Economic Survey of Asia and the Far East, 1947

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UNITED NATIONS

ECONOMIC COMMISSION FOR ASIA AND THE FAR EAST

ECONOMIC SURVEY OF ASIA AND THE FAR EAST, 1947

SHANGHAI May 1948

PREFACE

At the Second Session of the Commission held in Baguio, the Philippine Republic, between 24th November and 6th December, 1947, the Resolution on Statistical and Economic Documentation included an instruction to the Secretariat ‘ to publish a comprehensive annual survey of economic conditions and problems of the countries within the scope of ECAFE.’ The present Survey is presented in compliance with the Resolution. The terms of reference of the Commission as adopted at the Fourth Session of the Economic and Social Council on 28th March, 1947, and amended at the Fifth Session of the Council on 5th August, 1947, define ‘ the territories of Asia and the Far East...... shall include in the first instance, British North Borneo, Brunei and Sarawak, Burma, Ceylon, China, India (now India and Pakistan), Indo-Chinese Federation, Hong Kong, Malayan Union and Singapore, Netherlands Indies, Philip- pine Republic and Siam.’ ‘ The countries within the scope of ECAFE ’ should therefore, strictly speaking, include only those set forth in the terms of reference. However, in an economic survey of a region to which Japan and Korea properly belong, both geographically and economically, their omission would present a wholly partial and misleading picture, thereby raising difficult problems of presentation and treatment. The Secretariat, in undertaking the compilation of the present Survey, has thought it advisable to include these two countries because of their important place in relation to the rest of the economy of Asia and the Far East. Where they have been included, this region is referred to as AFE region (Asia and the Far East), not as ECAFE region with its limited connotation. Requests were addressed to the member and associate member governments in the region for their assistance in the supply of official information and literature required for the compilation of the Survey. Responses have not been unfavourable, but owing to the difficulties encountered by some governments in resuming collection, collation, and dissemination of information after the war, they have not been able to send adequate materials on all subjects or send them in time to be included in the Survey. Other materials, from the United Nations organs and Specialized Agencies as well as from unofficial sources, have been drawn upon to fill in the gaps so far as possible. The Secretariat has not been able to clear unofficial materials with the member and associate member governments. The Survey as a whole is not based exclusively upon official accounts of economic conditions. Considerable help was received from economists in several countries of the region, most of whom were government officials who supplemented official information by making a general review of the situation in its various aspects. In spite of assistance thus received, the material available has not been adequate and several gaps continue to exist. It was intended at first to present a statistical volume giving a series of data regarding production, trade, finance, wages and cost of living, etc., but the risk that the presentation of such series may give a misleading picture of the situation and is liable to an over-estimation of the accuracy of the figures presented led to its abandonment. Indeed, it was not without some hesitation that it was resolved finally to bring out this publication. Despite its shortcomings, however, it is hoped that it will serve as a basis on which, in the light of comments and criticisms, further studies and improvements may be made. The volume is intended mostly to serve the needs of the Commission in its task of recommending measures for reconstruction and development, but obviously such a work cannot be without interest to the general public. The Survey contains eleven chapters, the first being an introduction outlining the principal problems confronting the region. In each of the other ten chapters the trend of development since the conclusion of war has been briefly touched upon, but major attention has been given to the developments during the calendar year 1947. As far as possible, 1947 statistics have been used, but, for the chapters on national income, population, and land utilization, data available were much less up-to- date, and earlier materials have been used. Since this is to be an annual publication, it has not been thought essential to treat all subjects exhaustively in this first issue. Some sections, therefore, are more general than others, while certain subjects will, it is hoped, be more fully covered in later issues of the Survey. With a view to achieving uniformity, all units of measurement have been converted to the metric standard. For the sake of brevity ‘ Manchuria ’ in place of ‘ North-eastern Provinces,’ ‘Indonesia ’ in place of ‘ Netherlands East Indies,’ ‘ Indo-China ’ in place of ‘ Indo- Chinese Federation,’ ‘ Malaya ’ in place of ' Malayan Union,’ ‘ ECAFE in place of ‘ Economic Commission for Asia and the Far East,’ and AFE ' in place of ‘ Asia and the Far East,’ have been used. The Survey is mainly the work of the Research Division of the Secretariat, under the guidance of its Chief, Dr. H. D. Fong.

Economic Commission for Asia and the Far East P. S. L okanathan Shanghai, May 1948 Executive Secretary CONTENTS Page Chapter I. Introduction 1 Chapter II. N ational Income Nature of estimates 7 Pre-war, wartime, and post-war changes 10 Per -capita income 15 Income distribution by industries 17 National income and capital formation 19 Summary 20 Chapter III. Population Pre-war and post-war population 22 Population density 24 Population changes 26 Age distribution 28 Rural-urban distribution 30 Occupational distribution 31 Pre-war and wartime migration and settlement 33 Post-war population movements 41 Chapter IV. Land Utilization Extent of cultivation 49 Ratio of cultivated land to population 50 Types of land use 51 Pre-war and post-war changes 54 Chapter V. Agricultural Production Crop production 58 Food crops 58 Commercial and industrial crops 63 Livestock and poultry 66 Fisheries 71 Forestry and forest products 72 Chapter VI. M ining and Industry Pre-war situation 77 Damages caused by the war 79 Post-war recovery and rehabilitation 80 Factors in future development 107 Chapter VII. Transport and Communications General features 113 Railways and highways 115 Water transport 122 Civil aviation 126 Posts and tele-communications 126 Classification of labour 127 Chapter VIII. Labour Employment 129 Wages and cost of living 139 Hours of work 153 Labour organization 161 Labour disputes 172 Chapter IX. Currency and Banking General features 181 Inflation 183 Country summaries 188 Chapter X. International Trade Total value of trade 203 Direction of imports and exports 207 Composition of imports and exports 213 Chapter XI. Balance of Paym ents General features 220 Country summaries 223 LIST OF TABLES National Income Page 1. China’s national income in 1936 and 1946 compared 11 2. Gross national income of the Philippines, 1938 and 1946 11 3. Gross national income of the Philippines distributed by industries, 1938 and 1946 12 4. Gross national income of Ceylon, 1938 and 1947 13 5. Gross national income of Ceylon distributed by industries, 1938 and 1947 13 6. Gross national income of India, 1931-32 and 1942-43 14 7. National income of Japan, 1938-44 ' 14 8. Gross national income of Japan distributed by uses, 1940-44 15 9. Distribution of national income by industries in AFE countries, 1939-47 18 10. Private capital formation in Japan Proper, 1940-44 19 11. Expenditure of total available means in China, 1931-36 20 Population 12. Pre-war and post-war population of AFE countries 23 13. Distribution of population in AFE countries, 1946 24 14. Population density in AFE countries, 1946 25 15. Birth rate, death rate and natural increase rate per 1,000 inhabitants in selected AFE countries 26 16. Birth rate, death rate and natural increase rate per 1,000 inhabitants in Japan, 1936-46 27 17. Birth rate, death rate and natural increase rate per 1,000 inhabitants in India, 1885-1946 28 18. Percentage distribution of population by age groups in selected AFE countries 29 19. The rural-urban percentage of population in India, 1872-1941 30 20. Rural-urban distribution of population in Japan, 1920-40 30 21. The population in places with more than 50,000 inhabitants in Indonesia, 1930 31 22. Occupational distribution of gainfully employed population in selected AFE countries 32 23. Chinese emigrants in AFE countries, 1910-41 33 24. Japanese emigrants in AFE countries, 1910-45 34 25. Immigration into and emigration from British Malaya of Indians, 1909-37 36 26. British Malaya: Net arrivals and net departures of Chinese and South Indian labourers, 1929-38 36 27. Chinese immigration into Manchuria, 1923-39 40 28. Movement of refugees from North Korea to South Korea, 1946-47 43 29. Monthly changes in repatriation to and from Japan, 1945-47 45 30. Repatriates to Japan classified by origin, up to end of 1947 46 31a.. Repatriation of overseas Chinese from China to South-east Asiatic countries, up to end of 1947 47 31b. Repatriation to China of displaced Chinese from South-east Asiatic countries, up to end of 1947 47 32. Approximate number of overseas Chinese in China still awaiting repatriation by end of 1947 48 Land Utilization 33. Percentage of area under cultivation to total area in AFE countries 49 34. Ratio of cultivated land to population in AFE countries 50 35. Basic types of land use in selected AFE countries in pre-war years 51 36. Percentage distribution of the acreages of principal crops in AFE countries 52 37. Acreages of principal food crops in AFE countries in 1947 and their percentage changes as of 1946 and of pre-war years 56 38. Acreages of commercial and industrial crops in AFE countries in 1947 and their percentage changes as of 1946 and of pre-war years 57 Page Agricultural Production 39. Principal food crops in 1947 in AFE countries and their percentage changes as of 1946 and of pre-war years 59 40. Rice production in AFE countries, 1947 60 41. Commercial and industrial crops in AFE countries in 1947 and their percentage changes as of 1946 and of pre-war years 62 42. Number of working animals in selected AFE countries and their percentage changes as compared with pre-war years 67 43. Number of working animals in Burma in pre-war years 68 44. Number of goats, sheep and hogs in AFE countries and their percentage changes as compared with pre-war years 69 45. Number of goats, sheep, and hogs in Burma in pre-w ar years 70 46. Number of chickens and ducks in selected AFE countries and their percentage changes as compared with pre-war years 70 47. Annual catch of fish in selected AFE countries 71 48. Production and consumption of forest products in 1937 and 1946 72 49. Forest area and timber reserve in China, 1947 73 50. Forest products in Siam, 1941-46 76 Mining and Industry 51. Pre-war position of AFE region in the world production of minerals 78 52. Pre-war and post-war production of coal and crude petroleum in AFE countries 81 53 Supply of electric power in selected AFE countries 83 54. Number of cotton spindles in selected AFE countries 84 55. Pre-war and post-war production of cotton textiles in selected AFE countries 85 56. Pre-war and post-war production of selected industrial goods in China, India and Japan 86 57. Index of industrial consumption of electrical power in China 91 58. India’s industrial production, 1938-47 94 59. India’s production of coal and electric power, 1938-47 95 60. Industrial location in India and Pakistan, as of the situation in 1944 96 61. Industrial production of Indochina, 1938, 1946 and 1947 97 62. Mineral production of Japan, 1930-47. 100 63. Industrial production of Japan, 1930-47 101 64. Mineral production of Korea, 1934-47 102 65. Industrial production of South Korea, 1946-47 103 66. Mineral production of Malaya, 1938-47 104 67. Mineral production of Siam, 1938-46 106 Transport and Communications 68. Pre-war proportions of population and area to railroad kilometrage in AFE countries as compared with some western countries 113 69. Pre-war nationality of tonnage in overseas shipping in selected AFE countries 114 70. Pre-war and post-war kilometrages of railways in the war-devastated countries in Asia and the Far East compared 116 71. Pre-war and post-war railway rolling stocks in the war-devastated countries in Asia and the Far East 117 72. Pre-war and post-war railway rolling stocks in India, Ceylon, Siam, Japan and Korea 118 73. Pre-war and post-war railway traffic in selected AFE countries 119 74. Gross revenue and expenditure of railways in selected AFE countries, 1946-47 120 75. Pre-war and post-war kilometrages of highways in selected AFE countries 120 76. Pre-war and post-war number of registered motor vehicles in selected AFE countries 121 77. Pre-war and post-war net registered tonnage of vessels entered and cleared in selected AFE countries 123

vii Page 78. Pre-war and post-war air traffic in selected AFE countries 124 79. Pre-war and post-war volume of postal traffic in selected AFE countries 125 80. Pre-war and post-war number of telephones in selected AFE countries .. 126 Labour 81. Labour on tea and rubber estates in Ceylon, 1938-46 131 82. Industrial labour in 14 principal cities of China, June, 1947 132 83. Number of employment exchanges in China, 1945-47 133 84. Industrial labour in South Korea, classified, November, 1946 137 85. Employment in Malayan industries, 1941 and 1946 138 86. Employm ent in Singapore, 1937 and 1946 139 87. Minimum wage rate s in Ceylon, 1947 141 88. Real wage indices of workers in principal cities of China, 1946-47 142 89. Average wage rates for daily paid labour in Hong Kong, 1947 143 90. Average annual earnings and cost of living in India, 1939-45 144 91. Index of earnings of factory and mine workers and index of cost of living in Japan, 1940-44 146 92. Real wages indices for male and female workers in Japan, 1937-46 146 93. Average monthly wages of mining and manufacturing workers in Japan, 1946-1947 147 94. Daily wages of labourers in industrial and commercial establishments Manila, 1941-47 149 95. Cost of living indices in selected AFE countries, 1937-47 152 96. Average daily working hours in Shanghai factories, 1946 156 97. Number and membership of registered trade unions in China, 1936-47 163 98. Registered trade unions in China classified, 1946-47 165 99. Number and membership of registered trade unions in India, 1939-40 • to 1945-46 166 100. Distribution of union membership in India by industries, 1939-40 and 1945-46 166 101. Labour unions and membership in Japan, April-October, 1947 169 102. Labour unions and membership in Japan classified by industries, October 31st, 1947 169 103. Number and membership of registered labour organizations in the Philippines, 1946-47 172 104. Labour disputes in China, 1947 173 105. Labour disputes, strikes and lockouts in Shanghai, 1946 174 106. Industrial disputes in India, 1939-46 175 107. Labour disputes in Japan, 1947 178 108. Labour disputes in the Philippines, 1941-46 180 Currency and Banking 109. Financial and price statistics of Ceylon, 1939-47 189 110. Index of note circulation in China, 1937-45 190 111. Financial and price statistics of China, 1939-47 192 112. Financial position of banks in India and Pakistan, 1947 194 113. Financial and price statistics of India, 1939-47 194 114. Financial and price statistics of Indo-China, 1939-47 195 115. Financial and price statistics of Japan, 1939-47 198 116. Indices of money supply and prices in the Philippines, 1939-47 199 117. Financial and price statistics in the Philippines, 1938-47 200 118. Financial and price statistics of Siam, 1939-48 202 International Trade and Finance 119. Share of AFE countries in pre-war world trade 203 120. Share of exports in national income in selected AFE countries 204 121. Total value of imports and exports in AFE countries, 1938, 1946 and 1947 205 122. Indices of volume of trade of Ceylon, China and India, 1945-47 206

viii 123. Value of exports shown as percentages of volume of imports 1946 and 1947 .. 206 124. Pre-w ar trade within AFE region .. 207 125. Japan’s share in pre-war trade of AFE countries .. 208 126. Share of metropolitan powers in pre-w ar trade ofA FE countries .. 209 127. Korea’s trade, 1935 and 1938 209 128. U.SA.’s share in pre-war trade of AFE countries .. 209 129. Post-war trend of intra-regional trade in AFE region .. 210 130. Trade of AFE countries with the U nited States, 1946 and 1947, as compared with 1938 .. 211 131. Balance of trade of AFE countries w ith U.S.A., 1946 and 1947, as compared with 1938 .. 212 132. Trade of AFE countries with former or existing metropolitan powers ; 1946 and 1947, as compared with 1938 .. 213 133. Composition of trade of selected AFE countries, 1938-47 .. 213 134. P re -w a r and post-w ar export of ru b b er from selected AFE countries .. 215 135. Pre-w ar and post-war export of tin from selected AFEc ountries .. 216 136. Pre-war and post-war export of sugar, tea, and coconut products in selected AFE countries .. 217 137. Movements of rice to and from AFE countries .. 218 138. Pre-war and post-war import and export of raw cotton and cotton textiles from China, India and Japan .. 218 Balance of Payments 139. Ceylon’s balance of payments on currenta ccount, 1938-47 .. 224 140. Ceylon’s balance of payments on current account, 1947 .. 224 141. China’s balance of payments, 1946-47 .. 225 142. India’s balance of payments, 1945-46 .. 226 143. Indo-China’s balance of payments, 1937 .. 227 144. Indonesia’s balance of payments, 1939 .. 227 145. Philippines’ balance of payments, 1947 .. 229 146. Siam’s balance of payments, 1947 .. 230

ix C hapter I INTRODUCTION With the establishment of the Economic Commission for Asia and the Far East a new chapter opens in the economic history of the countries included in its territorial scope. For the first time a forum is provided by the United Nations at which the accredited representatives of the governments of the region can meet together to discuss common economic problems, establish agreed principles of action and carry out, if they choose, the policies determined by mutual agreement. Such a thing has not been known in the past; the ECAFE countries have not constituted an economic unit in the sense in which, for instance, Europe has been. Economic and trade relations have undoubtedly existed between them but these have largely been of a bilateral nature, confined to groups of countries within close proximity to one another. Thus, India and Burma, India and Ceylon, China and Hong Kong, have had a considerable degree of intimate trade relationship; the only exception was Japan, which sought to play a dominant role as a supplier to the region of consumer and capital goods, in return for the import of food and raw materials. In general, the economic bond that knit these countries together in their trade and other economic relationships was not based on geography but on political ties resulting from the metropolitan- colonial orientation. In the production and export of several commodities, their economies were largely competitive. The countries have thus largely been mere aggregates of separate entities with loose political and economic ties with one another. Such being the case, the production of an annual economic survey dealing with problems common to the whole region may appear to be something like wishful thinking. There is the danger that the Survey, instead of being an analysis of common problems, may become in large part an examination of the situation in respect of each country of the region. The position, however, is not so serious or unrealistic as th a t; even before the war, the percentage of inter-regional trade was considerable although perhaps not substantial. It is true that the trade was also largely confined to particular sets of countries ; nevertheless, there was a large volume of trade between the countries of the region, partly because of the vast aggregations of population, partly also because of the migration of people from one region to another, and also because geography cannot be completely obliterated. In any case, the war has greatly altered the situation. The changed political status of Asian countries combined with the reduced economic strength of their former metropolitan powers and the increased desire to promote greater inter- regional trade, has brought the countries of Asia together much closer. The trend towards diversification and industrialization, and the development of national resources will, over a period of time, undoubtedly strengthen the ties based on proximity and natural economic 1 factors. It is only to be expected that as the region becomes more and more industrialized, the channels of trade will be increasingly directed along regional frontiers. Although the Survey is directed towards presenting the picture as it appeared about the end of 1947, in respect of several aspects the treatment has had to be more general. And this is so because, it is felt that being the first volume, a certain amount of background material will serve a useful purpose and, secondly, on account of the war which interrupted the preparation of statistical series in countries Where they previously existed and the general lack of statistical data in other countries, sufficient detailed information was not forthcoming. In some countries, basic statistical series are just not available and until these gaps are filled in, the account must necessarily be meagre. The situation in AFE countries is dominated by two factors, the political and the economic. Progress towards rehabilitation of economy which was devastated during the war has been retarded partly by political difficulties and disturbances and partly by certain fundamental economic obstacles and handicaps. Throughout the region, the war has left a bundle of political problems and almost every country without exception has had to pass through similar trials in their transition to self-government and independence. China was once more plunged into civil war after the breakdown of peace negotiations between the National Government and the Com- munist group in January, and its end is not in sight. Communistic elements that gained steady sway over Manchuria during the year had similar success in North Korea. As a consequence, hundreds of thousands of Koreans, chiefly small farmers and business men, fled to South Korea which has been under American occupation. Before its adjourn- ment on November 29th, the General Assembly of the United Nations created the Korean Commission to supervise the elections of free Korea. On March 7, 1946, France recognized the Viet Nam Republic of. Annamese Nationalists as a free state within the Indo-Chinese Federa- tion and French Union, but severe military conflicts between French troops and Vieh-Minh forces, re-started in North Indo-China in Decem- ber of 1946, continued intermittently throughout the year. Cochin- China, however, was proclaimed a free Republic on February 4, 1947. In Indonesia, after a 19-month rebellion, Dutch and Indonesian representatives signed, on March 25, 1947 the Cheribon Agreement, granting de facto recognition to the Indonesian Republic, and providing for a United States of Indonesia by January 1, 1949 and for a Netherlands- Indonesia Union. On May 27, the Indonesian Republic received a note from the Netherlands in which the Netherlands Government stated it regarded the March agreement as the permanent basis of its policy, and urged joint measures to end violence. By June 6, the Indonesian Republic accepted the Netherlands proposals for an interim National Government of all Netherlands Indies islands, preparatory to establishing the United States of Indonesia. But further fighting took place as

2 a result of disputes over details of the projected interim National Government. Till the end of the year, peace was not restored, and final settlement was pending. In the British territories, however, self-government was granted without bloodshed. Negotiations entered into between the United Kingdom and Burma in February were followed by the establishment of a Union of Burma as an independent republic on June 17th, by the Constituent Assembly. On October 17th, the British and Burma Prime Ministers signed a treaty in London granting Burma independence, outside the British Commonwealth, as the Republic of the Union of Burma, while on November 5th, the Commons passed a second reading of the Burma independence bill. The British Government plan to quit India was approved by the Commons on March 6th. On June 3rd, the United Kingdom announced the plan for partition of British India into independent Moslem and Hindu States, offering each dominion status on August 15th, with right to withdraw from the Empire after June 1948. On August 15th, India became free after 346 years of intermittent British rule, and was parti- tioned into the Dominions of India and Pakistan. Independence, unfortunately, was accompanied by communal conflicts between the two states. Mass migrations, reaching into many millions, took place in the last part of the year, when non-Muslims from Western Pakistan moved in large convoys to East Punjab in India, and Muslims in East Punjab in turn crossed the frontiers to reside in Western Pakistan.1 Communist infiltration into China and Korea, struggle for self- government in Indonesia and Indo-China, and communal conflicts in the newly founded dominions of India and Pakistan—all these combined to exert a hindering influence on post-war attempts at economic rehabilitation and development. The developments in Asia and the Far East were necessarily affected by the overall uncertainty prevailing in the world situation, which arose from the tense relation that existed between the two world powers, the United States and the Soviet Union. This was true in Asia and the Far East, as much as in other parts of the world, notably Europe. The Survey has clearly brought out certain features which are obviously well-known, the low national income, excessive dependence upon agriculture, lack of diversification of economy, a high degree of population pressure and little industrialization. The estimates of national income which appear in the chapter that follows are obviously imperfect, but such as they are they reveal that even the low pre-war levels of income have not been maintained. Even in the few countries where national incomes have increased, they have been greatly offset by the growth of population. The failure of agriculture to contribute its

1 Economic Report, Salient Features of the World Economic Situation, 1945-47, United Nations Department of Economic Affairs, Lake Success, New York, January 1948, Chronology, pp. 322-354.

3 share to the national income is one of the basic elements in the situation. In an economy where agriculture plays such a large part, fluctuations in agricultural production are bound to cause serious hardship to the people already on low margins of subsistence. Japan was the one country before the war in which the proportion of income derived from manufacture was appreciably higher than that contributed by agriculture. In every other country, the contribution made by agriculture to the national income is large, ranging from 52 per cent in India to about 76 per cent in Indonesia. The pressure of population on the means of subsistence is one of the most disturbing factors in the economic conditions of the AFE countries and this pressure has, on account of the failure of production to recover to pre-war levels, increased appreciably. While the growth of population has been steady and continuous, production has not only not caught up but has in several countries declined below the pre-war level. The occupational distribution of the people in these countries is another aggravating circumstance. The percentage of population depending upon agriculture and fishing ranges from 61 per cent in Malaya to about 89 per cent in the Philippines, the only country with a proportion less than 50 per cent being Japan. All efforts towards industrialization even in countries like India and China have not resulted in any appreciable reduction in the dependence of the population upon agriculture. The average density of population is 60 per square kilometre in AFE countries, but there is great diversity in density among the different countries as well as among the different parts in each of them. Considering the land area available, it may perhaps be asserted that for a long time to come, until resources are fully developed, the pressure of population would remain severe. The possibilities of redistributing population within the country no doubt exist and this is especially true of Indonesia, the Philippines and Indo-China, but the scope is rather limited and in any case a lot of expenditure would be involved in the process of such transfer, often beyond the capacities of these countries. Before the war, this region afforded considerable scope for movements of population between the countries ; thus, for instance, the migration of Chinese workers into various countries of the region, of Indians to Malaya, Singapore, Burma and Ceylon, opened outlets for the surplus population. But as each country in the region becomes politically free, there is an understandable desire to restrict the number of such immigrants. Thus Burma, Ceylon and other countries of South-east Asia are all imposing considerable restrictions, quantitatively and qualitatively, on the immigrants permitted to settle. The outlet for surplus population being closed, the only way by which the pressure of population may be reduced would be a reduction in the rate of the natural increase of population, but here the position is discouraging. Throughout this region, with only minor exceptions, although both the birth rate and death rate are high, the natural increase rate per annum varies from 0·8 to 2·5 per cent, and unless this rate decreases in the course of some years, it is doubtful whether even if improvements take place through industrialization and agricultural

4 reorganization, they would not be lost through increases in population. The problem is so urgent and important that further studies seem to be indicated dealing more fully with the demographic features of the AFE countries. Some improvement in production, both in agriculture and in industry, is recorded in the year 1947, but the process of recovery is very slow. The recovery in production is considerable only as compared to 1946, but compared to pre-war, the production is still far behind. The decline in industrial and commercial crops, particularly in raw cotton, has led to the slower recovery of industrial production. Slight improvements in industrial production are noticeable in some countries but everywhere on account of political and economic uncertainties, rehabilitation and recovery have been hampered. The deterioration in the clothing situation ranks only next to the food shortage as one of the major post-war difficulties facing the AFE countries. The causes for the slow process of recovery are many and have been noted in the chapters that follow. Apart from political difficulties and unrest, and unsettle- ment caused by civil war and the fighting in some of the AFE countries, the economic causes arising from lack of essential materials and equipment are significant. If Asian recovery is to be speeded up, the removal of such bottlenecks and obstacles should occupy immediate attention. Transport was one of the things damaged in nearly all countries of the region and its restoration has been hampered by the same difficulties which militated against the speeding up of industrial and agricultural production. The railway lines that were displaced have not been opened to traffic and only about 53 per cent of the pre-war railways in six war-devastated countries of the region (Burma, China, Indo-China, Indo- nesia, Malaya and the Philippines) were open to traffic in 1946-7. The lack of rolling stock is another serious hindrance to their full utilization and this has become very urgent partly because much of the equipment was over-used during the war and has become unfit for use. In most countries of the region, there has been a certain amount of planning of reconstruction and development but those plans have been held up on account of the difficulties of getting essential imports. The foreign trade position of most of the countries is unsatisfactory; many of the countries are struggling with deficits and however much they have tried to reduce imports, they have not succeeded in effecting a proper trade balance. The export capacity has also declined and hence the volume of foreign trade is on a lower level than what it was before the war. Some countries have sought to maintain equilibrium by drawing on foreign balances, others have had recourse to foreign loans ; but once again it is clear that the fundamental factor that has operated to accentuate the difficulties all round is the fall in production and the difficulties in restoring it. The Survey has also brought out the need for securing essential imports with a view to increased production. The standard of living of the people of this region which at all times has been very low has become lower in the years during and after the war. Money wages in every country have gone up but except in one or two countries, real wages have lagged far behind on account

5 of the inflationary conditions prevailing in the region as a whole. Con- trary to the popular impression, the only country where wages have kept up with the cost of living is China, whose workers at least in the principal cities have been getting wages higher than before the w a r; in Burma and the Philippines real wages are about equal to pre-war levels but in India and Ceylon, in spite of increased production and less inflation, real wages are slightly lower than pre-war. One of the causes which have led to a fall in production has been industrial unrest in the countries of the region. Apart from the failure of wages to keep pace with inflationary price levels, there has been a considerable degree of unemployment arising out of the failure to absorb workers who were demobilized after the war. Unemployment has increased in nearly all the countries of the region and this combined with general social factors militating against willingness to work has brought about a situation which calls for urgent action. There is no easy way by which these countries can secure an improvement in their standards of living. Some of the factors that have depressed living standards in these countries are more fundamental ; the relation between population and resources, the low level of economic and industrial organization, lack of technical knowledge, insufficient capital equipment, archaic methods of production, poverty, ignorance and insanitary conditions, all these are not amenable to immediate or short-term treatment. They require a continuous expenditure of resources and time if they are to be treated adequately but it is a hopeful sign that the AFE countries have woke up and are all conscious of the need for bringing about rapid improvements all along the line. Much more fruitful results will follow if, instead of scattering available resources at all points, efforts are directed towards bringing about improvements in specific directions. The increase in food and agricultural production, increase in textiles and the restoration of transport offer immediate scope for useful action. It is not a vain hope that next year will record an improvement in some of these directions.

6 C hapter II NATIONAL INCOME

I. N ature of Est imat es National income estimates are available for six AFE countries, namely, China, Japan, India, the Philippines, Indonesia, and Ceylon. These estimates were prepared by private individuals and govern- m ent agencies. They referred to different years from 1930 to 1947. They are not based on precisely the same definition of national income or the same method of computation. The degree of reliability achieved, as well as the extent of comparability, leave much to be desired. At present, the United Nations Statistical Office is engaged in collecting and studying statistics of national income with a view to publishing comparable international data in this field, in accordance with the resolution adopted by the Economic and Social Council on March, 29, 1947, requesting the Secretary-General to pursue as expeditiously as possible work on national income and expenditure in consultation with the Specialized Agencies. Estimates by individuals or Government Departments : The estimates for three of the six AFE countries are made by private individuals ; these include V. K. R. V. Rao’s National Income of British India, 1931-32 (Macmillan, London 1940), Ta-chung Liu’s China’s National Income, 1931-36 (Brookings Institution, Washington, D.C., 1946), and B. B. Das Gupta’s Economic Survey of Ceylon for 1947 (unpublished, prepared for the ECAFE Secretariat). The government departments in China, India, Japan, the Philippines, and Indonesia have made further estimates, in some cases (China, India, Japan) extrapolations of the earlier ones. The Institute of Social Sciences of Academia Sinica, under the direction of Dr. Pao-san Ou, published in Chinese a two-volume estimate on The National Income of China, 1913 (Chung-hwa Publishing Company, Shanghai, 1947), with extrapolations for the period 1931-36. This was followed by an estimate for 1946 in a pamphlet entitled The National Income of China, 1933, 1936 and 1946 (Social Sciences Study Papers, No. 1, Institute of Social Sciences, Academia Sinica; Nanking, 1947). In a communication to the United Nations Statistical Office in April 1947, the Government of India gave an extrapolation of Rao’s estimate for 1931-32. The Japan Economic Federation published in Tokyo during 1939 a volume on National Income of Japan, 1930-39, which contains extrapolations of an estimate for 1930 undertaken by the Cabinet Bureau of Statistics at the time of the second Decennial Census. In December 1946 new estimates for 1940-44 were compiled by the United States -Strategic Bombing Survey, and embodied in a volume entitled The Effects of Strategic Bombing on Japan's War Economy (published by the Over-All Economic Effects Division of the SCAP). In The Yearbook of Philippines Statistics, 1946, issued in 1947 by the Bureau of the Census and Statistics in Manila, is given the com-

7 parative estimated national income of the Philippines for 1938 and 1946. This estimate is revised in the Report and Recommendations of the Joint Philippine-American Finance Commission (contained in a communication from the President of the United States, dated 8 July, 1947, and printed as the House Document No. 390, 80th Congress, 1st Session). Dr. J. J. Polak prepared for the Board of the Netherlands East Indies during 1942-43 a report which was mimeographed in 1943 in New York as The National Income of the Netherlands Indies, 1931-39, but summed up in a Dutch article in 1947 for the Central Bureau of Sta- tistics of the Indonesian Government. A summary in English is published in the August 1947 issue of the Economic Review of Indonesia (Department of Economic Affairs, Batavia). Definitions and Methods : In the six AFE countries for which national income estimates are available, there is great variation in the quality as well as quantity of the available data on the basis of which national income estimates have been built up. This variation necessarily calls for the employment of different methods of treatment, as well as the application of different concepts of national income.1 Japan: National income estimates for 1930-39 prepared by the Japan Economic Federation are extrapolations of an estimate for 1930 undertaken by the Cabinet Bureau of Statistics at the time of the second Decennial Census. The original aggregate is net national product at factor cost net of government interest and adjusted for payments abroad. For most branches of industry it is calculated at gross output minus intermediate products. The concept used by the United States Strategic Bombing Survey comes close, with minor exceptions, to gross national product as adopted by the U. S. Department of Commerce. It is net of overseas expenditures for direct war purposes except pay of military forces. Philippines : There are, as mentioned, two estimates for the years 1938 and 1946—one by the Philippine Bureau of the Census and Statis- tics (BCS), and the other by the Joint Philippine-American Finance Commission (JPAFC). The concept used by BCS is national income presumably at market prices ; that by JPAFC is actually national income at market prices plus various items of transfer from abroad for which no payment is made or service rendered, including cash payments such as back pay of the Philippine Army, and transfers in kind such as the transfer of U.S. surplus property, military equipment and UNRRA supplies. The latter aggregate will be referred to below as national income or product at market prices plus transfers from abroad. India: The concept adhered to in Rao’s estimate is the aggregate value of all goods and services produced less the value of all goods and 1 For this and other sections, use is made of a preliminary draft on the national income estimates for China, Japan, India, the Philippines, and Indonesia prepared by the United Nations Statistical Office. But original works have been checked in most casescases.. Detailed descriptions of methods and concepts are omitted here and can be found in Derksen’s forthcoming book being prepared for the United Nations Statistical Office.

8 services used up in production processes, less depreciation allowances, less indirect taxes, less net dividends and interest paid to foreign investors. Owing to statistical difficulties involved, depreciation could not easily be measured. It still remains to be deducted from the total arrived at, which, therefore, represents gross national product at factor cost. The territory covered in Rao’s original estimate (1931-32) is India including Burma (as Burma was not separated from India until 1937), but excluding the Indian States. The estimates (1942-43) prepared by the Government of India exclude Burma and the Indian states. China: The basic concept used by the Academia Sinica’s estimate is that of total available means, which differs from national income at factor cost in that capital influxes from abroad are included.2 Although Ou, director of the Academia’s estimate, refers to this basic concept as ' disposable income the term total available means will be used here to avoid confusion with the more common meaning of disposable income. The estimate for 1933 is built up by the objective method, but the estimates for the other years in the period 1931 to 1936 are based largely on extrapolation by means of various indices, and are subject to a wide margin of error. In estimating the net output of the various industries including finance, interest income is counted twice ; once in the non- financial industries and a second time in the net output of finance. Total of all net output is therefore adjusted by subtraction of this common item. In two subsequent articles3 Ou presented slightly revised figures for the same period, and added new estimate for the post-war year 1946. In the article giving the 1946 estimate, Ou applied the term ‘ disposable goods and services ’ to total available means, and makes an adjustment —exclusion of foreign borrowing and contribution—to show national income at factor cost, which, however, is referred to as ‘ disposable income The estimates cover all Chinese provinces and Manchuria and Tibet but exclude Formosa for the period 1931-36 and the post-war year 1946. This covers the same area as Liu’s. Liu’s estimate, being completed in the United States at the same time when Ou’s was undertaken in Free China, covers the same period 1931-36, resorting also to extrapolations for years other than 1933. Since Liu did not have as complete access to available materials as Ou, he performed a single-handed job. Liu deals with gross national product at market prices exclusively. Due to the absence of data on depreciation and indirect taxes, no attempt is made to derive net national income. The method of estimation is that of gross value added by industries, and is similar to Ou’s. As production data are available for only 22 provinces, the breakdown by industries is shown for these provinces only ; total figures for the other areas 2 An English summary of the Chinese work referred to above may be found in an article by Pao-san Ou, entitled ‘ A new estimate of China’s national income Journal of Political Economy, December, 1946. 3 TheThe twotwo articlesarticles areare : (1)(1) O Ou,u, P a Pao-san,o-san, The The National National Income Income of of China, China, 1933, 1933, 1936, and 1946 (in English) ; and (2) Ou, Pan-san,Pan -san , ‘ Revision of the National Income of China, 1933’, Quarterly Review of Social Sciences, Vol. IX. No. 2 (in Chinese).

9 2 (including Manchuria, Jehol, Sinkiang, Mongolia and Tibet) are derived simply by relating their combined population to the total population of the 22 provinces, assuming identical per capita gross product. Indonesia: National income is defined as the aggregate of all incomes earned by the three main groups of the population: Indone- sians, ‘ foreign Asiatics ’ (a term used to indicate, the Chinese population and other smaller groups), and Europeans, including income of the government and dividends and profits of foreign enterprises operating in the country. The concept used may be defined as national income at factor cost plus dividends and profits payable abroad. National income is computed separately for Java and for the Outer Provinces, because of the different economic structure of the various islands. Ceylon : Estimates are given by B. B. Das Gupta for the pre-war years 1937 and 1938, and the post-war years 1946 and 1947. They are rough approximations, since available statistics on production, incomes, or consumption and saving are all very limited in Ceylon. Total income from production of export goods has been taken as equal to the total value of exports. A similar procedure has been followed in estimating income from production of non-export or retained goods, although some duplication is made in trying to compute separately income from production of export goods and income from production of non-export goods. In estimating the value of services, probable average earnings are multiplied by probable number of earners. The estimates are of incomes produced within the country by residents (nationals) and non-residents (non-nationals) together, although it is difficult to distinguish the shares belonging to each group. Foreign military expenditure in Ceylon not elsewhere included is taken into account. The estimates arrived at by Das Gupta, therefore, approximates net national product at factor cost plus foreign military expenditure.

II. P re- war, W artime, and Post- war Changes Estimates are available to show the changes between pre-war and post-war years for China, the Philippines, and Ceylon, and those between pre-war and war years for India. The estimates for Japan and Indo- nesia refer to the war years 1938-44 and 1938-39 respectively. In China, the Philippines and Japan, despite a general increase in the value of national income because of universal rise in prices, there has been a varied degree of decline in the physical volume of national income. There have been slight increases in the national income for Ceylon and India, but these increases have been more than offset by population growth. China : In terms of the 1936 prices, China’s national income for all areas excluding Formosa shows an overall decline of 9·2 per cent. Agri- culture, accounting for 62·7 per cent of 1946 income, declined by 11·7 per cent while commerce, the second major item accounting for 9·7 per cent declined by 11·5 per cent. This was followed, in order, by a fall of 32·2 per cent for manufacturing (occupying 7·2 per cent of total

10 national income), and 71· 1 per cent for mining and metallurgy (occupying 0·4 per cent of total national income). The greater decline for manufacturing and mining than for agriculture and commerce confirmed the larger reduction of output in the modern sector of the nation’s economy. On the other hand, three branches of industry showed a gain in output over the pre-war (1936) return,—28·4 per cent for professional service (claiming 1·2 per cent in total national income), 66·4 per cent for government service (7· 1 per cent in total national income), and 200·3 per cent for banking and insurance (3·7 per cent in total national income). Wartime expansion in the armed forces and civilian (government and educational) services, growth of financial activities under inflationary conditions, and rise of accountants and lawyers to handle the expanding tax system on business enterprises—these together helped to prevent the national income from falling to a greater extent than is shown by the 1946 returns, that is, by 9 ·2 per cent. (Table 1) Table 1 C hina’s National Income in 1936 and 1946 C ompareda Percentage Percentage Distribution Increase (+ ) 1936 1946 or decrease (—) during 1936-46 Agriculture 64·5 62·7 - 11·7 Mining and metallurgy 1·1 0·4 - 71·1 Manufacturing 9·6 7·2 - 32·2 Building and construction 0·8 0·1 - 90·3 Transport and communication 4·0 3·7 - 16·2 Commerce 10·1 9·7 - 11·5 Banking and insurance 1·1 3·7 +200·3 Dwelling service 3·6 3·6 - 9·9 Professional service 1·2 + 28·4 Domestic service 0·5 - Government service 3·9 7·1 + 66·4 Total 100·0 100·0 - 9·2 a Ou, National Income of China, 1933, 1936 and 1946, valued for both years at 1936 prices. Philippines : According to the estimate by the Joint Philippine- American Finance Commission, there was during 1938-46 a 14 per cent decline in the physical volume of Philippine national income, the decline in 1938 prices being from 1,163 million to 1,006 million pesos. Agri- culture showed a decline of 24 per cent and other industries one of 33 per cent while services registered a gain of 33 per cent. (Table 2.) Table 2 G ross National Income of the Philippines, 1938 and 1946 (In million pesos at 1938 prices) Percentage increase (+) 1938 1946 or decrease (—) during 1938-46 Agriculture 482 369 -24 Other industries 411 277 -33 Services 270 360 +33 Total 1,163 1,006 -14

11 Table 3

G ross National Income of the Philippines, D is t r ib u t e d by Industries, 1938 and 1946 at current prices Value (million pesos) Percentage 1938 1946 1938 1946 Agriculture 482 1,472 41·4 45·6 Other industries Livestock and products .. 52 202 4 ·5 6·2 Forestry products and building 60 60 5·1 1·8 Fisheries 60 194 5·1 6·0 Mining 72 6 6·2 0 ·6 Manufacturing not elsewhere included 30 120 2 ·6 3 ·6 Value added to consumers’ goods imports 137 331 11·8 10·2 Services Restaurants, hotels, laundries, movies, and other domestic and personal services 83 249 7·1 7·7 Transportation and communication 38 54 3·3 1·6 Professions 24 72 2 ·1 2·2 Financial services 20 50 1 ·8 1·6 Government and education 76 115 6·5 3 ·6 Philippine Army 19 127 1 ·6 3·9 Civilian services rendered to U.S. Army 10 176 0 ·9 5·4 Total 1,163 3,228 100·0 100·0 The relative position of different industries and services has undergone a change during 1938-46, an improvement for agriculture, livestock, fisheries, manufacturing, professions, army services, domestic and personal services ; but a deterioration for forestry, mining, trade, (value added to consumers’ goods imports), transportation and communication, finance, government and education. (Table 3.) Ceylon: The estimates of national income for Ceylon during 1938 and 1947 were made at current prices, which have here been converted at the 1938 price level. In order to gain some notion of comparability, an attempt is made here to deflate the agricultural income by the export price index, since income from agricultural export constitutes 73 per cent of agricultural income in 1938 and 71 per cent in 1947. In the absence of better indices the cost of living index for Colombo is used to deflate the value of income for other industries and services. The export price index, with 1934-38 average as the base equivalent to 100, rose to 330 in 1947, while the Colombo cost of living index, with 1938-39 as the base, rose to 252 in 1947. With this adjustment, the gross national income, at an approximately 1938 level of prices, would be as follows. (Table 4.)

12 Table 4

G ross National Income of Ceyl on, 1938 and 1947 (In million rupees) Percentage At current prices At near-1938 prices increase 1938 1947 1938 1947 during 1938-1947 Agriculture 359·9 1,254·2 359·9 380·1 + 5·6 Other industries and services 267·2755·0267·2 299·6 +12·1 Total 627·1 2,009·2 627·1 679·7+ 8·4 Apparently, Ceylonese national income has not declined on account of war, but the small increase has been more than offset by population growth. Meantime Ceylonese economic position has deteriorated in the post-war years, chiefly because Ceylon, as an export country, has to suffer unfavourable terms of trade, with the import price index rising considerably in advance of the export price index. With the period 1934-38 as the base equal to 100, the import price index rose to 488 in 1947, while the export price index stood at 330. The relative position of different industries and services in the gross national income of Ceylon during 1938-47 has shown an improvement for agriculture and government, while for all other items there has been a decline,4 (Table 5.) Table 5

G ross National, I ncome of Ceyl on, D is t r ib u t e d by Industries, 1938 and 1947 Value in million rupees (at current prices) Percentage 1938 1947 1938 1947 Agriculture 359·9 1,254·257·4 62·4 Manufacture 55·0 160·08·8 8 ·0 Trade 74·0 160·0 11·8 8 ·0 Transport 10·0 26·0 1 ·6 1 ·3 Professions 13·0 22·0 2 ·1 1·1 Domestic service 12·0 20·0 1·9 1 0· Lands and buildings 32·2 42·05·1 2 ·1 Government 71·0 300·011·3 14·9 Foreign military expenditure not elsewhere included — 25·0 — 1·2 Total 627·1 2,009·2 100· 0 100·0 India : The estimate for India, for the two fiscal years 1931-32 and 1942-43 (from 1 April to 31 March), excludes Burma and the Indian states. During the period gross national income increased from 16,616 4 Detailed figures for 1937-44 are given in Appendix I on ' Estimate of National Income ’ by Dr. B. B. Das Gupta, in Report of the Commission on Social Services, February 1947, Ceylon Government Press, Colombo, 1947, pp. 122-130.

13 to 34,230 million rupees. If deflated by the Calcutta wholesale price index, which with 1914 as the base year equal to 100 stood at 68 in 1931 and 131 in 1942, thus showing an increase of 92·6 per cent between 1931- 42, the gross national product in India would have been 17,772 million rupees in 1942-43, as compared with 16,616 million rupees in 1931-32. The real increase during the 11-year period is thus 7 per cent. Allow- ing a population increase during the decade, which would be in the order of 10 per cent the per capita Indian national income seemed to have declined, despite increased production and employment arising from the World War II. The explanation lies perhaps in the failure of agriculture to maintain its share of contribution to the national income, vis-a-vis the increase in population. (Table 6.) Table 6 G ross National Income of India,a 1931-32 and 1942-43b Value at current prices Percentage distribution (In million rupees) 1931-32 1942-43 1931-32 1942-43 Agriculture .. 8,885 17,830 53·5 52·1 Organized industry .. 1,630 5,500 9·8 16·1 Unorganized industry .. 1,640 3,940 9·9 11·5 Other items .. 4,461 6,960 26·8 20·3 Total .. 16,616 34,230 100·0 100·0 a Excluding Burma and the Indian states. b Figures are for years running from 1 April through 31 March. 'Japan : The two series of estimates for 1938-39 and 1940-44 are not comparable. The former by the Japan Economic Federation, an extrapolation of the estimate made by the Cabinet Bureau of Statistics for 1930, refers to net national income at factor cost, while the latter by the U.S. Strategic Bombing Survey refers to gross national product, Table 7 N ational Income of Japan, 1938-44 (In billion yen) Japan U.S. Morita’s Deflated Economic Strategic wholesale value of Federation’s Bombing price index national estimatea Survey’s (1936=100) incomec estimateb 1938 22·52 126 17·87 1939 24·52 — 145 16·91 1940 — 39·80 171 23·27 1941 — 42·70 184 23·21 1942 — 52·60 236 22·88 1943 — 54·70 267 20·49 1944 — 82·40 325 25·35 a Net national product at factor cost net of Government interest and adjusted for payments abroad. For most branches of industry it is calculated as gross output minus intermediate products. b Gross national product as adopted by U.S. Department of Commerce but with minor exceptions. c Deflated to 1936 level.

14 Table 8

G ross National Income of Japan, D ist r ib u t e d by Uses, 1940-44

Value at current prices Percentage distribution (billion yen) 1940 1941 1942 1943 1944 1940 1941 1942 1943 1944 Government expenditure 8·0 10·8 191 26·7 398 20·1 25·3 36·3 48·8 48·3 Private capital formation .. 5·1 4·6 5·0 7·5 11·1 12·8 10·8 9·5 13·7 13·5 Consumer expenditure .. 26·7 27·3 28·5 20·5 31·5 67·1 63·9 54·2 37·5 38·2

Total .. 39·8 42·7 52·6 54·7 82·4 100· 0 100·0 100· 0 100·0 100·0

There seemed to be a substantial increase in the physical volume of Japanese national product during the initial years of aggression against China (1940-41). This increase, however, was arrested in 1942, and instead, a slow decline took place in the years following the Pacific War. In 1944 a desperate effort was made to boost up the production, evidently through high-pressured but uneconomical exploitation of manpower and capital resources to cope with the growingly critical situation. (Table 7) Throughout these years of war, government expenditure expanded at the expense of consumer expenditure. During 1940-44, while the former increased from a relative share of 20·1 per cent to 48·3 per cent the latter shrank correspondingly from 67·1 per cent to 38·2 per cent. (Table 8)

III. P er Capita Income The data available do not permit us to make even a rough comparison of the per capita incomes for the AFE countries. The definition of income is, in the first place, not uniform. Violent fluctuations in post- war price levels and application of exchange controls give rise to additional difficulties. However, the general pattern of per capita income in AFE countries seems to conform to the commonly observed phenomenon that per capita income rises with the progress of industrialization, and varies with the land-man ratio in countries with a more or less similar level of economic development. The per capita income among AFE countries is probably highest (at least in pre-war days) in Japan, but lowest in China. In between these two extremes are the Philip- pines, Ceylon, India, and Indonesia. Japan : In 1940 the total national income for Japan Proper was placed at 39·8 billion yen, or U.S. $9·33 billion according to the then prevailing rate of exchange (1 yen equals 23·44 U.S. cents). The civilian population for that year was 71,420,000 and the armed forces 1,694,000, giving the total population of Japan Proper in 1940 of 73· 1 million. The per capita income for Japan Proper was thus U.S. $128 in 1940. As the U.S. wholesale price level during 1940-46 rose by 54 per cent (from

15 91 to 140)5, the 1940 per capita income of U.S. $128 in Japan Proper would be w orth U.S. $197 in 1946. However, Japan’s national income must have been considerably reduced to-day, as compared with that for 1940. The Japanese index of industrial production, as compiled by

I ndex of Industrial Production in Japan, 1930-47 6 (1930-34=100) 1930 90·2 1939 192·2 1931 88·3 1940 195·3 1932 94·2 1941 201·5 1933 106·3 1942 192·7 1934 121·0 1943 180·9 1935 132·8 1944 154·8 1936 143·1 1945 61·5 1937 164·4 1946 32·5 1938 176·6 1947 40·9 the SCAP, showed a steady increase from 1932 up to 1841, the year of Pacific War. Ever since, there has been a continuous drop. The year of Japanese surrender saw the index more than halved, from 154·8 in 1944 to 61·5 in 1945. It was further halved in 1946, to 32·5. Not until 1947 did it begin to rise again, to 40·9. The 1946 index, as compared with the 1940 index, is only one-sixth. It is true that industrial production covers only mining and manufacturing, not other branches of the nation’s economic activity. Yet these branches contributed 44·2 per cent of Japan’s national income in 1940. Although a part of the industrial population in Japan during 1946 might have been considerably under-employed, or absorbed by agriculture, the national income of Japan must have been considerably reduced in 1946. It would perhaps be plausible to conclude that by 1946 Japanese national income had been more than halved, and that, in view of the increase in Japanese population, the per capita income had gone down even lower. At 1946 prices the estimated per capita income for 1940 was equivalent to U.S. $197. In actuality it was perhaps less than half that figure in 1946. Philippines: The gross national income of the Philippines in 1946 is estimated at 3,228 million pesos by the Joint Philippine-American Finance Commission, from which is to be deducted 469 million pesos as depreciation, thus giving a net national income of 2,759 million pesos. To this is to be added 501 million pesos as ‘ transfers from abroad ’, consisting of 154 millions for U.S. Government payments, 274 million pesos for U.S. surplus property, 64 million pesos for U.S. Defence and Military Assistance Programme, and 9 million pesos for UNRRA aid. The total disposable income in the Philippines during 1946 is thus 3,260 million pesos. Taking the 1946 Philippine population at 18,500,000, the Joint Philippine-American Finance Commission placed the 1946 per capita income for the Philippines at 176 pesos. The latter sum, converted at 5United5 United NationsNations MonthlyMonthly BulletinBulletin ofof Statistics.Statistics. 6Japanese6 Japanese Economic Statistics (Monthly), Economic and Scientific Section, ResearchResearch and Statistics Division, SCAP General Headquarters.

16 the 1946 rate of 1 peso equal to 50 U.S. cents, amounts to U.S. $88. The Philippine peso, however, has been over-valued ; consequently, the per capita Philippine income in terms of U.S. dollar is inflated to a similar extent. Ceylon : The 1947 national income for Ceylon is estimated by Das Gupta at 2,009 million rupees. Taking the 1946 census population of Ceylon at 6 ·7 million, the per capita income is 300 rupees. As each rupee in 1947 is equal to 30·225 U.S. cents, the per capita income in Ceylon during that year reaches U.S. $91. India : The national income for India excluding Burma and the Indian states is estimated by the Government of India at 34,230 million rupees for the fiscal year 1942-43 (from 1 April, 1942 to 31 March, 1943). The population for the same area is 297·8 million. The per capita income in India during 1942 is therefore 115 rupees, which equals U.S. $34·64, if converted at the rate of 1 rupee equivalent to 30·12 U.S. cents. Taking into consideration the 23 per cent rise in American wholesale price level during 1942-46 (from 114 to 140), the Indian per capita income of U.S. $34·64 in 1942 would be worth U.S. $42·61 in 1946. Indonesia : The national income for the Netherlands East Indies is estimated by Dr. J. J. Polak for the Board of Netherlands East Indies at 2,933 million guilders for 1939; which if divided by a population of 69·4 million during the same year gives a per capita income of 42 guilders. The latter sum is equal to U.S. $22·45, at the exchange rate of 1 guilder to 53·44 U.S. cents. The American wholesale price level during 1939-46 has risen by 56 per cent (from 89 to 140). The per capita income of U.S. $22·45 in 1939 would therefore be equal to U.S. $35 in 1946. China : China in 1946 had a population of 461 million and a national income of 24,737 million yuan at 1936 prices, giving a per capita income of 54 yuan or Chinese national dollars. This latter sum is equivalent to U.S. $15·95 in 1936 at the rate of 1 yuan to U.S. $0·2953. In view of 45 per cent increase in the U.S. wholesale price index during 1936-46, the per capita income of U.S. $15·95 in 1936 would have been equivalent to U.S. $23·13 in 1946. In comparison with the per capita income for other countries that of U.S. $23·13 for China in 1946 is the lowest.

IV. I ncome Dist r ibut io n by Indust ries The estimates of national income already quoted do not give uniform classification by industries. The classification for India is given in general terms and divides the national income into four groups, namely, agriculture, organized industry, unorganized industry, and other items. For Indonesia only the income estimates for Indonesians, not those for Foreign Asiatics and Europeans, are given breakdowns according to industries. Subject to these limitations, and also to the further fact that most estimates refer to different years, Table 9 is compiled to afford some rough guide to the distribution of national income by industries in the six AFE countries.

