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{
    "localId": "486500942",
    "label": "Report, Central Intelligence Agency, Japan, Situation Report 38",
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    "id": "486500942",
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    "contentType": "document",
    "title": "Report, Central Intelligence Agency, Japan, Situation Report 38",
    "citationUrl": "https://catalog.archives.gov/id/486500942",
    "collections": [
        "President's Secretary's Files (Truman Administration)",
        "Intelligence Files"
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    "productionDates": [
        {
            "day": 14,
            "logicalDate": "1948-09-14",
            "month": 9,
            "year": 1948
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{
    "seq": 60,
    "pageIndex": 0,
    "type": "photo",
    "url": "https://s3.us-east-1.amazonaws.com/NARAprodstorage/lz/presidential-libraries/truman/hst-psf/602196/875514/875514-01-060.tif",
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    "ocrText": "3. ECONOMIC STABILITY.\na. General Considerations.\nIn the period immediately preceding the war, Japan was the fifth largest\namong the trading nations of the world. Since its emergence into world economy in\nthe latter part of the nineteenth century, it had extended its interests until its economy\nhad become integrated with that of the Far East and was rapidly expanding into the\nwestern economy. Its export wares, principally textiles, supplied requirements of\nAsiatic countries and many other countries; it had investments in many countries and\nits shipping called at ports throughout the world. If Japan is to be allowed to remain a\nmodern country, it must be helped to assume at least a minimal role as a trading coun-\ntry. Allied powers are faced with the dilemma of restraining its ability to wage war\nwhile on the other hand, recognizing that it cannot be kept an agricultural nation\nbecause of its own inadequate resources.\nPrimarily, Japan's economic future is tied in with economic stability of the Far\nEast. Without foreign trade with that region, Japan cannot survive as a modern\nnation. Before the war, Japan's principal channels of trade other than the US were\nwith Manchuria, North China, Korea, and Formosa; it had gone to war several times to\nprotect and extend these channels. There had been some indication of expansion of\ntrade to other countries in the immediate prewar trade pattern. However, economi-\ncally, its future because of geographical proximity and historical economic relationships\nlies chiefly with other Asiatic countries.\nContrariwise, the economic stability of the Far East depends to some extent\non Japan's economic rehabilitation. Japan takes the raw materials of the Far East\nand processes them for ultimate consumption by the countries located within that area.\nThe cheap goods of Japan have in the past satisfied the needs of the Asiatic markets\nwhere the majority of the people are too poor to buy the more highly priced European\nand US goods. Moreover, it is expected that these countries will in the future demand\nmachinery, both heavy and light, which Japan can supply. Since the raw materials\npay for Japan's manufactures, a major flow must go to Japan.\nJapan's ability to create a credit trade balance with the US is improbable.\nAlready by 1932, Japan's balance of trade with the US had become of a debit nature.\nJapan's greatest prewar export by value to the US was silk and in view of the growth\nwithin the US of synthetic substitutes for silk, Japan cannot hope to regain more than\na fraction of the silk market. Prospects for appreciable expansion of other Japanese\nexports to the US are doubtful.\nb. Internal Considerations.\nJapan's economy is not self-sufficient. It must import essential foodstuffs and\nmaterials to survive, and as payment therefor must export. In the decade prior to the\nwar, Japan was unable to export enough to cover its import debit balance. Deficit in\nthe balance of payments was made up largely through credits for shipping services and\ndividends and profits on foreign investments.\nII-24"
}