as in territorial
aggrandisement, national pride found both ambition and self-
flattery. It was not only in recolouring the map of 'backward'
countries that Japan emulated the nations of the West.
Japan was also sometimes accused of unfair competition, by means
of dumping and of Government assistance to industry. On this point
the testimony of the Commercial Counsellor to the British Embassy
at Tokyo may be cited.1 * There is no question3, he wrote, 'of selling
at below production cost, nor is there any evidence to show that
goods for export are usually sold cheaper than goocls for the domestic
market.' Government subsidies to private industry, he reported,
amounted to about £2,000,000 per annum, of which over £1,000,000
went to shipping.
Altogether, then, it may be said that the assistance given to industry
by the state in terms of money is of comparatively modest dimensions;
and the principal form of Government help is probably protection by
import tariff. Apart from such measures, however, the Japanese
Government is not backward in taking positive steps to direct the
course of industry and trade by legislation. . . . Whether because of
Government policy or because of a spontaneous movement, the progress
of cartels and similar forms of jointly controlled activity has been very
marked during the past few years. . . . The leading feature of industry
in Japan in the period under review is its progressive * rationalization'.
In most of the important manufactures there was a serious and on the
whole successful effort to improve organization and technique, to
economize labour and to reduce costs.
These were scarcely times to welcome a sharpening of the blade of
international competition. Yet if the stagnation of world trade was
disastrous, was the gouging of new channels by Japan wholly to be
deplored ? And whereas every expression of nationalism breathed
a threat to the World, might not this wheel turn full circle, eventually
fostering in Japan, through her greater and greater reliance on inter-
national trade, a sense of international citizenship ? Japan's imports
1 Department of Overseas Trade Report. No. 541. (H.M. Stationery Office,
1933.)