3 17 Table 9

D is t r ib u t io n of National Income by Industries in AFE Countries, 1939-47 (In percentages)

Indonesiaa China Ceylon Philippines India Japan 1939 1946 1947 1946 1942-43 1939

Agriculture 76·1 62·7 62·4 59·6 52·1 15·9 Mining — 0·4 — — 2·9 Manufacture — 7·3c 8·0 3·6 — 41·3 Transportation and _ communication 1·4 3·7 1·3 1·6 5·9 Trade 6·7 9·7 10·2 - 25·3 Finance — 3·7 — 1·6 2·2 Professions — 1·2 1·1 - 8·7i Government 7·5 7·1 16·1 12·9f - Domestic services 2·3 1·0 — — Others 6·0b 3·6d 2·1e 7·7g 49·9h

Total .. 100·0 100·0 100·0 100·0 100·0 100·0

a For Indonesians only, who in 1930 constituted 97·4 per cent of the total population in Indonesia. b Including 5 per cent for ‘housing’, c I ncluding 0·1 per cent for ‘building and construction’. d Referring to ‘ dwelling service e Referring to ‘ lands and buildings ’. f Including ‘ government and education ’, ‘ Philippine Army and ‘ civilian services rendered to U.S. Army’. g Referring to ‘ restaurants, hotels, laundries, movies and other domestic and personal services ’. h An unpublished summary prepared by the United Nations Statistical Office gives the distribution of the 1931-32 national income of India as estimated by Rao, also of the 1942-43 estimate by the Government of India, as follows :

G ross National Product at Factor Cost of India, 1931-32 and 1942-43

(In m illions of rupees) 1931-32 1942-43

Agriculture 8,885 17,830 Organized industry . . 1,630 5,500 Unorganized industry 1,640 3,940 Other items 4,461 6,960 Total 16,616 34,230

Percentage distribution Agriculture 53·5 52·1 Organized industry 9·8 16·1 Unorganized industry 9·8 11·5 Other items • • 26·9 20·3 Total 100·0 100·0

i Referring to ‘ government, professional and domestic service

18 The above table sets the pattern of income distribution for two groups of countries. Japan, as an industrialized nation in the region, derives only 15·9 per cent of its national income from agriculture, but 41·3 per cent from manufacture and 25·3 per cent from trade. On the other hand, China, as an agricultural country, draws 62· 7 per cent of her national income from agriculture, with only 7·3 per cent from manufacture and 9·7 per cent from trade. Among the agricultural nations, two sub-types may be further distinguished. The dividing line here is the degree of diversification of economic development or, in other words, concentration of production on certain specialized exports, both agricultural and mineral. China thus derives more income from manufacturing and transportation than the Philippines and Indonesia, and more income from transportation than Ceylon. The Philippines, Indo- nesia, and Ceylon are meantime principal exporting nations for raw materials such as sugar, tea, rubber, and oil.

V. N ational Income and Capital Formation Available materials for Japan and China also deal with capital formation. As shown above, Japan’s private capital formation claimed 12·8 per cent of the national income in 1940, 10·8 per cent in 1941, 9 ·5 per cent in 1942, 13·7 per cent in 1943, and 13·5 per cent in 1944.7 In Table 10 is given the composition of private capital formation, in billions of yen, for 1940-44.

Table 10

P rivate Capital Formation in Japan Proper, 1940-44 (In billions of yen)

1940 1941 1942 1943 1944

Plant and equipment 4·5 4·7 4·7 7·9 10·0 Residential construction . . 0·4 0·5 0·3 01 Foreign balance 0·2 10

Total • • 5·1 4·6 50 7·5 11·0

a Less than 40 million Yen. In estimating China’s national income, an attempt is also made to arrive at total available means, that is, disposable goods and services, by the expenditure method. It was only found possible to estimate consumption, however, as data relating to investment were unobtainable. By subtracting consumption from total available means, a rough ap- proximation to net investment at home and abroad plus net capital flow from abroad is obtained, as shown in Table 11.

7 According to a study prepared by Robert W. Tufts, in Eugene Staley’s World Economic Development (Second edition, International Labour Organization, MMontreal, ontreal, 1945, p. 90), ththe e average aannual n n u al ininvestment v estm en t as pper e r cent of average aannual n n u al national income is 12·1 during 1900-09, 16·9 during 1910-19, 12·3 during 1920-29, and 9·6 during 1930-36.

19 Table 11

E xpenditure of Total Available Means in China, 1931-36

Millions of yuan

Net investment, Expenditure domestic and Total on consumers’ foreign available goods and (including means services capital flow)

1931 24,173 698 24,871 1932 23,014 808 23,822 1933 20,441 - 24 20,417 1934 20,060 -617 19,443 1935 21,675 -573 21,102 1936 25,286 1,472 26,758

Percentage

1931 97·2 2·8 100·0 1932 96·7 3·3 100·0 1933 100·1 -0 ·1 100·0 1934 103· 1 -3 ·1 100·0 1935 102·7 -2 ·7 100·0 1936 94·5 5·5 100·0 It is obvious that capital formation in China, as shown by the figures on net investment, is limited, and cannot be otherwise since the income of the people is so meagre and inadequate. The propensity to consume is high, while the propensity to save is low. There was even negative investment or dis-investment during the period 1933-35, when the effects of the world economic depression spread to China. But even in the best pre-war year, that is, 1936, net investment reached only an estimated sum of 5·5 per cent of the total national income.

VI. Summary The national income statistics quoted in the present chapter must be used with great caution, not only because these statistics are incomplete and in many cases represent only approximations, but because the term ‘ national income ’ is given widely different interpretations by the different compilers, whether government or private. Except for Japan and India, the figures given are all intended to represent net, not gross, national income at factor cost. In arriving at net national income totals, attempt is made in each case to subtract depreciation (which in some cases represents overall, not detailed, approximations), but no deduction is made for indirect taxation. Net national income includes certain items that are not uniform for the countries covered : these being ‘ transfers from abroad ’ for the Philippines, ‘ capital influxes from abroad ’ for China, ‘ dividends and profits payable abroad ’ for Indonesia, and ‘ foreign military expenditure not elsewhere included ’ for Ceylon. Subject to the above limitations, national income in China and the Philippines has declined in the post-war year 1946, as compared with

20 pre-war, the former by 9 · 2 per cent and the latter by 14 per cent. In Japan, such decline may have approximated about 50 per cent. Some increase is apparent for India during 1931-42 (7 per cent.) and for Ceylon during 1938-47 (8·4 per cent), but in view of the population growth, such increase measured on a per capita basis seems to be negligible if not negative. Available data fail to provide a basis for a post-war comparison of per capita national income in the AFE countries. In terms of the 1946 purchasing power for the American dollar, the per capita national income seems to be still the highest for Japan, followed in diminishing scale by Ceylon, the Philippines, India, Indonesia, and China. In Japan alone is the major share of the national income (66·6 per cent in 1939) derived from industry and trade, while in other countries agriculture still contributes from one half to three fourths of the national income. Thus, 52·1 per cent of the national income in India (1942-43), 59·6 per cent in the Philippines (1946), 62·4 per cent in Ceylon (1947), 62·7 per cent in China (1946), and 76·1 per cent in Indonesia (among the Indonesians in 1939) is derived from agriculture. Capital formation, except in Japan, must have been very limited all over Asia and the Far East. In China, pre-war estimates point even to the existence of net dis-investment in some years, once capital flow from abroad ceased to be maintained.

21 C hapter III

POPULATION

I. P re-W ar and Post-W ar Population

Except Japan, South Korea and Ceylon, the AFE countries have not yet taken any new census since the conclusion of the war. China has never taken a modern census.1 North Korea under Soviet occupation has not published any post-war estimate on population. It is thus difficult to give an accurate picture of the post-war population in the AFE countries except by means of intelligent estimation. Comparison between pre-war and post-war population is rendered difficult by additional factors. War broke out between Japan and China in July 1937, but in other AFE countries it did not begin until after the Pearl Harbour Incident in December 1941. Again, the last pre-war census year varied from country to country, being 1930 for Indonesia; 1931 for Malaya, British Borneo, Hong Kong and Ceylon; 1936 for Indo-C hina; 1937 for S iam ; 1939 for the Philippines; 1940 for Japan, Korea and T aiw an ; 1941 for Burma and India. Pakistan is a new state created in August, 1947; its population used to be included in the census for India, from which is now derived the official estimate of its population.2 Furthermore, the interval for census-taking also varied from country to country in pre-war years, being five years for Japan, Korea and Taiwan ; ten years for Burma, Ceylon, Hong Kong, Malaya and British Borneo, India, Indonesia, and Siam ; fifteen years for Indo-China and the Philippines. For comparative purposes resort has to be made to official estimates for the non-census years. Census figures for AFE countries do not possess the same degree of reliability, because in some of these census-taking has been a recent development. Thus, Indian census was first taken in 1872, Japanese census in 1920, and Korean and Taiwanese census in 1925. The first census for the Philippines was taken in 1903, immediately after Ameri- can occupation. Siam did not have a census until 1909, Malaya and British Borneo until 1911, Indonesia until 1920, and Indo-China until 1921. Where census figures are not available, estimates, both official and unofficial, have to be employed in filling the necessary gaps. Subject to the above limitations, the following comparison between pre-war and post-war population in AFE countries is given to show the changes that have taken place. (Table 12)

1 Except Taiwan, the census for which was taken every five years under Japanese occupation. The Chinese Government is preparing to take a modern census for the country in 1951. 2 The Statistical Digest of Pakistan, Office of the Economic Adviser to the Government of Pakistan, 1948.

22 Table 12

P re- war and Post- war Population of AFE C ountries (in 1,000) Country Pre-War Post-War

Burma 1941a 16,824 1946b 17,000 British Borneo 1939c 941 1946b 845 North Borneo 1939c 39 1946b 297 Brunei 1939c 302 1946b 48 Sarawak 1939c 600 1946b 500 Ceylon 1941b 6,020 1946a 6,651 China 1937c 455,213 1947c 462,798 Taiwan 1935a 5,213 1947c 6,384 Manchuria 1937c 28,154 1947c 41,130 Hong Kong 1941c 1,600 1946b 1,600 India 1941a, d 318,000 1946d 336,000 Indo-China 1936a 23,030 1946c 25,000 Annam 1936a 5,660 1946c 6,200 Cambodia 1936a 3,050 1946c 3,000 Cochin-China 1936a 4,620 1946c 5,200 Laos 1936a 1,000 1946c 1,000 Tonkin 1936a 8,700 1946c 9,600 Indonesia 1941c 71,534 1946b 75,290 Jap an 1937b 71,253 1946b 75,323 K orea 1937b 22,355 1946b 27,200 South Korea 1946a 19,369 Malayae 1939c 5,389 1946b 5,948 Malayan Union 1946b 5,000 Singapore 1946b 948 Pakistan 1941a, d 71,000 1946d 73,000 Philippines 1941b 16,971 1946b 19,067 Siam 1941b 16,898 1946b 18,147

Total 1,097,028 1,143,869

Source : For post-war years, data are supplied by the United Nations Statistical Office for all countries except China, for which the estimates for 1947 by the Population Bureau of the Chinese Ministry of Interior are used, a Census. b Mid-year estimate. c Estimate, mostly official. d According to the 'Survey of the Economy of India, prepared by the International Monetary Fund on 3rd February, 1948, ' assuming that Hyderabad and Kashmir finally accede to the Dominion of India, the populations of the areas to be included in the Dominion of India and the Federation of Pakistan; including the states joining them, were in 1941, on the basis of the census returns, 318 million and 71 million respectively ’. With an estimated annual rate of growth of about 1 per cent, the 1946 populations of the two Dominions would be 334 and 75 million respectively. The recent transfers of population are now estimated to reduce Pakistan’s population by about 2 million and raise India’s by that figure. (Refugees from Pakistan to India, 5 million ; from India to Pakistan, 3 million). e Including during pre-war years Straits Settlements and Dependencies, Federat- ed Malay States, and Unfederated Malay States, but during post-war years Malayan Union (since F eb ru ary 1948 know n as Malayan Federation) and Singapore. With the exception of British Borneo, the population in the AFE countries has all shown an increase of varying rate between the pre- war and post-war period. The population decrease in British Borneo

23 might have been due to higher estimate in earlier years, as the League of Nations’ estimate for Sarawak in 1939 was scaled down by the United Nations Statistical Office in 1946, by 100,000 or 17 per cent. The total population in the AFE countries during the post-war year 1946 is estimated at 1,143,869,000. Taking the world population in 1946 to be roughly 2·2 billion, the proportion for the AFE countries is about 52 per cent. This total population is distributed among three zones, namely— (1) 49·5 per cent in China, Hong Kong, Japan and Korea ; (2) 35·8 per cent in India and Pakistan ; and (3) 14·7 per cent in South-east Asia including Burma, Ceylon, Indo-China, Indonesia, Malaya and North Borneo, the Philippines, and Siam.

Table 13

D is t r ib u t io n of Population in AFE C ountries, 1946 Country Population Per cent (1,000) China, Hong Kong, Japan and Korea .. 566,921 49·5 China 462,798 40·4 Hong Kong 1,600 0 1 Japan 75,323 6·6 Korea 27,200 2·4 India and Pakistan 409,000 35·8 South-east Asia 167,948 14·7 Burma 17,000 1 ·5 Ceylon 6,651 0 ·6 Indo-China 25,000 2 ·2 Indonesia 75,290 6·6 Malaya and North Borneo 6,793 0·6 Philippines 19,067 1·6 Siam 18,147 1·6 Total 1,143,869 100·0

II. P opulation Density The AFE countries have a total land area of 18,992,000 square kilometres, with a total population of 1,143,869,000, giving an average density of about 60 persons per square kilometre. There is, however, great diversity in density among the different countries, as well as among the different parts in the country. Japan has the highest density of 197 persons per square kilometre, followed by 123 for Korea, 101 for Ceylon, 100 for India and Pakistan, 64 for the Philippines, 48 for China, 44 for the Malayan Union and Singapore, 39 for Indonesia, 35 for Siam, 34 for Indo-China, 28 for Burma, and only 3 for British Borneo. This average for each country is misleading, as within the country itself, large areas are usually uncultivable and sparsely populated. China proper, with 41 per cent of China’s area, has 86 per cent of China’s population. The density is 99 persons per square kilometre, as contrasted with 48 for the country as a whole. Again, Taiwan, with 0 ·0037 per cent of the total area of China, has 0·014 per cent of the total population, giving rise to a density of 177 persons per square kilometre. In Indonesia, although

24 the average density of population per square kilometre is 39, that for Java, Madura and Sumatra, which has 32 per cent of the total area but S3 per cent of the total population, reaches 130. (Table 14)

Table 14

P opulation Density in AFE Countries, 1946

Country Areac Population Density (1,000 sq. km.) (1,000) (Per sq. km.) — _ British Borneo 291 845 3 North Borneo — 76 — 297 4 Brunei — 6 — 48 — _ 8 Sarawak — 109 — 500 5 Burma 605 — 17,000 — 28 Ceylon 66 — 6,651 — 101 — China 9,736 — 462,798 — 48 — China Propera — 4,010 — 397,540 99 Inner Mongoliab .. — 1,026 — 11,351 — 11 Kokonor — 667 — 1,346 — 2 Manchuria — 1,070 — 41,130 — 38 Sinkiang — 1,712 — 4,047 — 2 Taiwan — 36 — 6,384 — 177 Tibet — 1,216 — 1,000 — 1 Hong Kong 1 — 1,600 — — 1,600 _ India and Pakistan .. 4,096 — 409,000 — 100 Indo-China 740 — 25,000 — 34 — Annam — 148 — 6,200 — 40 Cambodia — 181 — 3,000 — 16 Cochin-China — 65 — 5,200 — 80 Laos — 231 — 1,000 — 4 Tonkin — 116 — 9,600 — 83 Indonesia 1,904 — 75,290 — 39 — Borneo 539 — 2,500 — 5 East Indonesia — 759 — 10,290 — 14 Java, Madura and Sumatra 606 62,500 130 Japan 382 — 75,323 — 197 — Korea 221 — 27,200 — 123 - Malaya 136 — 5,948 — 44 — Malayan Union — 135·3 — 5,000 — 37 Singapore — 0·7 — 948 — 1,354 Philippines 296 — 19,067 — 64 — Siam 518 — 18,147 — 35 — Total 18,992 1,143,869 Average 60

a Including the 18 old provinces and the newly created province of Sikang. b Including Jehol, Chahar, Suiyaan, and Ninghsia. c League of Nations, Statistical Yearbook, 1942-44; Statistical Abstract of the Republic of China, 1947; Statistical Pocketbook of Indonesia, 1941.

Thus considered, the sparsely populated parts in AFE countries which may promise outlet for the rapidly growing population in the region seem to lie mostly in South-east Asia (especially British Borneo, Malaya, Dutch Borneo, East Indonesia, Laos, Cambodia, Burma, Siam, and the Philippines), Manchuria and Inner Mongolia.

25 4 Density of Population Country or Province per sq. km.

Japan 197 Taiwan 177 Java, Madura and Sumatra 130 Korea 123 India and Pakistan 100 China Proper 99 Tonkin 83 Cochin-China 80 Philippines 64 Annam 40 Manchuria 38 Malaya 37 Siam 35 Burma 28 Cambodia 16 East Indonesia 14 Inner Mongolia 11 Dutch Borneo 5 Laos 4 British Borneo 3 Sinkiang 2 Kokonor 2 Tibet 1

III. P opulation Changes

Table 15

B ir t h Rate, D ea t h Rate and Natural Increase Rate pe r 1,000 I nhabitants in Sel ect ed AFE Countries Natural Country Year Birth Death increase rate rate rate

Burma 1939 32·3 22·9 9·4 Ceylon 1943 40·5 21·3 19·2 China 1929-31 38·3 27·1 11·2 Taiwan 1937 45·6 20·1 25·5 India 1946 2 7 ·9 17 ·5 10·4 Indo-China : Cochin-China .. 1936 37·1 24·2 12·9 Indonesia : Java and Madura 1940 27·9 19·9 8·0 Japan 1946 25·3 17·6 7 ·7 Korea 1937 27·5 17·0 10·5 Malaya 1937 39 ·0 20·9 18·1 Philippines 1938 32·4 16·5 15·9

Source: From United Nations Bulletin of Statistics for India and Japan ; from Statistical Pocketbook of Indonesia 1941 for Java and Madura ; from Buck’s Land Utilization in China, for China ; from Pelzer’s Population and Land Utilization for British Malaya and Cochin-China; from League of Nations, 'Statistical Yearbook 1942-44 for other countries. 26 According to available statistics, which vary considerably in degree of reliability and must be used with much reserve, the birth rate in AFE countries is the highest for Taiwan, which reaches 45·6 per 1,000 inhabitants, and is followed by 40·5 for Ceylon, 39· 0 for British Malaya, 38·3 for China, 37·1 for Cochin-China, 32·4 for the Philippines, 32·3 for Burma, 27·9 for India, 27·9 for Java and Madura, 27·5 for Korea, and 25·3 for Japan. On the other hand, the death rate per 1,000 inhabitants is the highest for China, which reaches 27·1 per 1,000 inhabitants, and is followed by 24· 2 for Cochin-China, 22·9 for Burma, 21·3 for Ceylon, 20·9 for British Malaya, 20·1 for Taiwan, 19·9 for Java and Madura, 17·6 for Japan, 17·5 for India, 17·0 for Korea, and 16·5 for the Philip- pines. (Table 15) Birth rates are usually high for AFE countries except Japan where industrialization has, relatively, been more advanced. Here the birth rate has declined from the pre-war (1936) rate of 30 to the post-war (1946) rate of 25·3 but during the war years (1940-44) it stood high, fluctuating between 28·9 for 1940 and 30·7 for 1941. Death rate remains unchanged, being 17·6 per 1,000 inhabitants for both 1936 and 1946, but during the war years (1940-44) it was reduced, varying between 15· 5 for 1941-42 and 17· 5 for 1944. The year of Japanese surrender, however, raised the death rate to 29·9 on account of the wholesale destruction wrought by the atomic and other war losses. (Table 16)

Table- 16

B ir t h Rate, D eat h Rate, and Natural Increase Rate Per 1,000 I nhabitants in Japan, 1936-46

Year Natural increase Birth rate Death rate rate 1936 30·0 17·6 12·4 1937 30·6 17·0 13·6 1938 26·7 17·4 9·3 1939 26·1 17·4 8·7 1940 28·9 16·2 12·7 1941 30·7 15·5 15·2 1942 29·7 15·5 14·2 1943 29·6 16·0 13·6 1944 29·4 17·5 11·9 1945 23·3 29·9 - 1946 25·3 17·6 7·7

Source : United Nations Monthly Bulletin of Statistics.

Pre-war reduction in death rates through the improvement in sanitation and transportation has been a common experience of many AFE countries, especially India, South-east Asia, Taiwan, and Korea. Indian experience since 1885 in this regard is amply confirmed by official statistics.3 (Table 17)

3 S. Chandrasekhar, India’s Population, Jo h n D ay, 1946, p. 59. D ata fro m 1941 to 1946 are taken from the United Nations Monthly Bulletin of Statistics,

27 Table 17 B ir t h Rate, D eat h Rate and Natural Increase Rate Per 1,000 I nhabitants in India, 1885-1946 N atural increase Year Birth rate Death rate rate 1885-1890 36 26 10 1890-1901 34 31 3 1901-1911 38 34 4 1911-1921 37 34 3 1921-1931 35 26 9 1931-1935 35 24 11 1936 36 23 13 1937 35 22 13 1938 34 24 10 1939 34 22 12 1940 33 22 11 1941 32 22 10 1942 29 21 8 1943 26 24 2 1944 25 24 1 1945 27 22 5 1946 28 18 10 With the exception of Japan, most AFE countries are what has been called the ‘ pre-industrial ’ countries by demographers.4 These countries have presumably ahead of them nearly all of that period of large and steady growth which has characterized so much of the West since about 1800. The birth rates generally reach 30 to 40 per 1,000, and the death rates generally run very high, although quite variable from year to year. The possibility of quickly reducing the death rate in these countries is greater than ever before in man’s history because of modern advance in the control over diseases and mortality by means of sanitation, public health, and transportation ; but the probability would seem to be less than in the Europe of 1800 because of the very magnitude of the population we have to commence with, and of the more limited supplies of new land and resources available for their settlement.

IV. A ge Dist r ibu t io n For a study of population trends, age group statistics are required. In countries reaching a stationary stage of population growth, where both birth rates and death rates tend to decline, people in the older age groups tend to increase while those in the younger age groups tend to decrease, as is illustrated by Table 18. While people below 15 constitute 25·1 per cent of the total population in the U.S.A., they occupy 31 ·4 per cent in British Malaya, 33 per cent in the Philippines, 33·7 per cent in China, 36·9 per cent in Japan, 39·7 per cent in Korea, 39·9 per cent in India, and 42· 5 per cent in Siam. On the other hand, people of 50 years of age or above constitute 20·3 per cent in the U.S.A., but 15·2 per cent in Japan, 12·6 per cent in Korea, 10·3 per cent in the Philippines, 10·2 per cent in Siam, 9 ·6 per cent in India, and 9 ·3 per cent in British Malaya. 4 Thompson, W arren S. : Population and Peace in the Pacific, U niversity of Chicago P ress, 1946, p. 34.

28 Table 18

P er cent age Dis t r ib u t io n of Population by Age Groups in Sel ect ed AFE C ountries

China India Japan Korea Malaya Philippines Siam U.S.A. Age G r o u p 1947 1931 1935 1930 1931 1946 1938 1940

0- 4 11·2 15·3 13·5 1 6 0· 11·6 16·8 16·9 8·0 5- 9 11·4 13·0 12·3 12·9 11·4 14·6 1 4 0· 8 1· 10-14 11·1 11·6 11·1 10·8 8·4 11·6 11·6 9·0 15-19 9·3 9 1· 9·6 10·0 8·1 10·4 9·7 9·4 20- 24 6·8 9·4 8·8 8·5 9·9 9·4 9·1 8·8 25-29 7·0 8·6 7·6 6·8 11·3 8·4 7·8 8·4 30-34 6·2 7·7 6·7 6·9 10·8 6·0 6·9 7·8 35-39 7·0 6·2 5·8 5·9 7·9 5·2 5·7 7·3 40-44 6·4 5·3 4·9 5·2 7·2 4·0 4·5 6·7 45-49 6·1 4 1· 4·5 4·4 4 0· 3·3 3·6 6·2 50-54 5·2 3·3 4·1 3·6 4·6 2·6 2·9 5·5 55-59 4·4 2·3 3·7 2·9 2·2 2·5 4·4 60 and O v e r 7·9 4·1 7·4 6 1· 4·7 5·5 4·8 10·4 Total 100·0 100·0 100·0 100·0 100·0 100·0 100·0 100·0

0-14 33·7 39·9 36·9 39·7 31·4 33·0 42·5 25·1 15-49 48·8 50·4 47·9 47·7 59·2 56·7 47·3 54·6 5 0 - 0 17·5 9·6 15·2 12·6 9·3 10·3 10·2 20·3 Total 100·0 100·0 100·0 100·0 100·0 100·0 100·0 100·0

Source: From L eague of N a t i o n s , Statistical Yearbook 1942-44, for India ; Pelzer, Population and Land Utilization for other countries ; Yearbook of Philippines Statistics , 1946; Statistical Yearbook of Thailand, 1937-38 to 1938-39; 1947 Economic Survey for China. V. R ural-Urban Distribution Because of the retarded industrial development in AFE countries, urbanization is still a recent phenomenon in this part of the world. Some of the censuses in AFE countries do not differentiate between urban and rural population ; where such differentiation is made, it is not at all clear-cut. In India, for instance, where census-taking has the longest history among AFE countries, the definition of an urban area is in most cases left to the superintendent of the census district. It is usually taken, however, that a rural area is one whose population does not exceed 5,000. Villages which have a population of more than 5,000 people are classed as towns, and towns with 100,000 or more inhabitants are termed cities. Table 19 reveals how little progress has been made towards urbanizing India.5

Table 19

The R u ral-U rban Percentage of Population in India, 1872- 1941

Census Year Rural Urban 1872 91-3 8·7 1881 90·6 9·4 1891 90·5 9·5 1901 90·2 9·8 1911 90·6 9·4 1921 89·7 10·3 1931 89·0 11·0 1941 87·0 13· 0

Japan, on the other hand, offers a striking contrast to India. Here the progress of industrialization has been relatively speaking more rapid, and urbanization has taken great strides during the two decades prior to World War II. The rural population, defined to be residing in communities of 10,000 or under, has remained stationary, being 36·5—37·9 million during the two decades 1920-40; but the urban population has been more than doubled, from 18 million in 1920 to 37 million in 1940. As shown in Table 20, the proportion of urban population has increased from 32· 2 per cent in 1920 to 50·1 per cent in 1940.6

Table 20

R ural-Urban Dis t r ib u t io n of Population in Japan, 1920-40

Total Urban Rural Year Population Population Percentage Population Percentage (1,000) (1,000) of total (1,000) of total 1920 55,900 18,000 32·2 37,900 67·8 1930 64,450 26,300 40·8 38,155 59·2 1935 69,300 31,750 45·9 37,550 54 ·1 1940 73,114 36,627 50·1 36,487 49·9

5 C h a n d r a s e k h a r , op. cit., p. 29. ® Trewartha, Glenn Thomas; Japan: A Physical, Cultural and Regional Geography, University of Wisconsin Press, 1945, p. 135.

30 In Korea and Taiwan, the two pre-war colonies of Japan, urbanization seems to have proceeded more rapidly than in other AFE countries except Japan, the percentages of population residing in communities of over 10,000 in 1936 having reached 11· 7 per cent in the former and 34·4 per cent in the latter. In other areas, urbanization is still in an early stage of development. In Malaya, the percentage of urban population in cities of over 10,000 inhabitants in 1931 was 23·2 as compared with 21·2 in 1921.7 In Indo- nesia, the percentage of people residing in places with more than 50,000 for the last census year, 1930, is 4 ·65 per cent for Java and Madura, and 2·04 per cent for Outer Provinces. This percentage, however, varies for the different racial groups, being highest for the Europeans and lowest for the Indonesians. (Table 21) Table 21

T he Population in Places with mor e than 50,000 Inhabitants in Indonesia, 1930

(in percentages)

Racial Group Java and Outer All Madura Provinces Indonesia Indonesians 3·85 1·60 3·16 Europeans 64·58 27·87 56·13 Chinese 37·73 10·85 23·53 Other Asiatics 46·15 18·41 30·96 All groups 4· 65 2·04 3·83 Source: Statistical Pocketbook of Indonesia, 1941, p. 13.

VI. O ccupational Dis t r ib u t io n Statistics on occupational distribution are very incomplete for AFE countries. Even in India, statistics of this order are not available for the 1941 census, although the 1931 census gives classifications only for persons following occupations (i.e. earners plus Working dependents plus those following callings as subsidiary occupations). The rest of the population, which is numerically larger and probably represents mainly non-working dependents, remains unclassified, and there is no way of classifying them in terms of their respective means of living except by inference, on the precarious assumption that the proportion of non-working dependents to workers is a constant feature throughout.8 For other AFE countries statistics on occupational distribution are available for pre-war years ; they include those for Japan, Korea, Man- churia, the Philippines, Siam, Malaya, and Indonesia. (Table 22) These statistics, though incomplete and referring to pre-war years, still afford us a picture which, in the light of relatively slow economic changes in AFE countries, may apply at large to the conditions to-day. Generally speaking, the people in AFE countries, with few exceptions, depend upon the primary industries of agriculture and mining for a living, with little development in the secondary industries 7 Pelzer, op. cit., p. 14. 8 Chandrasekhar, op. cit., p. 49.

31 Table 22

O c c u p a t io n a l D is t r ib u t io n of G a in f u l l y E m pl o y e d P o p u l a t i o n in S e l e c t e d AFE C o u n t r i e s (in percentages)

India Indonesia Japan Korea Malaya Manchuria Philippines Siam Occupation 1931 1930 1930 1939 1931 1935c 1927 1937 Agriculture 66·6 47·7 68·3a 60·7 74·5a 8 9 ·1 88·3a Fishing, Forestry and Hunting 0 · 5 68 ·8d 1·8 1 ·6b 0 ·2b 2·2 0 ·3b Mining 0· 2 0 ·8 1·8 0 ·9 0 ·1 0·2 M a n u f a c t u r i n g 10·0 10·6 19·2 3 ·5 12·3 7 ·3 3·9 1·9 T r a n s p o r t a n d C o m m u n ic a tio n s 1·5 1 ·5 3·7 1·3 6·3 2 ·6 0 ·9 T rad e and C o m m e r c e 5·2 6·2 15·1 7 ·9 10·7 8·5 4·1 5·3 P ro fe s s io n s a n d P u b lic S e r v ic e 2·7 3 ·3 6 ·9 4 ·8 3 ·2 2 ·9 0 ·4 1·6 D o m e stic S e r v ic e 7·3 2·6 6 ·8 1·2 O t h e r 6·0 9·6 2·2 10·8 3 ·1 0 ·2 0 ·3 Total 100·0 100· 0 100·0 100·0 100·0 100·0 100·0 100·0 % gainfully employed in total population 42·2 34·4 46·0 45·3 36·0 24·3 47·2 Primary industry 65·9 68·8 50·3 71·7 60·7 75·6 91·4 88·8 Secondary industry 10·3 10·6 19·2 3·5 12·3 7 ·3 3 ·9 1·9 Tertiary industry 23·8 20·6 30·5 24·8 27·0 17·1 4·7 9·3 Total •• 100·0 100·0 100·0 100·0 100·0 100·0 100·0 100·0

a Agriculture and Forestry. b Fishing only. c Among Chinese and Mongols. d Covers all primary industries. Source : From Statistical Pocketbook, 1941 for Indonesia ; from Chandrasekhar, Op. cit., and Census of India, 1941, Vol. I. Part I, for India; from Grajdanzev, Modern Korea, John Day, 1944, for Korea ; from Statistical Yearbook for Thailand, 1937- 38 to 1938- 39 for Siam ; from Pelzer, op. cit., for other countries, also Yearbook of Labour Statistics 1945- 46 (9th issue) International Labour Office. of manufacturing. Among the gainfully employed population, the primary industries claim 91·4 per cent in the Philippines, 88·8 per cent in Siam, 75·6 per cent in Manchuria, 71·7 per cent in Korea, 68·8 per cent in Indonesia, 65·9 per cent in India, 60·7 per cent in Malaya, and 50·3 per cent in Japan. The latest official estimate from China shows that farm population occupies 72·8 per cent in the whole country, but 47· 1 per cent in Taiwan. 62·4 per cent in Manchuria, and 75·9 per cent in China Proper.9 The slow progress of industrialization in the AFE countries is reflected in the limited proportion of gainfully employed population in the field of manufacturing; 19·2 per cent in Japan, 12·3 per cent in Malaya, 10·6 per cent in Indonesia, 10·0 per cent in India, 7·3 per cent in Man- churia, 3·9 per cent in the Philippines, 3·5 per cent in Korea, and 1·9 per cent in Siam. VII. P re-W ar and War- time Mig r a t io n and Set t l ement The unequal distribution of population over AFE countries has given rise to two types of population movement in pre-war years, namely, emigration from China, Japan, Korea and India to South-east Asia and Manchuria ; and redistribution of population from the densely to the sparsely settled parts within the country, in China and South-east Asia. The intra-country redistribution of population gives rise to resettlement on the one hand, and on the other, to urbanization touched upon in a previous section. Emigration: Emigration has been directed mainly from China, India and Japan to South-east Asia, and from Korea to Manchuria and Japan. Table 23 C hinese Emigr a nt s in AFE Countries, 1910- 41 (in 1,000) a Latestb pre-war Country 1910 1920 1930 year Hong Kong 445 312 821 1,048 (1940) Japan 8 15 31 — Korea 725 68 — Taiwan — 23 45 46 (1940)

Sub-total 460 675 965 — Indo-China —— 385 326 (1936) Indonesia 563 810 1,235 1,709 (1931) Malaya 770 916 1,174 1,778 (1941) Philippines — 49 111 118 (1939) Siam .. 1,400 260 445 524 (1937) Sub-total .. 2,733 2,035 3,350 Total .. 3,193 2,710 4,315

a Pelzer, op. cit. According to T. O. Cherian, Handbook of Asian Statistics, Indian Council of W orld Affairs, N ew Delhi, th ere w ere 200,000 Chinese in B urm a (1941), 48,000 in B orneo (1935), and 100,000 in S araw ak (1935). b L atest pre-war year for which data are available. 9 Statistical Abstract of the Republic of China, 1947.

33 5 Chinese emigrants to AFE countries went largely to countries in South-east Asia—85-6 per cent in 1910, 75·1 per cent in 1920, and 77·6 per cent in 1930. (Table 23) The decline during the decade 1910-20 was caused by the re-classification in Siamese census, which in later years considered Chinese born in Siam as of their own nationality. As a matter of fact, Chinese emigration kept on increasing, and the total num ber of 260,000 Chinese in Siam in 1920 grew to 524,000 in 1937. Chinese immigrants in these countries constituted the dominant economic group, rising usually from coolie labour to the higher position of the trader, banker, and owner of rubber plantations and tin mines. With the resurgence of nationalism in South-east Asia since the war, their position tends to deteriorate, as the natives, freed from colonial control, begin to struggle also for economic freedom. However, being in possession of a sizeable proportion of capital in these lands, they are still significant as potential investors in the post-war development and industrialization schemes of these countries. Japanese emigrants in pre-war days went largely to China, Man- churia, Taiwan, and Korea as public servants, traders, bankers, industrialists, smugglers, and spearheads for imperialistic aggression. Their emigration to these countries grew rapidly in the two decades between 1910 and 1930, and culminated in the year of Manchurian occupation (1931) Between 1910 and 1936, the year before the Sino-Japanese war Japanese immigrants in China and Manchuria increased from 80,000 to 574,000. During the war, the influx of Japanese armed forces and civilian officials for occupation purpose reached significant proportions. By 1945 there were 5,131,000 Japanese in AFE countries, over four-fifths being sta- tioned in China, Manchuria, Taiwan and Korea. (Table 24) Most of these have now been repatriated, with the exception of a small number

Table 24

J apanese Immigr a nt s in AFE C ountries, 1910- 45 (In 1,000) Country 3910 1920 1930 1936- 37 1945a China 80 239 281 59(1937) 1,501 Manchuria ——90 515(1936) 1,327 Taiwan — 153 244 282(1936) 479 Korea 100 386 502 609(1936) 915 Hong Kong — 22 1(1937) 19 Sub-total .. 180 780 1,119 1,466 4,241 Malaya — 75 8(1937) — Indonesia — 4 7 6(1937) — Philippines — 8 21 24(1937) — South-east Asia 890 Sub-total .. 180 19 33 38 890 Total 180 799 1,152 1,504 5,131a

a Inferred from statistics on repatriation. 34 of technicians being retained in Chinese, especially Manchurian, government service. Korean emigration to Japan Proper is of recent origin—since the start of the ‘ benevolent ’ protection of Prince Ito. Its causes are both political and economic. In 1913 there were only 3,000 Koreans in Japan. In 1920 there were 40,755 ; in 1930 419,000. The Japanese Government formerly placed various obstacles in the way of Korean emigration to Japan, but under the pressure of war and the shortage of man-power that resulted, it began to encourage the immigration of Koreans and Chinese as tem porary workers. In 1938 the Governor- General announced that there were 800,000 Koreans in Japan Proper.10 A survey by the Cabinet Planning Board at the end of 1941 showed 1,469,230 resident Koreans in Japan Proper, of whom 777,023 were in labour force and 692,207 not in labour force. Of those in labour force, 220,969 were in construction and civil engineering, 208,338 in manufacturing, 94,320 in mining, 60,430 in trade, 26,982 in stevedore, 15,754 in communication and transportation, 9,480 in agriculture and fishing, 5,116 in professions, 4,751 in hotels and restaurants, 130,544 as workers, and 339 unemployed.11 Another compilation by the Labour Bureau of the Welfare Ministry showed a total immigration of 667,684 Korean contract workers in coal and metal mining, construction and civil engineering, and other work including factory, from 1st April, 1939 to June 1945. Of this total, 520,548 or 78 per cent came in during the last three years of war, from 1st April, 1942 to June 1945. There have been Koreans living in the frontier area of Manchuria for several centuries, especially in the Chientao region. The movement to Manchuria became important after 1905 when so many of the oppo- nents of the Japanese Regime fled to Manchuria, and made Chientao a centre of anti-Japanese activity. The total number of Koreans in Man- churia reached the peak of about one million just prior to the Pacific W ar in 1941.12 Indians have gone largely to Malaya and Burma, where they are preferred to the natives for steady work in the exploitation of rubber and tin resources. In Malaya, where population growth is due more to immigration than to natural increase, Indians constitute 14 per cent of the total population in 1939, and next to the Chinese are the largest alien group.13

10 Studies of Migration and Settlement Report Series No. R-99 (Korean Migrants in the Far East), Library of Congress, Washington, D.C., November 3rd, 1944, p. 100. 11 According to the Cabinet Bureau of Statistics, there were on 30 June, 1944 209,907 K orean w orkers in factories and mines previously introduced in groups, of whom 140,788 w ere in mines and 69,119 in factories. See The Effects of Strategic Bombing on Japan’s War Economy, prepared by the Overall Economic Effects Division of U.S. Strategic Bombing Survey, Washington, December 1946, p. 103-4. 12 Grajdanzev, op. cit. 13 Thompson, op. cit.

35 The immigration of Indian labour is well organized and supervised by both the Malayan and Indian governments. The Indian Emigration Act of 1922 regulates the elaborate machinery which has been set up in order to supply the plantations of Malaya with their labour force. Only the Presidency of Madras is open to recruitment for Malaya. The immigrants fall into two classes ; (1) assisted immigrants, i.e., labourers and their dependents who come at the expense of the Indian Immigration Fund to be employed by estates or public services ; and (2) non-assisted immigrants, who pay their own passage. A high percentage of the non- assisted immigrants is of the labouring class, the rest being mostly traders, etc. The following table shows the immigration of Indians in both directions. It is obvious that Indian migration to and from Malaya is highly fluctuating, depending upon world economic changes affecting directly the export possibilities of rubber and tin from Malaya.

Table 25

I mmigr at ion in t o and Emigr at ion fr om British Malaya of Indians, 1909- 37 (In 1,000) a Year Immigration Emigration Difference 1903- 13 average 93·5 50·5 43·0 1925·29 average 119·8 73·1 46·7 1930 69·1 151·7 - 82·6 1931 19·7 101·3 - 81·6 1932 17·7 84·5 - 66·8 1933 20·2 32·7 - 12·5 1934 89·8 28·1 61·7 1935 65·2 38·4 26·8 1936 43·2 40·1 3·1 1937 122·6 44·5 78·1 a Pelzer, op. cit. This fluctuation also holds true of Chinese migration to and from Malaya. The following table illustrates this situation by showing net arrivals and net departures of Chinese and south Indian labourers in British Malaya.

Table 26 B ritish M alaya : N et A rrivals and N et D epartures of Chinese and South Indian Labourers, 1929- 38 (In 1,000) Year Chinese South Indians 1929 99·8 37·8 1930 19·1 - 78·4 1931 - 133·8 - 81·2 1932 - 128·3 - 66·3 1933 - 58·1 - 12·3 1934 41·1 61·8 1935 76·8 27·2 1936 69·2 3·4 1937 176·8 78·2 1938 50·5 - 31·2 'Source: Malayan Yearbook.

36 In Burma, as in Malaya, the rapid exploitation of the country under British rule has also given rise to the use of Indian and Chinese labour. As is generally the case, race antagonisms between the native and immigrant labour are aggravated by the. fact that a large measure of control over economic resources has also been lost, chiefly to the British but in an increasing measure to the Indians and the Chinese. There have been some serious race riots in recent years, and the prospect is that they will grow both in number and in violence if a larger measure of economic control is not returned to the Burmese, the more so since Burma has regained her political independence. Resettlement: For many of the countries in Asia and the Far East, the rapidly increasing pressure of population arises from its mal-distribution. This applies especially to Indonesia, Indo-China, and the Philip- pines, and to a more limited extent, China. In Indonesia the extent of population mal-distribution is amply demonstrated by the fact that Java and Madura, with only 7 per cent of the area, have 70 per cent of the population. The density of population, which reached 362 per square kilometre in Java and Madura during 1940, was only 11 in the Outer Provinces including Sumatra. Not only is there an enormous discrepancy between the density of Java and the Outer Provinces; even within Java there are considerable and striking density differences; 486 per square kilometre in Jokjakarta in 1930, 420 in Surakarta, 389 in Middle Java, 309 in East Java, and 235 in West Java. In the regencies of the northern coastal plains of Middle Java (Cheribon, Tegal and Pakalongan) are, however, to be found the most densely populated rural districts in Java, with a density reaching as high as 1,683 per square kilometre in Adiwerno (Tegal regency), and 1,075 in Plumbon (Cheribon regency). These high densities are possible—to mention only some of the factors—because of the relatively small percentage of uncultivated ground, the high percentage of cultivated land occupied by sawahs (i.e. irrigated rice fields) and the pre- sence of Western agricultural enterprises offering employment to farmers and landless agricultural workers, i.e. the sugar industry. They also account for the rapid growth of the native population in Java and Madura from 4 ·5 million in 1815 to 48 million in 1940, that is, over ten-fold increase in 135 years. The great mass of the increasing population remains dependent upon agricultural and native crafts for its subsistence. In an agrarian economy of the type found in Java, any increase of inhabitants leads to an extension of the soil under cultivation. Now, however, the density has reached such a point that Java is faced by a problem of over-population which can no longer be solved by the clearing of forestland because the remaining forests must be protected in order to preserve the water supply of the island. In spite of this exhaustion of the possibilities for agricultural expansion, the population continues to increase. The Dutch authorities in pre-war days began to take steps towards industrialization and the betterment of the people’s livelihood, as well as migration to the Outer Provinces, especially the eastern and southern

37 parts of Sumatra. The total number of colonists leaving for the Outer Provinces in the years immediately preceding the war has however been small compared with the total natural increase of a population of 48 million. The num ber of colonists which was only 7,000 in 1932, about doubled by 1936, mounted to over 45,000 in 1939, and is supposed to have exceeded 60,000 in 1941.14 The last figure, however, may not seem of much importance in view of an annual increase in population in Java amounting to about 650,000 between 1920 and 1930 and probably averaging 700,000 or more during the 1930’s ; but a movement of this kind, when it is sound and the need is real, is cumulative and gathers mo- mentum once it is started. It appears that such a movement may have been in the making in Indonesia, with Java as the centre of emigration, when the war put an end to it temporarily. Since there is no question of an abundance of good rice land in the Outer Provinces or of difficulties due to settlement in a different national jurisdiction or among people of a different race, or even of the dampening effect of having to settle among strangers, it would seem that this movement has a good chance to attain large proportions when the Dutch authorities come to a settlement with the Republic of Indonesia, and peace is again established. The Philippines, though less densely populated than Indonesia, are as a whole far less fertile, probably more like Sumatra and Borneo. The population here has grown rapidly as in the case of Indonesia, from 1 -5 million in 1800 to 16 million in 1939. The population problem of the Philippines is not one of lack of land but of better distribution of people on the land, and is in this respect similar to that of Indonesia. The small island of Bantayan has a density of 231 persons per square kilometre, and Cebu, the ninth in size, has a density of 212, but Luzon, the main island, has only about 70, and Mindanao, second in size, has only 20. A tabulation of the population density in 49 provinces in the Philippines during 1939 gives the following results : Population density (Persons per square kilometre) Provinces with the density

1- 50 17 51- 100 11 101-150 12 151-200 4 201-250 3 251-300 2

Total 49

The great problem, therefore, is to transplant a portion of the people from the over populated regions of Bantayan and Cebu to the under-developed but potentially rich areas of Mindanao. In the three pre-war decades several acts were passed designed to ease the population problem by settling land-seeking peasants on homesteads, but without much

1144 K a r l J . P e l l z z e e r r ; Pioneer SettlementSettlem ent in the Asiatic Tropics, IPR, 1945, p. 202.

38 success. Since the fall of 1938, however, the authorities have made great efforts to get a new long-range programme of development started in Mindanao. 200,000 pesos were released as an emergency allocation for organization work in the Mindanao Resettlement Project. A government corporation, the National Land Settlement Administration, with a capital of 20 million pesos, was established. On 23rd February, 1939, the first group of settlers sailed from Manila to Mindanao, accompanied by the head of the Administration and a group of government technicians. The government hoped that this first group would be the van- guard of a stream of settlers who would follow in the next ten years or so. The number of residents in the Koronadal valley project thus increased from 82 in February 1939 to 2,139 in February 1940, and 11,016 in February 1941.15 As in the Philippines and Indonesia, the population problem of Indo-China at present arises from the unequal distribution of the population over the land rather than from too great numbers in the country as a whole. Latest statistics show an average density of population of 34 persons per square kilometre in Indo-China, which obscures however the characteristic feature of the population distribution—great agglo- merations in the lowlands while the uplands and mountainous regions are very thinly settled. In 1948, for instance, the density of Annam was 40, of Cambodia 16, of Cochin-China 80, of Laos 4, and of Tonkin 83. Of a total population of 25 million in 1946, 2·1 million are squeezed into an area of about 330,000 square kilometres—in other words, 84 per cent of the population occupies only about 44 per cent of the total area. Indeed, population pressure is most acute in the Tonkin delta and in the adjacent portion of Annam. The further south one goes along the coast of the China Sea the less the country is crowded ; in Cochin-China there is actually a great shortage of agricultural labour. One method of dealing with the Indo-Chinese population is redistribution, that is, a transfer of people from over-crowded regions to those of low density. For a long time the lack of communications was a great obstacle, but a good deal of road and railway network had been completed before the war. The greatest obstacle that still remains is the intense aversion of the Annamite peasants to leaving their alluvial homelands and moving even into the uplands of their own country; much greater is their reluctance to migrate to other countries, to face differences in climate, people, language and customs, and the corrolary unwillingness of other peoples to face so large an arrival of foreigners. At present, only about 10 per cent of the land is cultivated, chiefly with rice. A very large part of the territory is covered by forests, the exploited part of which represents a little more than 5 per cent of the total area of Indo-China. This would leave 85 per cent of the land and there is little doubt that a considerable part of this could be used to relieve the pressure in the overpopulated regions. The Manchurian density of population, which averages 38 persons per square kilometre, is a little over one-third of that for China Proper (99 per square kilometre). Chinese migration to Manchuria, chiefly 15 P e l z e r , op. cit., p. 152.

39 from the two densely populated provinces of Shantung and Honan in the North, is not planned deliberately by the government, but represents a spontaneous attempt of the people in these provinces to seek relief from the heavy pressure of population. It bears strong contrast to the government sponsored schemes of resettlement in both Indonesia and the Philippines. The first Chinese migration into Manchuria began towards the end of the 18th century, but it was not until 1878 that the official barrier to migration into Manchuria was removed. From then on a steady stream of Chinese peasants has flowed into the North-eastern provinces. The decade prior to the Japanese occupation of Manchuria in 1931 saw an enormous increase in the size of the migration stream. Two forces were active—on the one hand, the force of attraction of employment and settlement possibilities in Manchuria, and on the other, the driving force resulting from overpopulation and such adverse economic and political conditions as famine and civil war in North China. A good many of the migrants came only for one reason, somewhat comparable to the Indian labourers in Burma and Malaya, arriving early in spring and returning in the fall. Many, however, stayed and settled on the land. The following table shows increasing movements between Manchuria and North China up to 1930. During the years 1927 to 1929 the number of immigrants and of those who remained in Manchuria was especially large, due to serious conditions in Shantung. The situation changed considerably, however, after the Japanese established their control. By 1931 the two streams of migration had already nearly balanced each other. In 1932 the unsettled conditions brought about a large exodus of Chinese, but in 1933 and 1934 many Chinese labourers were required for construction work undertaken by the Japanese. Since 1935 Chinese migration has been controlled, the purpose of the control being to ensure that only Table 27

C hinese Immigr a t ion in t o Manchuria, 1923- 39 (In 1,000) Year Presumably Entered Returned Remained 1923 433-7 286·8 146· 9 1924 492·5 232·7 259·8 1925 532·8 214·6 318· 2 1926 607· 4 299·4 308·0 1927 1,159·7 316· 6 843· 2 1928 1,074·5 381· 1 693·4 1929 1,046·3 601·4 444·9 1930 748· 2 488· 5 259·7 1931 467· 4 461·3 6 ·1 1932 414·0 498· 8 · 84· 7 1933 619·0 497·2 121·7 1934 690·9 439· 6 251·3 1935 519·6 495·0 24·5 1936 358· 1 366·8 · 8·6 1937 319·3 259·1 60·2 1938 4 92·4 252·8 239·6 1939 986·0 391· 0 595·0 40 Chinese coolies, recruited principally for seasonal labour, be admitted. Unofficial information indicates, however, that control was not fully effective and that net immigration exceeded the figures for 1935 to 1937. Since 1938 the boom conditions prevailing in Manchuria under the Five- Year Plan of Industrial Development have attracted Chinese labour, encouraged to leave by the turbulent conditions in North China. (Table 27)

VIII. P ost-W ar Population Movements Two types of population movements have developed in AFE countries since the conclusion of the war, namely, repatriation and movement of religious and political refugees. The repatriation of under six million Japanese, mostly the armed forces and civilian officials, but also merchants, bankers, industrialists, technicians, and artisans, from the former Japanese occupied areas, especially China (including Manchuria and Taiwan), Korea and South-east Asia, back to Japan is a necessary consequence of military defeat, and contributes to enhance the difficulties of an already over-populated nation now deprived of its former colonies. This pressure of increased population, however, is somewhat relieved by the repatriation of 1·2 million foreign nationals, of whom 1 ·1 million are Koreans, from Japan back to Korea, Taiwan and other countries. Besides, another half million Koreans in Japan are reported to have registered for repatriation. The partition of the sub-continent of India into two new nations since August 15th, 1947—India and Pakistan—was followed by the second type of post-war population movement—the transfer of five million non-Muslims from Pakistan to India and that of three million Muslims from India to Pakistan. These transfers, arising largely from religious conflicts, are most spectacular in history, both because of their magnitude and on account of the short duration in which the tr ansfers were effected—less than four or five months. The profound social, political and economic consequences to which such transfers give rise can only be visualised in their broad outlines, as up till now they have not by any means been finalized. Another example of the same type, but caused by political but not religious factor, is the movement of Korean refugees from Manchuria and North Korea to South Korea for fear of communist domination. This movement, is of smaller magnitude and is confined to a much smaller territory. Less than one million Koreans were reported to have crossed the 38° parallel southward, six-tenths were from Manchuria and four-tenths from North Korea.

Post-War Transfer of Religious and Political Refugees India and Pakistan: Among the post-war population movements, the greatest in history occurred in India and Pakistan. This is the post- war mass migration, caused by communal conflicts of a religious nature,

41 6 of about five million non-Muslims (Hindus and Sikhs) from Western Punjab, North-western Frontier Province and Sind in Western Pakistan into East Punjab, Western United Province and Delhi in India, and of about three million Muslims from East Punjab and Delhi in India into Western Punjab in Western Pakistan. Both movements started as a mere thimbleful before the 15th August, 1947,—the date of partition ; but gathered torrential force during the rest of the year. For most of these ' refugees migration was not a matter of choice ; it was forced on them by the orgy of rioting and massacre connived at, if not, according to some reports, backed and in some cases participated in, by the policemen and soldiers. And the two Dominions recognizing the inevi- tability of it mustered all the available resources to move this large mass of uprooted humanity across the frontiers. There were, broadly speaking, five stages in the extremely complicated and difficult task of bringing over and resettling the refugees; evacuation, reception, relief, dispersal, resettlement and rehabilitation. Evacuation, which includes collection of men in camps or convoys, and their movement either on foot or in bullock carts, trucks, lorries, motor cars, trains, ships and aeroplanes, that is, by every conceivable form of transport, has probably been the quickest, the best organized and most efficiently executed operation in the whole programme of refugee aid. Reception has been less satisfactorily handled, due to the delay in taking decisions about the allotment of land to refugees in the different districts, the dislocation of road and railway tracks caused by the Sep- tember flood and the delay by the Pakistan Military Evacuation Orga- nization who are responsible for drawing up the programme for evacuation of Muslims from East Punjab into Pakistan. In the matter of preliminary relief, that is, the provision of food, clothing and medical aid, the Government has not stinted either resources or effort; but in the matter of housing accommodation, however, they have been up against an overall shortage. An early January 1948 report from the Indian Union thus complained that ‘ far too many people—near about 1,250,000 —are still in 160 camps (of them about three lakhs or 300,000 in one big camp at Kurukshetra) or lying huddled up on railway platforms and until recently there were thousands who did not even have a roof over their heads.’ 1 6 This could have been prevented to some extent if some part of refugee influx could have been made to gravitate towards the site of a capital for the East Punjab, but in any case the creation of a second Lahore, another Rawalpindi or a new Sialkot is a long-term proposition. The last two stages of dispersal and resettlement and rehabilitation constitute the real essence of the refugee-aid programme of the Gov- ernment and give rise to some of the most complicated issues, some of which will remain unsolved. In view of what has taken place, the possibility of non-Muslim minorities going back to Pakistan with peace and honour seems to be precluded. Apart from this, the whole pattern of life and administration has changed so rapidly since the partition that

16 The Eastern Economist Special Number, January 2nd, 1948, article on ‘The‘ The uprooted millions p. 27. 42 it would be futile to advise the refugees to think of a trek back—the status quo ante-partition cannot just be restored and those in Pakistan who have benefited from the change will see to it that they are not dis- lodged from the vantage points they have occupied in the economic, business and administrative set-up. Planning for refugees will, on the whole, have to be on the basis of rehabilitation and resettlement in India, and it follows that dispersal must be guided by that aim. This involves the settlement of several million agricultural refugees in East Punjab and Western United Provinces on the one hand, and the urban rehabilitation of 1,200,000 non-agricultural refugees, including under this cate- gory (1) traders, businessmen, industrialists, industrial workers, bankers and money lenders, (2) teachers and students, (3) lawyers and doctors, and (4) clerks and white-collar workers, on the other. South Korea: Another post-war migration, of Koreans, from Man- churia and North Korea to South Korea, arises from a largely political factor—that of fear of communist domination. From the date of official count on 15th October, 1945 to the end of 1947, 859,930 Koreans have entered South Korea from North of 38° parallel, including Manchuria and North Korea. Of this total, 348,694 came from North Korea during the two post-war years 1946-47, and were distributed by months as shown in Table 28.

Table 28

M ovement OF Refugees from N orth K orea to South K orea January 1946 to December 1947a

Month 1946 1947

January 13,306 706 February 20,437 186 March 34,670 8,096 April 50,450 28,443 May 25,818 40,164 June 17,203 25,631 July 8,212 13,295 August 4,739 11,374 September 2,234 13,623 October 2,997 9.533 November 4,740 7,715 December 635 4,487

Total 185,441 163,253

a As recorded at the four refugee camps : Chunchon, Chumunjin, Uijongbu and Kaesong.

The large number of refugees from North Korea coming during the early part of 1946 appears to have been due to the need for food. This may have been due to a policy to squeeze out the small business men and farmers. There also appeared to have been continued pressure on rich business men and farmers who did not agree with these policies

43 and who therefore migrated southward to avoid Communist domination. This prevailing pressure seemed to continue until October 1947. However, governmental restrictions evidently played a major role in the drop of 4,000 during the last two months. The number of refugees from North Korea was fairly large in relation to the total population in South Korea, and thus necessitated the making of plans for their care and distribution. These refugees were first sent to the designated area and gathered in groups prior to distribution throughout South Korea. Representatives of the Department of Finance, at each assembly camp, issued receipts for yen in excess of 1,000, which the refugees were permitted to keep. A plan for limited withdrawal was provided for such funds of blocked accounts from banks or financial associations nearest refugees final destination, as a necessary means to exert some control over the flow of currency. Refugees were guarded until delivery at their destination had been completed. Emer- gency feeding was provided by the Public Health and Welfare Depart- ment. The Office of Foreign Affairs conducted an orientation of all refugees, explaining the need for dispersion throughout the provinces to minimize food, housing and employment problems in the urban centres ; reason for inoculation and health measures ; why currency circulation must be restricted ; nature and source of food given them ; and furnished any other pertinent information which would aid, comfort or expedite the processing of refugee personnel.17 Repatriation Japan: Since the end of the war, the largest volume of repatriation has taken place in Japan and its former colonies. The movement flows both ways, the repatriation to Japan of Japanese nationals from overseas areas, and the repatriation from Japan of Koreans, Taiwanese and other nationals to their respective countries. From the end of the war to 31st December, 1947, 5·84 million Japanese nationals were repatriated to Japan from overseas areas, while 1·18 million Koreans, Taiwanese and other nationals were evacuated from Japan to their respective countries. The population of Japan Proper during the period thus increased by 4·66 million through the process of repatriation and evacuation. Since November 1946 monthly repatriations to Japan have declined sharply and in December 1947 they were at their lowest level since conclusion of the war. Of the 5·84 million Japanese nationals repatriated to Japan 5 million or 86 per cent were repatriated up to the end of October 1946. During the year 1947, the total repatriation of Japanese nationals to Japan amounted to only 700,000 or 12 per cent. Similarly, evacuation of Koreans, Tiawanese, and other nationals from Japan also took place largely prior to the end of 1946. Of the 1·18 million evacuees, only 26,000 or 2 per cent were evacuated during 1947. (Table 29)

17 South Korea Interim Government Activities, December, 1947, pp. 5-6. 44 Table 29

M onthly Changes in Repat r iat ion to and fr om Japan, 1945-47

Month To Japan From Japan Net Change

1945 October 272,508a 186,900a 85,608a November 420,872 277,568 143,304 December 231,209 190,055 41,154 1946 January 355,838 99,807 256,031 February 272,860 96,718 176,142 March 567,228 63,768 503,460 April 459,985 34,461 425,524 May 667,469 22,734 644,735 June 620,895 6,396 614,499 July 328,209 937 327,272 August 191,599 24,519 167,080 September 204,823 33,662 171,161 October 390,490 47,629 342,861 November 21,478 46,589 - 25,111 December 97,860 20,889 76,971 1947 January 61,088 1,159 59,929 February 83,939 3,007 80,932 March 90,085 1,266 88,819 April 62,327 1,489 60,838 May 89,702 2,011 87,691 June 61,170 2,396 58,774 July 65,672 2,085 63,587 August 60,850 3,508 57,342 September 51,256 3,050 48,206 October 47,659 2,348 45,311 November 46,589 1,085 45,504 December 16,420 2,534 13,886 Grand total 5,840,080 1,178,570 4,661,510

a Total from the surrender date through 28th October, 1945.

Of the 5·8 million Japanese nationals repatriated up to the end of 1947, 3·30 million or 56·5 per cent were from China, 0·91 million or 15·7 per cent from Korea, 0·89 million or 15·2 per cent from South- east Asia. These three areas accounted for 5·1 million or 87·4 per cent. Of the 767,000 Japanese still to be repatriated by the end of 1947, 692,000 or 90·2 per cent were from the Soviet Far East including Siberia, Kuriles and Sakhalin, and 73,000 or 9 ·6 per cent from China, chiefly Manchuria. (Table 30) South Korea : From the date of official count on 15th October, 1945 to the end of 1947, 1,206,194 Koreans have been repatriated, including 1,110,972 from Japan, 58,143 from China, and 37,079 from other Pacific areas. On the other hand, 597,289 foreign repatriates have left South Korea during the same period, including 595,072 Japanese—415,799

45 Table 30 Repatriates to Japan, Classified by Origin Up to December 31st, 1947a Country Already Repatriated % To be Repatriated % China 3,301,039 56·5 73,325 9 ·6 China Proper 1,496,155 — 4,513 — Taiwan 478,274 — — 526 — — Manchuria 1,040,551 —— 65,286 — — Dairen 218,179 —— 3,000 Ryukyu Islands 67,880 —— — Hong Kong 19,197 0 ·3 — Korea 914,438 15·7 — 504 0 ·1 North Korea 321,248 —— — South Korea 593,190 —— 504 South-east Asia 889,758 15·2 — 568 0·1 Indo-China (North) 31,869 —— — Indonesia 14,841 — — — Philippines 132,760 —— 198 Unspecified 710,288 — — 370 Soviet Far East 379,498 6·5 — 692,518 90·2 Kuriles and Sakhalin 173,724 —— 198,292 Siberia 205,774 —— 494,226 Other Pacific Area 336,150 5 ·8 — 346 — Australian Area 138,654 —— 329 Hawaii 3,412 —— — Nearby Islands 62,389 —— — New Zealand 797 —— — Pacific Ocean Area . 130,898 — — 17 Total 5,840,080 100·0 767,261 100·0 a Summation of Non-Military Activities in Japan, Dec. 1947, p. 324. civilian18 and 179,273 military, 1,940 Chinese, 103 Taiwanese, and 274 Okinawans. According to a Tokyo report in November 1947, there yet remain in Japan 529,907 Koreans who have registered for repatriation. Of these, 46·6 per cent are adult males, 16·4 per cent females and the remaining 37 per cent are children under 18 years of age. China : Up to the end of 1947, 28,872 overseas Chinese were repatriated from China to countries in South-east Asia, chiefly to the Malayan Union and Singapore (57 per cent), Burma (28 per cent) Siam (6 per cent), North Borneo and Sarawak (5 per cent). Of this total, 21,066 persons or 88 per cent were repatriated by UNRRA and CNRRA up to the end of June 1947, while 2,806 persons or 12 per cent were repatriated by the ICIRO between July and December 1947. Over 96 per cent of the 23,872 overseas Chinese repatriated to South- east Asia were from the four coastal towns in the two southern provinces

18 This represents the difference between 704,303 outbound Japanese civilians and 288,504 inbound Japanese from North of 38° parallel during the period October 15th, 1945 to December 31st, 1947. See South Korean Interim Government Activities, December, 1947, p. 4.

46 of Kwangtung and Fukien; these towns were Amoy, Foochow, Swatow and Canton. (Table 31a.) Table 31a

R epatriation of Overseas Chinese fr om China to South- ea st Asiat ic C ountries Up to end of 1947 To June 30th July-December Destination 1947 . 1947 Total British Borneo North. Borneo 41 — 41 Sarawak 1,111 3 1,114 Burma 4,652 2,017 6,669 Hong Kong 172 — 172 Indo-China 103 _ 103 Indonesia 59 737 796 Malayan Union and Singapore Malayan Union 7,421 21 7,442 Singapore 6,153 28 6,181 Philippines.

Siam 1,354 — 1,354 Total 21,066 2,806 23,872 Origin Amoy 10,310 974 11,284 Foochow 2,008 4 2,012 Swatow 3,756 949 4,705 Canton 4,219 773 4,992 Shanghai 153 29 182 Taipeh 11 — 11 Hoichow 609 77 686 Total 21,066 2,806 23,872 On the other hand, 7,945 displaced Chinese in South-east Asia were repatriated to China—over 94 per cent to the two provinces of Kwang- tung and Fukien. 7,722 or 97 per cent were repatriated by UNRRA and CNRRA up to the end of June 1947, while 2'23 or only 3 per cent were repatriated by the ICIRO during the second half of 1947. (Table 31b.) Table 31b

R epatriation to China of Dis pl a c e d Chinese fr om South- east Asiat ic Countries Up to end of 1947 To June 30th, July-December, Origin 1947 1947 Total British Borneo North Borneo 15 15 Sarawak — 1 1 Burma 49 — 49 Hong Kong — —— Indo-China 1 216 217 Indonesia 664 5 669 Malayan Union and Singapore Malayan Union 94 — 94 Singapore 248 — 248 Philippines 6,587 — 6,587 Siam 64 1 65 Total 7,722 223 7,945 47 Table 31b (Continued) Destination China Kwangtung 495 148 643 Fukien 6,843 6 6,849 Other 115 1 116 Hong Kong 269 68 337 Total 7,722 223 7,945

By the end of 1947, 25,968 overseas Chinese in China were still awaiting repatriation, according to the estimated figures received from the Overseas Affairs Commission of the Chinese Government which represented however those not yet screened for eligibility. Of these 12,263 or 47·3 per cent were awaiting repatriation to Burma, 6,269 or 24·2 per cent to Indonesia, 5,535 or 21·4 per cent to the Philippines and 1,831 or 7·1 per cent to other parts of South-east Asia (Malayan Union, Singapore, Sarawak and Siam ). 25,197 or 97 per cent were awaiting repatriation in the two Southern provinces of Pukien and Kwangtung, with only 771 or 3 per cent at other parts of China. (Table 32) The Chinese Government had entered into negotiations with the governments concerned for early repatriation, but up to the end of 1947 they were still pending without prospect of early settlement.

Table 32

A pproximate Number of O verseas Chinese in C hina S till A w a it in g R epatriation End of 1947 a

Embarkation Total Burma

Port Siam Union Singapore Malayan Sarawak Indo-Chin Indonesia Philippines 68 Amoy 4,127 ——2,998 450 — 5,480 13,123 Foochow 1,930 4 515 1,290 45 16 55 106 3,961

Swatow 3,386 — — 1,289 — 40 — 174 4,889

Canton 2,747 187 126 135 — 9 — 20 3,224

Shanghai — — — 27 5 — — 25 57

Taipeh — ——500 ———— 500

Hoichow 73 50 30 30 11 5 15 — 214 Total 12,263 241 671 6,269 511 70 5,535 408 25,968

Note:—These are estimated figures received from the Overseas Affairs Commission, and have not been screened for eligibility.

48 Chapter IV LAND UTILIZATION I. Extent of Cultivation It is a common practice to employ the ratio or percentage of area under cultivation to total area to indicate the degree of land utilization. Table 33 gives the percentage of area under cultivation to total area in the AFE countries. Table 33 Percentage of Area under Cultivation to Total Area in AFE Countries Area under Percentage of Total Area Cultivation* Cultivated to (1,000 hectares) (1,000 hectares) Total Area Burma 60,297 7,082a 11·75 Ceylon 6,475 1,548b 23·91 China : 1,120,639 110,450 9 ·88 China Proper 987,015 93,886 9 ·51 Manchuria 130,041 15,615 12·01 Taiwan 3,583 949 26·49 India : 407,917 114,043c 27·96 Indian Union 347,547 96,140c 27·66 Pakistan 60,370 17,903= 29·65 Indo-China 74,056 6,000d 8·10d Indonesiae 190,434 10,400 5·46 Japan 38,239 6,012 15·72 Korea : 22,025 4,398 19·97 South Korea 10,107 2,630 26·03 Malayan Union and Singapore 13,759 2,023 14·71 Philippines 29,629 3,954 13·34 Siam 49,998 5,000 100·0 Total 2,013,468 270,910 13·45 * Source: Unless otherwise stated, figures are estimated on the basis of information obtained from Food and Agricultural Data for Far Eastern Countries, a typescript prepared in 1948 by the Office of Foreign Agricultural Relations, U.S. Department of Agriculture, and from Economic Survey of the Pacific Area, Part I : Population and Land Utilization, by Karl J. Pelzer, Institute of Pacific Relations, 1941. aT his figure is estimated upon the data presented in the Country Studies on Burma, prepared by the United Nations: Economic and Social Council, Working Group for Asia and the Far East, January 1947. b From Ceylon, Post-war Development Proposals, 1946, page 2. c From Basic Facts Relating to Hindustan and Pakistan, The Far Eastern Economist Pamphlets, No. 5, 1946, page 9. dT his figure is estimated by the General Statistical Service of Indo-China, and refers to normal situation. At present, owing to the unsettled political situation, the area un de r cultivation in Indo-China has been reduced to 4,700 thousand hectares, which would reduce the percentage of cultivated land to total area from 8·1 per cent to 6·4 per cent. eJ ava and Madura only.

49 7 The over-all extent of cultivation in the region is 13·5 per cent, a figure that is rather low. Among the AFE countries, the percentage for India is the highest (28 per cent), and that for Java and Madura the lowest (5·5 per cent). China (9·9 per cent), Indo-China (8·1 per cent) and Siam (10 per cent) are of the lower group, whereas Ceylon (23·9 per cent) and South Korea (26 per cent), next only to India, are among the higher group. This difference should be considered together with the difference in the population density as shown in the Chapter on Population, and the difference in the types of land use, analysis of which will follow. These factors are closely inter-related. Given the state of farm technology, a country or a region with a higher percentage of cultivated land could usually maintain a larger population. On the other hand, population pressure in a country or region tends to call for a higher extent of cultivation, and the country or region would have to draw more of its land from forestry and pasturing to cultivation, unless improvements in farm techniques be effected.

II. R atio of Cultivated Land to Population The ratio of cultivated land to population indicates, under a given state of production arts, the extent of sufficiency at which the land of a country is capable of maintaining its population. Based upon the estimated population for 1946 and the estimated figures for the area under cultivation, the following ratio of cultivated land to population, in Table 34, is obtained : Table 34

R atio of Cultivated Land to Population in AFE C ountries Ratio Ratio Country (Hectares per Country (Hectares per 100 persons) 100 persons) Burma 42 Japan 8 Ceylon 23 Korea 16 China 24 South Korea 14 Manchuria 38 Malaya 34 Taiwan 15 Pakistan 23 India 28 Philippines 21 Indo-China 24 Siam 28 Indonesiaa 14 Total . 24 a Covers only Java and Madura. The AFE region, has, on the average, 24 hectares of cultivated land per 100 persons. As to whether this average is sufficient or not, much depends on the ways by which land is utilized and the patterns according to which economic activities are co-ordinated. The ratio for Burma is the highest, which reaches 42 hectares per 100 inhabitants. The ratio for Japan is the lowest, only 8 hectares per 100 inhabitants. Ratios for most other countries vary between 14 and 34 hectares. But it is to be noted that even within the same country the ratio may differ from place to place. In China, the regional difference is rather remarkable, varying from 38 hectares for Manchuria to 15 hectares for Taiwan. Even

50 more variable is the case of Indonesia, where the ratio for Java and Madura differs sharply from that of the Outer Provinces. Difference in the ratio of cultivated land to population may be co- related with the difference in population density on the one hand, and, on the other, with the types of land uses. That the ratio for Japan is the lowest may well be explained by the fact that her population density is the highest. Next to Japan are Java and Madura whose ratio is only 14 hectares per 100 inhabitants. This is due to the fact that although for Indonesia as a whole the average density of population per square kilometre is 39, that for Java, Madura and Sumatra, which have 32% of the total area but 87 per cent of the total population, reaches 130. That the ratio for Burma is the highest may also be explained by her population density which is only 28 per square kilometre, the lowest among the countries covered by the present Survey. It may also be pointed out that in the country where the ratio is lower, land is usually more intensively cultivated.

III. T ypes of Land Use Table 35 gives the percentage distribution of the basic types of land use for selected AFE countries. Although it refers to pre-war years, yet since in normal time changes in land use are gradual, and since for the war period no data are available, this table provides us, at least with a general background. Table 35

Basic T ypes of Land Use in Sel ect ed AFE C ountries In Pre-war Years (In percentages) (1930) India (1936) Japan China (1938) (1936) Korea (1938-9) Formosa (1930-36) (1929-33) Indonesiac Philippines Cultivated Land 27·0 23·8 (1936) 46·3 63·5b 17·5 20·8 21·9 Pasture 4·6 — (a) — 8·7 — 17·8 Forest 8 ·7 59·7 (1930) 13·1 23·0 54·5 77·5 58·2 Other Land 59·7 16-5 40·6a 13·5 19·3 1·7 2·1 All Land 100·0 100·0 100·0 100·0 100·0 100·0 100·0 a Figures not available separately for pasture land. b Includes both native and estate agriculture. c Java and Madura. Among the different types of land use crop cultivation claims the highest percentage in India and in Java and Madura, being 46·3 per cent and 63· 5 per cent respectively. The percentages for other countries vary between 18 per cent and 27 per cent. The country which has the highest percentage of land in pasture is the Philippines, amounting to 17·8 per cent. While no separate figure for pasture land is available for India, the percentage of land in pasture is low for China and Japan, being 4·6 per cent for the former and 8·7 per cent for the latter. But it should be pointed out that in the case of China, since the figures are taken from a sampling study which covers only China Proper and

51 Table

P er cent a ge Dis t r ib u t io n of the Acreages of

Indian Chinaa Taiwan Manchuria Country : Burma Ceylon Union 1940-41 1946 1930-37 1930-36 1935 Year: 1938-39

Food Crops: Rice 71·81 30·0 22·02 62·1 1·931·61 Wheat —— 22·44 — 7 ·9 14·70 Millets 2 ·58 — 7 ·78 — 19·4 23·00 Maize 1 ·23 — 5 ·25 — 10·0 3 ·25 Barley ——7 ·50 —— 2 ·81 — 22 4 — Kaoliang — 5 ·72 — · — Soybeans ——5 ·83 — 26·3 Beans 6 ·74 — — ——— Potatoes 1 ·58 — 2 ·61 12·7 — — — —— — — 7 ·47 Oilseeds — — Cassava ————— Areca nuts — ———— Others 12·26 — 16·00 — 2·7 —

Total 96·20 30·0 95·15 74·8 90·6 82·85

Commercial and Industrial Crops: Coconut — 30·24 ———— Sugar cane ———11·3 — — Tea — 18·06 — 3 ·8 — 0 ·34 Coffee — — ——— — — 0 ·64 —— 0-55 Tobacco 0 ·76 — —— Cotton — 4 ·21 — 9 ·51 Abaca (hemp) 2 ·40 —— — — Rubber —————— Jute 0·64 21·70 1 ·75 ——— -

Total 3·80 70·00 4·85 15·1 12·15 Other Crops: — — — 10·2 9·4 5 ·00

Grand Total 100·00 100·00 100·00 100·00 100·00 100·00

Source: Data are supplied by the governments concerned. a Excluding Taiwan and Manchuria.

52 36

P rincipal Crops in AFE C ountries

Malayan Indo-China Indonesia Japan Korea Union and Pakistan Philippines Siam 1937 1938 1936 1936 Singapore 1938-39 1936 1937-38 1938

82·96 45·1 43·8 26·8 14·3 46·66 45·5 93·89 — — 9·4 5·6 — —— — ——15·9 — 6·06 — — 8·30 22·9 — — 15·2 0·24 — — 10·7 17·9 — 1·17 — —

_ 13·2 ____ _ 1·24 7·3 — —— — — 0·31 1·91 — — — — — _ ———— 4·43 — — — 10·8 — — — — — 1· 2 0·83 3·6 25·7 12·6 5·0 — 0·04

95·24 91·9 89·6 96·2 20·5 80·52 62·7 94·48

12·1 14·0 1·40 _ — — — — 5·6 0·25 0·33 ——— 0·1 0·17 —— 0·16 —— — 0·5 — — 0·01 0·36 1·7 — — 0·1 0·86 1·5 0·33 0·24 — — 3·8 — 5· 7 10·6 2·10 — __ 64·7 _ 3·24 — — — — ——8·36 —

3·85 1·7 3·6 3·8 77·5 14·46 31·7 5·45

0·91 6·4 6·8 — 5·02 5·6 0·07

100·00 100 00 100·00 100 00 100·00 100·00 100·00 100·00

53 excludes most of the other parts where pasture is a more important type of land use, such as Manchuria and the North-western provinces, the percentage of pasture would be higher for China as a whole. The forest land usually occupies a much greater proportion than any other type of land use. This is true for most AFE countries except China, India, Java and Madura. The percentage of forest land is the highest for Korea, 77·5 per cent, and the lowest for China, only 8·7 per cent. That the figure for China is extremely low and is probably under-stated can well be explained again by the reason that we have just given for pasture. It is quite obvious that the percentage for other types of land use is very high for China and India, and of it a part would most probably be for forests and pastures. With regard to the cultivated land there are again several types of uses, which we usually call the types of farming. In Table 36 is given the percentage distribution in acreage of principal crops for all the AFE countries. Crops are classified into three groups : food crops, commercial and industrial crops and other crops. In the AFE region except Ceylon and Malaya, the main type of farming is that of food crops. The percentage in acreage of food crops is the highest for Burma, China, Korea, Indo-China and Siam, amounting to 95 per cent or over, after which are India, Japan, Indonesia, Pakistan, and Manchuria, with 81 per cent to 92 per cent; the Philip- pines and Taiwan, with 63 per cent and 75 per cent respectively. The land devoted to food crops is only 30 per cent for Ceylon, and 21 per cent for Malaya. Among the food crops, rice is the most important among the AFE countries except China. In China wheat and rice are the major crops. The overwhelming predominance of rice acreage applies especially to Siam, Indo-China and Burma, the three greatest rice-exporting countries in the world. Wheat is the next important crop after rice in Pakistan, and millet in India. For Indonesia and the Philippines maize (corn) is the next major food crop after rice. It may also be noted that soybeans is the most important crop in Manchuria, and is also among the major food crops in Korea. The percentage in acreages of commercial and industrial crops is the highest for Malaya and Ceylon, 78 per cent and 70 per cent respectively. In Malaya, rubber acreage alone takes 65 per cent. In Ceylon the acreage under commercial and industrial crops is more evenly distributed between coconut, tea and rubber. It is to be noted, however, that in some AFE countries a large part of the food crops is used for export and, therefore, their percentages of land devoted to commercial crops are actually higher than can be shown in the Table. This is especially the case with Burma, Indo-China and Siam where rice is the most important item among exports, and with Manchuria where soybeans has in some years ranked as the foremost export item.

IV. P re-W ar and Post-W ar Changes Most of the AFE countries have undergone the hardships of the second World War, and for some of them peace has not yet been re-

54 established since the V-J Day. This factor has reduced the crop acreage to such an extent that shortage in the supply of food and some important raw materials (such as cotton) has been made more acute and more difficult to alleviate than otherwise. Here the most important food crops and commercial and industrial crops are reviewed with a view to comparing the situation of 1947 with that prevailing in 1946 and the pre-war years. (Table 37.) Let us take the principal food crops first. The total acreage in 1947 for rice, wheat, millets, maize, barley, soybeans, and kaoliang is 166,845,000 hectares, which shows an increase of 2·3 per cent as compared with 1946 and of 4·6 per cent as compared with the pre-war years. Among the food crops, the acreage for millets in 1947 increased by 4·7 per cent as compared with 1946, and by 25·8 per cent as compared with the pre-war period. The increase for maize was 2·3 per cent and 17·9 per cent respectively. On the other hand, the decline in the acreages for soybeans and kaoliang was also conspicuous. The 1947 acreages for these two crops were only about three- fourths of the pre-war figures. Since soybeans and kaoliang are mainly grown in China (especially Manchuria) and Korea, the unsettled situation existing there in 1947 may explain in part such a great decline. It is most reassuring to note th at the 1947 acreage for rice, the staple food crop, remains almost unchanged as compared with 1946 or the pre-war period. This is due to the fact that although in some countries, such as Burma, China, Indo-China, Japan, and the Philippines, rice acreage was greatly reduced because of war destruction, it was almost correspondingly increased in other countries not directly hit by actions of war, such as Ceylon, India, Korea, and Siam. As to the changes that occurred in the total acreage of the principal food crops, the individual countries in the AFE region may be classified into two groups: One group shows a decrease in the total acreage in 1947, including countries directly affected by the war, such as Indo-China, Japan, Korea and the Philippines ; the other shows an increase, including countries like Ceylon, India, and Siam. The case of China needs some explanation. China is a country where war damage and destruction were among the heaviest and the duration of war the longest. It is rather unexpected that her total acreage for the principal food crops in 1947 shows a slight increase. But taking the individual crops separately, we find that the acreages for rice, soybeans and kaoliang decreased while those for wheat, millets and maize increased, as compared with the pre-war years 1930-37. The acreage for barley increased very little. It is to be emphasized here that the increase in the acreages of one group of food crops does by no means fully compensate for the decrease in the acreages of another. This is especially true since the food crops whose acreages have decreased, such as rice and soybeans, are those which usually take up the most fertile land and thus yield the greatest returns per unit of land. In Table 38 the acreages of principal commercial and industrial crops in selected AFE countries and their percentage changes as compared with 1946 and the pre-war years are given. 55 Table 37 A creages of Principal Foood Crops in AFE C ountries in 1947 and their Percentage Changes as of 1946 and of Pre- war Years Malayan Country : Ceylon Chinaa Indo- India Japan Korea Union a n d Philippines Siam Total Chinab Singapore Acreage in 1947 (1,000 h e c t a r e s ) Food C r o p s : Rice 370 18,898 4,000 31,625 2,900 1,111 330 1,852 4.000 65,086 Wheat 23,013 14,015 604 88 37,720 Millets 7,389 27,631 192 205 35,417 Maize 11 5,665 30 3,465 42 23 -c 819 10,055 Barley 6,834 2,646 353 425 10,258 Soybeans 4,005 255 281 -c 4,542 Kaoliang 3,727 40 3,767 Total 381 69,531 2,222 79,382 4,346 2,173 331 2,671 4.000 166,845 As Percentage of 1946 Rice 100·0 100·5 88·9 97·8 103·1 101·2 103·4 112·2 125·0 100·1 Wheat 104·9 100·2 95·5 106·5 102·9 Millets 98·2 106·3 115·6 146·7 104·7 Maize 100·0 99·3 300·0 99·4 114·9 112·6 13·2 143·4 102·3 Barley 116·5 96·8 95·6 105·1 109·5 Soybeans 100·1 115·2 120·3 110·3 101·7 Kaoliang 94·1 303·1 94·8 Total 100·0 102·6 89·4 99·8 102·3 109·1 102·6 120·2 125·0 102·3 As Percentage of Pre-war-Years Pre-war Years 1935-39 1930-37 1935-39 1935-40 1930-34 1936-40 1936-40 1938-42 1938-41 Rice 105·4 95·6 74·9 106·3 90·9 101·2 111·0 88·6 108·5 99·0 Wheat 114·2 100·7 110·0 68·2 108·6 Millets 105·6 133·4 81·6 100·6 125·8 Maize 120·2 10·0 135·9 100·0 145·2 30·8 89·9 117·9 Barley 101·4 105·5 97·7 61·8 99·6 Soybeans 76·5 75·1 86·1 820·6 77·0 Kaoliang 72·6 270·0 73·2 Total 105·4 101·2 71·5 112·9 92·1 87·8 110·7 89·0 108·5 104·6 Source : Data are supplied by the governments concerned. a Manchuria and Taiwan are not included. b Figures estimated by the General Statistical Services of Indo-China. c L ess than 500 hectares. Table 38

Acreages of Com m ercial and Industrial Crops in AFE Countries in 1947 AND THEIR PERCENTAGE CHANGES AS OF 1946 AND OF PRE-W A R YEARS Malayan Union Philip- Country CeylonCeyl onChinaa Chinaa India Japan and pines Total Singapore AcreageAcre age in in1947 1947 7 (1,000 hectares) Commercial and Industrial Crops : Coconuts 3 3 Sugar cane — — 1,663 — _b 20 1,683 Tea .. 222 ——— 4 — 226 Tobacco — 597 — 42 __b 23 662 Cotton — 4,124 5,912 — __b — 10,036 Rubber — — — — 1,343 — 1,343 Total .. 222 4,721 7,575 42 1,350 43 13,953 As Percentage of1946 Coconuts ————101·3 — 101·3 Sugar cane ——107·4 — 6·9 303·1 108·0 Tea 100·0 ———118·9 — 100·3 Tobacco — 106·7 — 184·1 250·0 85·2 107·2 Cotton — 102·8 100·9 —— — 101·2 Rubber ——————— Total 100·0 103·2 102·3 184·1 66·1c 127·2 102·7c As Percentage of Pre-war Year s 1935-39 1930-37 1935-40 1930-34 1936-40 1938-42 Pre-war Years Coconuts —— — —96·4 — 96·4 Sugar cane ——107·6 — 58·2 8·9 94·4 Tea .. 99·6 ———147·6 — 100·1 Tobacco — 104·7 — 120·1 500·0 34·6 98·3 Cotton — 109·0 60·4 —— — 73·9 Rubber ————102·1 — 102·1 Total 9 9 6· 108·4 120·1 102·2 14·1 77·5 Source : Data are supplied by the governments concerned. a Manchuria and Taiwan are not included. b Less than 500 hectares. c Rubber for Malayan Union and Singapore not included. Except two crops—rubber whose acreage has shown a slight increase and tea for which the acreage has remained almost unchanged— the acreages in 1947 for all the important commercial and industrial crops have shown a decline as compared with the pre-war period. The decline is the greatest for cotton, about 26 per cent. Among the individual countries, China, Japan and the Malayan Union and Singapore have shown an increase, and other countries a decrease. The most significant case is that of cotton. China and India are the two greatest cotton growers in the AFE region. In 1947 the acreage of cotton in China, as compared with pre-war years, increased by 9 per cent but that in India decreased by 40 per cent. This decrease in the acreage of cotton has contributed directly to the reduction in its production. The impact is the more serious since India is the only country in the AFE region that used to export a large amount of raw cotton.

8 57 Chapter V

AGRICULTURAL PRODUCTION

I. Crop Production Food Crops In Table 39 is given the 1947 production of principal food crops and their percentage changes as compared with 1946 and the pre-war years. In comparison with 1946, the 1947 production has, in general, shown a trend toward the better. A majority of the principal food crops, such as rice, wheat, maize, barley and soybeans, have continued to increase in production. Only three crops, millet, potatoes and kaoliang, have shown a decrease. As compared with the pre-war years, however, the 1947 production shows, in general, a reduction. Among the important food crops, only wheat and potatoes exceeded the pre-war levels, while other food crops, particularly rice, were still below the pre-war level of production. This is one of the important factors that have contributed to the present food shortage in the AFE region. The unsettled situation in some countries and the rapid population growth in general have made the shortage even more acute. Rice : As shown in Table 39, the total rice production in 1947 was 98,494 thousand metric tons. This figure, however, does not cover the whole AFE region because Burma and Pakistan are not included. Even for China, the figures are under-stated, because of the exclusion of Man- churia and Taiwan. In order to give a complete picture of production of rice, the most important food crop in the AFE region, estimates for the countries where they are lacking have to be made. In terms of thousand metric tons, they are 3,900 for Burm a1, 8,970 for P akistan2, 1,500 for Taiwan and Manchuria3, which raises the total for China to 49,929. With this revision, the total rice production in 1947 for the AFE region was raised to 112,864 thousand metric tons. This is the most approximate figure that could be arrived at with the information available. It is interesting to compare our figures for the AFE countries with those estimated and submitted by FAO to the United Nations for the Economic Report, 1945-47. The comparison is given in Table 40,

1 Estimated by FAO for the crop year 1946-47. 2 Data supplied by the Government of Pakistan for 1944-45. 3 Estimate based on the information supplied by the Government of China.

58 Table 39 P rincipal Food Crops in 1947 in AFE C ountries and their Percentage Changes As of 1946 and of Pre-war Years Malayan Union Country : Ceylon China a Indian Union Indo-Chinab Indonesia Japan Korea and Philippines Siam Total Singapore Production in 1947 (1,000 metric to n s ) Rice 181 47,929 21,884 3,965 6,600 8,725 2,160 239 2,037 4,774 98,494 Wheat 25,059 5,080 83 60 30,282 Millet 8,364 9,347 56 141 17,908 Maize 7,607 2,235 54 1,300 49 20 7 475 11,747 Barley 7,901 2,435 494 316 11,146 Soybean 4,689 209 127 2 5,027 Kaoliang 4,889 32 4,921 Potatoes 24,164 2,197 525 118 27,004

1947 Prod uct ion as P e r c e n t a g e of 1946 Rice 103·4 100·8 108·6 88·3 124·5 97·4 117·6 104·4 125·5 121·6 104·6 Wheat 108·7 82·0 95·5 99·4 103·1 Millet 91·9 94·9 160·8 178·3 93·9 Maize 99·6 91·7 327·3 185·7 118·1 188·3 93·3 143·3 105·0 Barley 125·7 104·3 119·4 84·5 118·4 Soybean 105·3 103·3 105·0 95·0 105·2 Kaoliang 89·7 460·5 90·2 Potatoes 97·0 126·9 109·4 74·7 99·0

1947 production as Percentage of Pre-war years (1930-37) (1935-39) (1937-41) 1930·34) (1936-40) (1936-40) (1938-42) (1938- 41) Rice 111·0 95·7 105·6 61·5 77·7 97·9 96·3 72·0 90·0 95·3 94·1 Wheat 115·1 69·5 110· 0 57·8 103·6 Millet 101·6 81·4 54·3 96·0 89·7 Maize 117·1 95·6 1 0 0· 61·9 74·4 219·8 233·3 88·4 97·2 Barley 100·4 104·3 6 4 0· 43·3 95·2 Soybean 76·9 62·7 62·8 75·8 Kaoliang 69·7 330·8 37·3 70·0 Potatoes 130·4 51·6 147·5 337·1 116· 5 Source: Data supplied by the Governments concerned. a Manchuria and Taiwan are not included. b Figures are estimated on the basis of data supplied by the General Statistical Service of Indo-China. Table 40

R ic e Production in AFE C ountries, 1947 (1,000 Metric tons)

Country ECAFE Figure FAO Figurea (1947) (1946-47) Burma 3,900 3,900 Ceylon 181 180b China 49,429c 49,000 India 21,884 42,900d Indo-China 3,965 4,100 Indonesia 6,600 5,600 Japan 8,725 11,500 Korea 2,160 2,200 Malaya 239 400 Pakistan 8,970 — Philippines 2,037 2,000 Siam 4,774 3,700 Total 112,864 125,480 a From United Nations, Economic Report: Salient Features of the World Economic Situation, 1945-47, Lake Success, New York, January 1948, p. 195, table 3. A b ccording to our estimate. c Including Taiwan, one million metric tons ; and Manchuria, half million metric tons. d Including Pakistan. According to our estimate, rice production in 1947 for the whole AFE region was 112,864 thousand metric tons. The FAO figure, 125,480 thousand metric tons, is higher than our estimate by 12,616 thousand metric tons. This difference lies largely in the fact that FAO figures for India (including Indian Union and Pakistan) and Japan are much higher than ours. As for other countries in the region, the two estimates are generally in accord, with only slight difference in some cases owing to two factors. One is the difference in the degree in which rice is milled. This factor alone has made it very difficult for the rice statistics to reach a high degree of accuracy. The other is the difference in the crop year referred to. In Table 40 our estimate refers to 1947 while that of FAO to 1946-47. In some countries, rice is only harvested within one calendar year, but in others rice harvesting, owing to double cropping, is extended to the following year. Compared with 1946, rice production in 1947 increased by 5 per cent, but was still 6 per cent below the pre-war level. Among the AFE countries, only Ceylon and Indian Union have shown a continuous increase in rice crop even compared with the pre-war period. All other countries, except Indo-China and Japan, which showed an increase in rice crop as compared with 1946, were still below the pre-war levels. Considering the rapid population growth and the position of rice as the staple food for the peoples in most countries in the AFE region, it is clear that this decrease in rice crop has already given rise to the serious problem of food shortage. Wheat: The total wheat production in 1947 for the AFE region was 30,282 thousand metric tons. The wheat crop has shown an increase

60 in 1947 as compared with 1946 (by 3 ·1 per cent) and with the pre-war years (by 3·6 per cent). In the AFE region, only China, India, Japan and Korea have reported on the wheat crop. The importance of wheat as a cereal product is most clearly shown in China, where, as is indicated by the acreage, rice and wheat share the predominance in the family of food crops. Wheat is also an important crop in India, though in a much less degree. Millet: Here many kinds of millets, even the native ones such as jowar and bajra of India, are included. As in the case of wheat, only China, India, Japan and Korea have reported on the crop. Millet is a more important crop in India, next only to rice; in a less degree in China and still less in Japan and Korea. The total production of millet in 1947 was 17,908 thousand metric tons. The millet production decreased in 1947 as compared with 1946 and with the pre-war period, the decrease being 6 per cent and 10 per cent respectively. In China, however, the 1947 crop was 1 ·6 per cent higher than the pre-war. Maize : Maize (corn) has been a popular crop in the AFE region. The total maize production in 1947 was 11,747 thousand metric tons, about 5 per cent higher than in 1946 but 3 per cent lower than during the pre-war years. Among the eight countries which have reported on the crop, China, India, Malayan Union and Singapore have shown, however, a decrease in production in 1947 as compared with 1946. But this decrease was more than offset by the increase in Indo-China, Indo- nesia, Japan, Korea and the Philippines,—the more than three-fold increase in Indo-China being the most remarkable. As compared with the pre-war years, only China, Korea, and the Malayan Union and Singa- pore have shown an increase in 1947, while all other countries have shown a decrease. The increase in Korea was the greatest, the crop in 1947 being more than twice the pre-war figure. In Indonesia where maize as a food crop ranks only next to rice, the production in 1947 was still 38 per cent below the pre-war level. In a less degree it is also true of the Philippines. Barley: In the AFE region, as in many other regions, barley is not used directly as a human food, but as a feed for hogs and a material for beverage. The total barley production in 1947 was 11,146 thousand metric tons, 8 per cent higher than 1946 but 5 per cent lower than the pre-war years. As in the case of wheat and millet, only China, India, Japan and Korea have reported on the crop. Both China and India have shown an increase in production in 1947 as compared with 1946 and the pre-war years, while Korea has shown a decrease. In Japan, the barley crop in 1947 increased by 19 per cent as compared with 1946, but was still 36 per cent below the pre-war level. Soybeans : In the AFE region, only China, Japan, Korea and Siam have reported on the soybean crop. The total soybean production for these countries in 1947 was 5,027 thousand metric tons. It was 5 per cent higher than 1946 but 24 per cent lower than the pre-war years. All the exporting countries except Siam have shown an increase in 1947 as compared with 1946, but were still far below the pre-war levels.

61 Table 41

C ommercial and Industrial Crops in AFE C ountries in 1947 and Their Per cent age Changes as of 1946 and of Pre- war Yea r sa

Malayan Indian Union Country : Ceylon Chinab Japan Union Indo-Chinac Indonesia Korea and Philippines Siam Total Singapore Production of 1947 (1,000 Metric tons) Coconuts 18 18 Sugar 940 18 71 1,029 Tea 132 23 155 Tobacco 649 60 11 15 12 7 754 Cotton 890 650 16 1,556 Rubber 81 13 39 356 610 56 1,155

As Percentage of 1946 Coconuts 101·3 101·3 Sugar 97·4 128·1 606·4 103·8 Tea 100·0 — 100·9 102·0 Tobacco 104·9 214·2 133·9 250·0 83·7 69·6 107·3 C otton 100·2 103·3 64·3 101·0 Rubber 186·7 186·7d

As Percentage of Pre-war Pre-war years 1930-37 1935-39 1939 1930-37 1 9 3 6 -4 0 1936-40 1938-42 1942 Coconuts 96·4 96·4 Sugar 108·7 48·5 7·9 57·2 Tea 122·2 57·8 105·4 Tobacco 99·8 91·5 53·4 500·0 34·6 42·3 95·2 C otton 110·0 64·9 138·4 85·4 Rubber 57·0 57· 0 d

a Data supplied by the governments concerned. b Manchuria and Taiwan are not included. c Including Cambodia and Cochin-China only. d Percentages refer to Indo-China only. Potatoes: In the AFE region, potato is the most important supplementary food, especially for the people in the lower-income group. It is to be recognized, first of all, that among the important crops, statistics for potatoes are the most incomplete. Most farmers actually do not pay much attention to the exact amount harvested. The different and changeable degree of shrinkage to which potato is particularly subjected has rendered the crop reporting inaccurate. The total production of potatoes in 1947 for the countries which have reported on the crop, that is, China, Japan, Korea, Malayan Union and Singapore, was 27,004 thousand metric tons. This figure, though 1 per cent lower than in 1946, was 17 per cent higher than during the pre-war period. Among these four countries, China alone harvested 24,164 thousand metric tons in 1947, almost 90 per cent of the total. While 3 per cent lower than 1946, the 1947 crop of China increased by 30 per cent as compared with the pre-war years. All this may indicate that under the present state of farm technology and under the increasing population pressure, farmers in China and Korea, and perhaps in some other countries as well,' have to pay more attention to some of the secondary crops so as to meet the increased demand for food. It is also to be noted that crops like potato require far smaller amount of fertilizers and attention on the part of the growers. Commercial and Industrial Crops: Statistics for commercial and industrial crops are much more varied and less complete. For tea, coconuts, sugar cane and tobacco, no accurate crop reports and even estimates are generally available. In Table 41, the production of principal commercial and industrial crops in 1947 in the AFE countries and their percentage changes as of 1946 and of the pre-war years, are given. But since some countries have not reported on some crops which they actually grow, the total production for each crop as here presented should not be considered as representative of the whole AFE region. Also for the same reason, the percentage changes can be taken only to indicate the general tendency in the post- war years. In 1947 all the commercial and industrial crops under review have shown an increase in production as compared with 1946, but, except tea, all have not reached the pre-war levels. Coconuts : In the AFE region, Ceylon, the Philippines, Malayan Union and Singapore are the three most important coconut growing countries. In Ceylon the percentage of the cultivated land in coconuts has ru n as high as 30 per cent. As to production in 1947, only Malayan Union and Singapore, where the acreage in coconuts is 12 per cent, has reported on the crop. The 1947 production of coconuts was 18,000 metric tons, 1 per cent higher than 1946 but 4 per cent lower than the pre-war years. Sugar: Among the AFE countries, only India, Japan and the Phi- lippines have reported on the amount of production in 1947 for sugar.4 4 From the Chapter on Land Utilization, we have learned that in addition to these countries, Taiwan, Indo-China and Siam also grow sugar cane. In Taiwan, the acreage in sugar cane has been as high as 11 per cent. 63 For these three countries the total sugar production in 1947 was 1,029 thousand metric tons. This figure was 4 per cent higher than 1946, but 43 per cent below the pre-war level. The 1947 sugar production in India, almost 3 per cent lower than 1946, increased by 9 per cent as compared with the pre-war period. In Japan the situation was the reverse. The 1947 sugar production was 28 per cent higher than 1946, but decreased by 51 per cent as compared with the pre-war years. The post-war reduction in sugar production in the Philippines was the most remarkable. In 1947, production, though six times that of 1946, was only 8 per cent of the pre-war production. This factor alone has rendered sugar shortage, especially in the Philippines, a serious problem. It was estimated by the FAO that the total sugar production in 1946-47 for Asia was 4,042 thousand metric tons.5 This amount was only 60 per cent of the pre-war production of 6,955 thousand metric tons. Such a drastic reduction in sugar production, especially in the Philippines, Java and Taiwan, was due to the damage done to the production facilities during the war. Tea : In the AFE region, Ceylon and India supplied 96 per cent of the 1946 tea exports. China is one of the countries producing the largest amount of tea, but her 1946 tea export was only 2 per cent of the world’s total. For 1947, only Ceylon and Japan have reported on the crop. The total tea production from these two countries in 1947 was 155 thousand metric tons, an amount higher than 1946 and the pre-war years. But if the two countries be taken separately, the situation is a little different. In 1947, while tea production in Ceylon has shown an increase as compared with 1946 and the pre-war years, that in Japan has remained almost unchanged as compared with 1946, but was below the pre-war figure by about ,42 per cent. In China, the total 1946 production was estimated at 344 thousand metric tons. Because of war devastation, tea production in China has declined substantially. This applies also to Indonesia. Tobacco : In the pre-war period, tobacco production in the AFE region accounted for one half of the world’s total. China and India are the two greatest producing countries in this region, next to which are Burma, Indonesia and Japan. Other countries, such as Korea, Mala- yan Union and Singapore, the Philippines and Siam, also produce tobacco but on a much smaller scale. For 1947 production, Burma and India have not sent in the required data, and no information has been available for Indonesia ever since 1941. For the six countries which have reported on the crop, the total tobacco production in 1947 was 754 thousand metric tons. In the case of Burma and India, if we take the 1946 figures for 1947, that is 476 thousand metric tons for India and 45 thousand metric tons for Burma,6 the total tobacco production in 1947 would be raised to 1,275 thousand metric tons. As compared with 1946, the 1947 production increased by 7 per cent. The production in Japan and in Malayan Union and Singapore was more than doubled.

5 F A O , Sugar Review, C47/12, Ju ly 1947, p. 2. 6 S eee e F A O , Tobacco Review, C47/16, JuneJu n e 1947, p. 4.

64 But as compared with the pre-war years, the 1947 production was still 5 per cent lower. Reduction in tobacco production was the heaviest in the Philippines, Siam and Korea, and in a less degree in Japan. Only in the Malayan Union and Singapore did the production show an increase, being five times the pre-war level. Cotton : Among the AFE countries, China and India produce the largest amount of cotton. The annual production of these two countries, next only to that of the United States, accounts for one-fourth of the world’s total. While China’s production is mainly for domestic consumption, India usually exports a large amount of raw cotton. In 1947, the total production of raw cotton in these two countries, added together with a small amount reported by Siam, was 1,556 thousand metric tons. The 1947 production, though 1 per cent higher than 1946, was 15 per cent below the pre-war levels. Compared with pre-war, the decrease in India was the most noticeable. This was chiefly due to the fact that the increasing demand for food as well as the government bounties had shifted many lands originally growing cotton to the raising of food crops. But since 1946 there has been a tendency both in China and India to increase the production of raw cotton. In the present post-war rehabilitation period, textile plants in many countries have resumed operation. This has not only reduced the stock-pile of cotton accumulated during the final stages of war in India and other cotton-supplying countries, but has also drawn some of the land back to cotton culture. Rubber : The AFE region is the world’s centre of natural rubber production. It may also be noted that more than half of the world consumption of natural rubber has been accounted for by the United States. This well indicates the geographical concentration of natural rubber production and consumption. Among the AFE countries, Malayan Union and Singapore, Ceylon, and Indonesia produce a major part of natural rubber. The importance of rubber production in Malayan Union and Singapore is the more conspicuous since rubber alone accounted for 65 per cent of the pre-war crop area. Other countries producing rubber are Burma, India, Indo-China and Siam. The total production of natural rubber in 1947 for the countries as presented in Table 41 was 1,155 thousand metric tons.7 Adding to this the production in Burma, which was 13 thousand metric tons, and that in British Borneo, which was 46 thousand metric tons, the production for the AFE region would be raised to 1,214 thousand metric tons. There are no data available to indicate the change in rubber production during the war and post-war period. It is generally believed that the production of natural rubber has increased in recent years but is still below pre-war. The reduction in natural rubber production during wartime may be attributed to several factors. In the first place, war operations reduced rubber acreage in some of the AFE countries. Secondly, shipping difficulties in wartime cut most of the export from the AFE producing countries to the United States. This in turn has affected and reduced the natural

7 S e e F A O , Rubber Review, C47/17, JuneJu n e 1947, p. 3.

65 9 rubber production. Finally, the substitution of natural by synthetic rubber, which was under a rapid process of development during the war period, has upset the whole picture regarding the world demand and supply of rubber. At present, maintenance of 770 thousand metric tons of world synthetic capacity, including a total of perhaps 560 thousand metric tons in the United States, has raised the aggregate rubber- producing capacity of the world close to 2,600 thousand metric tons, against a high-level demand of about 1,700 thousand metric tons.8 This would create, and seems to have already created, a serious problem of over-production. The problem is no less serious to the producers of synthetic rubber than to those of natural rubber, since both British and American tyre manufacturers have clearly indicated their preference for, and in many cases their insistence on, the use of the natural product.9 II. L iv e s t o c k and Poultry Livestock: Livestock is generally used as working animals or for food purposes. Some domestic animals, however, are bred and kept for both uses. In the AFE region, working animals consist mainly of cattle and horses. Under cattle are oxen and buffaloes. Buffaloes as working animals are popular mainly in the rice-growing areas. In Table 42, the number of working animals in selected AFE countries and their percentage changes as compared with the pre-war years are presented. The total number of cattle for recent years (either 1947, 1946, or 1945) in the AFE countries was 255,064 thousand head, including 21,449 thousand head of buffaloes for the countries for which buffaloes are reported separately. Because of war destruction, the number of cattle in recent years has been greatly reduced, about 4 per cent smaller than the pre-war years. The reduction in the number of buffaloes was the more remarkable, the present number being only four-fifths of pre-war. Even more serious was the reduction in horses. The total number of horses in recent years is 4,242 thousand head, which is only three- fifths of the pre-war figure. The heavy loss in working animals during the war has, more than anything else, contributed to the great reduction in agricultural production in wartime and its slow recovery in the post- war rehabilitation period. Among the AFE countries, so far as cattle is concerned, only Ceylon, India, and Japan have shown an increase in recent years ; while all other countries have shown a decrease as compared with the pre-war years. Loss in cattle was particularly heavy in China, Indo-China, Korea, Indonesia, and the Philippines, ranging from more than 19 per cent to 56 per cent. Such a loss was the direct result of war. In the case of horses, only Korea has shown an increase whereas all other countries have shown a decrease. The decrease was again the heaviest in China and the Philippines, and also in Japan, ranging from 25 per cent to 50 per cent. The use of horses directly or indirectly for war 8 Ibid., p. 12.12. 9 See P. T. Bauer, “ The Prospects of Rubber ”, Pacific Affairs, New York, Vol. XX, No. 4, December 1947.

66 Table 42

N umber of Working Animals in Sel ect ed AFE C ountries and Their Per cent a ge C hanges as Compared with Pre- war Yea r sa

Present Number (1,000 head) Percentage of Pre-w ar

Country Year Cattle Horses Year Cattle Horses

Total Buffaloes Total Buffaloes

Ceylon 1946 1,168 410 320 107·3 77·5 China 1947 28,318 9,320 2,039 1934-37 78·3 73·7 54·1 Indiab 1946 200,000 1930-35 100·8 Indo-China 1947 3,424 1,769 1938 72·5 77·9 Indonesia 1947 6,290 2,732 621 1940 80·9 86·0 80·5 Japan 1947 1,989 1,054 1934 125·5 74·2 Korea 1947 653 37 1938 70·6 112· 1 Malayan Union and Singapore 1946 415 171 1 1939 81·4 78·4 83·3 Philippines 1945 1,877 1,317 170 1939 43·5 45·1 5 0 0· Siam 1947 10,930 5,730 1941 86·1 90·8 Total 255,064 21,449 4,242 96·0 79·3 62·5

a Data are supplied by the governments concerned. b Including Pakistan. operations have made the loss in horses much heavier than in any other group of working animals. The above total of working animals in the AFE region does not include Burma because of lack of recent information. However, in Table 43 is given the number of working animals in Burma during the pre-war years.10

Table 43

Number of W orking Animals in Burma in Pre- war Year s (1940-41) (1,000 head)

Cattle : Oxen 5,246 Buffaloes 1,050 Horses 45 Since Burma was directly hit by war its percentage decrease in working animals would probably be like that of China or the Philippines. In Table 44 is given the number of goats, sheep and hogs in AFE countries and the percentage changes as compared with the pre-war years. The total number of goats and sheep for recent years (either 1947, 1946, or 1945) was 127,501 thousands. Compared with the pre-war days the number was 8 per cent smaller. Among individual countries, there exists a considerable difference. In India, no appreciable change has occured. In Ceylon, there has been a mild increase. In Japan, a tremendous increase has taken place, the number of goats being over six times greater and that of sheep more than twice. In Korea, the number of sheep has shown an increase, and that of goats a decrease. In Indonesia, a mild decrease has taken place. In all other countries, such as China, the Philippines, Malayan Union and Singapore, a great decrease has taken place, ranging from one fourth of the pre-war number up to one half. Such a reduction has an unfavourable impact not only on the supply of food, but also on the supply of the important industrial material —wool. The total number of hogs for recent years was 63,528 thousand head, which was 21 per cent smaller as compared with the pre-war years. Among the AFE countries, only India has shown an increase in the number of hogs in recent years, while all other countries have shown a decrease. The decrease was the heaviest in Japan, Korea, Malayan Union and Singapore, and the Philippines, also heavy but milder in China and Indonesia. The above total for goats, sheep and hogs in the AFE region does not include Burma. For that country, we have only information for the pre-war years, as given in Table 45.11

10 Figures are taken from the Country Studies: Burma, prepared by the Working Group for Asia and the Far East, United Nations : Economic and Social Council, January 1947. 11 F o r s o u r c e o f d a t a , s e e Ibid., p. 15.

68 Table 44

N umber of Goats , S heep and Hogs in AFE C ountries and Their Per cent a ge Changes as Compared with Pre- war Yea r s

Present Number (1,000 head) Percentage of Pre-war years Y ear Goats Sheep Hogs Year Goats Sheep Hogs

Ceylon 1946 305 123 138·6 China 1947 13,609 9,191 53,758 1934-7 69·1 59·0 88·6 India 1946 96,771 4,032 1930-5 101·8 144·0 Indo-China 1947 1,890 1938 55·6 Indonesia 1947 5,112 1,610 1,143 1940 85·9 85·2 90·2 Japan 1947 239 278 100 1934 663·9 257·4 22·3 Korea 1947 32 5 209 1938 76·2 112·0 25·3 Malayan Union and Singapore 1946 130 23 289 1939 42·8 74·2 37· 8 Philippines 1945 197 19 1,984 1939 49·0 50·0 45·6

Total 127,501 63,528 91·5 79·1

Source : Data are supplied by the Governments concerned. Table 45

N umber of Goats, S heep and Hogs in Burma in Pre- war Year s (1940-41) (1,000 head) Goats 297 Sheep 78 Hogs 570 It may be reasonably stated that in Burma the number of goats, sheep and hogs decreased during the war period. The extent of the decrease would be similar to that in other countries similarly affected by direct actions of war, e.g., China and the Philippines. Poultry : Chickens and ducks are the two most important items of poultry in the AFE region. It is difficult to get information on poultry because farms and rural families usually do not keep records for chickens, ducks and other domestic birds. Table 46 gives the number of chickens and ducks in recent years and the percentage changes as compared with the pre-war years, for six countries in the AFE region.

Table 46

N umber of Chickens and Ducks in Sel ect ed AFE Countries and Their Per cent age C hanges as Compared with Pre- war Yea r s

Year Chickens Ducks Year Chickens Ducks

Ceylon 1946 1,381 23 ——— China 1947 196,743 44,372 1934-7 74·0 69·0 Japan 1946 15,369 88 1934 28·0 16·3 Korea 1947 1,814 2 1938 53·2 29·4 M alayan Union and Singapore 1946 5,000 2,000 1939 71·4 66·7 Philippines 1945 9,724 346 1939 38·4 50·1

Total 230,031 46,831 64·2 68·3

Source : Data are supplied by the Governments concerned.

The total number of chickens for the six AFE countries in recent years was 230,031 thousand head, which, compared with pre-war, was smaller by 36 per cent. The decrease was the greatest in China and the Philippines, being 26 per cent and 62 per cent respectively. In China, decrease in chickens has resulted directly in a reduction in the post-war export of eggs. The total number of ducks for the six countries in recent years was 46,831 thousand heads, which was 32 per cent smaller than the pre-war figure. The decrease in number was the greatest in Japan (84 per cent), next to which is Korea (71 per cent). The decrease in chickens and ducks would, of course, have reduced the egg production. On the exact amount of reduction, no information is available, But it may be stated that prior to the war, China, Australia and Argentine were important egg exporters. During the war period, China disappeared from the world egg market because of war destruction and transport difficulties. In 1946 and 1947 China again appeared

70 as a very moderate exporter of shell and frozen eggs to the United States. The present unfavourable supply and price situation, however, makes it unlikely that China will be able to recover, in the near future, its place in the world egg market.

III. F is h e r ie s The annual catch of fish in the world as a whole in pre-war years was estimated at approximately 18 million metric tons, about two-thirds of which was utilized for human consumption, and the remainder for manufacture into such industrial products as fish meal and oil.12 From the information gathered, the pre-war annual catch of fish in the AFE region, excluding Burma and Siam, was 8,818 thousand metric tons, more than half of the world’s total.

Table 47

A nnual Catch of Fis h in Sel ect ed AFE Countriesa Percentage ; Pre-war 1946 1946 as of Pre-war Ceylon 8,128 — 22,352 270·0 China — — 259,549b — Hong Kong 32,300 — 16,201 50·2 India 662,262 — —— Indonesia 360,000 (1940) —— Japanc 5,559,000 (1938) 3,224,220 58·0 Korea 1,954,623 (1939) 280,990 14·4 Malayan Union and Singapore 72,000 (1936-40) 40,000 55·6 Philippines 170,000 (1940) 49,565 29·2

Gross Total 8,818,313 3,892,877 — Total for com- parationd 7,796,051 3,633,328 46·6 a Unless otherwise stated, data are supplied by the governments concerned. b Salt-w ater fish only. cFrom Japan Yearbook, 1941. d China, India and Indonesia are not included. Among the AFE countries, Japan is the largest producer and consumer of fish. The annual catch of fish for that country in 1938 was estimated at 5,559 thousand metric tons, more than one-fourth of the world’s total. It was also estimated that the annual pre-war per capita consumption in Japan was around 40 kilograms, the highest in the world. Next to Japan was Korea, where in 1939 the annual catch was 1,955 thousand metric tons. For China no information on the pre-war years is available. But, on the basis of 1946 figures and in the light of heavy wartime losses in boats, the annual pre-war catch of fish in China would be around one million metric tons. This is, however, for salt-water fish only, as no estimates can possibly be made at present for fresh-water fish. India, Indonesia and the Philippines come as the next group in

12 FFA AO, O , FFish ish Review, C47/26, July, 1947.

71 which the annual pre-war catch was between 170-662 thousand metric tons. In Ceylon, Hong Kong, Malayan Union and Singapore, although the absolute amount of annual fish catch was not great, yet, relative to total area and population in the region, fish production and consumption occupied a very important place. For 1946, Ceylon, China, Japan, Korea, the Philippines, Malayan Union and Singapore, and Hong Kong, have sent in the required data. For these countries, the annual catch of fish in 1946 was 3,893 thousand metric tons. For the purpose of comparing annual fish catch between recent and pre-war years, Ceylon, Japan, Korea, the Philippines, Malayan Union and Singapore, and Hong Kong are chosen. As shown in Table 47, the total annual catch of fish in these countries in 1946 was 3,633 thousand metric tons, which was smaller than the pre-war figure of 7,786 thousand metric tons by 53 per cent. This reduction in annual fish catch was caused mainly by the wartime loss in fishing vessels. Among the countries, the reduction in Korea was the greatest, the 1946 catch of fish being 14·4 per cent of pre-war. The reduction in the Philippines was also remarkable. The only exception is Ceylon, where the annual catch of fish was more than doubled in 1946 as compared with the pre- war period.

IV. F orestry and Forest Products Prior to the war, the total forest area of the world was estimated at 3,650 million hectares, and the average forest area per capita at 1·7 hectares.13 The forest area in the AFE region was estimated at 500 million hectares, about 14 per cent of the world total; while the population in the AFE region was over one billion, or over one half of the world’s total. The average forest area per capita was, consequently, unusually small,13 only 0·5 hectare.

Table 48 P roduction and Consumption of Forest Products in 1937 and 1946a Percentage World Total AFE Region of AFE in (million m.3) (million m.3) World Total 1937 Forest Products :b Production .. 1,500 300 20·0 Consumption .. 1,500 307 20·5 Imports 20 728·6 Exports 20 1946 Lum ber: Production 203 22 10·8 Consumption 219 27 12·3 Imports 36 7 19·5 Exports 20 2 10·0 a F AO, World Situation and Outlook for Forestry and Forest Products, C47/25, Ju ly 1947. b In equivalent volumes of round wood. 13 S e e F A O , World Situation and Outlook for Forestry and Forest Products, C47/25, July, 1947, p. 2.

72 In Table 48, the production, consumption and trade of forest products in the AFE region in 1937 and 1946 and their percentages to the world total are given. In 1937, world forest products were estimated at 1,500 million m 3, of which 300 million m 3 or 20 per cent was produced in the AFE region. But out of the total 1,500 million m 3, the AFE region consumed 307 million m 3 or 20·5 per cent of the total forest products. The deficiency of 7 million m 3 was imported from other regions. For 1946, information on lumber only is available. The total production of lumber in that year in the AFE region was 22 million m3, which was 10·8 per cent of the world total. The total consumption in the region was, however, 27 million m3, or 12· 3 per cent of the world consumption. The net import of lumber in the AFE region in that year was 5 million m3. Undoubtedly the war destroyed a large part of forestland in the AFE region, especially in countries directly hit by the war action. This would, of course, have reduced the forest products in the region, and would have made the present deficiency larger than before the war. Among the countries in the AFE region prior to the war, Burma, Indo-China, Indonesia, Malaya and Siam used to be exporters of forest products, where the forests were reasonably adequate to meet the domestic needs. Exports of timber from these countries to Europe and the Americas consisted chiefly of tropical hardwoods, of which the most important and best known was teak. The war has changed the picture and has reduced to a great extent their exportability in timber in the years to come. Exports of timber from Manchuria included a large proportion of softwoods, and during the Japanese occupation, they were almost entirely absorbed by Japan. Because of war destruction, the Manchurian forests have been heavily damaged and its exports of timber greatly reduced. On the other hand, China Proper, India and Japan are the three chief timber-importing countries. In China and Japan, the shortage in forest products has been made more acute by the war. In China, the uneven geographical distribution of forest resources and the poor transport facilities has made the problem even more difficult to solve. On forestry and forest products only China, Indonesia and Siam have sent in the required information. For the other countries in the region, information is incomplete or nil. Below is given a brief descrip-

Table 49 F ororest est Area and Tim b e r Reser ve in China, 1947a Regions Forest Area Timber Reserve (hectares) (1,000 m3) North-east 65,000,000 3,729,857 North-west .. 1,195,345 176,099 South-west 6,297,631 1,572,317 South-east 9,642,196 269,172 Central 1,605,000 102,829 North 399,133 193 Total 84.139.305 5.850,467 a Data are supplied by the Government of China.

73 10 tion of the forest situation in recent years for the countries for which information is available. China : About 45 per cent of the total area in China is estimated to be under forests. The total forest area has been estimated at 84 million hectares, and the total timber reserve at 5,850 million m3. Their geographical distribution is given in Table 49. On the basis of this estimate, the forest area per capita is calculated at 0 ·19 hectare, a figure which is much lower than 2 ·3 hectares for Burma and 2 ·2 for Indonesia.14 But even this low figure still gives too favourable an impression. Because of the strikingly uneven geographical distribution of timber reserve and the poor transport facilities, most Chinese forests are inaccessible to places where forest products are most needed. As shown in Table 49, 64 per cent of the country’s timber reserve is in the North-east (i.e. Manchuria) and 30 per cent in the remote South-west and North-west, leaving no more than 6 per cent in the Central, North and South-east which constitute the heart of China Proper. Not only are the majority of the country’s forests located far away from most of the consuming centres, the major part of the remaining 6 per cent is limited to inaccessible areas. As a consequence, all densely populated areas in China are faced with a scarcity of wood, both for industrial uses and for fuel. According to a pre-war estimate, lumber imports into China exceeded the very small exports by about 800,000 m 3, of which some 700,000 m 3 were ordinary softwoods. Most of the timber imported was used in or near the ports on the seacoast, and very little of it reached inland points. It goes without saying that the war has made the deficiency even greater. India: Forest area per capita in India is slightly more than 0·21 hectare, and forests occupy about 20 per cent of the total area. Only one half of the forest area, however, is considered accessible and pro- fitable for exploitation. Only 6 per cent of the accessible volume is soft-wood.15 On the whole, the supply of forest products in India is inadequate. Industrialization of the country in recent years, especially in the years immediately preceding the war, has stimulated the demand for timber and, consequently, has increased its import. In 1946, requirements were estimated at 34 million m 3 against yields of 23 million m 3, giving a deficit of 11 million m 3. India will have to rely largely on Burma and, to a lesser extent, on Ceylon, for the supply of forest products she mostly needs. Until imports of timber from these two countries are restored and expanded, the deficit situation in India will remain and will become even more serious. Indonesia : A sharp difference exists between the forest situation in Java and Madura and that in Outer Islands of the country. In Java and Madura, the proportion of forest land is much smaller. It has been estimated recently16 that Java and Madura have an area of 131,000

14 FAO, Forestry and Forest Products, World Situation 1937-1946, August, 1946, p. 39. 15 See Ibid. p 40 ; and FAO, World Situation and Outlook for Forestry and Forest Products, Ju ly 1947, pp. 23-24. 16 Data are supplied by the Government.

74 square kilometres, of which 28,000 square kilometres or 21 per cent are covered with forests. Out of the total area of forests, 8,000 square kilometres are in teak. Considering the extremely high density of population, this percentage of forests in the total area is rather low. It is for this reason that forests in Java and Madura have been strictly and efficiently protected by the Government. In the pre-war years, the forest area in Java and Madura was estimated at 31,000 square kilometres, of which 3,000 square kilometres were felled rather than planted. By comparison the forest area in recent years has been slightly reduced. It was estimated that in 1939 the teak-wood production in Java amounted to 500,000 m 3 of timber and one million m3 of firewood. The forests in Madura supplied 45,000 m 3 of timber and 280,000 m 3 of firewood. They gave a total of 545,000 m 3 of timber and 1,280,000 m 3 of firewood. In the Outer Islands of Indonesia, the forest area is much greater. The Outer Islands have an area of 1,800,000 square kilometres, of which 1,225,000 square kilometres or 60 per cent are covered with forests. Practically everywhere the forests are mixed, thus hampering logging. Since these islands are by and large thinly populated, protective measures are used only in a few places. It was estimated that in 1940 these islands produced 1,350,000 m 3 of timber and one million m 3 of firewood. The Philippines : The forests in the Philippines cover more than 17 million hectares, about 59 per cent of the total area.17 They contain approximately 464 million board feet (gross) of standing timber. This timber stand represents only that found in highland forests and does not include the trees on fresh marshes and mangrove swamps which cover approximately 606,000 hectares. The Government owns 97·5 per cent of the forests, while the rest belongs to the private interests. The forest is typically tropical, and mixed in composition. It is estimated to be growing at the rate of 1·5 per cent annually. The lumber industry in the Philippines is among those fast heading towards rehabilitation. It is expected that lumber production will exceed its pre-war level in a year or two. A larger excess produce will be available for export. During the fiscal year July 1st, 1946 to June 30th, 1947, the amount of mill-sawn lumber produced was recorded at 213,929,963 board feet, which was two-thirds of the pre-war annual output. Incomplete figures show a production of 116,843,743 board feet from July 1st to November 30th, 1947. At this rate, it will be possible to reach the pre-war production in 1948. Siam : Siam is an important exporter of forest products in the AFE region. Among the forest products in the export list, teak is the most important. The export value of teak in the pre-war years was over eight times that of all other forest products combined. But the war has somehow changed the picture, as shown in Table 50.

17 FAO, Philippine Committee, First Special Report, August, 1947, pp. 15-20; also Second Special Report, January, 1948, pp. 71-72. 75 Table 50 F orest Products in Siam, 1941-46a (1,000 cubic metres) Year Teakb Other Timbers Firewood Charcoal 1941 .. 163 619 978 362 1942 .. 147 353 943 249 1943 .. 70 472 1,190 433 1944 .. 70 552 1,324 375 1945 .. 72 663 1,110 498 1946 .. 76 466 1,057 645 a D ata are supplied by the Government of Siam. b Figures for 1943 and later years are estimated on the basis of actual figures for about one-third of the teak exploitation area. While production in firewood and charcoal has increased in recent years as compared with pre-war, production in timbers other than teak has mildly decreased. The teak estimates for 1943 and later years were made on the basis of actual figures for about one-third of the teak exploitation area. It may be safely stated that actually the total teak production since 1943 would be from twice to thrice of the figures shown in the Table.

76 C hapter VI

MINING AND INDUSTRY While the AFE countries, with the exception of Japan, may be considered as industrially undeveloped, their mineral production nevertheless occupies an important position, and, in some cases, even represents one of the major economic activities of the country. In most AFE countries, however, mining is confined to the excavation of ores, or, at most, to the refining or smelting of ores for export purposes. The development of mineral production, therefore, does not reflect accurately the progress of industrialization. However, there are close technical connections between mining and industry. Unlike the agricultural products, most minerals are used not to satisfy human wants directly but as industrial raw materials or power sources. The demand for minerals is, therefore, derived from the demand for industrial products. Technologically, moreover, the development of both mining and industry is conditioned by the development of scientific and engineering knowledge. Certain features too, are common to both occupations, such as the need for large capital investment, use of modern business methods, and the creation of a large wage-earning class. It is because of these resemblances that mining and industry, though basically different in nature, are treated as a combined subject in this chapter.

I. P re- war Sit u a t io n In the absence of detailed estimates of the national product in most AFE countries, the relative importance of mineral production may be roughly judged from the percentage shares taken by the mineral products in the export trade. During the period 1936-38, the percentages contributed by the mineral products to the total value of exports in various countries were as follows: petroleum products, 25-30 per cent of Burma’s exports; tin, tungsten, antimony, and other metals and minerals; 8-14 per cent of China’s exports (exclusive of Manchuria and Taiwan) ; gold and silver (coins and bullions) and manganese ore, 10-17 per cent of India’s exports ; petroleum products and tin, 21-31 per cent of Indonesia’s exports ; tin, 17-23 per cent of Malaya’s exports and 16-23 per cent of Siam’s exports; and coal, 4-5 per cent of Indo- china’s exports. The whole region of Asia and the Far East shared the world production of minerals prior to World War II as shown in Table 51. From these figures, it is apparent that the AFE region, taken as a whole, ranked high in the supply of non-ferrous metals but was comparatively weak in the production of iron, copper and oil. As some of the AFE countries are known to possess rich iron and oil deposits, the pre-war situation need not be taken to indicate their long-run trend in the future.

77 Table 51

P re- war Position of AFE Region in World Production of M in er a l s World Share of AFE Region Period Production, covered Unit Annual Annual Percent- Average Average age

Tin Ore 1936-39 1,000 M. tons 184·3 128·2 69·6 Tungsten Ore "" 20·4 12·9 63·2 Antimony Ore " 38·2 11·9 31·2 Manganese Ore . 1936-37 " 2,805·0 526·6 18·8 Coal (not including lignite) 1935-37 1,237,200·0 107,418·0 8 ·7 Gold 1936-40 Kg. 1,139,200·0 85,990·0 7·5 Silver 1936-38 M. tons 8,033·3 577·9 7·2 Iron Ore 1934-36 1,000 M. tons 64,566·7 4,566·0 7·1 Copper Ore 1936-39 2,071·0 90·4 4·4 Crude Petroleum . 1937-41 " 287,236·0 10,140·8 3·5

Industry, in the sense of production of manufactured articles, however. lagged far behind the mineral production. Whatever industrial activities existed before World War II were characterized b y : (1) the prevalence of cottage or village handicrafts, which went a long way towards meeting the local needs of the people and affording supplementary employment opportunities to the densely populated villages and homesteads ;1 (2) the predominance of the processing industries, mostly for exports, such as tin smelters, oil refineries, rice mills, sugar plants, sawmills, coconut mills, etc., as well as the manufacture of essential articles for daily use, such as textile products, food provisions, building materials, etc.; (3) the absence of heavy industries, such as metallurgical and chemical works, except in Japan, and, to a certain extent, India and China (particularly in Manchuria) ; and (4) the geographical concentration of modern factories in a few large cities along the seaboard, where cheap power supply was available and transportation was easier. While the mining activities in most AFE countries can be traced back to the end of the last century, the development of industrial production was relatively of a recent origin. Most AFE countries received the first impetus of industrial development from World War I, which cut off the supply of European manufactured goods to the Oriental market, thereby necessitating the latter to increase its own production to meet the domestic need. With the onslaught of the World Depression after 1929, and the consequent fall of prices of several staple materials, upon which some of the AFE countries depended as the chief source of income, the need for economic diversification became more apparent than ever. A second wave of campaigns for industrial development started everywhere in South-east Asia and the Far East. The govern-

1 For a general analysis of cottage industries, see International Labour Office, The Economic Background of Social Policy including Problems of Industrialization, Chapter III. “Traditional Industries and their Problems”. New Delhi, 1947.

78 ments, assuming the responsibility of safeguarding the economic welfare of the people, took an active part in the organization of large developmental corporations. Internally almost all AFE countries felt the pressure of population growth. The development of new industries was popularly favoured as the most effective way to absorb the surplus population, thereby raising the deplorably low standard of living. Steps were taken to increase the home supply of consumers’ goods, such as cotton textiles, flour, soap, matches, etc., so that a higher degree of self-sufficiency could be secured and the deteriorating position in the balance of international payments could be held in check. In the middle and the late thirties, another force came into play, namely, the attempt to establish or expand defence industries. Japan was among the early nations to start feverishly on war preparations. In her self-defence, China exerted her utmost in the establishment of some basic industries for the production of essential war supplies. After the outbreak of the European War in 1939, Indo-China and, later on, Indonesia, also made attempts to establish new industries either to strengthen their national defence or to increase home production to relieve the short supply caused by the war. Owing to her tremendous resources, India particularly made rapid progress in her industrial expansion, thus contributing a large share to the Allied war efforts. While the final result of the war was the widespread devastation wrought upon plants and industrial equipment, there can be no doubt that at its initial stage, the pace of industrialization was accelerated in some of the AFE countries.

II. D amages Caused by the War The AFE countries, covering a wide area, suffered losses from the war in different degrees and in different ways. Briefly, the damages and destruction resulting from the war may be summarized as follows : (a) Loss and damage caused directly by military operations. In China, for instance, where severe fighting continued throughout the whole period of the war, about 90 per cent of the productive capacity of the machine and light-metal industries was reported to have been lost, along with 70 per cent of the productive capacity of the coal, electric-power, and iron and steel industries. In Burma, also a scene of severe fighting, the railway system was completely destroyed, and most of the oil refineries and installations were destroyed by the British authorities on their withdrawal in 1942. A similar situation obtained in Indonesia where the Dutch authorties deliberately destroyed equipment in the oil, tin, and shipping industries as well as the harbour installations in the face of Japanese invasion in 1942. In Malaya, most of the tin dredges were rendered unserviceable by the retreating British troops and practically all bridges were destroyed in 1942. Similarly, the Philippines suffered large-scale physical damage as a result of both Japanese and Allied military campaigns. (b) Destruction done by aerial bombing : Although some of the AFE countries did not participate in actual fighting or suffered little therefrom, they nevertheless experienced large-scale aerial bombing, especially from the allied forces in the later stage of the war. The

79 notable case was Japan, and, to a lesser extent, the eastern seaboard of China (including Taiwan), Hong Kong, Burma, Singapore, Indo- China, and Siam, where considerable damage was done to harbour installations, oil tanks, air fields, production centres, and lines of communications. (c) Losses through neglect and destructive activities during the Japanese occupation : In order to increase the supply of iron and steel, the Japanese authorities did their best to collect iron and steel scraps in their occupied territories. Machinery of less important factories was removed for scrap, while those industries which were of no direct importance to the war effort were laid idle and allowed to deteriorate through disuse. In some places, notably Indonesia, certain factories were completely disorganized in Japan’s attempt to convert them into war plants. (d) Damages resulting from looting and disturbances: These generally took place during the transitional period from the Japanese surrender to the formal re-occupation by the allied forces. Large losses to property and industrial equipment were also sustained in the subsequent internal strifes. (e) Over-exploitation of resources and over-working of industrial equipment: Among the AFE countries, India and Ceylon suffered little direct damage from the war. On the contrary, both countries experienced considerable industrial and agricultural expansion. The increase in the production of iron and steel, cement and certain chemicals in India was particularly worthy of note. However, in order to meet the war requirements, almost all industrial plants were worked to capacity. This, coupled with lack of replacement parts resulted in excessive depreciation. In consequence, the end of the war found India’s effort virtually in a state of exhaustion, resulting in the marked drop of output of basic materials such as iron and steel, and other industrial products.

III. P ost- war Recover y and Re h a b il it a t io n Owing to the heavy war damages, widespread internal strifes in some of the AFE countries, wear and tear of equipment and shortage of capital goods for replacement and repair, the dislocation of the transport system, and the impairment of the health of workers through under- nourishment and deprivation, the recovery and rehabilitation of mineral and industrial production in the region, taken as a whole, proves to be slow and unsatisfactory. The current output of those, minerals which held key positions in some of the AFE countries before the war, has attained only a small fraction of the pre-war level. For instance, tin output of Malaya in 1947 amounted to about 45 per cent of the 1940 production; anthracite output of Indo-China in 1947 was less than 10 per cent of the 1939 figure; Burma’s production of petroleum has altogether ceased; oil production in the first nine months of 1947 at Tarakan, East Borneo, where the oil fields are most favourably situated for recovery, hardly reached one-third of the 1939 capacity; by October

80 1947, gold output in the Philippines was running at a rate less than 10 per cent of the pre-war volume; and, finally, in China, owing to the widespread military action, the production of coal and iron ore fell disastrously, while the output of tungsten and antimony, both of which were mined in places not directly affected by the civil strife, reached only 80 per cent and 22 per cent of the pre-war level respectively. The comparative position of AFE countries in the production of two basic minerals, coal and petroleum products, is shown in Table 52'.

Table 52

P re- war and Post- war Product ion of Coal and Crude Petrol eum in AFE Countries

Coal Crude Petroleum Production Production Year (1,000 m. tons) Year (1000 m. tons)

Burmaa NA. 1938 1,061 1946 Nil 1947 " Chinab 1936 41,086 1936 186 1946 18,500 1946 67 1947 16,700 1947 53 India and Pakistanc 1938 25,680 1938 350 1946 26,796 1944 396 1947 27,155 1945 334 Indo-Chinad 1938 2,335 N.A. 1946 261 1947 250 Indonesiae 1938 1,456 1938 7,398 1946 N.A. 1946 N.A. 1947 (Jan.-A pr.) 100 1947 (Jan.-Apr.) 133 Japanf 1930-34 Average 32,340 1930-34 Average 233 1937 52,404 1937 345 1946 20,376 1946 191 1947 27,240 1947 181

a The 1938 figures from League of Nations, Statistical Yearbook, 1942-44; production has not yet been resumed after the war. b Coal figures are estimates made by the Coal’ Mine Administration of the National Resources Commission, Chinese Government, and include both Manchuria and Taiwan. For crude petroleum, the 1936 figure from League of Nations, Ibid., and the 1946 and 1947 figures from UN Monthly Bulletin of Statistics, which represent production of industries under the control of National Resources Commission only. c Coal figures fro m UN Monthly Bulletin of Statistics, and, from August to December, 1947, do not include Pakistan. For crude petroleum, the 1938 figure, from League of Nations, Ibid., and the 1944 and 1945 figures from the Eastern Economist, Special Number, January 2nd, 1948, p. 74 (converted from gallons to metric tons at 1 metric ton = 245 gallons). d The 1948 figure from Annuaire Statistique de I’lndochine, 1941-42; 1946-7 figures from Bulletin Statistique de I’lndochine, Annee 1947. e From UN Document E/CN.11/39, Annex K. f Japanese Economic Statistics, Feb. 1948, (converted from kilolitres at 1 kilo- litre = 0 ·8983 m. ton).

81 11 Table 52 (Continued) Koreag 1936 2,282 Nil 1946 (Est.) 1,563 South Korea 1947 (June-Nov.) 194 Malayah 1938 486 Nil 1946 228 1947 (Jan.-June) 279 Philippinesk 1938 41 N il 1946 440 1947 (Jan.-June) 50 Siam N.A. Nil g The 1936 figure from League of Nations, Ibid, later figures are estimates from private sources, and South Korea Interim Government Activities, December, 1948. h The 1938 figure from League of Nations, Ibid., and later figures from Answers to Questionnaires k The 1938 figure from United Nations Document E /C N .11/39, Annex L. Nov. 1948 ; later figures from Answers to Questionnaires. With the exception of India, there was a general fall in coal production after the war. Even in the case of India, industries were not actually benefited by the slight increase in coal output in 1946 and 1947. On the contrary, owing to limited wagon facilities on the railways, large quantities of coal were accumulated at pitheads, with the consequence that industrial production was hampered by lack of coal (see Sub-Section under India and Pakistan below). According to the League of Nations’ estimate, pre-war production of iron ores in the whole AFE region averaged 4 ·6 million tons a year during the period 1934-36.2 After 1937, the output of iron ore was stepped up in Japan, India and China (including Manchuria). The record production in Japan reached 3·8 million tons in 1944, while in 1938 India’s output was about 2·8 million tons. The production in China immediately prior to the war was reported to have reached 3·3 million tons, of which Manchuria accounted for about 1·5 million tons.3 Other major iron ore producing countries in AFE region were the Malayan Union and the Philippines, their record production figures being 1,275,000 tons and 700,000 tons in 1939 and 1940 respectively. After the war, Japan’s output fell to 548,000 tons in 1946 and 487,000 tons in 1947. China’s output from the mines under the control of the National Resources Commission was only 18,900 tons in 1947. The production in the Philippines has not yet been resumed while M alaya’s output in 1947 was merely 1,700 tons in 1947. India’s production also showed a slight decline, her output in 1944 and 1945 being 2·4 and 2 ·3 million tons respectively. It was estimated that her production in 1947 might reach 2 ·5 million tons. As to manufacturing industries, the fluctuations in factory production may be roughly measured by the quantity of electric power consumed by industries. Unfortunately, only few AFE countries have available data on the quantity of electric power produced or consumed. As can be seen from Table 53, the installed power capacity in most AFE

2 League of Nations, Statistical Yearbook, 1942-441942-44; ; the figures given therein are not complete and in some cases represent estimates only. 3 United Nations Document E/CN.11/39, Annex ‘F ’.

82 countries, with the notable exception of China, did not undergo much change after the war. In China, the installed power capacity was cut by more than one half after the war. The total amount of electric power generated in China was estimated at 3,652 million kwh in 1947, whereas in 1942, Manchuria alone produced about 4,200 million kwh. Japan experienced an increase

Table 53

S upply of Electric Power in Sel ect ed AFE Countries

Pre-w ar Capacity a Present Capacity a Power Produced (thousand K.W) (thousand K.W.) Year (thousand K.W.H.) Ceylon 10 10 1936 20,000h 1945 48,400h China 3,000 1,301 1936 N.A. 1946 974,201 1947 2,004,666b India 1,380 1,380 1938 2,004,000c 1946 3,485,000c 1947 3,585,000c Indo-China 71 71 1940 103,900d 1946 N.A. 1947 N.A. Indonesia NA. N.A. 1940 364,400e 1946 N.A. 1947 N.A. Japan 10,000 10,000 1937 27,180,000c 1946 27,060,000 1947 30,257,000c Korea End of the Wark — 1937 N.A. 1,900 1946 666,0001 1947 666,0001 Philippines 30 30 1938 208,000f 1946 — g 1947 — g a Supplied by the Working Party on Industrial Development, ECAFE Secretariat, except Korea. b Production of plants under the Control of National Resources Commission, which possess in aggregate about 879,000 kw. of generating capacity; the total production of electric power in China was estimated at 3,652 Million KWH. in 1947 ; Economic Survey of China, 1947. c United Nations Monthly Bulletin of Statistics for India, from October 1947, not including Pakistan. d Annuaire Statistique de I’Indochine. e Representing electric power consumed, Statistical Pocketbook of Indonesia, 1941. f Yearbook of Philippine Statistics, 1946. g Taking 1937 as 100, the production index of electricity was 104·7 in January 1938, and 126·0 in December 1938. It dropped to 48·3 in November 1945, but rose to 166·8 in December 1946 and 214·7 in September 1947 (Philippine Journal of Statistics, January—December 1947). h Economic Survey of Ceylon for 1947; the 1936 figure represents Colombo supply only. k Private estimate. l For South Korea only, from South Korea Interim Government Activities, January 1948.

83 in the production of electric power in 1947 over 1946, but fell short of the peak level of 34,284 million kwh in 1943. India also reported an increase in the production of electric power in 1947. However, as these figures include electric power generated for consumers’ use as well as for industrial use, the increase in the total quantity produced does not indicate accurately a corresponding increase in manufacturing activities. Unfortunately, with the exception of China, separate figures for power sold for industrial use are not available for these countries. (For China, see Sub-Section below.) Among the industrial goods, the most important group is probably the cotton textiles. In general, China and Japan suffered great losses in cotton spindles with the consequence that the production of cotton textiles in these two countries fell considerably in the post-war years. Tables 54 and 55 summarise the pre-war and post-war situation of the cotton textile industry in selected AFE countries : Table 54 N umber of Cotton Spin d l es in Sel ect ed AFE Countries Pre-war Situation Wartime or Post-war Situation No. spindles No. spindles Year in operation Year in operation Ceylona .. 1938-9 22,228 1946 22,228 Chinab .. 1937 5,102,796 1947 4,459,760 Indiac .. 1938-9 8,900,000 1944 8,900,000 Philippinesd 1938 10,184 1947 16,000 Japane .. 1940 12,000,000 1946 1,250,000 1947 2,250,000 Koreaf .. 1938 200,096 1947 200,000 Siamg .. 1938 10,000 1947 4,500 a Answers to Questionnaires. b Not including doubling spindles, figures refer to spindles in existence ; from H. D. Fong, Problems of China’s Post-war Cotton Industry. c UN Document E/CN.11/39. d UN Document E/CN.11/39, Annex L. e-g Answers to Questionnaires. From the above table, it can be seen that before the war, Ceylon, China, India, the Philippines, Japan, Korea, and Siam, taken together had 26·2 million cotton spindles in operation, producing about 1·74 million tons of cotton yarn. After the war, the total number of spindles in operation in the seven countries was reduced to 15·8 million, while the total output of cotton yarn in 1947 was no more than 1·1 million tons. These figures do not include the production by cottage industries, but there is reason to believe that the latter has not in any way increased to such an extent as to compensate for the fall in the production of cotton textiles by factories. The deterioration in the clothing situation, therefore, ranks next to the food shortage as one of the major post-war problems facing the AFE countries. As an illustration of the fall in production of other industrial goods, particularly in China and Japan, Table 56 gives a comparative picture of the pre-war and post-war situation of certain important industries in

84 Table 55

P re- war and Post- war Production of Cotton Textiles in Sel ect ed AFE C ountries Pre-war Situation Post-war Situation Year Cotton Y arn Cotton C loth Year Cotton Y arn Cotton C loth (m. tons) (m. tons)

Ceylona 1938-9 680 2·5 million m etres 1946 N.A. 2·8 million metres 1947 680 N.A. Chinab 1936 394,000 942 " 1947 384,068 769· 1 million m etres Indiac 1938 591,600 3,900 1946 600,000 3,528 1947 587,400 3,464 Philippinesd 1938 680 2·9 1946 610 2·8 „ „ (1947 J a n . - J u n e ) 635 522 „ tons Japane 1937 720.000 4,032 million sq. m. 1946 58,800 204 million sq. m. 1947 122,400 552 „ Koreaf 1938 37,375 197· 5 „ „ 1946 3,960 21 million m etres 1947 5·508 29 " " Siamg 1938 108 0·2 million m etres 1946 N.A. N.A. (1947 J a n . - J u n e ) 70

aEconomic Survey of Ceylon for 1947. b Cotton ya rn figures from Economic Survey of China, 1947 ; cotton cloth fig u re s from H. D. Fong, Problems of China’s Post-war Cotton Industry. c-e UN Monthly Bulletin of Statistics. d-g Answers to Questionaires. f Answers to Questionaires and South Korea Interim Government Activities, January, 1948; 1946 and 1947 figures for South Korea only. Table 56

P re- war and Post- war Production of Sel ect ed Industrial Goods in China, I ndia and Japan Pig Iron and Ferro Alloys Steel Chemical Fertilizers Cement Paper

Year 000 m. Year 000 m. Year 000 m. Year 000 m. Year 000 m. tons. tons. tons. tons. tons. China 1936 1,449a 1936 714a 1937 394b 1935-6 710ab 1936 N.A. 1946 N.A. 1946 N.A. 1946 N.A. 1946 925 1946 62b 1947 36c 1947 44c 1947 29c 1947 726c 1947 191c India 1938 l,572d 1938 984d 1938-9 15ef 1938-9 l,536e 1938-9 59e 1946 l,347d 1946 l,249d 1945-6 21ef 1945-6 2,180e 1945-6 70e 1947 1,564 1947 l,224d 1946-7 21ef 1946-7 2,048e 1946-7 N.A. Japang 1930-4 1,281 1930-4 2,724 1930-4 1,637 1930-4 3,698 1930-4 744 1946 197 1946 564 1946 783 1946 924 1946 211 1947 367 1947 941 1947 1,605 1947 1,236 1947 287 a Supplied by the Working Party for Industrial Development, ECAFE Secretariat. b UN Document E/CN.11/39, Annexes, Country Studies. c Latest estimates from Economic Survey of China, 1947. dU N Monthly Bulletin of Statistics. eThe Eastern Economist. f F or ammonium sulphate only. g Japanese Economic Statistics. three major industrial countries in this region, namely, China, India and Japan. On the whole, India was able to maintain her level of production, although there was also a slight drop in the production of certain articles after the war, while the fall in production in China and Japan was very conspicuous. The progress in rehabilitation and recovery may also be viewed from individual countries, each taken as a unit. A separate account will, therefore, be given in the following sub-sections for each country in this region. Burma: The principal mineral product of Burma was petroleum. In the pre-war years, the annual output of crude petroleum was well over 1,000,000 metric tons. There were five refineries, the largest of which was the Syriam refinery. In 1942 most of the refineries and oil installations were destoryed by an effective scorched-earth policy carried out by the British authorities. Since the end of the war, steady progress has been made by the oil companies in rehabilitating the oil fields. A completely up-to-date refinery was being rebuilt at Syriam, providing employment for some 13,000 workers in 1947. However, it is estimated that the country will not be able to resume oil exports until towards the end of 1950. Among Burma’s metallic minerals, the most important are lead, zinc, and silver produced by the Badwin mines (Burma Corp., Ltd.), and tin and wolfram of the Mawchi mines. The average annual output immediately before World W ar II was 53,400 metric tons of zinc ore, 91,300 metric tons of lead ore, 4,870 metric tons of tin ore, 3,400 metric tons of wolfram ore, and 189 metric tons of silver.4 Damage during the war was heavy. Rehabilitation was reported to be under way at the Badwin Mines in the Northern Shan States, where new electric power generators were to be installed. It is expected that a monthly production of about 1,000 tons of refined lead and 2,177 kilogrammes of silver with ancillary by-products could be produced before the end of 1947. On the other hand, the rehabilitation of tin and wolfram in Tenasserim was extremely slow, largely owing to the difficulty in obtaining plant and equipment from the United Kingdom, as well as the exodus of Indian labour which before the war comprised about 80 per cent of the total labour force. There was not much industrial production in Burma, apart from saw-mills and rice-mills. For the formulation of an all-embracing national development plan with the ultimate object of raising the economic level of the country, the National Planning Department was created in January 1946 by the Burmese Government. In May 1947, the National Planning Board was constituted with a view to undertaking detailed investigation and give continuous consideration to matters placed before it. The Board was later superseded by an independent Economic Planning Board. A Two-Year Economic Develop- ment Plan was drawn up in the latter part of 1947, and several boards, such as the State Oil Industry Board, the Mineral Produce Marketing

4 League of Nation, Statistical Yearbook, 1942-44.

87 Board, and the Hydro-Electricity Board, were created to tackle the key economic problems of the country. Ceylon : Mining and industry do not contribute a large share to the national product of Ceylon. The only important mineral product is plumbago or graphite. Almost the whole output is exported, sharing less than half per cent of the total value of exports in the recent years. The annual output of plumbago can be seen from the fluctuations in exports as follows : Plumbago exported (1,000 Metric Tons) 1938 12·0 1945 7·9

1946 •• 8·2 1947 9·1 Regarding industrial production, large scale power-using industry has been little developed. Before the war, apart from factories which processed tea, rubber or coconut, the country had one cotton mill, a few tile works, one or two match factories, one gas works, one or two distilleries and a few engineering works. The production of the cotton mill was as follows : Yarn produced Cloth produced (Metric Tons) (Million metres) 1988 680 2·51 1947 680 2·83 Next in importance is the match industry, which produced about 16,000 cases (each containing 50 gross boxes) in 1947. During the war, new industrial concerns were started by the Government and private business to meet local consumption when foreign supplies were cut off. But with the end of the war, they have been experiencing difficulties. The government’s plan of industrial development is to nationalize all basic industries, such as power, iron and steel, cement, heavy chemicals, specified drugs, and cotton spinning, Owing to the lack of coal and oil deposits, the Government is also planning to develop hydro- electric power. China : Despite heavy damages caused by the war, the production of certain minerals and industrial goods in China experienced substantial expansion during the eight years of war with Japan. Both the Chinese government in Free China and the Japanese authorities in the occupied territory did their utmost to develop heavy industries for the purpose of prosecuting the long-drawn-out war. The surrender of the Japanese in August 1945, therefore, left China with a much larger industrial capacity than in 1937, especially in view of her recovery of Manchuria and Taiwan. However, losses subsequent to the Japanese surrender were huge and, in many ways, disastrous. The removal of machinery and industrial equipment in Manchuria as “ war booty ” by the Soviet occupational forces and the damages done to the material and equipment in factories in the area south of the Great Wall during

88 the tumultuous period of reoccupation made the work of rehabilitation and reconstruction much more difficult, and these adverse effects are aggravated by the civil strife now in progress in China. In 1947, increases in mineral and industrial production were registered in the southern part of China and Taiwan, but the crippling effect of a constantly shifting war front and the division of China into two hostile parts was felt everywhere. Little was known of the economic conditions in the area under the control of the Chinese communists. The survey given in the following pages therefore will be largely confined to the territory under the control of the National Government.5 In mineral production, coal occupies the foremost place in China. In 1936, coal output of the whole country, including Manchuria but excluding Taiwan, was estimated at 36·9 million tons. During the war, coal production was pushed up both in Free China and in the Japanese- occupied territory. In consequence, the whole country’s peak production was estimated at 65 million tons in 1942, of which Free China accounted for 7·3 million tons, North China 30 million tons, and Man- churia 24 million tons. After the end of the war, coal mines in Man- churia suffered great loss in equipment. When the Chinese government took over the mines on the evacuation of the Soviet occupational forces, tremendous effort was spent in putting these mines back into working order. In May 1947, the total output of coal in the five largest mines in Manchuria reached about one third of the wartime level, but following the military reverses in the latter part of the year, all but two mines in Manchuria were lost to the Chinese Communists. In a similar manner, the continuance of fighting in North China reduced the coal output of the eight leading mines in that area from a total of 17 million tons in 1942 to 6 millions in 1947. Production in the neighbourhood of Nanking and Shanghai, namely, in the three porvinces of Anhwei, Kiangsu and Chekiang, was able to return to the pre-war level but the total output in this area only amounted to 1,350,000 tons, while the city of Shanghai alone requires 3 million tons a year. Attention has recently been directed to the development of coal mines in Central Yangtze region, but the planned target is 4 million tons, which if realized can hardly compensate for the loss of mines in Manchuria and North China. China has to rely heavily on imported petroleum products to meet her domestic requirements. Oil production and refining was carried on in Kansu and Taiwan, the total output in 1947 being 528,774 barrels. There were two oil refineries in China with a total capacity of 23,000 barrels per day. Before the war, the annual production of iron ore amounted to 2·9 million tons, largely from Manchuria and North China. In 1942 the whole country’s output was raised to a peak level of 17 millions. How- ever, immediately following the end of war, iron and steel works in Manchuria, North China, and Free China practically all ceased opera-

5 Unless otherwise stated, all data quoted in the following pages are taken from Economic Survey of China for 1947. 89 12 tion. Subsequently, the iron and steel works in Manchuria were badly dismantled and damaged. Rehabilitation was pushed forward by the National Government in 1947, but the plant fell into the hands of the Chinese Communists in early 1948. Data for the total production of iron ores in China were not available, but from the mines under the control of the National Resources Commission a total of 15,114 tons of iron ore was produced in 1946 and 18,894 tons in 1947. The total production of pig iron and ferro-alloys in China was recently estimated at about 3,000 tons a month and steel and steel products at 3,676 tons a month. China leads the world in the production of tungsten and antimony. During the period 1913 to 1937, she contributed about 37 per cent of the world’s tungsten production and 60 per cent of the world's antimony production. Pre-war annual production of tungsten averaged about 8,000 tons, containing 65 per cent of WO3 tungsten. The output in 1947 was 6,402 tons, as compared w ith 2,638 tons in 1946. The production of antimony ore was estimated at 17,300 tons in 1936 and 8,100 tons in 19386 but the National Resources Commission reported to have produced only 1,780 tons in 1947.7 China contributed about 6 per cent of the world’s tin production, her annual output averaging about 8,000 tons during the period 1917-1946 The production of refined tin was on the increase, the output of 1947 being 1,470 tons as against 1,202 tons in 1946. In the absence of a manufacturing census, the relative position of manufacturing production in the national economy may be roughly measured by the aggregate sum of value-added in the national-income estimates. According to one of the national-income estimates for China,8 the net added value in 1933 amounted to 1 ·8 billion pre-war Chinese dollars while the gross value of national product of the same year was estimated at 7·7 billion pre-war Chinese dollars. Thus, manufacturing activities representing both factory and handicraft production created about 23 per cent of the national product of China. In order of importance, the food industry ranked first, contributing about 49 per cent, and the textile industry came next, with 29 per cent. In manufacturing production, non-factory production, i.e. handicraft production, far outweighed factory production, the ratio being 73 to 27. If -factory production alone is considered, the cotton-spinning industry ranked first, producing about 20 per cent of the net added value of the total factory production. Next in importance were rolled tobacco, wheat flour, electric power, cotton weaving, metal, silk spinning and weaving. Among non-factory industries, the most important were flour and rice milling, oil pressing, cotton weaving and wood working industries. Since 1933, the general pattern outlined above is believed to have undergone little change, except in Manchuria, where big strides were made toward industrialization after 1937. In 1943, M anchuria was reported to have produced 4,200 million kwh of electric power, 25·3

6 League of Nations, Statistical YearbookYearbook,, 1942-44. 7 The private production figure was not known but is believed to be not large. 8 Pao-san Ou, China’s National Income, 1933.

90 million tons of coal, 1 ·7 million tons of pig iron, 495,000 tons of steel, 1 ·5 million tons of cement, 92,000 tons of ammonium sulphate, 133 million metres of cotton cloth and 76,386 tons of paper. However, the productive capacity of that area was greatly reduced by the large- scale removal of plants and equipment during the period of Soviet occupation subsequent to the Japanese surrender, and the situation was made worse by the civil strife raging in 1946 and 1947. Industrial production in Taiwan also experienced expansion during the war. The peak production was reached in 1942. The most important industries in this island were food, sugar, tea and canned fruits. Serious damages, however, were inflicted on the industrial equipment by allied bombing in the later days of the war. The extent of post-war recovery varied with the regions. In the absence of an over-all index of industrial production, the index of industrial consumption of electric power, recently compiled by the National Resources Commission, may be taken as a fair indication of the productive activities of power-using factories. (Table 57) Table 57 I ndex of Industrial Consumption of Electric Power in Chinaa (September 1945=100) Nanking-Shanghai Area Manchuria Taiwan Total 1945 January 199·8 323·3 505·3 305·9 July 128·6 212·4 105·8 215·6 December 322·4 60·5 130·4 84·9 1946 January 333·7 64·8 173·7 93·8 April 527·4 23·3 145·5 67·2 July 641·6 19·4 190·2 73·1 October 767·2 31·9 187·3 92·0 1947 January 766·9 38·1 219·5 99·2 February 816·0 36·7 250·3 102·0 March 815·8 38·3 210·2 99·7 April 883·1 39·7 230·4 108·3 May 885·8 36·2 260·8 107·7 June 913·4 32·7 263·5 107·7 July 905·9 25·6 283·7 104·0 August 905·5 30·9 305·4 108·6 September 959·1 46·3 294·0 122·6 October 959·5 33·9 313·6 116·8 November 939·1 27·2 363-1 114·0 December 928·9 24·0 288·6 104·4 a T he index, as compiled by the National Resources Commission, covers eight areas, viz., Nanking-Shanghai, Manchuria, Taiwan, Wuchang-Hankow, South-China, South-western Provinces, North-western Provinces, and North-China; in the interests of space, only three most important areas are quoted here. In general, despite the sharp decline of production in Manchuria the index seems to indicate a slight improvement of industrial production in 1947 over 1946. However, as factory production accounts for only a small percentage of the national product of China, the slight increase

91 in factory production as reflected in the increased industrial consumption of electric power naturally did not indicate any substantial improvement in the well-being of the people. On the contrary, the increased military activities throughout the year 1947 must have consumed a large portion of factory production, leaving for civilian use probably a smaller share in 1947 than in 1946. The production figures of important industrial goods were not available. For articles subject to Commodity Taxes, the following selected figures given by the Administration on Commodity Taxes may be taken as the best available estimates9: — Unit 1946 1947 Rolled tobacco Case 147,315 208,270 Cotton yarn M. tons 295,555 428,599 Matches Case 359,807 672,877 Wheat flour Bags 37,572,910 33,036,685 With the exception of alcohol and sugar, the production of minerals and manufactured goods of the industries established and operated by the National Resources Commission, showed a general increase in 1947 over 1946. The following figures are highly indicative 10: — Unit 1946 1947 Electric power 1000 kwh 974,201 2,004,666 Gasoline hectolitre 197,445 330,544 Kerosene hectolitre 87,206 151,892 Diesel Oil M. ton 1,253 3,176 Pig iron M. ton 1,326 5,732 Steel ingots M. ton 7,536 18,507 Fertilizers M. ton 7,163 20,422 Alcohol hectolitre 128,387 67,524 Sugar M. ton 86,073 41,598 Cement M. ton 83,249 243,477 Paper and Paper boards M. ton 4,940 15,190 The limiting factor in the improvement in industrial production in the regions which were comparatively remote from the scenes of actual fighting was the shortage of coal and electric power. At the time of Japanese surrender, the aggregate installed power capacity in the occupied part of China was about the same as in 1937. However, due to depreciation and damages done by aerial bombing, the total available capacity on V-J Day was only about one-half of the pre-war capacity. Furthermore, some of the plants and equipment had been removed from one place to another by the Japanese during the period of occupation, thus causing considerable confusion and losses. The production of electric power was further handicapped by the shortage of fuel. The decline in coal output in Manchuria and North China 9 These figures do not cover production in Taiwan anandd part of Manchuria unless the products of these two places are shipped into the area, where the tax bureaux are functioning. 10 These figures represent production under the National Resources Commission only, and should not be confused with all-China figures quoted in the preceding tables. 92 described earlier, was mainly responsible for the fuel shortage. So long as these coal-producing areas are not available, the industrial development in the Nanking-Shanghai region and other parts of China will continue to be severely curtailed. Among other factors which accounted for the slow recovery of industrial production were the difficulty in obtaining replacements for machinery and equipment, the inadequate supply of raw materials, high labour cost, and the run-away inflation. On the other hand, the import-control system has given many industries an undisputed domestic m arket and has also provided cheap exchange rates for the purchase of foreign supplies approved by the Government. But, on the whole, these advantages are far outweighed by the handicaps which arise generally from the unsettled economic and political conditions. Hong K ong : W ith only 391 square miles of area, Hong K ong is not noted for its mineral resources. However, there are minor deposits of lead, silver, tungsten, and iron, worked on a small scale primarily for the local m arket. The most valuable m ineral product in the Colony is probably kaolin. Before the war, Japan was the principal market of this product, and recently this export trade has been resumed. The only heavy industry in Hong Kong is ship-building and ship repairing. Other industrial activities are mainly concerned with the light industries, such as textiles, rubber goods, buttons, leather goods, cigarettes, matches, preserved ginger and confectionary, tinned goods, glassware and paint. The outbreak of the Sino-Japanese war in 1937 and of the E uropean W ar in 1939 had a stim ulating effect on the Colony’s industries particularly in the larger dockyards and in those local factories w hich w ere able to undertake the m anufacture of w ar equipment. During the Japanese occupation, industrial activities came virtually to a standstill. Recovery, however, w ent on steadily since the end of the war, but was handicapped by loss of equipment, lack of raw materials, the high cost of raw materials, fuel and electric power, the high cost of labour, as well as restrictions on the import of certain goods into China, and foreign com petition and political disturbances in Siam, Indo-China, and Indonesia. In spite of these difficulties, new factories were being built or brought in from Shanghai, old plant was being reconditioned and a number of firms have installed new machinery. B y the end of 1947, the general level of industrial production reached about 50 per cent of pre-war capacity. B efore the war, more persons were employed in the textile industry than in any other single ind ustry in H ong K ong. T here w ere 150 factories engaged in cotton weaving and 450 in knitting, but by the end of the war, only 90 weaving factories were in operation and practically no knitting factories. Owing to the world-wide shortage of textiles, the industry experienced expansion in the last quarter of 1947, but was handicapped by its reliance on foreign yarn which was not imported in sufficient quantities. During 1947, the industry consumed 20,000,000 lbs. of yarn, which is equivalent to about 80 m illion yards of cloth. In the latter part of the year, two cotton spinning mills, operating 7,500 spindles each, have been established and are about to go

93 into production. Plans for the construction of two further mills of 15,000 and 25,000 spindles are underway and it is hoped that the total capacity of the Colony will be soon brought to 100,000 spindles. In spite of the shortage of raw materials the dockyards were very busy during 1947 and over 4,000 vessels have been handled for m inor or major repairs. Repair work was estimated to have reached 95 per cent of its pre-war output, but ship-building only achieved about 5 per cent of pre-war level, mainly due to the shortage of steel. India and Pakistan : Prior to the creation of the two dominions of India and Pakistan as of 15 August, 1947, the sub-continent of India produced about 25—30 million tons of coal and around 2 million tons of iron ore annually. Coal reserves in the whole sub-continent are estim ated at 60,000 million tons, of w hich 4,500 million tons are supposed to be of good quality and 1,700 million tons are coking coals. India also possesses manganese, copper, gold, salt, mica, saltpetre, magnesite and monazite deposits, but is comparatively weak in the supply of petroleum, tin, nickel, lead, zinc, and bauxite. The sub-continent’s water- power resources are estimated at 27 million kilowatts, next only to those of Canada and the U nited States. Only 9 ·5 m illion kilow atts have been developed. Apart from cottage industries, the large-scale industries founded on the sub-continent are mainly cotton textiles, jute, iron and steel, sugar, cement and paper. The cotton and jute industries dated from the middle of the last century, but most of the other industries were developed after World W ar I. Rapid progress was made especially following the adoption of a protectionist policy in 1924. The output of cotton fabrics was increased about 2 ·5 times in fifteen years in the inter-war period, while the output of sugar, which was negligible prior to 1931, could m eet the entire requirem ents of the country On the eve of W orld W ar II. However, at the outbreak of War, India was still dependent on im ports for capital goods and m achinery, During the war, most of the existing industries worked to capacity and several new ones were founded. The increase in industrial output recorded in the peak years 1943 and 1944 was estimated at about 25

Table 58

India’s Industrial Production, 1938-1947 (Monthly Averages) Wartime Unit 1938 peak 1945 1946 1947 year

Pig iron and Ferro-alloys Metric tons (000) .. 131 170 113 112 130 Steel ingots and Castings „ „ .. 82 116 108 104 102 Cotton yarn „ „ .. 49 64 61 50 49 Cotton Fabrics Metres (000,000) .. 325 371 354 294 289 Wheat flour Metric tons (000) .. 51 57 47 29 15 Cement „ „ .. 119 185 187 171 151 Source : UN Monthly Bulletin of Statistics; from Sept. 1947, not including Pakistan; for Cement, the figure for 1947 represents Jan.-Nov. only.

94 per cent of the pre-war level. However, most of the new industries started during the war were of a medium scale, while the increased production in the large-scale industries was generally achieved through over-working the existing plants and machinery. Since the end of the War in 1945, there has been a general fall in industrial production from the wartime peaks, as can be seen from Table 58. The production of jute manufactures, one of India’s major industries, rose from 1,221,000 tons in 1938-39, to 1,247,000 tons in 1942-43, but fell off to 1,097,000 and 973,000 tons in 1944-45 and 1945-46 respectively. The output of sugar reached 1,125,000 tons in the peak year 1943-44, but declined to 1,082,000 and 945,000 tons in 1944-45 and 1945-46 respectively. There was, however, no fall in the production of coal and electric power, as can be seen from Table 59. Table 59

India’s Product ion of Coal and Electric Power, 1938-1947 (Monthly Averages) Wartime Unit 1938 peak 1945 1946 1947 year

Coal Metric Tons (000) .. 2,089 2,214 2,202 2,233 2,263 Electric Power K.W.H. (000,000) 167 285 298 290 299 Source: UN Monthly Bulletin of Statistics from Sept. 1947, not including Pakistan. As explained by the Minister of Industry and Supply of the Govern- ment of India in his opening speech at the Industries Conference at New Delhi on 15 December 1947, “ of the many causes responsible for a fall in production, the most important have been unsatisfactory relations between labour and industry, a shortage of raw materials and defects of their distribution, inadequacy of transport to meet present needs, difficulty in obtaining capital goods and construction materials to instal them, and supply and exchange limitation on the import of full requirements of industry.” Coupled with the shortening of the working hours from the 54-hour to 48-hour week as of August 1946, there was a great increase in industrial disputes involving stoppage of work. The number of man- days lost in the disputes increased from 2,342,000 in 1943 to 4,054,000 in 1945, 12,718,000 in 1946 and 5,205,000 in the first four months of 1947. The discontent among the workers was mainly the result of reduced income and increased cost of living. The inadequacy of transport was most seriously reflected in the haul of coal. Despite a slight improvement in coal output in 1946 and 1947, the transport difficulties resulted in the large accumulation of coal at the pitheads, thereby reducing the supply of coal to industries. The defects in distribution were aggrevated by the political difficulties attendant on the establishment of two separate dominions. The notable case was the impediment to the free flow of cotton and jute

95 between India and Pakistan at the end of 1947, adversely affecting the production of the cotton and jute industries. The difficulty in obtaining capital goods for replacement was also a serious problem. It was estimated that the total arrears of depreciation in mining and industry amounted to 5 billion rupees at the current prices, or about U.S. $1·5 billion.11 For instance, it was estimated that about 50 per cent of the machinery in the cotton textile industry would need replacement. In the above brief account, India has been treated largely on its pre-partition basis. A word may be said of the consequences of the partition. According to the boundaries fixed between the two dominions. most of the mineral resources, especially coal and iron ore, are situated in India. In 1945, the territory now constituting Pakistan shared about 3·2 per cent of the total value of the mineral output. In quantity, this area contributed the following percentages in 1945 : coal, 1 per cent; petroleum, 14·6 per cent; gypsum, 30 per cent; and chromite, 65·5 per cent. As to industrial production, most of the large-scale industries are located in India. Table 60 shows the distribution of seven important industries between Pakistan and India as of the situation obtaining in 1944 :

Table 60 Indust rial Location in India and Pakistan As of the situation in 1944 India Pakistan Average Daily Average Daily Factories Number of Factories Number of Workers Workers Cotton mills 435 635,065 16 20,018 Jute mills 91 288,663 —— Sugar mills 151 82,188 93,771 Iron and steel 35 58,450 — — Cement 13 8,569 5 1,905 Paper 21 16,582 — — Glass 141 20,890 4 722

Total 887 1,110,407 34 26,416 Source : The Statistical Digest of Pakistan, Part I. With a view to promoting industrial production and ensuring better Planning of industrial development, an Industries Conference consisting of the representatives of the Central, Provincial, State Governments, and of industry, commerce, and labour, was held on 15th—18th December, 1947, in New Delhi. Without going into detail, it is worth while notic- ing that the Conference, after its four-day session, recommended, among other things, an increase in the production and import of raw materials, the fullest use of wagons, as well as of road, river, sea and air transport to solve transport bottlenecks, an agreement to observe a truce for three years between labour and management, the establishment of a Cottage

1111E ECAFECAFE CountryCountry StudyStudy onon India,India, November,November, 1947.1947. (E/CN.(E/CN. 11/39,11/39, AnnexAnnex G/Add. 1).

96 Industries Board to assist their expansion, the organization of a Priori- ties Board to allocate scarce materials, and, finally, the setting up of a Central Advisory Council to watch and ensure the execution of short- term plans, with a separate Planning Commission or Development Board to take charge of long-run planning. A similar Industries Conference was called in Karachi in December 1947 by the Pakistan Government, and attended by representatives of those states which had joined Pakistan, namely, Bhawalpur, Khairpur and Kalat, as well as representatives of the private enterprise. Several commissions were established to investigate the problem further. Indo-China: The principal mineral product of Indo-China is anthracite, the output of which reached 2,335,000 metric tons in 1938 and 2,615,000 metric tons in 1939. Other ores mined in Indo-China were iron, tungsten, manganese, tin, zinc, bauxite, gold and silver. Annual production prior to World War II averaged about 53,000 metric tons of iron ore, 341 metric tons of tungsten ore, 1,767 metric tons of manganese ore, 1,567 metric tons of tin ore, 5,380 metric tons of zinc, and 150 kilogrammes of gold.12 Geographically, Tonkin played the dominant part. In 1923, it represented about 99 per cent of Indo-China’s total production of minerals, but this percentage was later reduced by the development of mining enterprises in other regions, particularly tin mines in Laos. In 1937, Tonkin mines accounted for 83 per cent of Indo-China’s mineral production, while Laos’ share was 12 per cent. During the war years, mineral production dropped considerably. Since the end of the war, rehabilitation of mining and industry was hampered by the political difficulties. In 1946, coal production fell off to 261,000 metric tons. The severe fighting between the French and the Viet-Minh troops at the end of the year accounted for extremely low coal production in the beginning of 1947. Although increase in coal output was noticeable after August 1947, total production of coal in 1947 fell further to 250,000 metric tons. Another illustration of the decline in mineral output is the production of phosphate which reached 37,300 tons in 1938 but practically ceased in 1947. The manufacturing activities of Indo-China were confined to the processing or light industry, such as rice mills, sugar plants, soap fac- Table 61 I ndustrial Production of Indo-C hina, 1938, 1946, and 1947 Unit 1933 1946 1947 Alcohol Hectolitres 220,000 77.156 93.618 Sugar, Brown Tons N A. 5,029 12,954 White 11.776 53 445 Salt 36.862 14.735 16 818 Tobacco " 3.339 771 2.386 Soap " N A . 1.267 3.989 Cement 266,000 21,566 39,871 Source : Bulletin Statistique de I’Indo-Chine, Annee 1947. H aut-C om m issariat de France pour l’lndochine.

12 League of Nations, Statistical Yearbook, 1942-44.

97 13 tories, cotton goods, cement, alcohol and tobacco factories. Owing to political unrest and other difficulties in rehabilitation and reconstruction, the industrial production of Indo-China since the end of the war was much lower than the pre-war level. However, the year 1947 saw some improvement in production as compared with 1946, particularly in the soap, sugar, alcohol, and tobacco industries. Detailed figures of 1946 and 1947, as compared with 1938, are shown in Table 61. It is important to note that owing to the unsettled political conditions, the figures given above do not cover, in some cases, the whole territory for the years 1946 and 1947. Indonesia : Prior to World War II, mineral production represented one of the important economic activities in Indonesia. The share of mineral products in the total export value rose from 17 per cent in 1920 to 29 per cent in 1939. The most important group is the petroleum products. In 1939 and 1940, the annual output of crude petroleum reached 8 million tons or about 3 per cent of the world’s total petroleum production. According to the 1938 figure the geographical distribution of petroleum production was as follows : Java 13 per cent, Sumatra 63 per cent, Borneo 23 per cent, and Moluccas 1 per cent. Next in importance was tin, which was found on the islands of Banka, Billiton and Singkep and the Riouw Archipelago, with an annual total production of about 33,000 tons before the war, the largest share being contributed by the mines of Banka. Indonesia was almost self- sufficient in coal, the pre-war output being 1·75 million tons a year. Coal mines are located in Sumatra and Borneo. Other mineral products were as follows : Annual Average 1936-38 Bauxite 192,000 tons Phosphate 24,000 „ Sulphur 14,000 „

Manganese ore •• 9,800 „ Asphait 4,900 „ Gold 2,100 kg. Silver 18,100 „ Nickel 20,000 tons The total value of mining production in 1938 is put at 280 million guilders with an employment of about 60,000 persons. During the war, most of the mines were severely damaged. Reha- bilitation after the war was hampered by political difficulties between the Dutch authorities and the Republican forces. So far as petroleum is concerned, reconstruction proceeded satisfactorily only at Tarakan (off the east coast of Borneo), where oil, as extracted from the wells, can be used as fuel without having to go through a complicated process of refining. The total oil output by the Tarakan Petroleum Com- pany amounted to 173,527 tons in 1946 and 153,190 tons in the first seven months of 1947, as compared with 682,663 tons in 1939. On the other hand, the situation at Balikpapan, another important oil-producing place in East Borneo, is far less favourable. With great difficulty a small installation was constructed for carrying out the most important

98 part of the refining process locally. The production in the latter part of 1947 was about one-ninth of the pre-war output, or about 9,000 tons per month. Tin production, concentrated in Banka and Billiton, was resumed rather swiftly. The output of the first four months of 1947 amounted to more than 6,800 tons of ore, with a tin content of 5,100 tons. Coal production was recovering very slowly. In the first four months of 1947, Borneo produced about 30,000 tons, while Sumatra, roughly 70,000 tons, equal to about 7 per cent of the 1938 production.13 The industrial production in Indonesia was largely confined to small industries and home industries. In 1938, the total industrial production was estimated at 430 million guilders, of which 170 million guilders came from the mechanical industry, 150 million from the small industries, and 110 million from the home industries. According to a survey made in 1940, two-thirds of the industrial concerns were in Java. Moreover, the industrial concerns in Java, measured by employment and power capacity, were generally two or three times those in other islands. The textile industry and the food industry were two most important branches in the industrial production of Indonesia. In 1940, the textile industry produced 128 million metres of woven textiles of which 25 million metres were produced by the village home industry. This production was sufficient to satisfy one-seventh of the local requirements. In 1940-1942, the Government tried to increase production of the “ light industry ” so as to attain a better balanced economy within the country. Unfortunately, the development plan was interrupted by the Japanese advance and a large part of the industrial equipment was destroyed in the course of the war. In the second half of 1946 the production of most industries was at from 20-30 per cent of their pre-war capacities. By the middle of 1947, production reached approximately one-third of the pre-war level. It is, however, to be noted that owing to uncertainties in the relationship between Dutch authorities and Republican forces, a general appraisal of the economic situation for 1947 is well-nigh impossible. Information on economic development obtained in this Survey may not cover the whole geographical region of pre-war Indonesia. Japan: Among the AFE countries, Japan has made rapid recovery in mineral and industrial production. If the years 1930-1934 were taken as the base period, the annual index of mining and manufacturing production, compiled by the SCAP Headquarters, dropped from the record high of 201·5 in 1941 to 61·5 in 1945 and 32·5 in 1946, b u t rose to 40·9 in 1947. The monthly index for December 1947 was 44·8 which was record high since the end of the war. Generally speaking, mineral production attained a much higher level than manufacturing. The index of mining production increased from 65·4 in 1946 to 84·9 in 1947, while that of manufacturing rose from 27·4 to 34·1 during the same period. Of the principal mineral products, the production of lignite and iron

13 The Economic Review of Indonesia, Vol. I, No. 8, August,A ugust, 1948.

99 ore was maintained throughout the post-war years at a level much higher than that of 1930-34. The output of zinc ore which in 1945 and 1946 sank below the 1930-34 level rose again in 1947. If the years 1946 and 1947 were compared, iron ore and crude petroleum were the only mineral products which showed a drop in production in 1947. Of manufacturing production, those which rose above, or had never sunk below, the 1930-34 level were refined lead, motor trucks, ammonium sulphate, and lumber. As compared with 1946, the m anufacturing production of 1947 saw setbacks in wool yarn, wool woven goods, motor trucks, railway rolling stocks, rubber, tanning, salt, miso, and beer, apparently due to the depletion of pre-war stocks of raw materials and the unavailability of the new supply. For purposes of comparison with the production figures of other countries, the principal items in Japan’s mineral and industrial production are given in Tables 62 and 63.

Table 62

M in e r a l Production of Japan, 1930-1947 Monthly Averages r

a e e m Y i t

Unit 1930 1934 1937 1940r 1945 1946 1947

a k a e W P

Coal Metric tons (000) 2,615 2,994 3,772 4,367 4,777 4,111 1,698 2,270 Lignite 11 10 10 23 240 137 196 235 Iron ore „ 20·5 36·0 48·7 82·8 298·9 95·8 45·7 40·6 Copper ore „ N.A. N A. . 4·1 6·17·92·31·4 1·8 Lead ore „ 0·3 0 ·6 1·0 1·5 1 ·8 0 ·4 0·3 0·5 Zinc ore „ 1·6 2·2 3·7 6·4 7·6 1·9 1·7 2·5 Petroleum, crude Kilolitres (000) 24·5 22·7 32·0 27·0 25·6 19·9 17·7 16·8 The limiting factor of Japan’s industrial production, particularly manufacturing production, is the condition of raw material supply, which in turn depends upon the size of imports and the means of acquiring key commodities as raw cotton, wool, fertilizers, etc., in the world market. It is estimated by certain quarters that the present level of industrial production cannot be expanded substantially unless raw- material imports can be secured in much larger volume. Korea : Under Japanese control, Korea was not developed as a self- sustaining economic unit. Most of the productive activities were closely linked with the manufacturing and mining industries in Japan. The severence of economic and political ties with Japan since the end of war caused a general paralization of the Korean economy. The work of rehabilitation and readjustment was made more difficult by the division of the country into two zones. Almost 90 per cent of electric generating plants, all iron deposits, bituminous coal mines, and chemical industries are located in North Korea, while South Korea, chiefly agricultural, supplies textile products, tungsten, graphite, molybdenum,

100 Table 63

I ndustrial Production of Japan, 1930-1947 Monthly Averages

Unit 1930 1937 Wartime 1934 1940 Peak Y ear 1945 1946 1947

Electric Power Million K .W .H ... 1,152 1,516 2,062 2,457 2,857 2,715 2,255 2,521 Pig iron Metric Tons (000) . . 97 144 192 291 332 42 15 30 Steel Ingots and Castings „ 191 320 483 571 652 89 46 78 Cotton Yarn „ 38 53 60 34·6 26·5 2·2 4·9 10·2 Cotton fabrics Sq. metres (000,000) 182 282 336 183 93 3·8 17 46 Wool Yarn Metric tons (000) . . 1·4 1·3 5·6 3·4 3·5 0·5 1·1 10 Wool fabrics Sq. metres (000,000) 15·9 21·3 19·5 5·3 5·2 0·4 1·6 1·5 Wheat flour Metric tons (000) . . 58 70 67 81 62 17 45 66 Cement „ 274 367 486 500 363 98 77 103

Source : SCAP, Japanese Economic Statistcs. fluorite, and gold. The separation has left South Korea short of bituminous coal and fertilizer and dependent on North Korea for electric power. In 1946 and 1947, the amount of electric power delivered to South Korea by plants in North Korea was much larger than the power generated by South Korea’s own plants, but the total power available still fell far short of the actual requirements, thus hampering the full recovery of mineral and industrial production. During 1947, the larger gold and other metal mines have been put back into operation in South Korea, but owing to the shortage in machinery parts, production was very low as compared with the pre- war figures, as can be seen from Table 64.

Table 64

M in e r a l Production of K or ea, 1934-1947 Monthly Averages 1947 (average of Unit 1934 1936 1940 1944 6 months, June- November)

Anthracite Metric Tons (000) .. 81·987·7 262·8377·5 32·3 Lignite " . . 58·4 102·5215·6 209·9 3·8 Lead ore " . . 0 ·151 0 ·228 1 ·087 1 ·767 0 ·036 Copper ore (concentrates) 0 ·120 0·302 1 ·079 0 ·433 0·018 Tungsten ore " . . 0 ·031 0·142 0 ·377 0 ·700 0 ·049 Zinc ore 0 ·240 0 ·204 0 ·752 1 ·676 0 ·009 Gold Kilogrammes .. 1,036 1,457 2,205 529 3 ·8

Source: South Korea Interim Government Activities, August and December, 1947. Note: Pre-war figures refer to whole K orea; post-war figures, to South Korea only.

Similarly, the recovery in manufacturing production in South Korea has not been satisfactory. The low industrial production has been attributed to shortages of raw materials, lack of replacement and repair parts, inadequate numbers of skilled labourers, and transportation and power difficulties. Complete statistical records for industrial production were not available, but data are currently collected in South Korea from major plants, which represent a substantial portion of factory production. The monthly production figures of the essential manufactured articles during 1947, as compared with 1946, are shown in Table 65. The decline in production of machine-made paper in the early part of 1947 was largely due to the depletion of stockpiles of sulphite pulp which had formerly been secured from North Korea. The industrial production taken as a whole, showed a dip in November 1947, as compared with the preceding months. This is because more than half of the leading industries depended upon imported raw materials, the supply of which was still far from adequate.

102 Table 65

I ndustrial Production of South Korea, 1 946-47 Flour Noddles Cotton Cotton Machine- Unit Yarn Fabrics made M. Tons M. Tons M. Tons Metres paper (000) M. Tons 1946, M onthly Average .. 1,836 124 330 1,758 323·7 1947, J a n u a r y .. 2,171 207 498 2,485 196·2 February .. 1,925 368 459 2,215 128·3 March .. 2,598 391 492 2,549 199·0 April .. 2,424 512 541 2,665 230·5 May 871 423 636 2,884 345·2 June .. 2,561 382 605 3,028 321·4 July .. 1,409 226 502 2,833 362·3 August 269 221 433 2,537 312·9 September 452 266 359 2,130 375·1 October .. 3,592 164 427 2,329 320·6 November .. 2,637 271 370 1,964 2,492 December .. 1,344 197 266 1,377 171·8 Source : South Korea Interim Government Activities, January, 1948. Malayan Union and Singapore : Malaya was the largest producer of tin ore in the world, supplying about 34 per cent of the total world output in 1936-38. To the Malayan economy, the tin industry ranked only next in importance to the rubber industry. Tin-smelting was largely done in Singapore, and, to a lesser extent, in Penang. While the smelting industry suffered simply from neglect and bad management during the war, much more serious damages were done to tin mines as a result of the scorched-earth policy. Damages and loss of equipment also took place during the interval of the Japanese surrender and the British re-occupation. It was estimated in the early days of the liberation that it would cost between M $70,000,000 and M $75,000,000 to rehabilitate the industry to a productive capacity of 75,000 metric tons per annum. Rehabilitation was further hampered by delays in machinery deliveries and a shortage of fuel, due to the fall in the coal output of the Malayan Collieries. Much progress, however, was made in 1947. By the end of the year, the monthly tin output reached 4,580 metric tons, as compared with the monthly average output of 6,830 metric tons in 1940. Other mineral products mined in Malaya before the war were gold, iron, coal, tungsten, manganese and bauxite. The coal mines are situated at Batu Arang about 30 miles north of Kuala Lampur. The equipment on the mines suffered severe losses during the occupation and cost of replacement was estimated at about M $4,000,000. Iron ore w as obtained by the Japanese in large quantities in Trengganu before the war and was mostly shipped to Japan. After the re-occupation, production of iron ore was very small. Detailed figures of mineral production in Malaya before and after the war are shown in Table 66. Besides rubber and tin, the copra and pineapple processing industries ranked next in importance. In the case of Singapore, the port

103 Table 66 M in e r a l Production of Malaya, 1938-47 Unit 1938 1939 1940 1945 1946 1947 Tin ore Metric Tons (000) 43·9 54·2 81·9 8·6 36·7 Coal 486 448 794 206 228 229 Iron ore „ 1030 1275 1200 1·7 Tungsten ore „ 673 355 9 34 Gold Kg. 1269 1280 1125 13·8 162 Manganese ore Metric Tons (000) 7·5 7·4 Source : Pre-war figures from League of Nations, Statistical Yearbook, 1942-44, post-war figures from Monthly Economic Bulletins, Special Commissioner in South-east Asia. is more important as an entrepot rather than as a producing centre. After the re-occupation, industrial rehabilitation was hampered by labour unrest which was due to the shortage of food supply and the general demoralization as a result of the Japanese occupation. Progress was nevertheless made during the post-war years. Among the more important industries which were re-established during 1946 were engineering yards, a tin smelting plant, oil mills, breweries, distilleries, rubber milling factories, rubber works, ice works, sago factories, soap factories, boat-building yards, brick works and aerated water factories. The Philippines : The principal metals produced in the Philippines were gold, silver, iron ore, chrome, manganese ore, copper ore and copper concentrates. Almost all mines suffered heavy damages during the war and many of them may never be opened again. In the pre-war years, gold was by far the most important product in the Philippine mining industry. In the period 1936-40, gold output averaged about U.S. $30 million per annum. During the Japanese occupation, the mines were flooded and most of the equipment dismantled or destroyed. Re- covery was not easy in view of the current shortage of new equipment and machinery. The production of gold in 1946 was reported to be merely 32·8 kilogrammes, as compared with about 28,000 kilogrammes in 1938. Substantial improvements were made in 1947—three gold lode mines and one placer dredge were put back into operation from a total of 50 in 1947, and by October 1947 it was reported that the production was running at the rate of U.S. $3 million a year (at U.S. $35 per ounce) or less than 10 per cent of the pre-war volume. The 1948 output was expected to be much larger than that of 1947. The production of iron ore reached 1,121,461 metric tons in 1940, but completely stopped after the war. Authentic estimates have placed the Philippine iron ore reserves as ranging between 11,000,000 and 22,000,000 tons of 60 per cent or more metal content, and approximately 1,000,000,000 tons of lateritic Surigao ore which averages 57·76 per cent iron, as mined, and 70 per cent on the dry basis.14 The production of iron ore in the Philippines is therefore capable of revival and even considerable expansion, especially in Northern Mindanao, where the most extensive known iron deposits are owned by the Government.

14 “ Th e B e y stes t e r R e p o rtr t ”, p.p . 91.

104 Other metals produced before the war were copper ore and concentrate, chrome, manganese ore and lead concentrate. Before the war, copper concentrates were produced as main products of gold mining operations. The fall in gold production, therefore, reduced sharply the supply of copper concentrates. The chrome and manganese mines have been revived to some extent, the output of 1947 being 5,694 and 3,375 metric tons respectively, as compared with 66,910 and 49,359 metric tons in 1938. The pre-war production of coal was small, mostly from the Liguan Mines, Batan Island. In 1938, the coal output amounted to 41,000 metric tons, which met only a small fraction of the domestic demand. About 250,000 metric tons of foreign coal were imported in 1938. The output of the first six months of 1947 was estimated at 49,786 metric tons. The manufacturing industry in the Philippines is mainly confined to the processing of agricultural products, such as sugar centrals, rice mills, coconut mills, rope and cordage making, tobacco factories, etc. There were four textile mills, together with some 200 units of home weavers, in operation prior to the war, with a total annual production of about 22 million metres.15 Three of these mills were totally destroyed during the war. The production of cotton yarn and cloth in 1946 by the textile mills of the National Development Company, the only company which has resumed production, was 610 metric tons and 2,800,000 metres respectively, as compared with 1,920 metric tons and 10,400,000 metres in 1941.16 Electric power produced in 1938 amounted to 208·7 million K.W.H. of which 160·9 million were actually sold. The total electric power produced after the war was not known, but the production of the American- owned Manila Electric Company, the largest producer of electricity in the island accounting for about 75 per cent of the estimated total generating capacity in 1940, showed an increase from the monthly average output of 15 million K.W.H. in 1941. Serving as a blueprint for industrial development in the Philippine Islands, a comprehensive report was issued by the technical staff of the National Development Company under the supervision of the H. E. Beyster Corporation of the U.S.A. in October 1947, popularly known as the “ Beyster Report.” The main feature of the programme is the decentralization of the industries for strategic reasons and the provision of the people in all regions with an opportunity for employment in the factories and plants to be established. Two programmes, one short- range involving a total expenditure of P. 40,980,000, and the other long- range, covering a period from 10 to 15 years, are envisaged. By the end of 1947, preparations were made to set into motion 12 of the approximately 50 different types of industries recommended in the Report. These include the rehabilitation of the Insular Sugar Re- fining Corporation; a nail factory, a sawmill, a paper plant, a finishing

15 Ibid., p. 189. 16 Yearbook of Philippine Statistics, 1946.

105 14 mill, a sash and door plant, livestock industry, rice and corn projects, expansion of the government textile m ill; a plywood plant; and fishing boat building. Siam: Siam has long been a large producer of tin. Since the signing of the International Tin Control Agreement in 1937, the country became the fourth largest producer of tin in the world. From 1939 onwards, the standard tonnage allotted was 18,628 metric tons (metal content of ore) with additional buffer stock quotas. Most of the tin dredges were operated by the British and Australian mining companies before 1941. A large part of Siam’s tin ore was shipped to Penang for smelting, although there were several small smelters in Siam, operated by the Chinese. In the latter part of 1946, an agreement was signed by Siam, Australia, Great Britain and the United States providing for the disposition of tin stock and ores that had accumulated in Siam during the period of Japanese occupation, the allocation of purchase quotas of tin metal and ores between Great Britain and the United States, and compensation to the British and Australian mine owners for losses suffered under the Japanese occupation. The agreement, which was to be in force for three months and was subsequently extended, terminated on September 30, 1947, after which the question of allocation of tin metals and ores was separated from the settlement of war claims, concerning which negotiations were reportedly still in progress. Be- cause of these procedural and administrative difficulties, in addition to shortages of equiment and parts, tin mining in Siam has not yet been fully rehabilitated. In the pre-war years, considerable quantities of wolfram or tungsten were produced, mainly as by-products of tin mining. With the fall in tin production, the output of tungsten was also reduced, as can be seen from Table 67.

Table 67 M in e r a l Production of Sia m , 1938-1946 In Metric Tons 1938-9 1940 1941 1942 1943 1944 1945 1946a Tin ore 21,200 18,025 21,976 10,768 7,955 5,401 2,371 826 Tungsten 236 265 880 1,761 1,681 709 250 80 Source: Data supplied by the Siamese Government. a January to June. Besides rice mills and saw mills, Siam’s industrial production is confined to a few commodities, namely, cigarettes, cement, sugar, matches, and newsprint, mostly for local consumption, although small exports to other Far Eastern areas were not unknown. Total cigarette production in 1947 was estimated at 2,500 million, but since October 9, 1947, the m anufacture of cigarettes was placed under state monopoly. There is one modern-equipped cement factory in Siam. O utput in 1940 was estimated at 100,000 metric tons,17 but no information is available on current production. The production of newsprint reached the re- 1717 LLeague e a g u e of NNations, ations, 'StatisticalStatistical Yearbook, 1942-44.

106 cord high of 2,283 metric tons in 1941, but dropped to 256 and 490 metric tons in 1945 and 1946 respectively.18 The total electric power produced in Siam amounted to 46,220 and 49,241 thousand K.W.H. in 1841 and 1942 respectively. It fell to 20,700 and 11,675 thousand K.W.H. in 1944 and 1945 respectively. The year 1946, however, saw a revival to 33,261 thousand K.W.H. As Bangkok alone produced about 39.637,000 K.W.H. in 1947, the total production of electric power in Siam in 1947 appeared to have increased substantially over the preceding years.

IV F actors in Future Devel opment The development of mining and industry is closely linked up with other economic activities, such as transport and communications, the supply of labour and technical personnel, foreign trade, money and banking, etc. As these subjects will be dealt with in other chapters of this Survey, no attempt will be made here to elaborate the interrelations between mining and industry and other aspects of economic life. The following pages will be confined to a brief survey of some factors which cannot be adequately treated elsewhere but are of particular importance to the determination of the course and form of mining and industrial development in the future. Government Planning : Contrary to private and unconcerted individual action which was the rule of economic develoment up to World War I, government planning has been the order of the day since the latter part of the thirties. In Asia and the Far East, some of the countries had developmental plans put into effect in the late thirties, only to be interrupted by the w ar; some countries made planning during the war in anticipation of the peace-time to come ; and still some started planning after the end of the war or on their attainment of political independence. These plans, drawn up by the central government with or without the participation of private business, usually cover the whole economic life, and are not specifically concerned with industrial development, although industrialization or economic diversification is their main objective. As a summary of these plans is being prepared by the Industrial Development Working Party formed in accordance with the Resolution adopted at the Commission’s second session (ECAFE Docu- ment E/CN. 11/62), it will suffice here to mention, without giving their contents, the latest versions of the over-all plans or programmes, as well as the planning bodies, in each of the countries. (Vide p. 108.). Besides, Indonesia was reported to have an industrial development plan in progress, which would follow the principles laid down in the “ Industrial-political outline for Indonesia ”.19 Owing to their position as an entrepot rather than a producing centre, Hong Kong and Singapore do not feel the need of planning for industrial development, while the Malayan Union, preoccupied with rehabilitating mines 18 Data supplied by the Siamese Government. 19 ECAFE Country Study, E/CN.11/39,E/CN.11/39, AnnexA nnex K,K, p.p. 31;3 1 ; andand Economic Weekly of Netherlands Indies, 25 January,Ja n u a ry , 1941, p. 51.

107 Department Latest Version Country Responsible of Plans or Date of for Planning Programmes Issue Burma Department of National Two-Year Economic 1947 Planning. Development Plan. Ceylon No special planning Report on Industrial Sept. body ; planning done Development and 1946 by departments con- Policy by the Execu- cerned. tive Committee for Labour, Industry and Commerce. China Plans for Industrial March Development of 1948 China. Indo-China Adviser for the Plan. Preliminary plan com- 1946 pleted in 1946-47, final version under preparation. India Advisory Planning Report of the Advisory 1946 Board. Planning Board. Plans of the Central Government and the Various Provinces. Report of the Industries Dec. Conference. 1947 Pakistan Report of the Industries Dec. Conference. 1947 Philippines No standing planning Proposed Programme Oct. body. for Industrial 1947 Rehabilitation and Development (known as the Beyster Report). Siam No special planning Under preparation. body. and estates, has not yet made attempts to plan for future economic development. Japan and Korea, under allied military occupation, are already under rigid system of control and planning. On the withdrawal of the controlling power the governments of both countries will no doubt continue to enforce some kind of economic planning in order to tide over the difficulties. It is, therefore, apparent that for the whole AFE region, government planning is the most important factor which should be taken into consideration in the study of the future development of mining and industry. State Enterprises : Closely related to government planning is the widening scope of government activities in the business life of the nation. The trend of the increasing role played by the government in the business was already apparent during the World Depression since 1929. Mention has been made in this chapter of the government concern with unemployment and economic depression and of measures intended for relieving the population pressure in some of the AFE countries in the thirties. The tendency of the government going into business has been made more evident since the end of the war. On account of heavy

108 losses to private property and also as a logical extension of the wartime powers of the government, the task of recovery and rehabilitation was largely performed by the government itself. In addition to expediency, there is a definite demand from the people for the nationalization of large enterprises which affect the general welfare of the nation. In response to this sentiment, some governments are planning to take over those private industries which hold a key position in the national economy. Furthermore, in order to hasten the tempo of economic development, it is deemed necessary for the government to take active part in the exploitation of natural resources and the supply of basic materials. For all these reasons, a substantial portion of production and distribution is now carried on by the government or government-controlled corporations. In Burma, for instance, various Boards, such as the State Oil Industry Board, the Mineral Produce Marketing Board and the Hydro- Electricity Board were established with the ultimate view of achieving State Socialism. In Ceylon, most of the new industries started during the war were state-owned. After the end of the war, the government’s avowed policy is to nationalize the basic industries such as power, iron and steel, cement, heavy chemicals, specified drugs and cotton spinning, while non-basic industries are also to be subject to state control. In China, the National Resources Commission, a department of the Central Government, contributed about 36 per cent of coal production, 65 per cent of electricity, and 35 per cent of tin in 1947.20 The China Textile Industries Inc., a government corporation, controlled 39 per cent of the total spindles and 57 per cent of the total looms in the country and produced about 42 per cent of cotton yarn in 1947 ; and as of Septem- ber 1947, about 28 per cent of the total tonnage of sea and river-going vessels was in the hands of the state-owned shipping companies. In Indo-China, the policy of state-controlled colonial development (“ Mise en valeur ”) was well known before the War. The Central Government had a large interest in the transportation and electric power production. Similarly, the Dutch Government in Indonesia was a large investor and owner of many of the leading enterprises before the war. In 1932, 8 per cent and almost 10 per cent in more recent years of the state income came from business enterprises. In view of the prevailing uncertainties, it is difficult to obtain quantitative information as to the role played by the government in business after the end of the war, but there is no doubt that both the Dutch and the Republican authorities will assign to the government the major portion of the responsibility for the development of the Indonesian economy. In the Philippines, the National Development Company, founded by the Government in 1937 with a paid-up capital of 26,411,300 pesos, acts as the main government agency to execute the industrial developmental programme. The charter permits the Company to engage in any kind of business enterprise which is calculated to bring about a rapid but systematic development of resources, or in which private capital has not been invested. It has organized several subsidiaries including the

20 UN Monthly Bulletin of Statistics.

109 National Food Products Corporation, National Rice and Corn Corpora- tion, National Warehousing Corporation, National Footwear Corporation, Cebu Portland Cement Company, and Insular Sugar Refining Corpo- ration. There are other minor government corporations and agencies, such as the National Abaca and Other Fibres Corporation, National Coconut Corporation, and National Rice and Corn Corporation. The last-named corporation was previously a branch of the National Deve- lopment Company, but has recently been converted into an independent organization. These government corporations, though not created to compete with private capital, will no doubt exercise important influence on the Philippine economy. In Siam, the Government also took an active part in establishing new industries even before the war. In 1937-38, the government spent 1 ·25 million baht for the development of the sugar industry and secured a controlling share in the holding company of sugar.21 Among the government enterprises of Siam the most noted are a paper factory in Kan- chanaburi, a distillery at Bangyikhan, a modern weaving mill, to which a dye-works is attached. It is reported that the Siamese Government is planning to construct a textile factory in one of the north-eastern provinces. While there is a strong case for the government to take part in the business, it is yet uncertain what would be the line of division between the government and private enterprises, and most of the private business in the AFE countries are demanding that a definite policy be promulgated by the government in its relation with the private industries. Foreign Capital: In the face of expanded government activities in business and increased control and planning over economic life by the state, the problem of foreign capital assumes special significance in the post-war period. Owing to technological backwardness as well as special political ties, almost all AFE countries owed their initial stage of industrial and mineral development to foreign enterprises. While a comprehensive account of foreign investment in the AFE region lies outside the scope of this Survey, the general situation obtaining prior to the outbreak of the war may be outlined briefly here. According to the estimates for years varying from 1935 to 1939, the total foreign investments, in Burma, Indo-China, Indonesia, Malaya, the Philippines, and Siam, excluding those made by the Chinese residents, amounted to U.S. $3,836 million, of which U.S. $2,715 million were for entrepreneur investments.22 In Burma, the exploitation of petroleum was almost exclusively in the hands of three great corporations, the Burman Oil Company, the British Burma Petroleum Company, and the Burma Shell Oil Storage and Distributing Company of India. Lead, silver, zinc, copper, nickel, and some iron were exploited by a British firm, the Burma Corporation, Ltd. Tin and tungsten were exploited by the Tavoy Tin Dredging Cor- poration, the Anglo-Burma Tin Corporation, the Consolidated Tin Mines of Burma, Ltd., and the High Speed Steel Alloys Mining Company, all 21 HelmustH e lm u s t G. Callis,C a llis, Foreign Capital in South-east Asia. 22 Ibid.

110 of which were British-controlled.23 In Ceylon, an estimate given in the Ministers’ Post-War Development Proposals puts the total capital invested in Ceylon in 1919 by foreigners through the medium of sterling and rupee companies at Rs. 860 million, out of a total of Rs. 1,018 million invested by foreign and local investors together. The foreign share thus amounted to nearly 85 per cent. The present value of this foreign capital is perhaps in the region of Rs. 1,200 million. Tea, the principal source of the island’s income, is 80 per cent owned by foreign capital.24 In China, before the outbreak of the Sino-Japanese War in 1937, foreign controlled coal mines supplied almost half of China’s total annual production; most of iron mining in China Proper was controlled by Japanese capital; and in the modern cotton textile industry, British and Japanese capital controlled almost half of the spindles and almost 58 per cent of the looms.25 In India, according to the Statistical Abstract (1930-31 to 1939-40), the total paid-up capital of joint stock companies registered elsewhere than in India but working in British India amounted to £741,130,000 of which £116,940,000 were in mining, cotton and jute mills, cotton ginning, pressing, baling, etc. According to an article in the Financial Times of London (24 March, 1943), the total British investment in India in 1936 was £616 million, comprising £376 million Government of India sterling obligations and £240 million other investments. The Government of India sterling obligations had since been paid off and the still surviving British investments in India was then estimated at £240 million. Non-British foreign investments were estimated at about £200 million. In individual industries, 20 per cent of capital in cotton textiles was in British hands; the engineering industry, where 300,000 persons were employed, was a preponderantly British enterprise, while the foreign share in sugar, cement, paper and match industries was substantial.26 In Indo-China, the main producers of minerals were great French corporations such as the Societe Francaise des Charbonnages du Tonkin at Hongay, the Compagnie Miniere at Metallurgique de l’lndo- Chine with mines at Chodien and foundries near Haiphong, the Societe des Etains et Wolfram du Tonkin, and the Societe des Ciments de l’lndo- Chine in Haiphong.27 From 1885 to 1940, total investments of French capital in Indo-China were estimated at 5,200 million piastres of 1939, that is U.S.$1,130 million. In Indonesia, foreign entrepreneur investments in 1937 were estimated at U.S. $1,411 million, of which U.S. $1,040 million was from the Dutch investors, and U.S. $200 million from the British.28 In Malaya, the total foreign entrepreneur investments were estimated at U.S. $372 million, exclusive of the Chinese investments which were placed at U.S. $200 million. The British portion was well over 70 per cent of the total business investment. In the former Fede- rated Malay States, about 40 British companies with a capital of eight 23 KaK a tte e L L. . M itcitchell, h e ll, Industrialization of the Western Pacific,Pacific, p.p. 193.193. 24ECAFE Country Study on Ceylon (E/CN.11/39, Annex ‘E ’), November 1947, p. 14. 25 Mitchell, op. cit., p. 103. 26 P. A. Wadia and K. T. Merchant, Our Economic Problems, pp. 448-450. 27 Callis,C allis, op. cit. 28 Ibid.

111 to nine million pounds sterling were engaged in tin-dredging, while tin smelting was dominated by the Straits Trading Company and the Eastern Smelting Company, both of which were British firms. The most important single gold mine in Malaya was owned by the Raub-Australian Gold Mining Company, Ltd.29 In the Philippines, total foreign direct investments in 1936 were estimated at U.S. $315 million of which U.S. $163 million was American and U.S. $90 million, Spanish. American capital held a key position in gold mines, public utilities and the sugar industry. Spanish interests were also large in gold mines and sugar mills.30 In Siam, foreign investments were estimated at U.S. $124 million in 1938, of which U.S. $90 million was in entrepreneur investment. Tin-dredging was mainly in the hands of the English and the Australian companies, while most of the rice mills and part of the saw mills were Chinese.31 During the war, considerable losses were suffered by foreign enterprises in the AFE countries, but owing to their comparatively large resources, the progress in rehabilitation and recovery of foreign enterprises did not compare unfavourably with other enterprises. The new problem that is facing the AFE countries is the proper place to be given to foreign enterprises in national planning. It is generally recognized that foreign capital is very much in need and, in some countries, even indispensable for the execution of the developmental programmes. But on the other hand, the national governments will naturally reserve the right to exercise due control over all private business activities in the interests of the nation as a whole. The manner in which the existing foreign enterprises are treated, therefore, will be a delicate problem, the solution of which may well affect the future flow of capital from the industrially advanced countries to the AFE countries.

29 Ibid. 30 Ibid. 31 bI id.

112 C hapter VII TRANSPORT AND COMMUNICATIONS

I. G ener a l Fea t ur es Two aspects are to be distinguished in the study of the transport system of a country, namely, external and internal. As most of the AFE countries have long sea coasts and some of them are islands and penin- sulas, the external transport facilities in this region mainly consist of ocean-shipping and, in recent years, of air-lines as well. For domestic transport, coastal and inter-insular shipping, railroads, air-lines, highways, inland waterways, and even pack animals are utilized to varying degrees. The lack of a modern transport system is felt in some of the AFE countries. A study of the proportions of population and area to the kilometrage of railways in pre-war years will bring the comparative situation of the AFE countries clearly to the fore. (Table 68) Table 68 Pre-war Proportion of Population and Area to Railroad Kilom etrage in AFE Countries as Compared with some W estern C ountries Number of Kilometrage Sq.km. of Area People Country of Railroads per km. of per km. of Railroads Railroads Burma 3,301 183·3 5,089 Ceylon 1,469 44·9 4,084 China (excluding Manchuria and Taiwan) 11,604 956·8 38,176 Manchuria 11,336 114·9 2,470 Taiwan 3,925 9·1 1,448 Hong Kong 36 27·8 44,444 India (including Pakistan and States) 66,185 61·9 5,878 Indo-China 3,016 245·4 7,858 Indonesia 7,400 257·3 9,662 Japan 24,441 67·3 2,987 Korea 6,108 36·2 3,978 Malaya 1,718 79 2 3,143 Philippines 1,141 259·4 14,899 Siam 3,210 161·4 5,265

Canada 68,708 139·2 166 France 42,680 12·9 965 Netherlands 3,591 9·2 2,451 United Kingdom 32,309 6·9 1,483 United States 381,079 345 Source: League of Nations, Statistical Yearbook, 1942-44; Answers to the questionnaires sent by the ECAFE Secretariat; The World Almanac, 1948. The above table indicates that in the AFE region India, Ceylon, Japan Korea, Manchuria and Taiwan, and Malaya, were adequately served by

113 15 railways, while others were not. For those countries which did not have a widespread network of railways, internal transport largely depends on waterways. For instance, the Yangtze and the West (or Pearl) River, together with numerous streams and canals, provided China with a slow but extensive system of transportation for both cargo and passenger traffic. In Burma, a large portion of internal transportation was carried on by waterways, particularly the Irrawady and its tributaries. Prior to the War, the Irrawady Flotilla Company was reported to have carried about 1,300,000 tons of cargo annually. Siam had an excellent system of canals and waterways converging from all parts of the country on the Menam River, which almost bisects the country from north to south and flows by Bangkok into the Gulf of Siam. In Indonesia, the inland and inter-insular traffic was carried on by powered vessels as well as by wooden boats. As regards external transport facilities, the AFE countries had to rely extensively on foreign shipping. The merchant fleet owned by the AFE countries was generally very small, except Japan, which, prior to the war, ranked third as the maritime power of the world. The predominance of foreign shipping in the pre-war overseas trade can be seen from Table 69.

Table 69 P re- war Nationality of Tonnage in Overseas Shipping in Sel ect ed AFE Countries National Flag of Country Year Metropolitan Foreign Flag Power Flags China 1936 16·2% — 83·8% India . . 1938-39 3·7% 66·3% 30·0% Indo-China .. 1938 — 25·5% 74·5% Indonesia .. 1938 20·9% 25·8% 53·3% Japan . . 1939 67·2% — 32·8% Malaya . . 1938 — 34·4% 65·6% Philippines 1938 1·0 % 10 ·0% 89·0% Siam 1937-38 — 94·0% Source : Katrine Greene, An Economic Survey of the Pacific Area : P a r t II, Transportation; and Nalinaksha Sanyal, India and Inter-Asian Transport and Com- munications.

In the aggregate tonnage of merchant vessels entering the ports of China (including Manchuria), Indo-China, Indonesia, Japan, Malaya, Philippines, and Siam for overseas trade, the Japanese flag took the lead, followed by the British, the Chinese, and the Dutch. A detailed table showing the percentage distribution by nationality of tonnage of merchant vessels entering the ports of the above seven countries in two pre- war years, 1936 and 1938, is given on page 115. Besides merchant vessels, the AFE countries are also linked with each other and with other parts of the world by air-lines, largely operated by the foreign aviation companies. Owing to the predominant reliance on ocean-shipping, the inland connections between the AFE countries are generally of secondary im-

114 Flag 1936 1938 Tons (000) % Tons (000) % Japan 63,927 38·1 49,997 36·4 Great Britain 38,234 22·8 35,580 25·9 China 12,354 7·4 5,347 3·9 Netherlandsa 11,483 6·8 13.032 9·5 Norway 8,629 5 ·1 8,528 6·2 United States 6,856 4·1 1.890 1 ·4 Germany 4,884 2 ·9 4,092 3 ·0 France 2,992 1 ·3 2,687 2 ·0 Others 18,575 11·0 15,976 11·7 Total 167,934 100·0 137,129 100· 0 Source: Compiled from data given in Institute to Pacific Relations, An Economic Survey of the Pacific Area : Part II. Transportation. a Including Netherlands Indies. portance. There are some inland waterways which are of concern to two or more countries, such as the Mekong River, which has as riparians Siam, Indo-China, China and Burma, and the Amur River, which flows between China and the U.S.S.R. Some of the waterways of India have become bilateral concern to India and Pakistan since the partition. There were a number of railroad connections between the AFE countries, some of which have not been in operation since the end of the war. Thus China has railroad connections with Hong Kong, Indo-China, and the U.S.S.R., but the two latter connections are not in operation. Siam has railroad connections with the Malayan Union and Indo-China, but the latter are not in operation. Since the partition, the former Indian railway system has been divided into two inter-connecting systems. There are highways connecting Siam with the Malayan Union, Indo-China and Burma. India has highway connections with the French and the Portuguese Settle- ments and Afghanistan. China is linked with Burma by the Burma Road and with the U.S.S.R by the Great North Road through Sinkiang. In general, as inland transport connections are relatively undeveloped between the AFE countries, the operation and utilization of these facilities do not as yet pose serious international problems in this region.1 Among the important changes that have been brought about by the war are the damages and dislocations caused to the railway system in most of the AFE countries and the disappearance of the Japanese and German merchant fleet in overseas shipping. A detailed account of the post-war developments is given under separate headings in the following paragraphs.

II. R ailways And Hig h w a y s Apart from the heavy damages wrought by the war, the task of rehabilitation was hampered and, in some cases, even nullified by the ensuing internal strifes in some of the AFE countries. The lines that have been restored to traffic in the war-devasted countries still fall far short of the total kilometrage that existed prior to the war. (Table 70)

1 United Nations Document No. E/CN.2/34.

115 Table 70

P re- war and Post- war Kil o m e t r a ge s of Railways in the War- devastated Countries

In A sia and the Far East Compared Pre-war Situation Post-war Situation Year Kilometrage Year Kilometrage Burmaa 1941-42 3,301 1946-47 2,439 Chinab (excluding Manchuria and Taiwan) 1937 11,604 Dec. 1947 8,507 Manchuria V-J Day 11,336 " 934

Taiwan " 3,925 " 3,925 Hong Kongc 1941 36 1947 36 Indo-Chinad 1941 3,016 1947 1,150 Indonesia 1941 7,400 N.A. Malayae 1941 1,718 1947 1,281 Philippinesf 1941 1,141 1947 875

a Annual Report of the Burma Railway Board, 1946-47. b Economic Survey of China for 1947, ECAFE Secretariat, 1948, c Annual Report on Hong Kong for the year 1947. d Economic Survey of Indo-China for 1947, ECAFE Secretariat, 1948 e Answers to questionnaires (ECAFE) by member governments. f Ibid.

From the above table, it can be seen that the six war-devastated countries, not including Indonesia, had a total of 36,077 kilometres of railways before the war, but up to 1947, only 19,147 kilometres, or about 53 per cent, were open to traffic. The situation of the rolling stock in these countries is summarised in Table 71. The noticeable increase in the rolling stock in China was due to the large contributions made by UNRRA. Of the UNRRA’s whole programme for China, a net amount of U.S. $90,000,000, or about 17 per cent, was spent on transportation equipment and materials,2 which include 262 locomotives and 3,445 freight cars.3 On the other hand, owing to the spreading of fighting in China, it is reported that a total of 6,595 kilometres of railways was destroyed from V-J Day to December 1947.4 However, the work of repair and reconstruction was pushed forward with untiring effort, so amidst widespread disruption and destruction in the war areas, the total length of railways in operation in China reached 13,366 kilometres at the end of 1947 as against 13,162 kilometres at the beginning of the war.5 In general, the inadequate recovery of the railway system in the war devastated countries hampered the progress of rehabilitation and reconstruction, and gave rise to serious bottlenecks in the distribution of key materials.

2 UNRRA, Report of the Director-General to the Council for the period 1st April, 1946 to 30th June, 1946. 3 United Nations Document No. E /C N .11/39. 4 Economic Survey of China for 1947. 5 Ministry of Communications, Chinese Government, Summary of Transport and Communications Statistics,

116 Table 71

P re- war and Post- war Railway Rolling Stocks in War- devastated Countries

I n Asia and the Far East c e d a g a i f n n a i s a b o - a e h y a g p K n s i a m n C l l i o e r - i a h

d o n u h i g n d C M B n P p I n o I H

A. Pre-war Situation : Locomotives 360 1,339 180 1,004 17 173 178 Freight cars 10,000 17,294 2,123 22,959 134 5,600 2,427 Passenger coaches 1,200 2,476 438 2,866 44 N.A. 397 B. Situation on V-J Day or in 1946 : Locomotives 16 2,082 N.A. N.A. 8 52 N.A. Freight cars 3,000 25,864 N.A. N.A. 24 3,425 N.A. Passenger coaches 100 2,741 N.A. N.A. 10 N.A. N.A. C. Situation in 1947 : Locomotives 205 2,324 N.A. N.A. 17 225 74 Freight cars 3,566 29,524 N.A. N.A. 48 3,884 1,674 Passenger coaches 291 3,573 N.A. N.A. 17 199 98

a Pre-war and V-J Day figures from United Nations Document E/CN.11/39 ; 1947 figures from Annual Report of the Burma Railway Board, 1946-47. b Pre-war figures do not include Manchuria and Taiwan; figures under B. refer to the situation in December 1945 ; all figures from Economic Survey of China for 1947. c Answers to Questionnaires. dUnited Nations Document No. E/CN.11/39, Annex, K. e Answers to Questionnaires and the Annual Report of Hong Kong, 1946 and 1947. f From the Report on Malayan Union, 1946 ; and Answers to Questionnaires. g Supplied by the Philippine Government. Note: The figures given above are based upon latest information available and differ from those given in United Nations Department of Economic Affairs, Economic Report, Salient Features of the World Economic Situation, 1945-47, pp. 81-82, Table 34. The discrepancy is due partly to different pre-war years used and partly to ambiguity in the term used which may refer either to rolling stock in possession or to rolling stock in actual use. As far as possible, the figures given in the above table refer to rolling stock in possession, i.e. including those under repair or temporarily put out of commission. A more favourable picture was obtained in the countries which had suffered little direct damages from the war, as well as in Japan and Korea. The situation of railway rolling stock in those countries is shown in Table 72. So far as railway traffic is concerned, conditions differed widely in the AFE countries. Owing to general improvement in the rolling stock situation and the restoration of the key lines in the southern part of

117 Table 72

P re- war and Post- war Railway Rolling S tocks in India

(Incl uding Pakistan), Ceyl on, S ia m, J apan, and Korea

India Pre-war Situation (including Ceylonb Siamc Japand Koreae Pakistan)a 1939 1939 1939 V-J Day Locomotives N.A. 244 207 4,735 874 Freight Cars N.A. 2,739 3,827 87,373 14,222 Passenger Coaches N.A. 839 317 12,286 2,552 Situation in 1946 : Locomotives 8,985 237 230 6,287 N.A. Freight Cars 218,436 2,709 4,987 116,553 N.A. Passenger Coaches 17,485 772 316 13,198 N.A. Situation in 1947 : Locomotives 9,136 248 365 6,201 650 Freight Cars 224,152 2,769 5,558 105,308 7,205 Passenger Coaches 17,342 790 426 13,566 629

a Figures refer to rolling stock in service, from Government of India, Railway Department, Report by the Railway Board on Indian Railways for 1945-46 and for 1946-47. b From Answers to Questionnaires. c " " " " " d " " " " " e The 1947 figures refer to South Korea only. The number of locomotives in 1947 includes about 100 locomotives recently imported from the United States. The numbers actually in operation in Dec. 1947 were 248 (see South Korea Interim Government Activities, Dec. 1947).

China, both China and Hong Kong experienced an increase in passenger and cargo traffic in 1946 and 1947. For entirely opposite reasons, India and Japan, on the other hand, suffered a setback in cargo traffic in 1946-47, as compared with 1945-46. (Table 73) In India, the decline in cargo traffic was due to the general deterioration in railway equipment. It was estimated that as many as 2,900 locomotives, or approximately 35 per cent were over age, and owing to the difficulty in obtaining replacement it would take three more years for rail capacity to reach a level of sufficiency. The fall in cargo traffic was reflected in the bottlenecks in coal transportation from the mines to the industrial centres, with the consequence that industrial production also fell off in 1947. As a result of partition, the Indian Union got about 39,525 kilometres of railways, and Pakistan, 10,858 kilometres. In the case of Japan, there was a phenominal increase in passenger traffic, but the low level of production accounted for a noticeable fall in cargo transportation. Most of the railways in the AFE countries are state-owned. Private railways account for a very small portion of the total kilometrage. A comparison of gross revenue and expenditure of railways indicates a surplus for most of the AFE countries except China as can be seen from Table 74.

118 Table 73

P re- war and Post- war Railway Traffic in Select ed AFE C ountries

Passenger Traffic Carg o Traffic Unit Year Unit Year

Chinaa Million 1936 1946 1947 Million 1936 1946 1947 passenger 4.203 12,420 14,146 ton 6,378 3.756 5,591 kilometres kilometres 1939 1496 Hong K o n g b 1939 1946 1·0 7·5 37·4 64·1 1938-9 1945-6 1946-7 44,123 India c (including 1938-9 1945-6 1946-7 36,230 47,686 ” Pakistan) 29,157 66,510 67,675 1940 1497 Indo-Chinad 1940 1947 382 42 1,086 71 1939 1946 1947 Japane 1939 1946 1947 ” 21,228 22,198 16,553 33,632 72,048 87,434 1940 1496 Philippinesf Million 1940 1946 Million 2 · 0 0·2 passengers 12·2 2·0 tons 1945-6 1496-7 Burmag 1·97 1940-1 1946-7 ” 0·96 19·8 8·2

aEconomic Survey of China for 1947, pre-war figures do not include Manchuria and Taiwan. b Answers to Questionnaires. c Report by the Railway Board on Indian Railways for 1946-47. d Pre-war figures from Annuaire Statistique de l'Indochine, 1941-42; 1947 figures from Economic Survey of Indo-China for 1947. e Japanese Economic Statistics, February, 1948, figures refer to years ending March 31st and represent Government railways only. f The Yearbook of Philippine Statistics, 1946. g Annual Report of the Burma Railway Board, 1946-7. Table 74 G ross Revenue and Expenditure of Railways in Sel ect ed AFE Countries, 1946-47 Gross Revenue Expenditure Profit (+ ) Year or Loss (—) (000,000) (000,000) (000,000) Burmaa Oct. 1946- Rs. 49·9 Rs. 42·1 + Rs. 7·8 Sept. 1947 Chinab 1946 CN $387,600 CN $576,500 - CN $188,900 1947 CN $2,995,700 CN $3,782,900 - C N $787,200 Indiac April 1946- March 1947 Rs. 2,033·5 Rs. 1,698·3 + Rs. 335·3 Hong Kongd . 1947 HK $5·9 H.K. $2·2 + HK $2·7 S. Koreae Dec. 1946- Nov. 1947 Won 3,115·8 Won 2,906·8 + Won 208·9 Malayaf 1946 St. $22·9 St. $16·4 + St. $6·5 a Annual Report of the Burma Railway Board, 1946-47. b Economic Survey of China for 1947, the 1947 figures are preliminary. Expendi- ture figures do not include capital outlays. c Report by the Railway Board on Indian Railways for 1946-47. d The Report on Hong Kong, 1947. e South Korea Interim Government Activities. f Annual Report on the Malayan Union for 1946. Owing to the comparatively low cost of construction, motor transport has been increasingly utilized to supplement rail transport, but some of the highways in the AFE countries are merely improvements of old cart roads, while others do not have all-weather surfacing. The kilometrages of highways given in the reports from different AFE countries, therefore, are not strictly comparable. Nevertheless, the following pre-war and post-war figures may give a rough picture. (Table 75). Table 75 P re- war and Post- war Kil o m e t r a g e of Hig h w a y s in Sel ect ed AFE Countries Pre-war or Wartime Kilometrage Post-war Kilometrage Year Year Ceylona 1939 5,603 1946 6,355 1947 6,417 Chinab 1937 109,000 1945 76,888 (Free China only) 1947 (Dec.) 70,637 Indiac •• 1942-3 363,600 N.A. Indo-Chinad 1942 32,596 1947 26,000 Japane 1939 939,593 1946 917,908 1947 919,621 Korea, Southf N A. . 1946 14,267 Malayag 1946 9,844 N.A. 1947 9,939 Philippinesh 1941 24,046 1946 24,659 Siami 1939 4,466 1946 6,280 a Answers to Questionnaires. b Economic Survey of China for 1947. The 1937 figure does not include Manchuria and Taiwan. c Presidential Address to the 11th Session of the Indian Roads Congress, February 5th, 1947. d Annuaire Statistique de I’Indochine, 1941-42; and Economic Survey of Indo- china for 1947. e-h Answers to Questionnaires. i Economic Survey of Siam for 1947.

120 The extent to which motor transport has been utilized may also be seen from the number of motor vehicles registered in each of the AFE countries. (Table 76) Table 76 P re- war and Post- war Number of Registered Motor Vehicl es in Sel ected AFE Countries Trucks, Year Passenger Commercial cars Buses Lorries and Vehicles Ceylona 1939 21,014 2,574 4,408 1946 19,653 2,388 6,414 1947 N.A. N.A. N.A. Chinab 1936 (Dec.) 36,143 10,837 17,655 1946 (Dec.) 13,195 3,412 31,429 1947 (Apr.) 17,007 2,954 34,311 Hong Kongc 1939 N.A. N.A. N.A. 1946 1,645 N.A. 1,152 1947 4,309 N.A. 2,338 Indiad 1939 91,782 23,767 13,577 1946 120,000 54,068 41,951 1947 N.A. N.A. N.A. Indonesiae 1941 56,352 6,459 10,922 1945 (Oct.) 1,180 N.A. 1,349 1947 (June) 6,097 N.A. 9,589 Japanf 1939 51,210 23,686 54,722 1946 19,985 11,950 69,315 1947 20,821 12,306 84,378 Koreag 1939 2,987 2,278 4,601 South Korea 1946 1,462 873 5,839 1947 1,766 726 6,650 Malayah 1940 20,452 1,461 5,063 1946 10,542 1,025 10,304 1947 (Est.) 15,612 1,127 11,500 Singaporei 1939 11,028 160 2,676 1946 5,893 415 3,812 1947 (Est.) 8,000 520 5,000 Philippinesj 1941 34,000 21,200 1946 21,783 37,376 1947 (June) 21,966 38,244 a Answers to Questionnaires. b Statistical Abstract of the Republic of China, the 1947 figures for passenger cars include buses of Shanghai. c Answers to Questionnaires. d United Nations Document No. E/CN.11/39. e United Nations Document No. E/CN.11/39, Annex K. f-i Answers to Questionnaires. j Supplied by the Philippine Government. Besides the above, Indo-China was reported to have 25,000 motor vehicles before the war, but a large portion was lost during the war.6 In 1938-39, there were 5,113 passenger cars and 782 buses in Siam, but no post-war data are available.7

6 Economic Survey of lndo-China for 1947. 7 Statistical Yearbook of Thailand, 1937-38 and 1938-39, 121 16 As a result of the war, the roads, on the whole, are in a bad condition of repair, but owing to the large amount of war surplus left by the Allied forces, there seems to be a general increase of trucks and commercial lorries available in the AFE countries, as compared with the pre-war years.

III. W ater Transport Although water transport plays a leading part in the internal transport system of some of the AFE countries, no reliable figures are available to make a comparison of the pre-war and post-war situation possible. So far as ocean shipping is concerned, the most notable post- war change was the rapid decline of the powerful Japanese merchant fleet, which reached 5 ·6 million gross tons in 1939 but was reduced to 1·1 million in 1947. China suffered huge losses in her shipping. In 1937, she possessed about 600,000 tons of steam and motor vessels, but by V-J Day her fleet was reduced to a negligible size of about 80,000 tons. Fortunately, she was able to stage a rapid recovery by purchases from abroad as well as by re-possession of about 100,000 gross tons in the occupied part of China. By the end of 1947, China possessed about 4,038 vessels with a total of 1,042,402 gross tons.8 Before the war, foreign-lfa g vessels were permitted to ply between coastal and river ports in China. Thus, in 1937, there were as many as 710,000 gross tons of foreign vessels registered in China, as compared with 576,000 tons under the Chinese flag. As a consequence of the abolition of unequal treaties, the right of foreign vessels to carry on coastal and river trade has been revoked. Therefore, the total tonnage of Chinese vessels, though larger at the end of 1947 than in 1937, still falls short of actual needs, and the shortage will be more acutely felt as soon as business returns to normal condition. Before the war, India’s overseas trade was almost entirely carried on by foreign shipping. Her m erchant fleet of about 135,000 tons was able to control only about thirty per cent of coastal trade, including trade with Ceylon and Burma. Despite her losses during the war, India’s merchant fleet was augmented to 200,000 tons at the end of 1946, and it is estimated that with the completion of new ships under construction, a total of 150,000 tons will be added by the end of 1948.9 In Indonesia over one million tons of shipping were engaged in inter-insular and regional trade before the war. About one half of this fleet was lost during the war, but by mid-1947, 160 ships totalling 761,000 tons were put back to service in Indonesian waters and it is hoped that by the end of 1947, the total ocean-going shipping tonnage would be restored to its pre-war level.10 In the Philippines, there were altogether 125,000 net tons of vessels registered for inter-insular, coastal and overseas trade in 1936. By 1946, 8 Economic Survey of China for 1947. 9 U N Deppaarrtm ent of Economic Afffaaiirrs: Economic Report, Salient Features of the WorldWorld. EconomicEconomic Situation,Situation, 1945-47.1945-47. 10 UUN N DDocument o c u m e n t EE/CN.11/39. /C N . 1 1 / 3 9 .

122 the total registered tonnage was reduced to 87,000 tons, but with the purchase and charter of many ships from the United States, the Philip- pine merchant fleet reached 113,900 tons in 1947.11 As a reflection of shrinkage in foreign trade, the total tonnage of vessels entered and cleared for overseas trade has declined considerably after the war, as can be seen from Table 77.

Table 77

P re- war and Post- war Net Registered Tonnage of Vessel s Ent ered and Cleared in Sel ected AFE Count ries Vessels Entered Vessels Cleared (million tons) (million tons) Chinaa 1936 72 ·7 72·3 1946 6·0 5·7 1947 9·9 9·8 Hong Kongb 1936 41·7 41·7 1946 11·2 11·2 1947 19·0 19·0 Indo-Chinac (for Saigon only) 1940 3·0 2·8 1946 1·6 1·6 1947 1·2 1·2 Indiad 1940 6·1 6·5 1946 4·9 4·4 Malayae 1938 (Penang only) .. 12·8 — 1946 (all ports) 5·2 5·2 1947 „ „ N.A. N.A. Philippinesf 1939 7·9 7·9 1946 2·1 2·5 1947 2·8 3·2

a Chinese Maritime Customs, The Trade of China, 1936, 1946 and 1947. Figures include coastal trade, and represent vessels entered and cleared with merchandise, b Annual Report of Hong Kong, 1947. c Economic Report of Indo-China for 1947. d UN Monthly Bulletin of Statistics: figures refer to vessels entered and cleared with merchandise. e The 1938 figure from Answers to Questionnaires, the 1946 figure from Annual Report on the Malayan Union for 1946. Figures seem to include coastal trade as well. f Answers to Questionnaires.

In general, the picture of heavy reliance on foreign shipping for overseas trade has not changed since the war. Coupled with the inadequacy of the railway system, the shrinkage of the merchant fleets in the AFE countries has hampered the task of rehabilitation and reconstruction and will continue to impose a limit to the rate of recovery in this region. 11 Answers to Questionnaires. 123 Table 78

P r e - w a r and P o s t - w a r Air T ra ffic in S e le c te d AFE Countries

Passenger Traffic Freight Mail Chinaa 1937 17· 3 million passenger— 0 · 3 million ton-kms. kilometres 1946 225· 6 „ 13·3 1947 227· 0 „ 27·7 Hong K o n g b 1938 9,969 p a s s e n g e r s 289 m. to n s 1946-7 28,897 239 1947 1,053 Indo-Chinac (Tan-son Nhut Airport only) 1947 43,938 „ 991· 4 „ 241· 5 m. tons Indonesiad 1940 23,794 „ 201 73 1946 139,580 „ 8,400 1,000 Philippinese 1940 1· 9 million passenger— N.A. kilometres 1946 88·4 N.A. 1947 63·8 N.A. (Jan.-June) Siamf 1939 358·8 thousand passen- 13· 8 thousand ton-kms. 23· 1 thousand ton-km s. ger—kilometres 1946 38·0 1·0 1947 5,327 p a s s e n g e r s 38·7 m. to n s 23· 8 m. tons aEconomic Survey of China for 1947. bAnnual Report of Hong Kong, 1947 Freight figures include mail. cEconomic Survey of Indo-China for 1947. dStatistical Pocket Book of Indonesia, 1941 and UN Document E/CN.11/39. e Journal of Philippine Statistics (Jan.-Dee. 1947). f Answers to Questionnaires; figures for 1947 represent domestic air service only (from Economic Survey of Siam, 1947). Table 79

P re- war and Post- war , V olume of Postal Traffic in Sel ect ed AFE C ountries

Pre-war Traffic Post-war Traffic Letters Letters Country Year Post-cards, Parcels Year Post-cards, Parcels etc. etc. (in m i l l i o n s ) (in millions)

Burmaa N.A. 54·3 0·7 Ceylonb 1939 66·7 0·8 1946 132·3 2·1 1947 134·0 2·2 (Est.) Chinac 1937 ( J u l y - 328 0 2-8 1946 1,010·2 1·0 Dee.) 1947 1.030·3 2·8 Indiad 1938-9 1,241 1944-5 1,730 Indo-Chinae 1938 38-1 0-3 1946 8 ·0 1947 10·8 0 ·001 Indonesiaf 1939 121-0 0-8 N.A. Japang 1939 4,586 101-0 1946 2,611 28·0 1947 2,712 50·0 Malayah 1939 88-9 1946 43·7 1947 ( E s t . ) 64·0 Philippinesi N.A. 1945-6 8·9 N.A. 1946-7 14·2 N.A.

Siamj * * 1938-9 42-7 1946 19·7 Singaporek 1939 45-6 1946 30·0 1947 44·0

a Supplied by Director of Posts, Burma. c'Summary of Transport and Communications Statistics (by Ministry of Com munications) and Statistical Abstract of the Republic of China. d Report on the Work of the Indian Posts and Telegraph Dept. 1944-5. e.g-k Answers to Questionnaires, f Statistical Pocket Book of Indonesia, 1941. j Statistical Yearbook of Thailand, 1937-38 and 1938-39 and Economic Survey of Siam, 1947. IV. C iv il Aviation Owing to the disruption of rail and road connections, the loss of merchant fleets and the damages caused to harbour installations, air transport has been increasingly used in the post-war transitional period, especially in such countries as China, Hong Kong, Indonesia and the Philippines. Table 78 on page 124 gives the partial data for the AFE countries. These figures are not strictly comparable, as some of them include international air traffic, while others do not. V. P osts and Tel ecommunica t ions Almost all countries in this region had good postal service before the War, but internal strifes in the post-war years have disrupted regular mail communications in some parts of the AFE countries. The data on postal traffic quoted above are not strictly comparable because some of the figures include international mail matters while others do not, but they do well reflect the general condition in each of the countries. (Table 79) Owing to wide differences in technical equipment, it would probably be misleading to give summary figures to indicate the comparative situation of wireless and telegraphic communications in the AFE countries, but the following data on the number of telephones may be taken as a rough index of the development of telephonic communication in this region. (Table 80) Table 80 P re- war and Post- war Number of Tel ephones in Sel ect ed AFE C ountries Country Pre-war Number of Post-war Number of Year Telephones Year Telephones Ceylona 1939 10,957 1946 13,037 1947 (Est.) 13,500 Chinab June, 1937 76,232 V-J Day 10,000 1947 172,260 Indiac Mar. 1940 92,796 Mar. 1946 126,130 Japand 1939 1,343,000 1946 1,001,000 1947 1,126,000 Koreae 1939 69,432 South Korea 1946 44,431 1947 46,181 Malayaf 1939 12,685 1946 11,306 1947 (Est.) 12,406 Philippinesg 1939 32,769 N.A. Singaporeh 1939 10,132 1946 7,034 June, 1947 9,015 a Answers to Questionaires. b Economic Survey of China for 1947. The 1937 figure does not include Manchuria and Taiwan while V-J Day figures refer to Free China only. c-h Answers to Questionaires. From the above table, it can be seen that with the exception of Japan, most AFE countries are rather poorly equipped with telephone service. The great progress made by China in restoring and expanding her telephone system, though still inadequate in proportion to her vast territory and population, was largely due to the strenuous effort made by the Chinese Government and the great technical and material help received from UNRRA.

126 C hapter VIII LABOUR Information on labour conditions in AFE countries is rather scanty and incomplete. The 1945-46 issue of ILO Yearbook of Labour Statistics includes some of the AFE countries in only 22 of the 31 tables presented. Even here Japan, India and China, the countries for which relatively more data are available, have not been covered as adequately as is desired. Nor have governments in the region responded fully to the requests for materials on labour from the ECAFE Secretariat, on account of difficulties encountered in resuming the post-war collection of labour statistics. In this chapter, available information on labour is presented regarding types of labour, employment, wages and cost of living, hours of work, labour organization, and labour disputes. Reference is made chiefly to industrial labour, with due attention being paid to other types of labour, especially agricultural labour on estates and plantations.

I. C l a s s if ic a t io n of Labour Labour in AFE countries can be classified according to occupations, sources of supply, or systems of employment. Occupational distribution: Occupational distribution of labour need not necessarily correspond with occupational distribution of population, as those gainfully employed in agriculture, manufacture, or other occupations are not all labourers, in the sense that they depend upon wages as their primary source of income. In the absence of a census of labour in the region, it is difficult to determine the proportion of different types of labour according to occupational distribution. Yet certain differences between agricultural and industrial labour can be readily distinguished. In the first place, among those gainfully employed more labourers can be found in industry than in agriculture, as those gainfully employed in agriculture in the AFE countries (except plantation labour) are in many cases peasants, proprietors, tenants, or part owners, not labourers. Secondly, agricultural labour, being more dispersed and working on small farms, is, generally, more poorly organized than industrial labour. Labour, however, is not confined to agriculture and industry, but can be found to-day in other fields if industry is narrowly interpreted as referring to manufacturing. Labour in public utilities and essential services is assuming an increasingly growing importance in the rising labour movement of the region. Sources of labour supply: Sources of labour supply differ in AFE countries. In over-populated areas such as China, Japan and India, industrial labour comes largely from the rural areas. The rapid progress of urbanization in Japan is well reflected in the rising propor-

127 tion of urban population in the total population, from 32·2 per cent in 1920 to 50·1 per cent in 1940. In India, it is much slower, the proportion of urban population having increased from 10·3 per cent to 12· 8 per cent during the same period. No census statistics are available for China, but it seems plausible to conclude that the extent of urbanization there would resemble more or less that in India. In South-east Asiatic countries, except in such over-populated areas as Java, the Tonkin delta, and Northern Annam, labour is generally inadequate in quantity and in quality to meet the requirements of large- scale enterprises. Where numerically adequate, the labour supply is either poorly distributed in relation to areas of employment or fails to respond to opportunities offered. The industrial development of the entire area suffers from lack of full-time services of skilled labourers. Some of the factory employees form the only stable, trained groups of workers. They comprise a small proportion of the population. In South-east Asia, therefore, resort has to be made to immigrant labour from the over-populated areas in southern China, southern India, and to a limited extent, in Java, for supply. This gave rise to the waves of emigration in pre-war years dealt with in our chapter on population. Immigrant labour, in various countries of South-east Asia, chiefly Chinese and Indian, has been dealt with elsewhere,1 and will not be repeated here. Systems of employment: In many AFE countries certain systems of employment that have long been relegated to the earlier stages of agricultural and pre-industrial development in western countries seem to be still in vogue or to have disappeared only recently; these include forced labour in agriculture and public works, and of contract labour among immigrant workers in South-east Asiatic countries. Forced Labour : In the field of agriculture and public works, two types of forced or compulsory labour may be distinguished, namely, (1) agricultural servitude to private interests including landlord, merchant and money-lender on the one hand, and (2) compulsory labour service for public authorities on the other. Agricultural servitude to private interests still survives in important agricultural countries like China and India. The employment of domestics by landowners for household work as well as work in the fields in Kwangsi province in Southwest China is an instance in point. Persons so employed are bound by custom to continue in service. More- over, in most districts of this province tenants appear to be under an obligation to render certain services to the landlord for nominal wages. It is not unusual for peasants who are heavily in debt to discharge it by rendering service to the creditor for a specified period. In several parts of India certain forms of agricultural servitude, for the most part associated with indebtedness, are prevalent. Not infre- quently, for a comparatively small sum of money the agricultural labourer is constrained to mortgage his services and along with them 1 For detailed description see Virginia Thompson, Labour Problems in South- east Asia, Yale University Press, 1947 ; Kenneth K Kurihara, Labour in the Philip- pine Economy, Stanford University Press, 1945.

128 a large measure of his personal freedom as well. The debt often enough remains a lifelong burden. These forms of servitude are known by different names in different parts of the country, and it is estimated that the total number of persons so affected is fairly large. The mobilization of local labour in sparsely populated areas by the public authorities for the building of roads or bridges or other public works projects, or for transport services, still survives in some AFE countries. In such cases, however, the conditions of employment have been carefully regulated in most parts in recent years. This system is by its very nature open to serious abuses and therefore calls for careful supervision.2 During wartime extensive resort was made to labour conscription in areas under Japanese occupation, especially in China, Burma, Malaya, Indo-China, Indonesia, and Siam. In the post-war years, Japanese prisoners of war have been similarly employed by the Governments of victorious nations in the region. Contract labour : Contract labour existed mostly in pre-war days for the recruitment of immigrant labour from China and India to Malaya, Siam, and other South-east Asiatic countries. Known under different names, such as ‘kangany recruiting’ of Indians, ' maistry system’ in Burma, ‘pig business’ among Chinese, ‘indenture system,’ or ‘contract labour,’ the essence of the system lies in the exploitation of a group of hard pressed, ignorant, illiterate and unskilled workers by their fellow compatriots for coolie labour in mines (tin), estates (rubber, tea, etc.), and other newly developed enterprises, under contract terms concluded between the coolies and their indirect employer, the contrac- tor. In the post-war years immigrant labour is being regulated not only by the emigrant countries like China, India, and Indonesia (which before sent Javanese labour to Malaya), but also by the receivng countries, the former for the sake of national pride and concern over welfare of their own people overseas, and the latter because of reduced demand and increasing nationalistic sentiment against immigrant labour.

II. E mployment The employment situation in AFE countries has on the whole tended to deteriorate since the conclusion of war. Unemployment usually follows demobilization accompanied by sudden suspension or contraction of operations in the war plants. Return to civilian employment has failed to keep pace with the rate at which demobilization has been carried out, and as a consequence, in countries like China, India and Japan, surplus labour has become a serious problem. Government programmes for retraining, redirection, and provision of employment opportunities by means of public work and employment exchanges are necessarily limited in scope, as many governments are already heavily burdened financially by costs -of rehabilitation and repatriation. 2 Preparatory Asian Conference : Labour Policy in General including the Enforcement of Labour Measures. International Labour Office, New Delhi, 1947, pp. 22-23.

129 17 Another cause for increase in unemployment, and under-employment, is the shortage of raw materials and equipment. This is true of all nations great or small, victorious or defeated, overrun by the scour- ges of war or not. In all these countries, there has been a universal shortage of raw materials to keep the existing plants going, or to secure parts or replacements for the equipment existing. In Malaya, the extensive damages sustained from war destruction by tin mines and rubber plantations are holding back the efforts at rehabalitation. In China, India and Japan where plants are not lacking, shortage of foreign exchange to purchase raw materials is keeping them partly idle. Still another factor is civil war and disturbance which makes it impossible for many plants to resume operation and to absorb the workers laid idle by the end of war. The most notable example is that of Manchuria, where civil war has not ceased but has steadily increased in magnitude. In Indonesia and Indo-China, conflict between the metropolitan authority and native revolutionary groups has hindered normal production and employment, though not to the same extent as in China. In the sub-continent of India, the conflict between the Hindus and the Muslims after partition in August 1947 is followed by rioting, bloodshed and mass migrations reaching into millions across the frontiers of India and Pakistan. These migrations give rise to considerable dislocation in production and employment, resulting in close-down, at least temporary, of many industrial and commercial establishments, in addition to cessation of work in the field. In China, the progress of hyper-inflation has reached a stage when the whole cost-price structure has been upset, and hoarding and speculation, instead of production, is assuming increasing proportion. Factories are finding it increasingly difficult to keep up production; in fact, it is becoming a general practice for the plants to operate a few days in the week, and even to suspend operation where it is possible not to arouse too much opposition from the organized labour groups. In countries more fortunately situated, employment tends to increase for reasons not totally alienated from those listed above. In Hong Kong, for instance, refugees from South China are arriving in increasing proportions for employment. And the flight of capital from China, followed now by the flight of manpower (especially capitalists and entrepreneurs), is bringing to the colony a period of industrial activity. In some South-east Asia countries, such as Burma, the wartime replacement of alien by native labour and the post-war nationalistic policy of the new Government, are providing more employment to the native population. In the sections that follow, a brief description of the employment situation in selected AFE countries is given on the basis of available materials, with special reference to the calendar year 1947. Burma : One immediate effect of the Japanese occupation was to throw open to Burmans a wide variety of jobs previously held by Europeans, Indians, and Chinese. Practically all senior civil service jobs held by Europeans, for instance, were filled by Burmans. Indian labour was still present, but only about half as much as before. Thus

130 competition from foreign labour was drastically reduced during the period of occupation. The flight of great numbers of Indian labourers during war years raises a delicate problem, that of their return to Burma now that the war is over. About 10,000 per month have returned thus far in 1947, and while both governments appear to agree in principle that the evacuees should return, both have imposed some control over the movement of Indians desiring to enter Burma as labourers for the first time. The reconstruction of Burma’s damaged transport and industrial systems and the rebuilding of the main towns will require great amounts of local labour or of imported Indian labour. It seems possible to solve the problem in either way.3 Ceylon : Labour in Ceylon is mainly employed in (a) tea, rubber, coconut and other estates, (b) firms which handle the export and the import trades, (c) transport organizations, and (d) central and local government service. Since industries are very few, industrial labour as such forms only a small portion of the total wage-paid labour force. A fairly large number is also employed in non-estate agriculture such as the cultivation of paddy, but the employment here is generally seasonal. Full employment statistics are not available, but labour employed in the tea and rubber estates is given in the Report of the Commission on Social Services (Ceylon Government Press, February, 1947) for 1938-1945, and estimated by Prof. Das Gupta for 1946. (Table 81)

Table 81

L abour on Tea and Rubber Est a t es in Ceyl on, 1938-46 (In 1,000) 1938 1943 1944 1945 1946 Indians .. 465·5a 440·9 442·5 447·2 455·0 Men — .. 197·2 196·0 198·9 203·0 Women — .. 183·3 184·6 186·4 190·0 Children — .. 60·4 61·9 61·9 62·0 Non-Indians .. 78·1 120·1 120·2 120·6 126·0 Men — .. 54·6 52·4 53·5 56·0 Women — .. 46·5 48·4 48·6 53·0 Children 19·0 19·4 18·5 17·0

Total .. 543·6a 561·0 562·7 567·8 581·0 a Includes cocoa, cardamoms and coconut. The employment on tea and rubber estates increased all the way from 1938 through the first post-war year 1946. Although no figure is available as yet for 1947, either total number employed has declined or under-employment through spreading out of work has taken place in view of the estimated decline in production and export, due to insuffi- ciency of fertilizers, failure to maintain replacements, diseases, and in case of rubber, fall in world price and termination of the export contract with Britain.

3 A n d r u s, J. R . : Burmese Economic Life, Stanford University Press, California, 1947, p. 340.

131 China : According to a recent survey conducted by the Chinese Social Affairs Ministry on 30 June, 1947, there were 1,004,356 industrial workers in 14 principal cities of China. Of this total Shanghai had 32·7 p e r cent, T ientsin 1 7 ·2 per cent, Mukden 14·4 per cent, Taiwan 10·4 per cent, and other ten cities 25·3 per cent. These workers were distributed by industries as follows : Textile, clothing, etc., 54 per cent; food, 14· 8 per cent; metal and machinery, 14·3 per cent; others 16·9 per cent. (Table 82)

Table 82 Indust rial Labour in 14 P rincipal Cit ies of China, 30 J une, 1947 District and City Number Per cent Central Nanking 27,772 370,133 2·8 36·9 Shanghai 328,801 32·7 Hankow 13,560 1·4 North 224,716 22·4 Tsingtao 43,561 4·3 Tientsin 172,802 17·2 Peiping 8,353 0 ·8 South 181,274 18·0 Canton 76,347 7·6 Taiwan 104,927 10·4 Northeast 145,083 14·4 Mukden 145,083 14·4 Northwest 11,061 1·1 Lanchow 4,482 0·4 Sian 6,579 0·7 Southwest 72,089 7·2 Chengtu 7,902 0 ·8 Chungking 35,038 3·5 Kunming 29,149 2·9

Total 100·0 1,004,556 Industry Textile, clothing, etc. 542,685 54·0 Textiles 337,775 33· 6 Clothing 110,005 11·0 Leather, rubber and related 9·4 products 94,905 Food 148,834 148,834 14·8 14·8 Building 26,245 2·6 Building 1,074 0 ·1 Cement 25,171 2 ·5 Metal and Machinery 143,276 14·3 Metallurgical 3,222 0·3 Metal 41,287 4·1 Means of transport 56,982 5 ·7 Machine 26,487 2 ·6 Electric manufacturing .. 15,293 1·5 Chemical 34,055 34,055 3·4 Power 24,194 24,194 3·4 2·4 Cultural 57,972 2·4 5·8 Printing and bookbinding 50,470 5·0 Paper 5,908 0 ·6 Stationery and scientific instruments 1,594 0 ·2

132 Table 82 (Continued) Other 27,095 2·7 Wood working 3,079 0·3 Furniture making 8,978 0·9 Articles of ornament 2,266 0·2 Articles of art 433 0·04 Pharmaceutical 5,414 0·5 Fuel 3,156 0·3 Others 3,760 0·4

Total .. 1,004,356 1,004,356 100·0 100·0 Source : Survey conducted by the Ministry or Social Affairs. The resumption of civil war in post-war China has affected seriously the employment situation. Although the problem of general demobilization does' not arise in China because of conscription for military service of the adult male labour, yet industrial depression, resulting from disruption of transportation and consequent interruption of the exchange of industrial products for agricultural raw materials, as well as reduction of imported raw materials and equipment to feed the urban factories, is bringing about a state of unemployment and under-employment which, together with the constant rise in the inflationary spiral, is working considerable hardship upon the labouring population. Except those who are fortunate enough to have retained their jobs at a rate of pay higher in real terms than in pre-war days, the large majority of the labouring class, who, even willing enough to accept employment at reduced wages but unable to find vacancies because they are now mono- polized by employed, usually union, members, are threatened with unemployment. In industrial and commercial establishments still able to keep up operations under daily worsening prospects, much under- employment prevails, especially among the piece workers, through the sharing of work. The overall situation in principal centres is rendered even more difficult by the influx of refugees from the countryside ravaged by civil war. The above observation on the employment situation in post-war China today is familiar to many, and seems to have been confirmed by the limited statistical materials released by the Government. According to the Ministry of Social Affairs, the 9,697 registrations for jobs at the employment exchanges in 1945 jumped to 45,118 in 1946, but the place- ments were only one-tenth of the registrations, being 1,172 or 10·5 per cent in 1945, and 5,395 or 11·9 per cent in 1946. The employment exchange has only been recently established, and even now is confined to towns and cities. Their rapid expansion, from 109 in 1945 to 199 in 1946 and 498 in 1947, reflects the growing need for coping with the urgent problem of unemployment. (Table 83). Table 83 N umber of Employment E xchanges in China, 1945-1947 (At end of each year) 1945 1946 1947 Employment offices 12 13 172 Social service centres 97 162 269 Other bureaus engaged partly in employment service — 24 57 Total 109 199 498

133 Hong Kong : Apart from fishing and farming, the major part of Hong Kong’s population is engaged in commercial pursuits, and in em- ployments such as stevedoring, shipbuilding and repairing, etc., ancillary to the Colony’s position as a great port and entrepot for South China. With a constantly fluctuating population it is difficult to estimate (except in shipbuilding where the numbers employed are approximately 16,900) the numbers employed in individual trades. It is possible, however, to give an approximate figure for the numbers employed in the three main groups of industrial undertakings. From returns submitted by the managements concerned it is reckoned that in the engineering (including shipbuilding), metal and chemical industries approximately 24,500 persons are engaged ; in public utility companies nearly 3,000 ; and in other manufacturing industries, 31,500. These 1947 figures are double those for 1946, and two-thirds of those for 1941. This increase in industrial employment is in the main due to the further rehabilitation of factories previously existing, and to the setting up of a number of new factories by employers from Shanghai and Canton. There is every likelihood that such increase will be still further expanded in the near future with the establishment in Hong Kong of several new industries such as cotton spinning and the manufacture of plastic household wares.4 India: Employment situation in India during 1947 was characterized by the large number of demobilized labour force awaiting employment, and the increasing effort of the employment offices to place the demobilized force. The total personnel released from the Armed Forces in India by the end of 1946 was stated to be 1,252.765, for which 1,215,137 had been demobilized from the Armv and 18.208 from the Navy. During the period September 1945 to December 1946, 821,000 persons, largely unskilled. were discharged from the various departments and undertakings of the Government of In d ia ; while 254,000 persons were engaged. Returns received from 224 undertakings showed that during the same period, 84,360 workers had been discharged and 75,702 engaged. All these put together point to a large supply of labour force awaiting employment by the end of 1946. In a note submitted by the Department of Labour, Government of India, to the Eighth Session of the Indian Labour Conference at New Delhi on 22-23 April, 1947, this excess of the rate of demobilization over that of absorption into civil employment was stressed. By the end of February 1947, the Resettlement Organization had registered altogether 726,776 persons and placed 139,961. It was expected that as soon as the provincial post-war plans were put into operation the demand for manpower would almost certainly exceed the supply. Demobilization, furthermore, would be completed within a few months.5 The mass movement of Hindu refugees from Pakistan into Indian Union after the partition in August 1947 gave rise to considerable dis-

4 Annual Report on Hong Kong for the Year 1947, The Government of Hong Kong, 1948, pp. 11-12. 5 International Labour Review, July, 1947, pp. 72-73.

134 location of employment, and added further difficulties to the already serious problem of unemployment. Indo-China : There had been a general shortage of agricultural and industrial labour in Indo-China during 1947, arising chiefly from the internal conflict between French authorities in Indo-China and the Viet-Nam, which resulted in considerable bloodshed and consequent disorder in December 1946 and afterwards. As a result of the December conflict, workers employed in coal mines and in cement factories were dispersed. Since then, their recruitment became more difficult, and not until the middle of 1947 did the rehabilitation of these industries proceed on a satisfactory scale. The gradual return to security and to normal rice supplies induced the workers to return to their place of work, and the supply of industrial labour improved towards the end of the year. The supply of agricultural labour was less satisfactory; its recruitment, particularly in the great rubber plantations, was still difficult towards the end of the year because of the insecurity prevailing in provinces lying away from the principal urban centres, mainly in Cochin- China. The total labour force employed by the more important rubber plantations of Indo-China reached 60,000 coolies in February 1945, which was itself inadequate. In November 1947, there were only 26,300 coolies or 44· 2 per cent of the February 1945 supply. The recruitment of agricultural labour on rubber plantations has become more difficult because such labour is composed mainly of tappers whose skill cannot be acquired until after several weeks. Meantime, the political situation did not permit the recruitment in 1947 of any alien labour force, Chinese or Indian.6 Japan : The drastic reduction in Japan’s industrial production during post-war years is having its profound effect on industrial employment. Taking the years 1930-34 as the base period equivalent to 100, SCAP’s index of industrial production showed a fall from 154·8 in 1944 to 61· 5 in 1945 and 32· 5 in 1946, but rose to 40·9 in 1947. Just to what extent this reduction in production has been reflected in the employment situation is not exactly determined up to the present. But it is significant to note from the White Paper on Economic Conditions released on July 4th, 1947, by the Japanese Government that although actual extent of surplus labour in industry had not been determined by the Government, yet the existence on payrolls of large numbers of unused or partially unused workers was inferred from statistics indicating that, while production in 1946 and 1947 had declined to approximately 33 per cent of pre-war levels, total employment had remained about the same.7 Japanese industry is thus faced with the serious problem of surplus labour which now exists under the disguise of under-employment in most cases. The Cabinet’s proposal to ‘take measures to encourage those enterprises which are heavily burdened with surplus workers

6 Economic Survey of Indo-China for 1947, ECAFE Secretariat, 1948. 7 Summation of Non-Military Activities in Japan, (M onthly) July, 1947, p. 195.

135 occasioned widespread comment during June, 1947, particularly among labour groups. In an effort to determine the extent of surplus or ‘under-employed’ labour as a basis for formulating a government programme, the Ministry of Welfare officials met late in June with employers from eight major industries. Most surplus workers were discharged in production curtailments immediately following the end of the war, according to employers questioned, and labour idleness since that time stemmed from bottlenecks in allocation and distribution of production materials. Improvement in the flow of materials would result in full utilization of employed workers, but such improvement seemed difficult in view of Japan’s unfavourable international economic position. All through the second half of the year there was keen concern among labour unions over the possibility of future widespread unemployment stemming from government plans to eliminate surplus employment within industry. Labour support for the government employment rationalization programme was contingent upon full labour repre- sentation in formulation and execution of the programme, according to the views expressed at a joint conference on 8th August of leaders representing the National Congress of Industrial Unions, the General Federation of Japanese Trade Unions and the Government Railway Workers’ Union. Concrete reallocation and retraining programmes applicable on an industry-wide basis were recommended. In some industries such as railways, coal, construction and fertilizer manufacture, labour-sponsored retraining programmes would make it possible to shift surplus unskilled labour into skilled-work departments underproducing because of the shortage of trained labour. In a number of cases, according to claims made at the conference, the Factory Diagnosis Com- mittee of the General Federation of Japanese Trade Unions had already successfully prevented layoffs by shifting workers from over-manned to under-manned departments or plants and by assisting in development of new products and production techniques. In September, the Ministry of Transportation, the first government agency to propose positive action to handle its surplus-labour problems, introduced a personal adjustment programme. The Ministry, in co- operation with the labour-management committees set up in agreement with the Labour-Government Railway Management Council, planned to reallocate some 5,000 workers in its initial transfer of ' proper workers to proper jobs’ and to allow employment in government railways to drop below 600,000 by not filling vacancies during the rest of the fiscal year. In October, the Government announced a personnel re- trenchment programme which called for (1) gradual reduction in total government employment by filling only one-third of future vacancies, (2) adjustment of personnel requirements through intra-agency transfers, and (3) no hiring from outside. Deviations from the plan require Cabinet approval. Korea : A survey of industrial labour force as of November 1946, conducted by the Census Division of USAMGIK, reveals a considerable decline in the number of industrial establishments and in the num-

136 b er of workers employed. According to instructions issued to the provinces a complete coverage was requested. Comparison of 1946 coverage with 1944 shows a decline in number of firms reporting by 43·7 per cent (from 9,323 to 5,249), and in num ber of workers covered by 59·4 per cent (from 300,520 to 122,159), although 1946 statistics indicate a 22 per cent increase in population for South Korea. The question arises as to where this employable industrial population may have shifted to or been absorbed, and whether this potential working population is : (1) unemployed, (2) earning a livelihood elsewhere by black market operations, or by gainful employment in other economic fields, i.e. agriculture; fishing; commerce, merchants, vendors; government employment, constabulary, or road repair; and home industries or (3) enrolled in institutions of learning. The USAMGIK Census Division thus concludes that ‘it is very vital to have a periodic system of reporting on a trend basis to indicate shifts.’8 The 122,159 workers employed in 5,249 establishments9 in Novem- ber 1946 are classified as follows :

Table 84 Indust rial Labour in South Korea Cl assified, N ovember, 1946 Industry No. Per No. Per establishments cent workers cent Metal 499 9 ·5 8,966 7 ·3 Machine and tools 878 16·6 17,394 14·2 Chemical 574 10·9 19,171 15·7 Utilities 78 1 ·5 9,693 7·9 Ceramics and cement 731 13·9 2,711 Textiles 615 11·7 36,269 29·8 Lumber and wood products 584 11·1 6,502 5·3 Printing and book binding 233 4 ·4 4,540 3 ·7 Food 726 13·8 8,383 6·9 Engineering and construction 175 3·3 5,598 4·6 Other manufacturing 156 3·3 2,932 2·4 5,249 100·0 122,159 100·0 Besides, there were in November 1946, 10,901 workers in 20 ‘monopoly’ and government-owned establishments including railway rolling stock, weights and measures, salt, ginseng, cigarettes, tobacco drying, cigarette paper, police uniforms and construction enterprises. Malayan Union and Singapore : In July, 1946, all known employers of 25 or more labourers were requested to supply a statement showing, inter alia, the number of labourers employed in December, 1941, and June, 1946. The figures received are estimated to be about 80 per cent complete and the percentages can be probably regarded as representative of the country as a whole. Comparison of the 1941 and 1946 figures shows that the greatest fall in employment has taken place in

8 Industrial Labour Force and Wage Survey of South Korea, November, 1946. National Economic Board, South Korea Interim Government, Seoul, March 1948, Report No. 4, pp. 11-12. 9 Including firms employing 5 or more workers, and in addition those with facilities for a capacity employment of 5 or more workers, even thoughthough temporarily understaffed. See Ibid, p. 12.

137 18 the Indian male labouring population, the drop being about 40 per cent as against 27 per cent of male Malays. The adult female employed population shows a decrease in the case of Chinese and Indians and an increase in the case of Javanese and Malays. The number of children employed has risen in every nationality. The changes of the employed labour force by industry, as given by the return, are summarized in Table 85.

Table 85

E mployment in Malayan Industries, 1941 and 1946 Per cent change Industry 1941 1946 between two periods Estates 300,104 218,841 -27 Government Departments 33,441 32,654 - 2 Mines 29,120 16,008 - 4 5 Factories 6,701 7,448 +11 These figures show that the biggest decrease in employment has taken place in the mining industry followed by the estates, while the population engaged in factory production has increased by 11 per cent. This table does not, of course, mean that the population formerly engaged in the various industries has disappeared during the Japanese regime. The potential rubber and tin production of the South-east Asia territories was well in excess of Japanese requirements and output was sharply curtailed from the immediate pre-invasion level. Some of the surplus labour in these industries was removed for the building of the Bangkok-Moulmein railway but a lot of it drifted to the towns to take up occupations such as trishaw-men or hawkers, the latter proving to be a lucrative business as the result of shortage of goods and the inflation of the Japanese currency, while others grew foodstuffs such as tapioca, sweet potatoes, ragi and vegetables. The increase in the factory workers was due to the setting up of small local industries to produce substitutes for several articles which could no longer be imported.10 In Singapore, considerable progress was made in 1946 towards re- establishment of relatively normal occupational opportunity, though the high cost of living and other factors, mainly concerned with rehabilitation, have delayed complete restoration of a settled labour economy. In the early days of the Liberation, under the British Military Administration, the Government was practically the only employer. Gradual resumption of civilian business enterprise restored other open- ings for employment, so that soon after the re-establishment of Civil Government it could be said that the form of normal labour employment had been restored, even though conditions remained unsettled as regards opportunities available, wages paid and output achieved. For example certain industries, such as rubber milling, cigar manufacture, and making of latex-cups, sprang into existence or expanded greatly to supply temporary shortages, due mainly to the lack of import

10 Annual Report on the Malayan Union for 1946, Kuala Lumpur, 1947, p. 3.

138 from abroad. They flourished for a time, but were already declining before the end of the year. The building industry is still the largest employing industry in Singapore. The extensive expansion and rehabilitation programmes of the Services have resulted in the absorption of most of the building labour available with a consequent shortage which is one of the factors responsible for the present high cost of building—now six to seven times what it was in pre-war days. Among principal employers in Singapore are the Municipality, the Government Public Works Department, and the Harbour Board while the Services now rank high among employers of direct labour as distinct from that employed through contractors. A comparison of pre-war (1937) and post-war (1946) employment figures shows that there has been a great increase in the total number of labourers employed, from 68,857 to 121,507. It also shows how the Services have risen as direct employers of labour, from 9 per cent of the total to 32 per cent. An interesting point is the decline in the number of labourers employed by the Municipality and by the Public Works Department, due to the difficulty of obtaining replacements in face of commercial competition.. (Table 86)

Table 86

E mpl o yment in S ing apo r e, 1937 and 1946 Per cent change Industry 1937. 1946 between two periods Public Works 1,924 1,665 - 14 Municipality 8,404 7,905 - 6 Services 6,329 38,657 +511 Miscellaneous Government Departments 3,754 2,242 - 50 Factories, etc. 45,783 70,102 - 65 Estates 2,663 936 Total 68,857 121,507 + 76

III. W ages and Cost of Liv in g Wages Although money wages have risen under inflationary conditions in almost every one of the AFE countries, cost of living has shot up further in most of these countries. As a result, real wages in post-war years, especially during 1947, have declined. China is in this respect an exception, and workers in principal cities have in many cases been paid real wages at a higher level than the pre-war (1937) scale. Workers in Japan enjoyed an improvement in their real wages during the period of war, the 1945 index being 24 per cent greater than the 1937 figure for male workers and 48 per cent higher for female workers. Defeat and surrender brought about a drastic reduction, for by June 1946 the real wages of male workers were reduced to one quarter, and those of female workers to one third, of the 1937 level. Since December, 1946, SCAP index has pointed to a rapid recovery in

139 the real wage position, although it appears that by the end of 1947 the real wages for Japanese workers were still below the pre-war level. In Burma and the Philippines, where prices have tended to fall since the conclusion of war, the fall from the pre-war level of real wages on account of the war seems to have been made good, and 1947 level of real wages seems to have approached the pre-war. In India and Ceylon, although wartime and post-war inflation appears to be, relatively speaking, moderate, real wages in 1947 are still below the pre-war level, by about one quarter to one third. No cost of living indices are available for Malayan Union and Singapore, as well as Hong Kong ; real wages there have at best only approximated the pre-war level. In Indo-China and Indonesia, internal disturbance and conflict between the Metropolitan Government and local revolutionary elements have brought about serious post-war inflation and consequent rise in the cost of living. Money wages have risen as compared with pre-war, but cost of living has gone up much further. Real wages in 1947 were at best not more than half of the pre-war level. While minimum wages are being introduced, as in the Philippines, India and Ceylon, allowances—cost of living, rehabilitation, or family— have been applied as a means to supplement the reduced basic rates of pay, in Burma, Hong Kong, and Indo-China. In the following paragraphs, wage conditions in AFE countries are briefly summed up, and comparisons with pre-war and wartime developments given wherever available data permit. Burma : Statistics on Burman wages are not available, but according to J. Russel Andrus, (Burmese Economic Life, Stanford University Press, 1947), wages have risen to about Rs. 70-80 per month for unskilled labour, against Rs. 20-25 before the war, just about keeping pace with the official cost of living index for Rangoon. The latter, which takes 1937 as the base year equal to 100 (originally 1931, but recomputed to 1937 basis by the IL O ), shows a rise in the index from 122 in 1941 to 392 in 1947 (January to October average), that is by 321 per cent. The increasing cost of living and inability of workers to maintain a customary pre-war standard of living on their wages during the rehabilitation period were responsible for a great number of strikes, culminating in a police strike of September 1946, which approximately coincided with strikes by a great many other unions including railway, communications, and saw mill workers. The demands of the Joint Committee of Service Organizations for extra cost of living allowances were for greater additional pay for low-paid workers, and no extra pay at all for workers drawing over Rs. 600 per month. Those drawing Rs. 30 and under were to receive a cost of living allowance of Rs. 60, while those drawing Rs. 100 were to receive an allowance of Rs. 100. Concessions were eventually made despite the government’s unwillingness to grant major wage increases at a time of budgetary deficit, and of rapid rise of prices because of shortage of consumer goods. These increases were reported to be substantial, though not as substantial as those demanded by the strikers.

140 Ceylon : During the war wages rose in Ceylon because of increased demand for war services and industries, increased cost of living, labour’s growing consciousness of its rights, and recognition by the state of its duties to labour. No exact measure of the change in wages is available, there being no general or sectional wage indices for the country. But some idea may be obtained from the minimum wage rates fixed for certain industries by tripartite wage boards consisting of representatives of employers, employees, and government. The rates of wages as fixed by more important Wage Boards for unskilled (that is, the lowest grade) adult male labour and as in force at present are given in Table 87. Rates for women and children are appropriately less. Basic rates are supplemented by cost of living allowances which change with every change in cost of living index. The index, with November 1938-April 1939 as the base year equal to 100, was 240 for estate labour and 252 for Colombo workers in 1947.

Table 87

M in im u m Wage Rates in Ceyl on, 1947 Cost of living Industry Basic daily allowance wage (cts.) (cts.) Tea and rubber growing 58 67 (when index is 215) Coconut growing 60 65 „ „ Coconut processing 103 (Colombo) 65 " " " " 78 (outside) 65 " " Tea and rubber export .. 124 62 (when index is 200) Engineering 124 62 „ „ An unskilled labourer was on this scale generally getting in 1947 about Rs. 1·50 per day if he worked in an estate and Rs. 2·00 if in Colombo. Before the war, he generally received 50 cents in the estates, 50-75 cents in non-estate agriculture and 50-60 cents in town.11 For this particular type of labour, therefore, there seems to have been generally a 300 per cent rise in wages, while the rise in the cost of living index has been a little less. It should be remembered, however, that the cost of living index is prepared upon controlled prices at which workers are often not able to make their purchases. In terms of actual prices which they paid, the index would be appreciably higher. China : Because of the steady progress of inflation during wartime, wage control was introduced simultaneously with price control in China, first in Chungking and principal cities, and later on to the whole of Free China. After the war, with a view to stabilizing the workers’ condition in the areas recovered from the Japanese, the Ministry of Social Affairs promulgated regulations in October 1945, governing the adjustment of wages in these areas and specifying that such adjustment must be made with reference to the cost of living indices. Owing to the continued instability of the economic situation and to the difficulties met

11 Economic Survey of Ceylon for 1947, prepared by Dr. Das Gupta for the ECAFE Secretariat (Typewritten). See also Preparatory Asian Conference, p. 223,

141 Table 88

R eal Wage Indices of Workers in Principal Cit ies of China , 1946-47 (January-June 1937=100)

Nanking Shanghai Tientsin Tsingtao Chungking Canton IW OW IW OW IW OW IW OW IW OW IW OW

1946 Mar. 127·7 238·7 40·5 63·5 96·3 143·6 June 104·3 149·9 153·4 202·8 50·4 70·8 95·9 171·9 Sept. 111·9 143·0 143·0 177·3 48·9 77·0 124·1 182·3 48·6 57·4 Dec. 162·5 172·3 151·6 172·1 64·0 90·3 127·6 140·1 69·6 68·6

1947 Mar. 109·9 140·6 121·6 134·0 153·0 210·0 63·8 74·6 124·1 116·8 53·4 79·4 June 108·2 103·9 136·5 113·6 150·2 138·3 58·7 56·4 154·4 93·6 66·9 73·9 Sept. 115·7 124·9 124·4 117·3 152·3 157·1 57·6 63·4 135·0 74·3 60·3 82·1 Dec. 115·9 153· 8 122·0 106·1 159·6 159·6 52·7 58·7 75·4 91·9 90·5

Note: IW refers to Industrial Workers, OW to Occupational Workers. Source : The Statistical M onthly. November and December, 1947, Directorateof Statistics, Nanking, p. 58; Economic Survey of China for 1947. with by factories and mines during the process of reconversion to peace- time operation, Economic Emergency Regulations were promulgated on 17 February 1947, which provided, among other things, that in specified cities (32 in number, according to an announcement made by the executive Yuan on 26 February) wages fixed with reference to the cost-of- living index number were to be ‘ frozen ’ at the January 1947 level. On the other hand, employers were required to issue rations of food, clothing, and fuel to the workers at January 1947 prices ; these commodities were to be purchased through the Government and not in the open market. The wage freezing order, however, had to be rescinded in May. On July 18, 1947, the Outline of Mobilization was promulgated against the Communist Rebellion, in which article six provided for government control over wages and salaries, as well as prices of daily necessities. China is probably one of the few post-war countries where the working class in some cities seems to have enjoyed an improvement in its real rates of pay. According to the Chinese Ministry of Social Affairs, real wage indices for industrial (i.e. factory) workers, as compared with pre-war (1937) level, rose in December 1947 by 15·9 p er cent in Nan- king, 22 per cent in Shanghai, and 59·6 per cent in Tientsin. In Chung- king, in South-west China, however, there was a decline by 24·6 per c e n t; in Tsingtao, also, there was a decline by 47· 3 per cent. (Table 88). The great disparity in the Chinese level of real wages among different cities is mainly accounted for by civil war, which disrupts transportation and reduces the mobility of labour. It obtains also among the occupational (i.e. craft and common) workers in these cities. Hong Kong : Although no cost of living index has yet been published for Hong Kong, wages have been roughly adjusted to increases in living costs, through the grant of ‘rehabilitation allowances.’ Wages for Chinese artisans and unskilled labour employed in European-owned industries and in transport concerns are now largely uniform, and have been determined through a number of negotiated agreements. These rates have also been applied by the Government for its own labour of similar grades. At the end of 1947 these rates, as compared with pre-war and 1946 scales, were as follows: (Table 89)

Table 89 A verage Rates of Wages for Daily Paid Labour in Hong Kong Dockyards.

U tilities, and Government Service, 1947a

Skilled Semi-skilled Skilled Unskilled Year Tradesmen Workmen Workmen

Pre-war 0·75-1·40 0 ·70-1·00 0·60-0·75 0·40-0·66 1946 (end) 5·00-6·20 4·50-5·00 4·20-4·50 3 ·20-3·60 1947 (end) 6·00-8·00 5·50-7·00 4·60-5·80 3·50-4·00

a These rates are based on an 8-hour day for 26 days a month, and include the rehabilitation allowance, which for artisans averages HK$3 per day and for male unskilled labour HK$2·40 per day. 143 It is estimated that 28,000 workers are employed on these scales, while approximately 32,000 are employed in Chinese industrial establishments, and 55,000 in miscellaneous occupations such as stevedoring, carrying, etc. Table 89 shows a wide disparity between pre-war and post-war wages. The upward tendency was continued during 1947, and can also be observed by a comparison of wages of representative transport workers including tram drivers, bus drivers, tram conductors, and bus conductors. Owing to the continued shortage of skilled labour many Chinese firms, which do not generally speaking have as high operating costs as the large European concerns, but at the same time cannot offer the same security of empolyment, are compelled to pay a comparatively higher scale. These Chinese concerns in the majority of cases pay wages on piece basis, which vary considerably from industry to industry. Most piece workers are women working on the basis of a 9-hour day. India : Comprehensive wage data for India are recently compiled for the period 1939-45 from the annual reports on the working of the Payment of Wages Act (1938) submitted to the Government of India by the Provinces. They cover all workers in receipt of a wage or salary of below Rs. 200 per month in manufacturing factories which have submitted the returns under the Act. Total wages paid, according to an analysis of these reports by the Indian Labour Gazette (September 1947), increased from 378,800,000 rupees in 1939 to 1,243,800,000 rupees in 1945, that is, by 228 per cent. This increase is partly due to a 51 per cent increase in employment, from 1,751,000 to 2,643,000 during the period and partly due to more factories making the returns ; but is largely accounted for by an increase in earnings. The average annual earnings of employees in factories, according to the same source, increased from 287·5 rupees in 1939 to 595·5 rupees in 1945, that is by 107· 2 per cent. This 107·2 per cent increase in earnings is, however, nominal rather than real, as the cost of living index during the same period has risen even more rapidly ; by 124 per cent in Bombay, by 128 per cent in Madras, by 208 per cent in Cawnpore, and by 177 per cent for the whole of India. Thus, it will be seen that the increase in the average earnings has lagged considerably behind the increase in the cost of living. In Bombay and Madras, with 38 per cent of the total factory workers in British India, the rate of increase in cost of living during the period is twice that in earnings. The real earnings of factory workers in these two provinces has, in other words, been halved during 1939-45. (Table 90) Table 90

A verage Annual Earnings and Cost of Liv in g in India, 1939-45 Increase Increase in cost of Earnings in rupees in 1945 living 1939 1945 over 1939 index (In %) (1939=100) Bombay 370·4 814·7 120 224 Madras 175·9 357·6 103 228 All British India 287·5 595·5 107 277 144 The Autumn Sessions of the Indian Constituent Assembly (legislative) 1947, passed an act providing for the fixing of minimum wages in certain scheduled occupations where ‘ sweated labour is most common, but covering a very small fraction of industrial workers in India, in following occupations: woollen carpet making or shawl weaving, rice milling, tobacco (including bidi making) manufacturing, plantation (cinchona, rubber, tea or coffee estate), oil milling, Local Authority, road construction or building, lac manufacturing, mica works, public motor transport, and agricultural employment. Minimum wages, fixed by law, are open to revision from time to time by and through the machinery appointed for the purpose, which is the Provin- cial Advisory Committees and the Provincial Advisory Board consisting in each case of equal representatives of employers and workmen in the scheduled employment. They must be fixed by the Provincial Government within three years in the case of agricultural workers, or two years in other scheduled employment.12 Indo-China: Cost of living in Indo-China increased rapidly during the war, and much more after the Japanese ‘ coup de force ' of March 9, 1945. The index for workers in Saigon, which stood at 100 in 1939, rose threefold to 462 in 1945. But by December 1947 it shot up to 2,802, approximately 28 times the pre-war (1939) level. This increase in the cost of living, coupled with shortage of industrial and agricultural manpower arising from internal disturbance, was accompanied by a much smaller increase in wages. The daily pay of an unskilled worker reached 7 piastres in 1947 in the area of Saigon- Cholon, as compared with 65 cents for 1938-39. Wages of the white coloured employees increased less than workers’ wages. On the average, in 1947, they were eight or nine times greater than before the w ar for Indo-Chinese employees, and from six to seven times greater for Euro- pean employees. A special scale of wage allowances for families was introduced in Indo-China by a decree of September 26th, 1947. According to this a 15 per cent allowance of a workers’ wage must be made for a spouse not gainfully employed, and a 5-15 per cent allowance for each child, up to 5 children.13 Japan: During the war period 1940-44 earnings of factory and mine workers in Japan Proper increased by 169·2 per cent and 154·2 per cent respectively, vis-à-vis a 158·6 per cent increase in the cost of living. It thus seems that real earnings for factory workers improved by 7 per cent, while those for mine workers deteriorated by 3 per cent. However, during the four years 1940-43, both categories of labourers enjoyed a substantial improvement in their real earnings, as is shown in Table 91. The improvement in the general level of wages for Japanese workers during wartime is confirmed by the index numbers of real wages compiled by the Japanese Cabinet Bureau of Statistics. Taking 1937 as the base year equal to 100, the index in 1945 rose to 124 for male

12 National Planning Committee, Labor, Vora & Co., Bombay, 1948, pp. 172-74. 13 Economic Survey of Indo-China for 1947.

145 19 Table 91

Index of Earnings of Factory and Mine Workers and Index

of Cost of Living in Japan, 1940-44

(1940=100) a Earnings Year Factory Mine Cost of living workers workers 1940 .. 100·0 100·0 100·0 1941 .. 112·9 110·6 102·7 1942 .. 121·9 122·3 104·1 1943 .. 143·5 134·1 117·2 1944 .. 169·2 154·2 158·6 a The earnings index applies to workers in establishments not owned by government, Japan Proper, and is recomputed from monthly average with 1926=100. It is compiled by the U.S. Strategic Bombing Survey, and published in its report on The Effects of Strategic Bombing on Japan’s War Economy, Over-all Economic Effects Division, D ecem ber 1946, p. 106. The cost of living index is com piled by the Cabinet Bureau of Statistics for Tokyo, with 1937=100, and is here recomputed with 1940=100. (International Labour Review, August, 1947, p. 231). workers, and 148 for female workers. But the end of w ar witnessed a drastic fall, the index dropping from 124 in 1945 to 24 in June 1946 for male workers, and from 148 to 34 during the same period for female workers. (Table 92).

Table 92

Real Wage Indices for M al e and Femal e Workers in Japan, 1937-1946 (1937=100) a

Year Male Female Both

1937 100 100 100 1938 94 101 98 1939 90 98 89 1940 1941 1942 1943 1944 1945 124 148 1946: June 24 34 Persons covered 1,048,576 515,025 1,563,601 a International Labour Review, August, 1947, p. 222.

As far as data permit us to conclude, there has recently been some improvement in the real wage position of manufacturing and mining workers in Japan. According to SCAP’s Research and Statistics Divi- sion, during the 13-month period December 1946—December, 1947, while money wages for mining workers increased by 236 per cent and those for manufacturing workers by 212 per cent, the cost of living index increased less, by 191 per cent. (Table 93)

146 Table 93

A verage Monthl y Wages of Mining and Manufacturing Workers in Japan, D ecember 1946-December 1947a

Money wages (yen) Index of money wages Cost of Living Month Mining Manufac- Mining Manufac- index turing turing (Dec. 1946=100) 1946 Dec. .. 1,371 1,206 100·0 100·0 100·0 1947 Jan. ... 1,278 1,073 93·289·0 114·1 Feb. .. 1,273 1,129 92·8 93·6 126·8 Mar. .. 1,378 1,195 100·0 99·9141·2 April .. 1,746 1,388 127·3 115·1141·5 May .. 1,972 1,610 143·9 133·5168·3 June .. 2,572 1,856 187·6153·9195·6 July .. 3,024 2,020 220·6167·5228·7 Aug. .. 3,197 2,258 233·2187·2222·8 Sept. .. 3,259 2,450 237·7 203·1 228·2 Oct. .. 3,507 2,564 255·8212·6243·4 Nov. .. 3,582 2,816 261·3 233·5257·8 Dec. .. 4,604 3,765 335·8 312·2 290·9 a Japanese Economic Statistics, February 1948, General Headquarters, SCAP, Tokyo, pp. 66, 86, 87. The cost of living index has been recom puted from the original base of average A ugust 1946 to March 1947=100 to the present base of December 1946=100. Korea: Of the industrial workers in South Korea as of November 1946, 7 per cent were skilled and 93 per cent unskilled. Total average wage per 8-hour day amounted to Yen 117·93 for skilled workers, but Yen 79·60 for unskilled workers. Among the unskilled workers, the ratio of male to female workers was 2 ·4 to 1, and the wages for male unskilled workers were 70 per cent higher than those for female unskilled workers. Among the female unskilled workers 4 per cent were under 14 years of age and received an average wage of Yen 39·22 per 8-hour day, as compared with one of Yen 46·82 for all female unskilled workers. There were 122,159 male and female unskilled workers in 5,249 operating establishments in South Korea in November, 1946. Their average wages per 8-hour day, including wages, subsistence and payment in kind where reported, amounted to Yen 79·60 for all industries, but varied from the highest of Yen 107·14 for metal industry to the lowest of Yen 57·83 for textile industry. Between the two extremes were average wages per 8-hour day for the following nine industries; Yen 96·73 for printing and bookbinding, Yen 93·86 for machine and tool, Yen 90·51 for lumber and wood products, Yen 87·67 for engineering and construction, Yen 86·33 for other manufacturing, Yen 84·35 for chemical, Yen 82· 10 for ceramics and cement, Yen 79·51 for food, and Yen 67·22 for utilities. However, the average hours actually worked per day were in most cases less than eight hours, except food (8·06 hours) and utilities (8·13 hours). The average hours actually worked per day for all industries were 7·72.

147 Malayan Union and Singapore : Despite the absence of an index for this area, it can be said that cost of living has increased rapidly in Malaya because of the great shortage of the staple food which is rice. Prior to the Japanese occupation Malaya was only producing some 34 per cent of her basic foodstuffs. By 1946 the natural increase in population had expanded Malaya’s demand for rice but local production during the year was estimated to be only 66 per cent of the 1939 figures, with the result that the country’s degree of self-sufficiency at pre-war per capita rates of consumption fell to some 20 per cent of rice requirements. Imports of rice for the year were approximately 23 per cent of requirements, so that only 43 per cent of the estimated amount of rice needed to maintain the pre-war level of consumption was available. As official ration at depressed price could meet only about one quarter of the actual need, the labourer’s cost of living rose rapidly. The pre- war budget for an Indian labourer cost in December, 1939 approximately M$7. Assuming the deficiency in the official ration was made good by purchases in the free market, the same budget in December, 1946 cost approximately M$60. As a consequence, labour unrest arising from demand for wage increases was widespread. Yet wage increases were far from adequate. According to the Annual Report on the Malayan Union for 1946 issued by the Malayan Union Government, ‘ among the unskilled and semi-skilled workers monetary wages have increased from 125 per cent to 200 per cent and more of the pre-occupation levels, but even so the real wage is below that earned in 1941..... The general trend of wage increases as compared with the pre-war scales among artisans may be appreciated when it is observed that the engineering trade was paying $5·50 a day where it used to pay $2·50 ; bakers and potters are receiving $170 per mensem where they used to receive a maximum of $45. Women stripers in the rubber godowns are earning up to $1·20 a day as against 50 cents a day, while shoe factory machine hands who pre-war earned an average of $1 a day can now obtain a wage of $6 a day. Trained sawmillers who commanded $80 per month pre-war can now earn $180.’ (pp. 5, 6) (all in terms of Malayan currency). In Singapore, the shortage of rice and consumer goods has pushed the cost of living and wages even higher. According to the Annual Report on Singapore for 1st April to 31st December 1946 by Mr. P. A. B. McKerron, the Colonial Secretary, the increases of wages which have resulted in this situation ‘ often amounted to as much as 1,000 per cent (over pre-war)’, (p. 42). A comparative table on labour wages (p. 47) shows a 2·5—10·5 fold increase in wages for the wage-earners in Sin- gapore. So concluded Mr. McKerron, ‘ when compared with a cost of living increase assessed in December, 1946 at three and a quarter times the 1939 figure, it will be seen that the wage earner has, in general, improved his standards.’ (p. 43). Philippines: Money wages in industrial and commercial establishments in Manila during Japanese occupation increased by 162 per cent for skilled labourers and 164 per cent for common labourers, but cost of living for workers in Manila increased much faster, by 583· 3 per cent.

148 As a consequence, real wages declined by 63 per cent for skilled labourers, and 61 per cent for common labourers. Since 1945 there has been a steady improvement in real wages. As compared with pre-war, common labourers in 1947 enjoyed an advance in real wages of 5 per cent, although skilled labourers still had to suffer a reduction of 9 per cent. (Table 94) Table 94

D aily Wages of Labourers in Industrial and Commercial Est a bl ishment s in Manila, 1941-47a Common labourers Skilled labourers Money wages (pesos) 1941 1·24 2·34 1945 3·27 5·93 1946 4·53 6·76 1947 4·66 7·68 Real wages (1941 pesos)b 1941 1·24 2·34 1945 0·48 0·87 1946 0·87 1·30 1947 1·30 2·14 Index of money wages (1941=100) 1941 100 100 1945 264 262 1946 365 306 1947 376 328 Index of real wages (1941=100) 1941 100 100 1945 39 37 1946 70 56 1947 105 91 a D ata supplied by the Philippine Government. b Real wages are obtained by deflating the money wages with the cost of living index for Manila wage-earners’ families. There is at present no minimum wage legislation covering workers in private employment. Commonwealth Act No. 103, setting up the Court of Industrial Relations, however, authorizes the Court, when directed by the President of the Philippines, to investigate and study all pertinent facts related to any industry or to industries in any locality with a view to determining the necessity and fairness of fixing for each county or locality or industry a minimum wage or share for labourers or the minimum rental to be paid by tenants to landowners. Further, when industrial disputes are referred to the Court of Industrial Rela- tions for decision, the Court may, through awards, fix the rates of salaries and wages that should be paid by the employers concerned to their employees and labourers. Cost of Living The increase in the cost of living during war and post-war years is largely caused by war, both external and internal. India and Ceylon, being free from war operations in their own territory, are fortunate exceptions, and have among AFE countries the slowest rise in the cost living.

149 Taking August 1939 as the base year equal to 100, the Bombay cost of living index stood at 118 in 1941, rose to 224 in 1945, but remained at 273 in November, 1947. Wartime prosperity accompanied by shifting of industrial production from consumers’ goods to war materials and products, as well as shortage of transport to move necessities especially foodstuffs, gave rise to a sharp increase in the cost of living from 118 in 1941 to 150 in 1942, and 219 in 1943; but since 1943 the rise has been less rapid, the index climbing to 224 in 1945, but 273 in November 1947. In contrast, China, afflicted by eight years of external war (1937- 1945) and over two years of civil war (1945-47), is perhaps the first nation in history that has suffered so extensively the effects of hyper- inflation for such a long period—extensive in the sense that the population affected is large and constitutes about a fifth of the world’s total. Cost of living in Shanghai increased by 250 times during the eight years of external war, by 300 times during the post-war period of less than two and a half years (September 1945 to December 1947). Among other AFE countries affected by the World War II, the only ones that have succeeded in controlling the course of inflation in the post-war years are the Philippines and Burma. With generous aid from the United States, cost of living in the Philippines, as reflected by the Manila index, has shown a steady decline from the peak of 827 for November 1945 (with the base year 1937=100). It rose from 112 in 1941 to 180 in 1942, 435 in 1943, 751 in 1944, and 777 in 1945; but declined to 585 in 1946 and 411 in 1947 (for first nine m onths). The index for Septem ber 1947 was only 381. Burmese cost of living, as represented by the cost of living index in Rangoon, stood at 122 during the pre-war year 1941 (with the base year 1937=100), but rose to 857 during the year of Japanese surrender (average of November and December 1945). Because of contraction in the note circulation arising from the repudiation of Japanese military notes, the cost of living index showed a steady decline to 392 in 1947. In December 1947 the index fell to 338. Japan, though a defeated country, did not suffer much from the effects of inflation during the period of war. The Tokyo cost of living index, as compiled by the Japanese Cabinet Bureau of Statistics, rose by 1· 5 times from 1937 up to the time of German surrender (May 1945). Then ensued a period of inflation raising the cost of living by 16 times up to June 1946, (3,922 in June 1946 as compared with 249 in May 1945), when the Cabinet Bureau’s cost of living index was suspended. Since August another index for Tokyo has been compiled by the SCAP, using the nine-month period (August 1946 to March 1947) as the base equal to 100. Owing to the effort of American occupation authorities, post- war inflation in Japan has been slowed down if not completely arrested. The SCAP’s cost of living index for Tokyo, which stood at 86 in August 1946, rose to 223 in July 1947—an increase of only 1-6 times in one year. By December 1947, the index stood at 282.14

14 For details see Economic Conditions in Japan, by Research and Statistics Division, SCAP, Tokyo, February, 1948.

150 In their struggle for political independence from the metropolitan powers, both Indonesia and Indo-China have been afflicted by continued military operations, although on a scale far smaller than that in China. The cost of living in Indonesia, as reflected by the index for Batavia, rose from 118 in 1941 to 279 in May 1946, jumped to 814 in June, and 2,628 in December. From that time onward the Batavian index was discontinued, but a new series, now being released regularly in the U.N. Monthly Bulletin of Statistics, has been compiled since April 1946, covering food items at free market prices in Batavia. The new food index for Batavia, which stood at 1,171 in April 1946, rose to the peak of 4,430 in November. Since February 1947, the index has however shown a slow decline, until in September 1947 it stood at 1,526. In Indo-China, the cost of living index for industrial workers in Saigon, taking January-June 1939 as the base equal to 100, rose to 462 during the first half of 1945. By March 1946 it had jumped to 1,292, and by December 1947 to 2,802. There has thus been a six-fold increase in the index since the conclusion of war.15 (Table 95)

IV. H ours of Work In nearly all AFE countries hours of work have been regulated by law since the thirties, by the Factory Act in India, Burma, China and Japan, by the Labour Code or Ordinance in Hong Kong, Malavan Union and Singapore, by contract and other labour laws in Indo-China and Indonesia. In India, there are now, in addition to the Factory Act, special acts for shops, railways, motor vehicles, and mines regulating working conditions including hours of work. In countries employing alien contract labour, the hours of work for such labour were subject to legal regulation earlier than for non-contract or indigenous labour, chiefly because of rampant abuses practised alike by the employers and by the contractors. In the Philippines, hours of labour have been regulated by the Eight-Hour Labour Law of 1939. The principle of 8-hour day is being gradually introduced into AFE countries, in China, Japan, India, Malayan Union and Singapore, Ceylon, and Indo-China, although in countries affected by seasonal employment such as rice mills in Burma and Siam, or rubber and tea plantations in India and Indonesia, 9-hour day plus a rest period of an hour or more is still being practised. The number of working hours per day, however, varies between European-owned and Asiatic-owned enterprises, the former usually requiring fewer hours than the latter. Similarly, working hours are generally shorter in heavy industries operated under continuous process than in light industries such as textiles The practice of providing rest period after continuous work of five or six hours is also recognized by law. Such rest period varies from half an hour to one hour, in some cases even longer (e.g. estates or plantations). 15 Indices Economiques Indochinois, Troisieme serie, (Supplement au Bulletin de Renseianements Economiques No. 12), Statistique Generale de 1’Indochine, Saigon, Juillet, 1947, p. 20.

151 Table

Cost of Liv in g Indices in

Country : BURMA CEYLON3 CHINA INDIA

City Rangoon Colombo Shanghai Bombay

Original base : 1931 XI 1938- 1936 VIII 1939 IV 1939

Composition: a-e a-e a-e a-e

1937 .. 100 — 100 — 1938 99 — 129 — 1939 97 104 172 10310 1940 .. 107 112 3604 107 1941 .. 1221 122 — 118 1942 — 164 — 150 1943 — 196 — 219 1944 — 200 — 226 1945 .. 8572 221 24,978 224 1946 .. 3812 229 337,761 247 1947 .. 392 252 3,290,0005 6, 2654 _ 1947—January 361 672,498 255 February .. 365 — 1,045,0005 255 March .. 370 — 1 ,122,000 256 April .. 371 — 1,285,000 257 May .. 410 — 2,088,000 258 June .. 430 — 2,462,000 265 July .. 434 — 2,725,000 261 August .. 415 — 3,066,000 270 September .. 393 — 3,767,000 285 October .. 372 — 5,397,000 282 November ——5,866,000 273 December .. 338 — 7,444,000

a = Food, b = Fuel and Light, c = Clothing,

1 January—October. 2 From Nov. 1945 new series with 1941=100, spliced by ILO to old series, composition a, b, c, e, (Including d. from Sept. 1946 on). 3 Compiled by the Ceylon Department of Statistics. 4 January—November. 5 New series covering all items linked to old series which excluded heat and light. 6 February—December. 7 January—September. 8 August—December. 9 New series, with March 1946=100, spliced to old series by ILO. Average covers March to December.

152 95

S el ect ed AFE Countries, 1937-47

INDO-CHINA INDONESIA JAPAN PHILIPPINES Saigon Batavia Tokyo Manila I-V I 1939 I 1929 VII 1938 VII 193716 VIII 1946 1941 III 1947 a-e a-e a a-e a-e a-e

100 100 100 102 100 109 104 100 10311 123 105 117 106 145 110 128 118 149 112 164 151 180 215 170 435 330 230 751 46218 24917 777 1,5559 1,67512 2,51815 3,83618 888 585 2,452 1,9637 191 4117

2,108 3,002 111 442 2,298 3,295 123 437 2,359 3,238 137 424 2,410 24813 3,123 137 404 2,402 279 2,025 163 397 2,378 814 2,286 190 402 2,522 2,138 2,279 223 408 2,552 2,10914 1,885 216 401 2,706 1,83914 1,526 224 381 2,787 1,71714 236 2,769 3,30014 250 2,802 2,62814 282 d = Rent, e = Miscellaneous.

10 August—December. 11 Average calculated for period of less than a year. 12 April—December. 13 New series based on 1938—100 spliced to old series by ILO. 14 Provisional. 15 April—December. 16 Compiled by Cabinet Bureau of Statistics. 17 M ay . 18 January—June.

153 20 One rest day in the week, usually Sunday, is required by law in China, Japan, India, Ceylon, and Indo-China. Annual holidays with pay are also common, in China, India and Indo-China. Burma: The provisions of the Indian Factories Act and other legislative measures concerning labour were applicable to Burma until the country was separated from India in 1937. Under the Factories Act of 1934, a statutory distinction was drawn between the maximum hours to be worked in seasonal and perennial (i.e. non-seasonal) industries : 60 a week in the former, and 54 in the latter. Working hours in rice and sawmills, which together comprised nearly 80 per cent of the premises coming under the Act, remained generally at the maximum allowed according to the Labour Department’s Report for 1940. Rice mills usually worked continuously throughout a 12-hour milling period. The provision that machinery attendants must take rest intervals was found hard to implement by the Labour Inspectors. Continuous-process factories worked on three 8-hour shifts, resulting in a 48-hour week in the heavy industries. Engineering works varied between a 44 and a 54-hour week. Cotton gins continued to work the full 60-hour week allowed for seasonal factories. The existence of so many small scattered mills made enforcement of working-hour regulations very difficult, but in the late 1930’s the number of inspectors under the Factories Act had been increased and consequently the effectiveness of this limited legislation had improved. Another major difficulty was the prevalence of part-time employment; many more persons were employed in part-time handicrafts than in factory industries proper. The strongest demand for maximum-hour legislation came from urban workers. When the Burma Shops Bill came again before the Lower House in 1941, it was found that one of the major demands from the Shop Assistance Aid and Welfare Society was for a weekly holiday. While many employers had already voluntarily agreed to this, it was not the general practice, especially on the part of small employers. At this time the Society solicited public co-operation, asking people not to shop on Sundays. In agriculture, working hours depended upon seasons and crops but probably averaged somewhat less than in the temperate zone. Holidays were frequent, especially during the full moon, so that there were seldom more than 24 working days per month.16 Ceylon : Wages boards, consisting of the Controller of Labour and members representing employers and workers in equal proportion, are authorized in Ceylon to determine in the case of each particular industry or trade the duration of the normal working day. These boards may not, however, extend the daily hours of work beyond 9 hours including a rest period of at least an hour. They are also empowered to require a full day’s rest a week to be accorded to the workers, and in trades to which the Wages Boards Ordinance applies such a provision is customary. Regulations by the wages board for specific trades

16 Thompson, op. cit., pp. 45-46.

154 generally prescribe a maximum working week of 48 hours. A shorter week, has, however, been prescribed in some cases, as, for instance, in the engineering trades, in which the hours of work are limited to 45½ . Under Ordinance No. 18 of 1940, the hours of work in shops in Ceylon are limited to 8 a day and 45 a Week. The Ordinance also provides for an hour’s rest a day for the midday meal between 11 a.m. and 2 p.m., and a weekly holiday with pay for a day and half. In the industries covered by the regulations made by the wage boards, provision is made for a total of 21 days of annual leave with full pay for the workers, including sick leave and leave for urgent private business or other good reasons ; and a similar provision is made for shop workers by the Shops Ordinance.17 China : According to the Chinese Factory Act, as consolidated in 1932, the hours of work for adults may not exceed 8 a day, although in the case of force majeure or emergencies they may be extended to 12 a day, provided, however, that such overtime does not exceed 46 hours a month. A rest period of 30 minutes after a period of five hours of continuous work is provided, as also a weekly day of rest as well as the cessation of work on public holidays, with regular wages. The Act also provides for 7-30 days of annual holiday with pay for the workers, according to their length of service. The war had, of course, the effect of prolonging the working day. Enquires made in 1944 by the Bureau of Statistics of the Ministry of Social Affairs showed that during the emergency the hours of work were so long as to impose a great strain on the workers. The consequence was that diminishing returns set in, in the form of absen- teeism, frequent turnover and an increasing number of accidents. For example, in Chungking the larger cotton mills worked as a rule two shifts of 12 hours each, and the larger engineering establishments, 11½ hours a day, of which h ½2ours were regarded as overtime. In the other factories the working day averaged 10 hours (it was generally longest, 12 hours, in the flour mills, and shortest, 8 hours, in the printing establishments), but additional hours were frequently worked in case of need. In Chungking the cotton mills allowed the workers a day’s rest every week, or every 10 days when there was a change of shifts. Chemical and engineering works granted as a rule a day's rest every fortnight, and most of the larger printing establishments one day a week. Smaller factories generally did not have any fixed holidays, but gave the workers two to four days’ additional wages per month by way of compensation. Some of the traditional national holidays—usually at least three a year—were also observed.18 In Shanghai during 1946, the average working hours per day were 9 ·94 for the 92,971 workers from 40 industries in 240 factories surveyed, which showed a distinct improvement over those for earlier years, namely, 10·84 during 1941, 10·57 during 1936, and 10·61 during 1930.

17 Preparatory Asian Conference, op. cit., p. 211. 18 Ibid., pp. 207-8, 215.

155 (Table 96) Such improvement is in compliance with the Factory Act and helps to reduce one of the causes affecting disputes between capital and labour.

Table 96

A verage Daily Working Hours in Shanghai Factories, 1946a

Hours per Industries having largest No. workers day No. factories number of workers 8 34 13,512 9,944 in public utilities 8½ 16 2,126 1,319 in cotton weaving 9 35 4,622 1,110 in cotton weaving 9½ 5 404 187 in cotton weaving 10 127 67,495 56,929 in textiles, mainly cotton 10 ½ 4 2,929 2,674 in cotton spinning 11 7 471 371 in silk spinning and weaving 12 12 1,412 430 in glass Total .. 240 92,971 a Statistics on Shanghai Factory Labour, 1946, Shanghai Social Affairs Bureau, 1947 (In Chinese). Overtime was resorted to by 35 of the 40 industries surveyed, and applied to all or part of the workers in these industries. Overtime pay varied, from counting six hours as one man-day to time plus 50 per cent or straight double pay. 19 of the 40 industries had also night work, from 24 to 31 nights per month, each night varying in length from 6 to 12 hours. Of the 29,041 workers surveyed, 25,634 in the cotton mills had night work lasting from 10 to 10½ hours for 26 nights during the month Almost all of the factories surveyed used lunch time as rest period. Of the 240 factories surveyed, 27 had no rest period, 1 had rest period of ¼ hour, 114 had rest period of ½ hour, 2 had rest period of ¾ hour, 86 had rest period of one hour, 3 had rest period of 1¼ hours, and 7 had rest period of 2 hours. Most of the factories in Shanghai had only one shift, but others had two-shift, three-shift, and even four-shift system. The telephone operators worked on four-shift system, each shift to last six hours. Three-shift system, with 8 hours per shift, applied to flour mills, water works, gas works, street cars ; while two-shift system, with 9-12 hours per shift, was most commonly adopted in cotton mills and cigarette factories, but applied also to other industries. The number of rest days per month also varied, the commonest being 4 days. Of the 240 factories surveyed, 23 had no rest day, 4 had one day, 76 had 2 days, 3 had 3 days, 131 had 4 days, and 3 had 6 days. Cotton mills generally had four days, using Sundays as rest days, while cotton weaving sheds had 2-4 days per month. Public utilities also had four days during the month as rest days. The number of annual holidays also varied with different factories : 3 had no holiday, 165 had 5-10 holidays, 46 had 11-15 holidays, and 26 had 16-20 holidays. Of the factories surveyed, 188 paid wages for rest days and 205 paid wages

156 for annual holidays. On the other hand, 28 factories did not pay wages on rest days, and 21 factories did not pay wages on annual holidays. Hong Kong : In 1947 the usual hours in Chinese-owned factories are from 7 a.m. to 5 p.m. (with an hour off at mid-day), but extra work from 6 p.m. to 8 p.m. at ordinary rates is not uncommon. In the latter case a further rest period between 5 p.m. and 6 p.m. is usual. In many other occupations, such as catering, transport and stevedoring, the working day may be 9 hours or longer, with a 7-day week. The tempo of work in these occupations is, however, proportionate, and there are many short rest periods. In European-owned concerns the 48-hour week is now standard, except in the Naval Dockyard where a 44-hour week is now standard. The usual rest-day is Sunday, though other days are allotted where work must necessarily be continuous. India : Under the Indian Factories Act, as amended and consolidated in 1934, the hours of work for adults were limited to 54 a week and 10 a day in perennial factories, and to 60 a week and 11 a day in seasonal factories (factories working for not more than 180 days in the year).19 By an amendment to this Act which was adopted in 1946 the hours of work have been reduced to 48 a week and 9 a day in perennial, and to 50 a week and 10 a day in seasonal, factories. The amendment also fixed the rate of wages for overtime at twice the ordinary rate. The Indian Factories Act limits the spreadover of hours of work to 13 hours a day, which was reduced to 10½ hours in the perennial factories and 11½ in seasonal factories in April 1946 ; and provides for a weekly day of rest on Sunday or any other day of the week. It also provides for a total of an hour’s rest for 6 hours of work ; and prohibits continuous work for more than 5 hours. In April 1945, the Act was amended with a view to making statutory provision for annual holidays with pay for the workers covered by the A ct: 10 days for adults and 14 days for children (persons between 12 and 15 years of age) ; the qualifying period prescribed was a year of service. The scope of the Factories Act is limited, however, to establishments employing not more than 20, or, in provinces in which the Governments have in their discretion extended the scope, to not more than 10 persons each. Since 1937 a num ber of provinces have adopted legislation to regulate the hours of work in small workshops, as, for instance, in the Central Provinces, where the hours of work are limited to 10 a day Several of the provinces have, moreover, adopted in recent years legislation to limit the hours of work in shops the maximum limit in Bombay and Sind is 9½ hours, and in Bengal and Punjab, 10 hours. After consulting the provinces on the need for legislation concerning the weekly rest, the Central Government adopted the Weekly Holidays Act in 1942, providing for the closing of shops, commercial establishments, restaurants and theatres for one day in the week. The weekly holiday is to be a paid holiday. The Act is put into operation

19 Seasonal factories include for the purpose of the Act cotton ginning, cotton or jute pressing, factories for the decortication of groundnuts, andand for the manufacture of coffee, tea, rubber or sugar.

157 only if and when the provincial governments so desire, and they are also empowered to add a half day to the weekly holiday. The Act came into force in 1943 in British Baluchistan, Ajmer-Merwara, the North- west Frontier Province and Bihar. On the railways, under the Hours of Employment Regulations of 1930, the hours of work are limited to 84 a week in the case of persons whose work is essentially intermittent, and to an average of 60 a week in any one month for the others, with provision for overtime work in special circumstances at the rate of one and quarter times the ordinary rate of wages. Under the Motor Vehicles Act, 1939, the hours of work of drivers of such vehicles are limited to 9 a day and 54 a week, and a rest period of at least half an hour after 5 hours of continuous work is provided, Under the Indian Mines Act of 1935, the hours of work above ground are limited to 10 a day and 54 a week and the spreadover is limited to 12 hours. A rest period of not less than one hour after 6 hours of continuous work is provided. As to work underground, the hours are limited to 9 a day (including journey to and from the face) and 54 a week. So far as plantations are concerned, it is reported that in the north of India the labourers usually work from 8 a.m. to 2 or 3. p.m. and that in the South they work from 8 a.m. to 5 or 6 p.m. on the tea and coffee estates, with a nominal interval of an hour in the course of the day; the tappers on the rubber estates usually work from 6 a.m. to 1 or 2 p.m. Sunday is usually a holiday on tea and coffee estates except in times of heavy rush.20 lndo-China : Working hours were regulated for contract labour before they were for other forms of labour. If work were carried out on a daily basis, the maximum number of hours permitted was ten, including the time required for the journey between home and the place of work. In effect, this resulted in a nine-hour working day. Where work was organized on a task basis, the amount of labour assigned to any worker was required not to exceed what he could reasonably per- form in the maximum number of hours fixed on a daily basis. If a labourer were required to work overtime on some urgent and exceptional task, he was to be paid 1½ times the normal rate. The law also provided for a two-hour rest period about noon, and, one day of rest weekly. In addition, they were granted four holidays at New Year and other festivals. No wages were paid, nor was food supplied on these rest days, but employers had to guarantee their labourers not less than 25 days of paid employment each month. The first regulation of working hours for non-contract labour dated from 1933 and applied only to certain categories of industrial workers. This measure specified that boys under 15 years of age and girls under 18 might not be employed for more than ten hours a day, during which rest periods must be given totalling a minimum of one hour. Some types of labour could not be employed in night work (11 p.m. to 5 a.m.)

20 Ibid., pp. 208-211.

158 and the nightly rest period had to last 11 consecutive hours except in emergencies when it might be reduced to 10. During confinement women were entitled to 8 consecutive weeks without work. Not only was this legislation extremely restricted in the categories of labourers to which it was applicable, but also it made no reference to a weekly rest day. In the Law of December 30, 1936 governing indigenous labour, working hours were still fixed at ten a day for all wage-earning employees of either sex and any age, but from January 1, 1937, hours were universally to be reduced to nine, and beginning a year later, to eight. Moreover, night work was now prohibited for all children under 15 years of age and for women without any age limit. A supplementary decree issued at about the same time made a weekly rest day compulsory in industrial and commercial establishments of all types. Annual holidays with pay became the right of all workers in industry, commerce and liberal professions. From Jan u ary 1, 1937, they were fixed at a maximum of five days and from January 1, 1938, at ten days.21 A new Labour Charter for Indo-China, which is to be promulgated shortly, provides for many modifications of the earlier rules. The maximum number of hours is reduced to 8 per day or 48 per week. Night work (between 10 p.m. and 5 a.m.) is forbidden for children less than 18 years old and women, for whom night rest shall be at least of 11 consecutive hours. A weekly rest of 24 consecutive hours, at least, is compulsory for all workers. Indonesia : The daily hours of work on plantations in Indonesia before the Second World War were nine, and the statutory rate of wages for overtime was not less than time and a half; provision was also made for not less than two days of rest a month, in addition to public religious holidays The daily hours of work underground in mines were limited to 8½ , and in industrial undertakings to nine. Japan : Hours of labour in Japan were regulated by the Factory Law, put in force on September 1, 1916, which was revised in March, 1922 and carried into effect on July 1, 1926. This Law, effective all through the war, fixed the maximum working hours at 11 for factories employing the protected workers, i.e. male operatives under 16 years of age (formerly 15) and female operatives, there being no restrictions as regards those employing adult males. Factories enforcing the 11-hour day or less must allow their workers at least 2 rest days every month, and over half an hour’s rest period when the day’s work exceeds 6 hours, and 1 hour’s rest period when it exceeds 10 hours. Allied occupation of Japan under the SCAP brought about a significant change for the better in all directions. The Labour Standard Law, enacted in March 1947 and implemented by cabinet and ministerial ordinances, became effective in major part on 1 September. Minis- terial ordinances submitted to public hearings prior to promulgation established administrative procedure and provided exceptions to the articles effectuated 1 September. Among the more important excep-

21 Thompson, op., cit., pp. 193-94

159 tions are those relating to hours of work, which provide for extention of the basic eight-hour work day and 48-hour work week set by the Law for workers in general, up to nine hours per day and 54 hours per week for workers in retail trades except stores employing more than 10 workers continuously, hotels and restaurants, hospitals and theatres, and up to 10 hours per day and 60 hours per week for special groups of railroad workers, workers in small post offices, policemen and firemen. Where work hours for women were extended up to 60 hours per week under the above exceptions, no overtime was permitted. Malayan Union and Singapore : Although the Labour Code for the Malayan Union provided for a 9-hour day, the principle of an 8-hour day has become generally established in mines, factories and workshops and, in theory, on estates, the majority of which work even shorter hours. By the end of 1946 hours had become stabilized and employers were showing tendencies to expect good time-keeping. Demands were now being made for one rest day a week usually with pay, not so much with a view to seeking a day of rest and recrea- tion but to enable the worker to obtain additional pay if he is asked to work on that day—the rates for which, it is suggested, should be double. In Singapore the normal working day is eight hours. The Labour Ordinance still permits a maximum of nine hours, but local workmen have long since achieved an eight hour day by collective bargaining. Philippines : The Eight-Hour Labour Law, passed on December 9, 1933 for certain classes of labourers, but replaced on June 3, 1939 by an act covering all except agricultural workers, piece workers, domestic servants and members of the family of the employer working for him, limits regular working hours to 8 per day or 48 per week. Excess hours are paid time and one-fourth. In practice, however, overtime is paid from time plus 50 per cent to time plus 100 per cent. According to statistics supplied by the Philippine Government for adult male workers in Manila in October, 1947, the normal working hours per week were 56 for bakers, but 48 for all other industries—furniture making, printing and bookbinding, electric power distribution, mechanical engineering, building, railways, transport, cartage, and local authorities (unskilled labourers). Siam : The authors of the two economic surveys of Siam found it impossible to ascertain the number of hours regularly spent on the fields by the agricultural population—that is, the very great majority of the people living in Siam. By its nature rice-farming is obviously seasonal, with periods of idleness alternating with others of arduous labour. In Bangkok industrial labourers averaged a 50-hour week during the years from 1936 to 1938, but in the latter year and in 1939 the working week was increased to 54 hours, except in the case of a few categories of skilled labourers. Office clerks worked a 44½ -hour week. All workers seemed to have enjoyed a weekly holiday and, in addition, 17 other days were observed as national holidays as well as 15 commercial holidays. No information is available as to whether paid vacations were widely prevalent. Presumably they depended upon the generosity of

160 the individual employer. The hours of work and of leisure were customary and not generally based upon legal provisions. A law introduced into the Assembly in 1938 to reduce universally the working day to 8 hours was turned down. In July 1940 a member of the Assembly introduced a labour bill to make uniform and regulate hours of work, to require a written contract between employers and employees that would specify the type of work to be done and the hours and wages therefor, and would provide for termination of the contract upon a month’s notice being given by either party. The bill’s sponsor also intimated that he would like to insert clauses providing for a fortnight’s paid vacation annually, and for overtime and sick leave with compensation. The government asked that the bill be withdrawn. It was not the time to introduce such legislation when the country was being industrialized. The majority of workers, it asserted, were treated as members of the employer’s family; the majority of employers—and this included the administration—treated their labourers fairly and justly. The bill was duly withdrawn.22

V. L abour Or g a n iz a t io n The post-war years have witnessed a resurgence of trade unionism all over the AFE region, in China, India, Japan, and South-east Asia. Because of the fragmentary materials available, it is not possible to make a complete survey of the up-to-date developments in the countries of the region. But a few significant trends can be clearly set out. Japan, as the leading industrialized nation in the region, has numerically the largest trade union membership, which in 1947 approached six million. China, with a membership of over two million in the territory under the jurisdiction of the National Government, follows as a close second. The latest (1945-46) return for India gives a total membership of about 1·6 million. Other countries have a far smaller union membership, from below one hundred thousand to several hundred thousand. Industrial development in these latter countries is still in a stage of infancy ; and trade unionism, largely a product of industria- lism, is retarded in its rise by other complicating factors including political disturbance in Indonesia and Indo-China, and predominance of alien, transient, and illiterate labour groups all over South-east Asia. The infiltration of communist influence among the rank and file of organized labour is another feature that calls for attention. In China, as well as in Korea, labour is divided into two camps, communist and non-communist. In other countries, in Japan, for instance ; this division is also marked. Elsewhere, whether in Hong Kong, Singa- pore, or Rangoon, although the two groups cannot as yet be clearly distinguished, there are strong undercurrents tending to accentuate the difference in labour policy and programme, which becomes significant once political conditions of the country begin to give signs of change. Labour on the whole has, however, made important advances towards a more fully organized movement. In China the principle of

22 Ibid., pp. 233-34. 161 21 labour organization has been made compulsory, while in India the National Planning Committee is having this principle accepted in its recommendations. In Japan, the SCAP authorities have from the beginning of the occupation ordered in one of the three important directives on labour the removal of all hindrances to labour organization. In Malayan Union and Singapore, the Trade Union Act of 1941 has since 1946 been enforced, while in Hong Kong a similar Act will soon be passed. In Burma, there has been developed a movement for the organization of peasants’ unions, in addition to organization among the industrial workers. Burma : Shortly after the re-occupation of Rangoon by the British, Burma’s leaders met to revive and expand trade unionism throughout the country. In May 1945 labour leaders decided to work for such objectives as ‘ the freedom of the world and of Burma.’ On 30th June of the same year, labour representatives met in the Burmese capital to form an association of trade unions in Burma. On 8th July, Than Tun, Communist Secretary of the Anti-Fascist League, published a statement of the League’s policy on trade unions to the effect that members of unions might meet unofficially, and that workers, proved not to be Japanese spies after investigation, were welcome to join the League if they wished. On 30 September a mass meeting of the All-Burma Labourers’ Union was held in Rangoon, passing resolutions on the Union’s political objectives. Mass meetings were frequent during the first half of 1946 and new unions were formed, large organizations of labourers generally preceding, or less frequently, absorbing, those of a particular trade. These unions included clerks and office workers, post office workers, mining labourers, but the most important was that organized on 1st January, 1946, by the civilian workers on Burma’s railroads, with a membership of about 2,500. By the end of February, 1948, the total number of unions registered under the Trade Unions Act was 59, with a total membership of 40,620.23 An unusual development in Burma’s post-war labour movement has been the organization of peasants into unions under political leadership, which seems to have antedated the British re-occupation of Burma. By January 1946 cultivators who had attended the All-Burma Trade Union Congress were asked to a special peasants’ mass meeting, at which resolutions were passed which placed upon all workers in Burma the duty of uniting under a single trade-union congress and called upon cultivators throughout the country to join associations which eventually would be merged into an all-embracing Peasants’ Union. A central committee of this proposed Peasants’ Union, under the chairmanship of the Communist leader Than Tun, who was also secretary of the AFL, urged upon the government the adoption of an agricultural reform programme including government remittance of all rents and taxes payable by the farmers throughout Lower Burma, enactment of a new tenancy law, direct purchase of paddy from the cultivators and cessation of all rice exports, and the establishment of an 23 Burma Weekly Bulletin, No. 5, Week ending 13th March, 1948, Office of the Director of Information, Rangoon, p. 12.

162 Agricultural Projects’ Board on which the peasants’ unions would be represented to make concrete plans for the 1946-47 paddy season. Ceylon : The organization of trade unions in Ceylon is regulated by the Trade Union Ordinance of 1935, under which registration is compulsory and the registered unions and their members enjoy certain immunities. The local trade union movement gathered appreciable strength during the interval between the two wars, although adversely affected by cleavages resulting from diversity in the structure of the working population. There are now 105 unions with a total membership of 189,309. The largest union, with 107,995 members, is composed mainly of plantation workers China : The Trade Union Law in China, first passed in 1929, was revised three times in 1931, 1932 and 1933. During wartime, in 1943, a new Trade Union Law was promulgated, which introduced the principle of compulsory organization for labour as a means to facilitate wartime mobilization of manpower. This law, which applies to ‘ ordinary unions,’ requires the organization of industrial unions for any group of over 50 workers, and of occupational unions for any group of over 30 workers. Special unions, in public utilities and other enterprises affecting public interest, are to be governed by a special legislation now under consideration. The end of the war has witnessed a rapid growth in the number and membership of trade unions in China, since the principle of compulsory organization for labour under the Trade Union Law of 1943 has been extended to the large industrial areas reoccupied from Japan. According to the statistics on registered trade unions released by the Ministry of Social Affairs, trade unions in China have grown from the pre-war (1944) total of 3,359 with a membership of 885,310 to the 1946 total of 6,355 with a membership of 2,046,710. By the end of Novem- ber, 1947, the num ber of registered unions grew to 10,523, including 4 trade federations and 753 county and city federations whose membership was not included in order to avoid duplication. (Table 97).

Table 97 N umber and Member ship of Regist er ed Trade Unions in China, 1936-47 No Unions Total Membership 1936 872 743,764 1940 (Oct. 31) 3,061 842,130 1942 (Feb. 28) 3,456 903,730 1943 (Dec. 31) 2,872 1,009,011 1944 (Dec. 31) 3,359 885,310 1945 (Dec. 31) 4,359 1,522,003 1946 (Dec. 31) 6,353 2,046,710 1947 (Nov. 30) 10,523 — Source: Yearbook of Statistics of People’s Organization, 1946, Ministry of Social Affairs, Nanking, p. 1; Statistics on Social Administration, No. 39, December 1947, p. 3. (in Chinese). The fi gures for 1936 are taken from China Handbook, 1937-43. In 1946 ordinary unions had 1,393,216 members, or 68 per cent of the total membership, leaving the remaining 653,494 members or 32 per cent to the special unions. Occupational unions, the largest group,

163 claimed 47·8 per cent of the total membership, with 9·1 per cent for industrial unions. (Table 98) The Trade Union Act was amended on June 13, 1947. These amendments were prepared by the Ministry of Social Affairs and submitted for discussion to a conference of leading industrialists, labour union leaders, public officials and experts, which met in Shanghai on August 2-3, 1946, under the guidance of the Minister of Social Affairs. The opinions gathered in the Conference were considered by the Minis- try in revising the draft amendments which were then submitted to the Legislative Yuan, the President of which, Dr. Sun Fo, condemned the provisions of the existing legislation prohibiting strikes. These provisions were deleted in the amended Trade Union Act as approved by the Legislative Y uan on June 13, 1947. The 1947 amendments alter the earlier Act in that they perm it the organization of national federations of trade unions, define the basic organization of trade unions, and, in principle, accord the right to strike to all labourers, including public utility employees, and permit the payment of wages during the strikes. An industrial or occupational union may establish branches where there are more than three groups each consisting of from five to twenty members. The area of a trade union must conform with the administrative area of a hsien (county) or municipality and not more than one industrial and one occupational union may be formed in the same industrial establishment or locality. Workers of 16 years of age or over who are resident in the area must join the union for the industry in which they are employed. Federated organizations may be of four types : (1) a hsien or municipal general trade union, (2) a provincial general trade union, (3) a national federation of industrial unions, and (4) a national federation of trade unions. Hong Kong: In Hong Kong, as in other AFE countries, the ancient gild is progressively yielding place to the modern union, although the Trade Union and Trade Disputes Bill, now under consideration, has not yet become law but may soon be passed by the Hong Kong legislature. At the moment therefore there is no marked difference between trade unions and other forms of association. Most societies, including trade unions, voluntarily notify the Secretary for Chinese Affairs and furnish particulars of their formation. Since the re-occupation of the Colony and up to December 1947, 147 gilds classified as workers’ unions, and 65 craft gilds of workers and employers have given such notification. Twelve of the workers’ unions, covering seamen, dock-yard workers, tramway employees, motor drivers, hotel and restaurant boys, weavers and knitters, women workers in chain and battery making, etc., rubber factory employees, engineers, and musicians, were reported to have a total membership of 30,926. One weakness of the present system is the difficulty of determining the precise status of these associations and their position as representative bodies in labour relations. Furthermore, there is considerable

164 Table 98

R egist er ed Trade Unions in China Classified, 1946-47 • No. U nions Total Membership Type of Union Dec. 31, 1946 Nov. 30, 1947 Dec. 31, 1946 Percentage

Federations Trade 5 4 County or city 394 753 Unions Ordinary 5,680 9,373 1,393,216 68·0 Industrial 261 629 188,046 9·1 Occupational 5,253 8,507 978,378 47·8 Trades 166 237 226,783 1 1 1· Special 274 393 653,494 32·0 Postal 18 47 5,359 0·3 Tele- comm unication . . 1 9 655 Highway 8 11 30,974 1·5 Railway 9 11 69,585 3·4 Seamen’s 26 31 70,942 3·5 Boatmen 165 234 79,298 3·9 Salt 37 38 128,326 6·3 Miners 9 10 267,630 13·1 Other transport 1 2 725 Total 6,353 10,523 2,046,710 100·0 duplication in many trades. This inevitably militates against the successful conduct of such a trade union function as collective bargaining. The Trade Union and Trade Disputes Bill will distinguish between trade unions and other types of voluntary associations. Those associations which by the nature of their constitution and objects qualify for registration as trade unions will acquire a legal status as registered trade unions. There is provision in the Bill for amalgamation. The enactment of this Bill should considerably assist the consolidation of the growing trade union movement and should help to counteract the present tendency towards an unnecessary multiplication of small unions. India: The Trade Union Act of 1926 provides the basis upon which unions in India are registered and acquire their legal status. The registered trade unions in India reached 667 in 1939-40, but increased steadily during the period of war. During 1945-46 they reached 1,087 in number, with a total membership of 864,031 for the 585 registered unions that made returns under the 1926 Act. Table 99

N umber and Member ship of Regist er ed Trade Unions in India, 1939-40 to 1945-46 Year Registered Unions Registered Unions Making Returns No. Unions Membership 1939-40 667 450 511,138 1940-41 727 483 513,832 1941-42 747 455 573,520 1942-43 693 489 685,299 1943-44 761 563 780,967 1944-45 865 573 889,388 1945-46a 1,087 585 864,031 a Figures do not include Punjab. The average membership for the registered trade unions making returns during 1945-46 reached 1,480. Applying this average to the 1,087 registered trade unions in India during 1945-46, there would have been a total union membership of 1,608,760. Table 100 compares the distribution of union membership in India during the first (1939-40) year of war, and the first post-war year (1945-46).

Table 100 D is t r ib u t io n of Union Member ship in India, by Industries, 1939-40 and 1945-46 Industry 1939-40 1945-46 Railways 179,381 269,461 Tramways 6,080 10,339 Textiles 136,931 234,751 Printing presses 11,890 15,248 Municipal 19,546 23,070 Seamen 52,742 79,142 Docks and port trusts 23,465 26,625 Engineering 6,768 31,875 Miscellaneous 74,335 173,520 Total 511,138 864,031 Source: Indian Labour Gazette, Ministry of Labour, Government of India, New Delhi, July, 1947 ; January, 1948.

166 The figures show that the bulk of the membership of the trade union's making returns is confined to railways and textiles. The cate- gory of seamen is the third highest in importance. During the period 1940-46, trade union membership increased in all branches of industry. The percentage increase was largest in the engineering group. The overall increase in membership in 1945-46 as compared to 1939-40 was 70 per cent, while in the case of textiles and railways it was 71 per cent and 50 per cent respectively. The rapid wartime development in Indian trade unionism is due to several factors. The number of factory workers increased from 1,751,137 to 2,642,977 during 1939-1945. Similar increases took place in other industries and services, such as railways, mines, plantations, etc. Wartime conditions also brought about complex problems like dearness allowance, bonus, longer hours of work, overtime, etc., and collective bargaining on these issues necessitated better organization of workers. These factors encouraged the workers to get organized, increasing thereby the membership of trade unions. Trade union statistics subsequent to the year 1945-46 are not yet available. Significant amendments, however, were made to the 1926 Act and passed in the Autumn sessions of the Constituent Assembly (Legis- lative) of India in 1947. The most important changes in the amendments are : (1) the introduction of ‘ recognition ’ of a Trade Union, in addition to registration and, (2) enumeration of unfair practices by employers as well as by workmen.24 A recognized union enjoys certain rights, e.g. (1) its executive is entitled to negotiate with the employer in respect of all matters connected with the employment, its terms, and conditions of labour, for all or any of its members; (2) the employer must receive and send a reply to letters sent by the executive, and grant interviews to that body on all matters relating to the above. Until recently there were two national trade union organizations in India with affiliated unions in all parts of the country : the All-India Trade Union Congress (1920- ) and the Indian Federation of Labour (1941- ), both with provincial or regional and local branches. In. September 1945 a special enquiry was carried out by the Government into the relative strength of the Indian Federation of Labour and the All-India Trade Union Congress, as a result of which the Congress was declared to be the more representative organization, with 696,555 members, as against 313,807 members of the Federation. A third national organization, the Indian National Trade Union Congress, was formed in May 1947. One of the outstanding features is that every affiliated organization must offer to submit to arbitration every industrial dispute in which a settlement is not reached by negotiation, and must not sanction or support a strike till other means of settlement have been exhausted. The Congress proposes to form nation- wide organizations of all categories of workers in each industry, and to assist in the formation of trade unions. 24 National Planning Committee, Labour, Vora & Co., Bombay, December, 1947.

167 There are other national federations, such as the All-India Rail- waymen’s Federation and the All-India Postal and Railway Mail Ser- vice Union whose membership is confined to unions in specific industries, notably public utilities. In addition, there are provincial and local federations ; the most outstanding of such local organizations is the Textile Labour Association at Ahmedabad, which was founded by Gandhiji in 1920, and was reported to have a membership of about 33,000 in 1945. Indo-China: Under the legislation in force in Indo-China, the organization of trade unions, properly so called, is not permissible, but workers’ mutual aid associations may be established. Legislation on trade unions is being prepared in Indo-China and discussed at the meetings of the Economic Committee of Indo-China at which representatives of the governments of the associated states and of the private interests participate. Government employees, however, are reported to have already formed trade unions. Japan : Trade unionism in Japan revived under SCAP’s encouragement. On Questions of labour, one of the three points dealt with in the original directives under which SCAP was operating was to require the removal of legal hindrances to union organization. Thus on 4th Octo- ber, 1945, the SCAP issued the very important directive ordering the removal of restrictions on political and civil liberties, which was regarded as removing all hindrances to labour organization. This step, together with the dissolution on September 30, 1945, of the two wartime labour front organizations—Sangyo Hokoku Kai and Romu Kokoku Kai, was interpreted as granting full freedom to labour in organizational activities. The legal basis for the new status of labour in Japan was provided by the Labour Union Law passed by the Diet on December 21st, 1945. Much of the early activities of SCAP’s Labour Division was directed towards obtaining this important piece of legislation, and the draft of the law was approved by practically all shades of labour opinion. Although passed on 21st December, 1945, the Imperial Ordinance setting up procedural regulations was not promulgated until 27th Febru- ary, 1946, effective 1st March, 1946. The Labour Union Law, which made labour history in Japan, guarantees the right to organize and to bargain collectively and recognizes the right to strike ; laws and regulations infringing on the activities of labour unions are made invalid, and employers are forbidden to discharge workers for union activities ; the registration of labour unions is required ; the establishment of a system of Labour Relations Committees on national and ken levels provides for the mediation of disputes. Labour unions began to revive shortly after the occupation began. By the end of October 1945 unions that had announced plans to reor- ganize were the Japan’s Seamen’s Union, the Tokyo Transport Workers’ Union, the Tokyo Communications Workers’ Union and the Tokyo Gas Workers’ Union. Organizational activity was also noted among railway workers, fishermen, farmers and school teachers. Rapid progress in unionization was subsequently made. By February 1946, 675 unions

168 with a total membership of 496,000 had registered with the Welfare Ministry. By 1st May, 1946, the num ber of registered unions had increased to 7,357 with a membership of 2,691,500. By September 1st, 1946, 13,622 labour unions, representing 3,936,815 workers, had been registered under the Trade Union Law. The latest return for 31st Octo- ber, 1947, gives 25,896 unions with a total membership of 5,926,985 for Japan, which represents a monthly gain of 1·5 per cent for the period April to October 1947. (Tables 101 and 102) Table 101 L abour Unions and Member ship in Japan, A pr il -October, 1947 Membership End of No. of Unions Men Women Total April 21,332 4,112,147 1,293,766 5,445,493 May 21,963 4,208,073 1,311,433 5,529,086 June 22,722 4,296,960 1,332,462 5,639,002 July , 23,270 4,363,436 1,351,835 5,724,851 August 22,971 4,430,891 1,366,623 5,810,437 September 25,060 4,433,520 1,351,747 5,840,251 October 25,896 4,493,500 1,378,287 5,926,985 Table 102 L abour Unions and Member ship in Japan Classified by Industries, O ctober 31, 1947 Membership Industry No. of Unions Men Women Total Percentage Manufacturing 12,792 2,043,890 657,445 2,702,144 45·6 Mining 1,040 422,454 69,457 491,911 8·3 Transportation and Communication 3,635 951,810 197,901 1,203,196 20·3 Agriculture 1,349 104,237 25,036 129,273 2·2 Marine Products 143 24,598 2,801 27,399 0·4 Commerce 1,539 192,865 101,798 294,689 5·0 Education and Liberal Profes- sions 5,187 770,321 312,279 1,013,479 17·1 Other 211 53,325 11,570 64,895 1·1 All 25,896 4,493,500 1,387,287 5,926,986 Percentage 76·6 23·4 100·0 Along with the growth of local unions, three national federations have been formed. In August 1946 national federations were inaugu- rated by both wings of the labour movement. The National Federation of Labour Unions, claiming a membership of 955,000 workers, was closely affiliated with the Social Democratic Party. The more left-wing National Congress of Industrial Unions, claiming 1,630,000 workers, stressed its political independence, and adopted an eleven-point programme calling for a 40-hour week, an extensive social insurance system, and rehabilitation of the national economy. In October 1946, a third national federation—the All-Japan Council for Labour Unions —was organized under the auspices of the Democratic People’s League. It was formed so that the independent unions not affiliated with the

169 22 two major federations could obtain a voice in the nomination of candi- dates for the Central Labour Relations Committee. It had a comparatively small membership of 208 unions with about 300,000 workers. In 1947, there had been a growing rift between the two right-wing federations—the National Federation and the All-Japan Council—on the one hand, and the left-wing Congress on the other. This rift rendered attempts at merger of the three units almost futile, while accen- tuating their differences in economic policies and political ideologies. The Congress favoured merger around a programme of opposition to the Government’s wage stabilization and employment rationalization policies, while the Federation and the Council preferred modified trial co-operation with the Government programme. The Federation further predicted merger upon ‘ suppression of communist fractional activity within the NCIU.’ 25 Korea : South Korea to-day has two major labour unions—the Tai Han No Chong, an extreme rightist organization; and Chun Pyung, an extreme leftist organization. Both unions are young and inexperi- enced in dealing with labour matters and have many misconceptions concerning the functions of organized labour. The Tai Han No Chong has manifested an interest in learning healthy labour union practices and has been willing to co-operate with the Department of Labour of United States Army Military Government in Korea (USAMGIK). On the other hand, the Chun Pyung has failed to co-operate with the De- partment, has refused to appeal to the Mediation Board and also to participate in elections regarding the choice of proper bargaining agents.26 In December 1947, there were 193 reporting unions with 58,556 members in South Korea, according to reports by the provincial labour bureaux. Since there is a lack of complete labour bureau coverage in South Korea and since many unions prefer to keep their activities as secret as possible, this count is probably very incomplete. The federations, Tai Han No Chong and Chun Pyung, claim 3,680 unions with 998,561 members.27 Malayan Union and Singapore: During the period of Japanese occupation no opportunities existed for workers’ groups to organize or to act collectively, and it was not until the liberation of Malaya in late 1945 that trade unions on m odern lines began to be formed. During the early post-war period, incipient trade unions came into being, many of which went out of existence again directly a particular dispute was settled. Upon the resumption of civil government in April 1946 many groups continued to act and work collectively and to develop into large (General Labour) Unions which organized workers upon a geographical rather than upon an occupational or industrial basis. These unions enrolled not only individual members but also separate trade unions and covered such diverse occupations as trishaw and rickshaw 25 Summation of Non-military Activities in Japan, July, 1947, p. 187. 26 Summation of Economic Activities, August, 1947, p. 103. 27 South Korea Interim GovenGovennmentnment Activities, December, 1947, p. 92.

170 pullers, artisans, estate and tin mine workers, coffee shop-keepers, bar- bers, dance hostesses, government employees, clerical workers, etc., all of whom were under the nominal control of the General Labour Unions, which established a Pan-Malayan Headquarters in Singapore covering the whole of the Malayan Union and Singapore. A Registrar of Trade Unions was appointed on 1st July, 1946, from which date it was decided to operate the Trade Union Enactment of 1941, and all trade unions in the Malayan Union, already in existence on that date, were called upon to apply for registration within three months, and all other trade unions to apply within one month of their formation. Up to the end of 1946, 83 of the 276 applications from the workmen’s unions for registration had been registered, with a total membership of 67,452 ; while 154 applications had been approved but were awaiting printed rules, leaving 39 applications outstanding. The racial ratios represented by the applying unions were, approximately, Chinese 54 per cent, Indians 25 per cent, Malays 1 per cent, and other races 20 per cent. In addition, many trade unions now began to appear covering government employees. They were organized on a departmental basis, confined their membership to government staff, and banded together through a Joint Board of Secretaries to deal with matters of common interest. In Singapore, an Ordinance to provide for the registration and supervision of trade unions was introduced in 1941, but could not be effectively operated owing to the outbreak of the Japanese War. That Ordinance was made operative in May, 1946, and a Registrar of Trade Unions appointed to administer it. About 180 such unions gave notice of their intention to register, but at the end of 1946 only 11 unions, covering 16,759 members, had completed the necessary formalities to comply with the law. Nine-tenths of the membership, however, be- longed to the five unions : Government and Municipal Labour Union 4,372 ; Singapore Transport Vessel Workers’ Association, 3.500 ; Singa- pore Seamen’s Union, 2,297; Singapore Clerical and Administrative Workers’ Union, 2,235; and Chinese Seamen’s Union, Singapore Branch, 1,600. Philippines : According to the Philippine Commonwealth Act No. 213, a trade union registered under the Act acquires the right of collective bargaining with employers. Before the Japanese invasion there were about 340 registered trade unions, with a membership of about 90,000, and it is reported that there were about 190,000 workers in un- registered trade unions. During the war trade unions were outlawed, and after the liberation a fresh start had to be made. During the year of Japanese surrender there were only 19 unions, with a membership of 3,992. The first post-war year witnessed a rapid increase of union membership to 354,085, which was again reduced to 32,689 in 1947. The reduction was due mainly to a lowering in the membership of ‘miscellaneous’ unions from 313,984 to 4,704. (Table 103)

171 Table 103

N umber and Member ship of Regist er ed Labour Organizations in the Philippines, 1946-1947

1946 1947 Industry No. Unions Membership No. Unions Membership Steamship and stevedoring 45 17,540 61 9,608 Sugar centrals and refineries 5 2,435 11 3,455 Farming 4 2,530 29 3,319 Lumber yards and saw mills 6 1,610 14 3,187 Shipyards and drydocks —— 1 2,928 Coconuts and vegetable oils 14 4,741 1 1,525 Land transport 12 5,976 10 1,254 Other .. 27 11,270 70 7,413 Total .. 113 46,102 200 32,689 ( 200) (354,086)

Note : The figures in brackets refer to totals including number and membership of ' miscellaneous ’ unions.

VI. L abour Dis pu t e s The post-war period has witnessed the resurgence of organized labour movement, which carries with it the powerful weapon of resorting to strikes when a dispute between capital and labour cannot be settled by mediation, conciliation or arbitration. The principal cause of disputes has been the failure of wages to be adjusted to the rising cost of living, although in some countries, especially Japan, dismissal of surplus labour in plants laid idle by shortages of materials has also figured prominently as an important factor for disputes. Strikes are most effective in public utilities because their suspension of operation affects so vitally the public interest. In many countries, workers in these enterprises were denied the right of strike during wartime. Now that the war is over, strikes in these enterprises are permitted only after failure of efforts at mediation, and with prior notification to the local authorities. New legislation governing labour disputes has been passed in the major AFE countries, including China, Japan and India. In China, the Labour Disputes Settlement Act during the period of Civil Rebellion Suppression, passed on 28th October, 1947, provides for arbitration, and prohibits strikes, lockouts, or sabotage prior to arbitration by local arbitration committees. In Japan, certain categories of public servants are not allowed to strike, while public utility employees must appeal for mediation to the Labour Relations Committee, and cannot strike for 30 days after presentation of the appeal. In India, the Industrial Dis- putes Act of 1947 provides for conciliation and arbitration machinery, and prohibits strikes and lockouts pending conciliation and arbitration. Burma : In view of the undeveloped state of organized labour in pre-war Burma, it is not surprising that there were very few strikes.

172 During the period of Japanese invasion, strikes were forbidden. The rehabilitation, however, saw a great number of strikes, culminating with a police strike in September 1946, which approximately coincided with strikes by a great many other unions including railway, communications, and sawmill workers. The high cost of living, and inability of workers to maintain a customary pre-war standard of living on their wages, appear to have been the chief cause of the strikes The Directorate of Labour, according to latest reports for February 1948, seems to have served as a successful mediator between capital and labour. Successful negotiations were effected over such disputes as sawmills strike at Ahlone, Beedi Workers’ strike at Rangoon, etc. Through the intervention of Conciliation Officers of the Directorate, the demands for wage increases by the workers in three rice mills at Prome had been met by the employers satisfactorily, with the result that the threatened strike was averted. Many other labour troubles and strikes have also been successfully settled through the intervention of the Directorate.28 Ceylon : During the war, all important industries, including plantations, were declared essential services and workers were deprived of the right to strike. But these restrictions went with the war. In 1946, there were 87 strikes in estates and 70 in other establishments. The total man-days lost was quite heavy. In 1947, as far as information is yet available, the figures were as follows : 53 strikes in estates with 11,800 man-days lost and 52 strikes outside estates, with 199,657 man- days lost. A comprehensive Industrial Disputes Bill has been drafted which, when passed, will make provision for the registration of collective agreements, for conciliation and voluntary submission of disputes to arbitration, and for compulsory arbitration in public utility services. China : In 1947 the Social Affairs Ministry statistics showed 3,114 labour disputes, involving 84,048 establishments and 1,076,705 workers in the whole of China. Of these, 1,918 disputes (62 per cent), involving 32,195 establishments (38 per cent) and 594,249 workers (55 per cent), occurred in Shanghai, China’s principal industrial metropolis. (Table 104) Table 104

L abour Dis pu t e s in China, 1947

No. disputes No. workers Duration in No. est’ts involved involved days Cities 2.538 62,537 876,749 7,362 Shanghai 1,918 32,195 594,249 Chungking 186 5,856 71,102 1,831 Other 7a 434 24,485 211,398 5 531 Other parts 576 21,511 199,956 6,513 Total 3,114 84,048 1,076,705 13,875 Source : Chinese Ministry of Social Affairs. a Includes Nanking, Hangkow, Canton, Peiping, Tientsin. Tsinstao, Mukden. 28 Burma Weekly Bulletin, week ending 13th March, 1948, p. 12. 173 In 1946, there were in Shanghai 1,434 disputes involving 584,305 workers, in addition to 282 strikes involving 499,619 workers. During the first half of the year, there were 55 per cent of the total workers involved in disputes and 91 per cent of the total workers involved in strikes, due chiefly to the rapid increase in the cost of living and consequent demands for wage increase and improvement in treatment. During the second half of the year, Shan- ghai industries had to face increasing difficulties in meeting the rising costs of production, arising alike from wage increases and growing cost of raw materials and motive power. Labour had to share the effects of industrial depression, and the number and magnitude of disputes and strikes decreased. There were only 45 per cent of the total workers involved in strikes. Many of these disputes and strikes arose from differences over hiring and firing, rather than over wage increases. (Table 105)

Table 105

L abour Dis pu t e s , S trikes and Lockouts in S hanghai, 1946

Number W orkers involved Disputes Strikes and Disputes Strikes and Lockouts Lockouts

First half year 641 215 319,179 458,126 January 92 32 78,590 84,552 February 80 49 30,767 95,575 March 78 60 41,147 137,557 April 152 36 46,321 108,394 May 133 29 80,475 29,177 June 106 9 41,879 2,871

Second half year 793 67 265,126 41,493 July 118 4 28,469 882 August 142 5 53,985 10,620 September 143 12 57,665 8,450 October 147 10 37,562 4,484 November 115 9 23,243 6,606 December 128 27 64,202 10,451

Total 1,434 282 584,305 499,619

On 28th October, 1947, the Labour Disputes Settlement Act during the period of Civil Rebellion Suppression was passed by the Executive Yuan of the Chinese Government. This Act provides for the establishment of local arbitration committees under the Hsien (i.e. county) or Municipal Governments for the settlement of labour disputes in manufacturing, mining, transport and communication, and public utility enterprises. Each committee, to be composed of local government officials and representatives from local people’s council, chamber of commerce, general labour union, employers’ associations and trade unions, can make decisions which, if not observed by either party, shall be com- pulsorily enforced by local authorities.

174 Hong Kong : At the beginning of 1947 the labour position was generally satisfactory. Most of the larger employers of labour had concluded new agreements with their employees during 1946. As the year advanced, however, the economic factor once again became obtrusive, and necessitated further adjustment in the pay-scales of various grades of skilled workers, who had not hitherto benefitted from high post-war standard of living to the same extent as the semi-skilled and unskilled workers. There were in 1947 eight disputes resulting in six strikes over the demands for wage increases, of which the largest was called on 16th August by the Chinese Engineers’ Institute, the oldest craft union for this type of workers. Within a few days over 11,000 skilled men employed in the dockyards, Government services, the Green Island Cement Company and the Wharf Companies had ceased work. The strike lasted for 27 days, and it is estimated that 236,440 man-days were lost. The result was a compromise agreement reached at a final meeting of the two sides under the chairmanship of the Commissioner of Labour, by which skilled workmen represented by the Institute obtained an increase of 50 per cent in basic wages, which subsequently entailed a readjustment in wages of workers above and below the artisan level of approximately 20-30 per cent. The other 7 disputes of the year affected the employees of the following concerns : Peak Tramway Company, Hong Kong Rope Works, British Cigarette Company, eight taxi companies, several utility companies (electricity, tramway, gas, telephone, motor bus, ferry), Fisheries Wholesale Marketing Organization, and China Motor Bus Company. These disputes resulted in wage increases in two cases and no increase in four cases, with one case to be settled during the following year. In three cases the strikes were ended through enrollment of new staff to replace the strikers. India : The industrial conflict in India, as measured by the number of people involved and the number of working days lost, increased sharply during the first year of the Pacific War in 1942, due to sudden increase in production for war needs, progress of inflation, and rapid rise in the cost of living.29 It subsided for a while in 1943, but rose

Table 106

I ndustrial Dis pu t e s in India, 1939-46

No. people No. working Year No. disputes involved days lost 1939 406 409,189 4,992,795 1940 322 452,539 7,577,281 1941 359 291,054 3,330,503 1942 964 772,653 5,799,965 1943 716 525,088 2,342,287 1944 658 550,015 3,447,306 1945 820 747,530 4,054,499 1946 1,629 1,961,948 12,717,762 29 The Bombay cost of living index, which remained at 100 during 1937-39, rose to 106 in 1940 and 117 in 1941, b u t 148 in 1942

175 again with increasing magnitude until 1946, the latest year for which data are now available. Thus, as compared with the pre-war year 1941, the num ber of disputes in 1946 increased by 354 per cent, the num ber of people involved by 574 per cent, and the num ber of working days lost by 282 per cent. In 1946, there were 1,629 disputes, 1,962,000 people involved, and 12,720,000 working days lost. (Table 106) Cotton, woollen, silk, and jute industries led in 1946 with 1,051,231 people involved in the disputes, followed by 313,714 people in the jute mills, 119,684 people in railways, 101,024 in engineering, 29,025 in mines, and 347,270 in miscellaneous industries. 604 disputes or 37 per cent, were caused by demand related to wages, 79 to bonus, 280 to personal reasons, 130 to leave and hours, and 534 to others. Results obtained were wholly or partially successful in 552 (278 successful, 274 partially successful) disputes or 34 per cent, unsuccessful in 696 disputes or 43 per cent, and indefinite in 317 disputes or 23 per cent.30 On 1st April, 1947, the Industrial Disputes Act of 1947 became effective for the whole of British India, repealing the earlier Trade Disputes Act. Certain defects in the latter Act had been apparent by the 1931 Report of the Royal Commission on Labour in India, which had, inter alia, emphasized the need for extending conciliation facilities and the utility of works committee. The new Act, which applies to all industries, that is, any business, trade, undertaking, manufacture or calling for employers, as well as any calling, service, employment, handicraft or industrial occupation or association of workmen, provides conciliation and arbitration machinery. Settlements reached through conciliation procedures and arbitration awards are declared to be binding. Strikes and lockouts are prohibited pending conciliation or arbitration procedures. Public utility services are accorded special treatment. Strikes in breach of contracts by employees of public utility services are illegal if called in the absence of 14 days’ notice, given within the 6 weeks preceding the strike, or if called prior to the expiration of the date fixed in such notice. Lockouts are likewise illegal if declared by an employer carrying on a public utility service, in the absence of such notice or if engaged in prior to the expiration of such notice. In addition, an employer must advise the Government within five days of receiving or issuing notices pertaining to strikes or lockouts in public utility services.31 Indo-China : On account of labour shortage labour conflicts were reported to be non-existent in 1947. Demands for wage increases were presented several times in order to follow the rapid increase in living cost. In all cases a solution was found without difficulty, as the employers recognized the necessity of such an increase in wages. Japan: During the first year of occupation, labour disputes, while fairly numerous, were not serious and did not involve any important stoppages of production. Demands for wage increases were the primary cause of labour disputes during this post-war inflatory period when the cost of living was soaring tremendously. 30 Indian Labour Gazette, JulyJu l y 1947. 31 International Labour Review, August, 1947,1947, pp. 176-78.

176 Preliminary government figures record 1,411 labour disputes involving 1,152,000 workers during the period August 1945 through July 1946. However, only 297 disputes involving 102,630 workers resulted in actual stoppage of production. It was estimated that during this period man- days of work lost was less than one-tenth of 1 per cent. The basic Labour Union Law provided for a system of Labour Rela- tions Committees for the mediation of labour disputes. The law provided for two tripartite committees on the national level—the Central Labour Relations Committee and the Maritime Labour Relations Com- mittee—and for Labour Relations Committee in each ken. The machinery set up, however, was found to be inadequate, and on September 20th, 1946, the Labour Relations Adjustment Law was passed. This Law sets up conciliation, mediation, and arbitration machinery. Its most disputed parts refer to the restrictions on the right to strike. Police- men, firemen and prison guards are not permitted to form unions and are prohibited from striking. General government employees, likewise, cannot strike, although they have the right to organize. Transporta- tion, mail, telephone and telegraph, water supply, gas and electricity, and medical, sanitation and public health are designated as public utilities, whose workers must appeal for mediation to the Labour Relations Committees and cannot strike for 30 days after presentation of the appeal. In the fall of 1946 another wave of strike activities broke out, which was occasioned by plans for the mass dismissal of workers in order to reduce the labour force of the Government Railways, the Maritime Bureau, and other organizations. In September 1946 general strikes were called by both the railway workers and the seamen’s unions, in both of which the unions took care to avoid any actions ‘ inimical to the objectives of the Occupation’ by arranging for the continuation of transportation for the Occupation forces. This was in response to the SCAP order issued August 29th that ‘ strikes, walkouts or other work stoppages which are inimical to the objective of the military occupation are prohibited.’32 Since the spearhead of the ‘ labour offensive ’ was blunted in the much-publicized, abortive general strike by railway workers on 1st Feb- ruary of 1947, labour disputes in Japan during the rest of the year tended to mark time, although they reached their peak in September when 104 disputes involving 1,087,113 persons took place. (Table 107) In the first seven months of the year, particularly after the unsuccessful February railway strike, labour disputes failed to make any particular headway and the average number of participants per dispute slipped markedly. The general tendency featured a steady dimunition in the scale of the disputes, with disputants showing a lack of unified programmes. The number of disputes in April particularly slipped, apparently because labour union leaders were busily engaged in campaigning for the General Election which took place in that month. It should also

32 Stew art, John R. Notes on the Economic Aspects of the Allied Occupation of Japan, IPR, April, 1947.

177 23 be noted that the advent of the Katayama Cabinet in April, generally interpreted as the month for labour’s reflection, also served to curb the labour offensive. In and after July, however, labour disputes began rebounding, hit- ting the year’s high in September, as workers became impatient with Government measures relative to the relief of the food crisis, establishment of standard wages and industrial adjustment. Spurred by these grievances, systematic union activities became rampant throughout the country. Government workers’ unions united in pressing common demands to the Government for issuance of livelihood allowances, establishment of a minimum wage system and conclusion of a unified collective bargaining contract. In August, the All-Government Offices Liaison Council was formed by eight major Government workers unions, including the Government Railway Workers’ Union, the National Com- munications Workers’ Union, the National Government Workers’ Union. The revival of labour’s offensive was well manifested by the sharply increasing number of dispute participants in September and October.

Table 107 Labour Disputes in Japan, 1947

Month Disputes Participants Strikes, etc, Working Days Lost January 57 513,042 49 275,458 February 56 33,255 49 454,382 March 76 26,184 72 380,261 April 24 82,454 21 108,726 May 43 11,174 27 63,072 June 44 18,798 32 178,402 July 66 28,243 46 165,799 August 100 39,325 78 274,991 September 104 1,087,113 77 459,424 October 80 764,347 46 1,649,123 November 47 8,116 28 845,504 December

Total 697 2,612,051 525a 4,885,142 a Including 295 strikes, 109 sabotages, 49 lockouts, and 72 production management cases by workers. Source : The Ministry of Labour. The fact that demands for higher wages predominated, however, attests that the latest union movement has found its roots in the economic struggle under the inflationary spiral. Of the itemized list of demands in labour disputes during the first eleven months of 1947, 421 out of a total of 1,614 demands, or one fourth, were demands for higher wages, 181 for labour contracts, 123 for grant or increase of dismissal allowances, 102 for opposition to dismissal or demand for reinstatement, and the rest 787 for others.33 Malayan Union and Singapore : The upheaval which labour has experienced during the war years and the propaganda to which it has 33 ‘ Labour DisputesD isputes in 1947 in The Oriental Economist, FebruaryF eb ru ary 28th, 1948, pp. 153-155.

178 been subject have developed a sophistication and a consciousness of its political and economic significance wholly alien to pre-war labour in respect of which wages and conditions of employment conformed to a recognized standard prescribed by the Labour Department. Strikes on European-managed estates broke out almost as soon as managers returned in any number. The strike epidemic reached its peak during July and August, 1946, and showed small signs of abating by the end of the year. Demands put forward were many and varied including increase in wages, overtime rises, workmen’s compensation, sick pay, dismissal of unpopular staff, supply of clothing, amendment of hours of work, improvement of living conditions and free passages at fixed periods to country of origin. Labour in the Malayan Collieries at Batu Arang has been unsettled during 1946, as there have been con- tinual grievances, disputes, negotiations and two short strikes. This is the only coal mine in Malaya and its production is essential for serving the railways, Government Departments and the tin mining industry. It had during 1946 a labour force of 3,000 as compared with the pre-war total of 11,000, of whom 5,000 were employed in the collieries. Officers of the Labour Department have been successful in their work as investigators and conciliators with relation to claims and grievances, disputes, negotiations and two short strikes. This is the only coal mine in Malaya and its production is essential for serving the railways, Government Departments and the tin mining industry. It had during 1946 a labour force of 3,000 as compared with the pre-war total of 11,000, of whom 5,000 were employed in the collieries. Officers of the Labour Department had been successful, in their work as investigators and conciliators in relation to claims and grievances, and in many cases strike action was thus avoided. Negotiations had been instituted between employers and labourers and trade union leaders clarifying issues and ascertaining the nature of demands which were insufficiently defined. Labour Officers had also presided at meetings between parties in dispute and, in the discharge of these offices, their knowledge of the language and psychology of the people concerned had proved of particular value, having regard to the fact that the majority of the workers did not understand or speak English. However, in the spring of 1947, labour difficulties continued to be one of Malaya’s main problems. There were indications that the British Government was preparing for a trial of strength with the organized forces of immigrant labour, chiefly Chinese and Indian. Its declared policy even before the war had been to foster the growth of trade unionism in the western sense of that term, but to divorce it from poli- tics. The acceptance of Chinese leadership by unions composed of Indian workers was then a conspicuous sign that the former sharp divi- sions between the Chinese and the Indian communities—so advantageous to large employers—was breaking down. In Singapore, labour generally has been unsettled since the resumption of civil administration on the 1st April, 1946, due chiefly to the demands for wage adjustment to cost of living rise.

179 Despite lack of union registration, demands for improvement of conditions were frequently put forward by bodies of workmen acting as trade unions and very often resulted in strikes. Altogether there were 47 strikes during 1946 resulting from trade disputes. When the Labour Department becomes aware of the existence of a dispute encouragement is given to both parties to discuss the points in dispute and to settle the matter themselves. Usually one or other of the parties asks for assistance from the Department. If the parties to a dispute cannot settle their differences by direct negotiation in this way they may, if they both agree, place the dispute before an Arbitra- tion Board or before an Industrial Court. Under the Industrial Court Ordinance power is given to the Commissioner for Labour or to the Governor to set up arbitration of various kinds. Local workmen are never eager to resort to these formal methods of arbitration, but prefer to reach agreement through the assistance of the Labour Department or through the mediation of community leaders. Only once in the year did both parties to a dispute agree to refer to an Arbitration Board and in that case the matter was finally settled before the Board was appointed. Philippines: Labour disputes disappeared during the period of Japanese occupation, but revived soon after victory. During the last four months of 1945, there were 5 disputes, but by 1946 the num ber of disputes increased to 69, affecting 69 establishments and involving 45,537 workers. 68 of these disputes were initiated by unionists; 66 were caused by demands over wages. 30 disputes were adjusted in favour of labourers, and 3 in favour of employers, with the remaining 36 disputes being settled by the Court of Industrial Relations. (Table 108) All these tend to show the growing strength of labour movement on the one hand, and increasing number of disputes arising from demand for adjustment of wages to the increasing cost of living on the other.

Table 108

L abour Dis pu t e s in the Philippines, 1941-46 1941 1945 1946 (Sept. 1-Dec. 31) Total 67 5 69 Disputes initiated by Unionist 62 5 68 Non-unionist 5 1 Number of Establishments 69 5 69 Workers involved 9,542 623 45,537 Causes Wages 41 4 66 Others 26 1 3 Adjustments In favour of Labourers 50 2 30 In favour of Employers 2 3 Referred to Courta 15 3 36

a T he Court of Industrial Relations was created in 1937 to decide cases which the Department of Labour fails to settle amicably.

180 C hapter IX

CURRENCY AND BANKING

I. G ener al Feat ur es It is not easy to draw a general picture of currency and banking for the whole region, because of the difference in conditions in different parts and lack of adequate information from certain parts. However, the salient features may be summed up as follows : 1. Inflationary pressure has continued in varying degrees in nearly all countries. China and to a lesser extent Japan are still in the grip of hyper-inflation. In most of the other countries, inflationary pressure has considerably decreased, but not quite died down. 2. There has been a drift from automatic to managed currency systems. China and Japan of course have already managed currencies, but exchange standards obtaining in India, Siam, the Philippines and other places have tended to be modified in varying degrees. These countries are apparently feeling that exchange standards with 100 per cent reserves do not give them full freedom to expand or contract the currency according to their own needs. The movement thus reflects the new attitude to money, namely, that it is a tool to be freely used for promoting full employment and maximum production. The Philippines have already decided to drop the existing dollar exchange standard and adopt a managed currency, managed by a new central bank. In India also the sterling link was de jure, if not de facto, given up by the amendment of the Reserve Bank of India Act in 1947, which freed the Bank from unlimited obligation to convert rupees and sterling. It will now, under the Government’s direction and consistently with the country’s obligations to the International Monetary Fund, buy and sell all foreign currencies at rates to be specified from time to time. In Siam and Indo-China also, exchange rates had to be revised, which again perhaps indicates that the sanctity of fixed exchange rates, a feature of exchange standards, is breaking down. The establishment of central banks or the move towards their establishment may also be interpreted as a step towards adoption of managed currencies. Most central banks to-day have power to expand or contract currency at their discretion. This power is almost becoming a part of the definition of a central bank. In the ECAFE region also, new central banks have been or are tending to be established. Siam established one in 1944 and Burma one in 1947. The Ceylon Government also has declared its intention of establishing one in the near future. The Philippines are on the threshold of establishing one. Indo-China, although she is not contemplating any central bank yet, is planning to introduce a slight measure of “ management ” in her existing exchange standard. The powers and functions of these central banks, established or proposed, vary, and they do not or will not in every case mean the introduction of a managed currency.

181 Indeed, the Burma bank, for the time being at least, will not be a bank of issue at all. The issue which will continue to be on the basis of rigid convertibility with sterling, will remain in the hands of the existing Currency Board which may almost be described as a branch of the Treasury. But that in general the establishment of central banks implies an assault on the prevailing exchange standards, can hardly be doubted. The introduction of trade and exchange controls has, of course, already modified the rigidity of exchange standards to an appreciable extent, but quite apart from that, the trend seems to be to replace exchange standards by managed currency systems. Needless to say, the movement has been possible largely as the result of greater political freedom of the countries concerned. Political dependency almost automatically meant exchange standards. With larger political powers, it is now possible for these countries to free their currencies from rigid links with the Metropolitan currencies. The departure also therefore signals a weakening of existing currency areas, such as the Sterling Area and the French Monetary Area. 3. There has been a movement towards (a) greater control and co-ordination of credit, and (b) unification of currency and credit administration. This movement is not quite the same as the movement for the adoption of managed currencies. It is more specifically a movement for central banks, with or without managed currencies. A central bank can of course be created with full powers to manage the supply of money, but it can also be created for the more modest object of (a) guiding, assisting and controlling the other banks, and (b) issuing notes according to rigidly laid down rules. Hitherto, in most ECAFE countries, banking has been uncontrolled and decentralized and note issue has been in the hands of the government. This lack of control over credit and divorce between currency and credit is now sought to be remedied by establishing new central banks or by giving greater powers to the existing ones. To an extent, exchange control has necessitated this centralization, but it would have in any case come. In Burma, Siam, Philippines and Ceylon, as already stated, central banks have been established or planned. In India the Reserve Bank has been given greater powers. The Burma Central Bank however, as already mentioned, has no control over currency. In this respect the proposed Phi- lippine Central Bank, plans for the establishment of which were per- fected during the year, will be a landmark. It will have wide and unified control of both currency (including coins) and credit. Its large powers and functions are a contrast to the modest powers and functions given to the Burma Bank. 4. There has been a considerable expansion of banking. The number of banks and the volume of funds which they handle, have both increased. The increase of course has mainly been due to inflation and the rise in money incomes. As inflation stops or reverses itself, bank deposits will probably tend to fall. The process may impose a great strain on the weaker banks. It is partly because of this and partly 182 because of civil disturbances and other causes that banking in India, for instance, received in 1947 a slight setback. It is hardly necessary to point out that banking progress generated by inflation is more apparent than real. If 1947 bank deposits were corrected or deflated by the rise in prices, they would for most countries, be found to be not higher than the 1939 deposits. For China, they would be found to be a mere fraction. This shows that in real terms, the part played by banks in the economy has diminished, rather than increased. 5. There has been a tendency for banking to be more and more nationalized, both in the sense of the State starting or taking over banking institutions and in the sense of local banks acquiring more and more of the country’s banking business relatively to foreign-owned banks. The new central banks in Siam and Burma are both government banks, and so is going to be the proposed central bank in the Philippines. In India, the government has decided to nationalize not only the existing central bank (the Reserve Bank of India) but also the leading commercial bank (the Imperial Bank of India). In China, the government banks are increasingly dominating the banking scene.

II. Inflation

Of these five features, the most important certainly has been the continuation of inflation. Some special observations may therefore be made on it. During the war, the financial machine in all AFE countries was more or less ruthlessly used for war purposes. Budget deficits, created by heavy military expenditure, were financed mainly by inflating currency. In some countries, for instance, India and Ceylon, the expenditure was incurred partly on behalf of Allied governments and consequently described as ‘ recoverable.’ But the internal effect was the same. The expenditure was financed by newly printed notes, for which Allied governments credited the country with foreign balances. The prevailing exchange standards in these countries proved very handy for this operation. Thus arose the so-called sterling balances to the credit of these countries. In the same fashion, Indo-China accumulated large franc balances. These balances have not, however, proved to be quite so freely and easily ' recoverable ’ (or convertible into goods and other foreign currencies) as was originally expected. In addition to such ‘ recoverable ’ expenditure, each country also of course spent very large sums on its own account. The combined budget deficit on domestic and ‘ recoverable ’ accounts grew cumulatively into very large figures over the period of the war and as its counterpart, took currency expansion to new heights. As far as possible non-inflationary war finance was also used, but its scope was limited. The main reliance had to be placed on currency inflation. Inflation of legal tender currency naturally accompanied and induced inflation of credit. The total money supply (notes, coins and deposits) thus enormously increased, and with it prices. In China the process reached proportions unique and unprece- dented in history.

183 During the post-war period, this inflationary process rapidly declined and in 1947 was generally tending to come to a halt, except in China and Japan. In the Philippines, Ceylon and Indo-China there has been a slight decline in circulation from the 1945 level. But speaking generally, the inflationary pressure has not quite died down and still persists in various degrees in most of the countries. While budget deficits, high rates of private investments or spendings of accumulated liquid assets are increasing effective monetary demand, supplies of consumer goods are either not increasing at all or increasing at a much slower rate. In certain countries, for instance India, the production slow-down has assumed the proportions of a production crisis. It will be a mistake to suppose that inflationary pressure is coming exclusively from the demand side, that is to say, from the growth of money. To some extent, it is being produced by setbacks in production and imports, caused by various factors. In Japan, the impetus has come mainly from the fall in production. The disturbing effects of this inflationary pressure on the economy, and how it hampers stability and development and hits particularly wage earners, need hardly be discussed here. The precise factors that are still creating inflationary pressure are not of course quite the same in every country. In China, budget deficits due to the civil war have been the main cause. “ The Chinese Government spends more on the civil war than on all other purposes taken together.”1 In Indonesia and Indo-China also internal warfare has still been going on. Although war against the Axis ended in Sep- tember 1945, these two countries have not seen peace yet. In India also, budget deficit has been the main factor, but the deficit has arisen largely because of civil disturbances and colossal refugee movements. In certain countries, for instance Malaya and Ceylon, heavy subsidization of food has made great demands on government revenues. Expenditure on salary and wage increases and on rehabilitation and reconstruction programmes are two general factors which have been present in varying degrees nearly everywhere. Development can, of course, be financed by non-inflationary methods also, such as foreign loans, foreign balances, internal loans (of genuine savings and not of inflated bank credits) and taxation. But their scope is limited. For countries like India and Ceylon which accumulated fairly large sterling balances during the war, the partial inconvertibility and blocking of the balances has reduced their usefulness as a source of development finance considerably. The amount that can be raised by internal loans and taxes in countries where incomes mostly border on the subsistence level, is also very limited. Direct taxation again can do little to solve the problem of inflation of food prices, because taxation of higher incomes which it implies, hardly reduces the demand for food. Development in these countries thus can hardly be adequately financed by non-inflationary methods. The Bombay Plan for India, it will be recalled, openly

1 Economic Report, Salient Features of the World Economic Situation, 1945-47, U nited Nations D epartm ent of Economic Affairs, Lake Success, 1948, p. 87. 184 provides for partial use of created money. In this respect, undeveloped countries seem to be faced with a choice between two evils, either to remain undeveloped or develop with some use of inflationary finance. ment goods has also been a general factor. This demand was for one Spending of accumulated liquid savings on consumption and invest- reason or another pent-up during the war, but after the war with the relaxation of controls on expenditure, it is exercising its influence on prices. Controls on private investment have also been largely relaxed and the rate of such investment has increased. The cheap money policy followed in most countries has helped to stimulate this investment. In India in 1947 the rise in private investment is estimated to have more than counterbalancetd the fall in government expenditure.2 Inflation can of course be checked by monetary and fiscal measures, such as reduction in government expenditure, surplus budgeting, savings campaigns (to drain off and impound purchasing power), and monetary reforms designed (a) to prevent easy expansion of currency, (b) to freeze or immobilize cash balances, (c) to restore Confidence in money. But failing such measures, direct control of investment and of price and distribution of essential consumption goods may be helpful. These are however, not only administratively difficult to enforce, but may to some extent even distort the production pattern. Expenditure on essential goods being controlled, incomes tend to be largely spent on non-essential goods, whose prices consequently increase. As a result, investment tends to flow into these high-price channels. Unless the distribution of investment is rigidly controlled (which is difficult), production takes to wrong lines and genuine recovery is delayed. These consequences of ‘ suppressed inflation ’ are visible in many countries. Control of investment and consumption has been and still is carried out in varying degrees in most AFE countries. But it has not done much to check inflation or its evils. So far. no solution has also been possible through an increase of imports or of home production. Imports, although they have tended to exceed exports, have still, absolutely speaking, remained low partly because of foreign exchange shortage and partly because of slow recovery of production in exporting countries. Although inflation in most countries has now stopped or considerably weakened, a legacy of problems left behind by past inflation is still hampering recovery. For instance, income readjustments are yet incomplete. In particular, wages of large sections of labourers are still lagging behind prices, with the result that labour discontent is hampering production. Secondly, as mentioned above, prices of essentials being chained down, resources are tending to move into the production of non-essentials. Thirdly, since in most cases the internal price-cost structure has risen higher than in countries with which trade is done, the currencies, most of which have remained pegged at pre-war levels, have become over-valued in exchange. This is encouraging imports and discouraging exports. It is well to add, however, that it is not the only, 2Anjaria2 Anjaria and PintoPinto: : 'SurveySurvey of the Economy of India, International Monetary Fund, 1948.

185 24 nor perhaps the most important factor causing an import surplus pressure on these economies. But it has certainly been a major factor. Inflation normally reflects itself in higher prices and lower rates of exchange. The rise in prices, however, has been to some extent kept in check by price controls and rationing. Still, the rise has generally been high. Free (or rather black market) prices have of course risen much higher. Exchange, on the other hand, has been more rigidly controlled.. The demand for foreign exchange has been artificially kept down by import and exchange control. Export of capital has generally been banned or strictly limited. Foreign exchange proceeds from exports, on the other hand, have been more or less commandeered. It is only by these means that it has been possible to maintain exchange standard currencies at their pre-war parities in countries like India, Burma and Ceylon. No devaluation has been necessary, although it is not sure if without some measure of devaluation these countries will be able to achieve complete and lasting equilibrium in their balance of payments. In China, because of the extraordinary speed and volume of inflation, exchange rates have defied stabilization. There has been, since the beginning of the war, a series of devaluations. In addition, the government has been compelled to create two official rates of exchange, one for very limited transactions and the other (a much higher one) for all other permitted transactions. Since even the second rate has been much lower than what demand and supply of foreign exchange would justify, a third illegal rate, the black market rate, has also been in existence. In the place of a single rate thus has evolved a triple rate exchange system. And all three rates have, as inflation has proceeded, been going downwards steadily. It should also be added that the supply of foreign exchange in certain countries has been kept up by (a) foreign loans and gifts, and (b) continuing foreign military expenditures. A good example is the Philip- pines where considerable receipts are coming from this source. When this flow dries up, the balance of payments position will worsen, strain- ing the exchange rate. In Siam and Indo-China also the old parities have been lowered. In Indo-China the devaluation of the franc, to which the piastre is linked, has meant an additional dose of devaluation for the piastre in terms of sterling and the dollar. The fact that, in most countries, a fairly high black market rate still exists, obviously shows that the official rates do not quite equalize demand and supply. An interesting phenomenon in China has been that the fall in exchange has lagged considerably behind the fall in the internal value of the currency (that is, rise in prices). Between 1939 and 1947 prices have risen some 50,000 times while exchange (official) has fallen some 4,000 times. The explanation, in the first place, is that the official rates are not the true rates. They are much below the free market rates. Secondly, even illegal free market rates have lagged behind what relative purchasing powers would suggest because of difficulties of obtaining foreign exchange and foreign goods. It is not only difficult to obtain import and exchange permits, but also to get down goods from

186 abroad because of slow production recovery in exporting countries, transport bottlenecks, etc. This keeps down the demand for foreign currency.3 Inflation normally should produce full employment. But the fact that unemployment still more or less persists in nearly all countries or is even tending to increase in some, is paradoxical. It seems to be explained by three reasons. First, the scarcity of technological and mana- gerial ability is preventing industry to expand fully and employ the due quota of labour. The demand for labour is there latent, but the scarcity of co-operating factors is obstructing its full expression. This is, almost by hypothesis, to be expected in ‘ undeveloped ’ countries. Secondly, a part of this unemployment is normal frictional unemployment. It will always remain. Thirdly, employment in export (foreign- market) industries, which constitutes a large sector of the whole field of employment in these countries, is normally less sensitive to injections of money into the economy than home-market industries. The immediate effect of such an injection is to increase the demand for imports. The demand for exports only rises when and insofar as the foreigner uses his higher purchasing power to buy the country’s exports. Interest rates have generally been low. The supply of money-to- lend has been ample because of issue of more currency or because of short period government borrowing from banks which has increased their credit-creating powers. On the other hand, the demand for loans has generally been low because of uncertainty about the future, restrictions on capital investments, difficulties of obtaining capital goods and other factors. Governments have often maintained the prices of their bonds by buying in the market. The main object of this cheap money policy has been of course to facilitate large-scale government borrowing. As a stimulant for private investment, its wisdom at a time of more or less full employment and low business confidence, seems debatable. Many believe that it has only been adding to the inflationary pressure. Strong criticism, for instance, of the policy has been voiced in India. It is well to add that in China, due to the fast pace of inflation, it has been impossible to keep interest rates too low. While for instance, in India the discount rate for three months Treasury bills has been between ·40 and ·50 per cent, in China it has been generally above 20 per cent. Interest offered on long-period bonds in India has been in the region of 3 per cent, while the three-year Chinese Treasury notes issued in April, 1947 bore 20 per cent.4 This is only to be expected. At a time of fast rising prices, it pays to borrow money at high rates because goods bought with borrowed money go up in value very fast. On the other hand, the lender insists on compensation for the shrinkage of purchasing power of his principal when repaid. Interest rates in China, though high, have however not caught up with the rise in prices. Consequently, the money market has been chronically tight. 3 Wu,W u, C h i-i-y y u e n : ·Currency Currency ExchangeExchange andand PricesPrices inin WartimeWartime China,China, ChinaChina IPR,DPR, 1945. 4 U.K. Trade Mission to China Report, 1947.

187 III. C ountry Summar ies So much for an over-all view. Brief notes on individual countries, within limits of information available, are given below:

Burma Two important developments took place in Burma in 1947. (i) On 1st April, Burma established a separate currency of her own, giving up the use of Indian currency. The new Burma rupee was linked to sterling at 1/6d. Burma thus continued the exchange standard with the same rate of exchange as before, only there was now a direct link with sterling instead of a link through India. The issue and redemption of notes was vested in a Currency Board of five members appointed by the Government. On 1st April, the Reserve Bank of India which issued notes and acted otherwise as a central bank, terminated its operations in Burma. To take over some of its central banking functions pending the establishment of a central bank, government established a Central Treasury to accept deposits from other banks, to make payments on behalf of the government and to provide facilities for remittance to places outside Rangoon. (ii) Necessary legislation to create a central bank was passed in October. The bank, called the Union Bank of Burma, was actually established in January 1948. As it now stands, it is not a full-fledged central bank, but probably will be developed into one later. It is banker to the Government and the other banks, but it is not in charge of the note issue. That function remains in the hands of the Currency Board. The only provision made is that ' without prejudice to the authority of the Currency Board, the bank may also act as the Board’s agent ’ (Section VIII of the Act). The bank, incidentally, is a government bank, all the capital being provided by the Government, and all its seven directors being appointed by it. It is also reported that ‘ it will undertake certain forms of commercial banking,’5 The establishment of the bank presumably ends the pro-tem central banking functions of the Treasury. Burma saw very heavy inflation when she was under Japanese occupation. After liberation, the Japanese currency issues were re- pudiated and this brought down prices considerably. Since then, however, inflationary pressure has again reappeared and prices in 1947 were higher than in 1946. Ceylon Inflation on a large scale took place in Ceylon during the war. The Ceylon rupee which is linked at par to the Indian rupee which in turn is linked to sterling at 1/6d., could be very easily inflated against deposit of sterling in London and deposit of rupees in India. Between 1939 and 1945 Ceylon currency was expanded from Rs. 53,000,000 to Rs. 449,000,000 and as its counterpart, sterling and rupee balances of 5 U.S. Foreign Commerce Weekly, December 27th, 1947.

188 Ceylon increased from Rs. 228 million to Rs. 1,138 million. Needless to say that the reason for the inflation was financing of Allied war expenditure in Ceylon. With the end of the war, this inflationary process stopped. The circulation appreciably contracted in 1946, but again increased slightly in 1947. This heavy inflation, coupled with the fall in the supply of consumer goods, locally produced and imported, shot prices up considerably. No general price index is prepared in Ceylon, but the indices of export and import prices and of cost of living, all record this increase. Actually, the cost of living index understates the rise, being based on controlled prices. The rise in prices continued, though at a lower rate, in 1947, not so much because of the expansion of currency as perhaps because of the release of pent-up demand. Post-war budgets have been surplus budgets, but the surpluses have not done much to syphon off purchasing power because (a) they have been small in size, and (b) a part of them has gone back into circulation through various payments not shown in the budget, such as the advance account in food subsidization. Since the currency is on an exchange standard, exchange has remained unchanged. The demand for foreign exchange has of course been higher than the supply, because of inflation (which has made the internal value of the currency lower than its external value), release of pent-up demand, worsening of the terms of trade and other factors. But the demand has been kept in check by strict import and exchange control. In 1947 this control was further tightened as a result of the dollar crisis. Consequently no black market in foreign exchange has been allowed to develop. Banking in Ceylon is decentralized and uncontrolled and mainly in foreign hands. Currency expansion and rise in money incomes have naturally produced an expansion of banking. A notable event in 1947 was the announcement by the Government of its intention to establish a central bank which would take over from the government-appointed Currency Board the note issue and also exercise general central banking functions. Details, however, have not yet been drawn up.

Table 109

F inancial and Price Statistics of C eyl on, 1939-47 Dec. 1939 Dec. 1945 Dec. 1946 Dec. 1947 Total issue of currency .. 53·2 449·5 392·8 411·8 (Rs. million) Bank deposits (Rs. million) Demand .. 123·7 460·8 483·1 468·0 Total .. 162·7 524·4 544·1 531·5 Cost of living .. 104 221 229 252 (1938-39=100) Import price index .. 102 404 423 488 (1934-38=100) Source : Ceylon Economic Survey, 1947, ECAFE Secretariat, 1948.

189 China The dominating event in China has been inflation. China changed from a silver to a paper standard in 1935. The new currency (Fapi), issued by the four government banks, was backed by ample reserves and maintained its exchange value of 1 yuan (also called the Chinese National Dollar,) to 1/2½ d. For one and a half years after war began with Japan, inflation was moderate, but thereafter it increased very fast. The reason for the inflation was, of course, war expenditure which could not be financed in any other way. In July 1942, the note issue was vested solely in the hands of the Central Bank of China. No statistics of note issue have been published, but the following index by the statistician, Ministry of Finance, is available.6

Table 110

I ndex of Note Cir c u l a t io n in China, 1937-45 (End of June 1937=100) End of End of 1937 117 1942 2,442 1938 .. 164 1943 5,357 1939 305 1944 13,464 1940 560 1945 (Jan.) 28,289 1941 1,076 Since 1945 the increase has been even faster. In the face of such inflation, exchange rates naturally fell. Heroic attempts have, of course, been made by exchange and trade controls to keep the demand for foreign exchange equal to the supply and prevent changes in rates, but without much success. To make a long story short, two developments took place. (1) As inflation progressed, the exchange rate (or rates)7 fixed by the Government had to be revised from time to time, in other words, the yuan was progressively devalued. (2) In the place of one single rate, there evolved in the course of time, three. Side by side with the official rate a free market rate developed early, because (a) the official rate (yuan per pound sterling or U.S. $) was too low (that is to say, it undervalued foreign currency and overvalued the yuan) and (b) government could not control all demand and supply of foreign exchange. At certain stages the government recognized the open market rate and tried to keep it at desired levels (this function being given to an Exchange Equalization Fund), at others it tried to ban and suppress it. There thus emerged two permitted rates, (1) the ‘ official ’ which was very low (in yuan per U.S. $) and (2) the ' open rate ’ which was higher. Exchange at the ‘ official ’ rate was given for very limited purposes. But since both rates were lower than what supply and demand justified, a third rate, the black market rate, also developed. In November 1946, import control was further severely tightened. 6 Economic Survey of China for 1947, ECAFE. Secretariat, April,A pril, 1948. 7 Up to 1940 rates were linked to tthehe pound sterling and thereafter to the U.S.$.

190 The main developments in this connection in 1947 have been as follows : On February 17th, (a) the ‘ official rate ’ was changed from 3,350 to 12,000 yuan per U. S. dollar, (b) the free market in foreign exchange which had been tolerated by the Government was banned under severe penalties. The new rate was actually higher than the prevailing free market rate, in other words, it undervalued the yuan, instead of overvaluing it. This was done deliberately in order to step up exports and for a time it showed results. The black market in exchange disappeared and exports expanded rapidly. The export-import ratio increased from 37·7 per cent in February to 79·6 per cent in May.8 Unfortunately, continuing inflation soon made the new official rate (12,000 yuan) also unrealistic and out-of-date and a black market rate increasingly outpacing the official rate again developed. Consequently on August 17th, 1947, new foreign exchange and trade regulations were introduced and a double exchange rate was set up. (a) The official rate was retained at 12,000 yuan per dollar, but it was to be used for a very limited range of authorized imports, such as cotton, rice, wheat and wheat flour, coal, coke and fertilizers, (b) Side by side with the official rate, an “ open ” rate was established (or rather re-established). This rate was to be fixed by the Stabilization Board appointed by the Central Bank and it was to be altered from time to time according to market conditions. It was to be used for all other licensed imports and approved financial transactions. (c) The general rigid licencing and control of imports introduced in November 1946 was retained. The first open market rate fixed under the new scheme on August 17th, namely 39,000 yuan per dollar, more or less approached the prevailing black market quotations. But later, although it was revised upwards 11 times during the year, it deviated increasingly from them. At the end of December 1947, the open market rate was 90,000 and the black market rate 145,000 yuan. Since then, it may be added both have climbed much higher. Two features about inflation in China, namely (1) that the fall in exchange has lagged behind the rise in prices, and (2) that interest rates have been high, have already been discussed under ‘ Inflation ’. Regarding interest rates, it is well to add that although they have risen high, they have not caught up with the rise in prices. Actually, in terms of real goods, interest rates have been negative.9 Another interesting point is that the rise in prices has been pro- portionately much greater than the rise in money supply. This is largely due to increase in velocity of circulation.10 The fall in production has also contributed to it to some extent. 8 C. C. Liang, Development of Trade and Exchange Control in ChinaChina,, IMF, 1947. Economic Survey of China, 1947. 9 Chi-yuen Wu, Currency, Exchange and Prices in Wartime China, China IPR, 1945. 10 H. D. Fong, Prices and Money, China Economist, A pril 5th, 1948. 191 In banking, three main developments have taken place during and after the war. (1) The banking system has become more centralized, both by the organization of the Joint Board of Four Government Banks and concentration of note issue and other powers in the central bank. In 1947 this tendency was strengthened. (2) The importance of the government banks in the banking system has enormously increased. In 1946 the total deposits of the government banks were five and a half times that of the commercial and savings banks.11 (3) There has been a great expansion of banking both in number and in the size of their business. This, of course, as already explained, is mainly a consequence of inflation. Actually, if account is taken of the rise in prices, business has fallen to a mere fraction of the prewar amount. Table 111 F in a n c ia l and Price Statistics of China, 1939-47 End of Year 1939 1945 1946 1947 Note circulationa 1,600 (1936) — 35,000,000 (yuan million) 2,300 (1938) Commercial bank depositsa 7,924 697,043 5,985,188 30,936,534 (yuan million) Prices—wholesale indexb 214 158,000 608,764 10,035,911 (1937=100) Exchange ratec— (yuan per U.S.$) official 3·33 3,350 12,000 open market — ——90,000 black market 12·96 1,350 6,450 145,000 Wages—monthly earnings 52 14,028 65,073 — (yuan) a Economic Survey of China for 1947, ECAFE Secretariat, 1948. b United Nations Monthly Bulletin of Statistics, February, 1948. c International Financial Statistics, IMF, February, 1948. India (including Pakistan) Unless otherwise stated, India here includes Pakistan. Pakistan was separated from India on 15th August, 1947, but continued the same monetary system, using the same central bank (The Reserve Bank of India). Under existing arrangements, the Indian rupee will remain the monetary unit till the Pakistan legislature decides otherwise. Indian notes will be legal tender till September 30th, 1948, and Indian coins till one year after the introduction of Pakistan coins. After April 1st, 1948, the Reserve Bank may issue Pakistan banknotes. The main developments in India in 1947 were as follows : (1) The automatic sterling exchange standard was de jure, if not de facto, given up in April 1947. The Reserve Bank was released from 11 Economic Survey of China for 1947,—ECAFE Secretariat.

192 its obligation to buy and sell sterling at the fixed rate of l/6d. per rupee and empowered to buy and sell other foreign exchanges also at rates consistent with India’s obligations to the Monetary Fund. In the words of the Finance Member, “ it signalized the emergence of the rupee as an independent currency ." In practice, however, sterling convertibility has been (subject to exchange control) fully maintained. The par value of the rupee (as notified to the Monteary Fund) also remains at 30· 225 U.S. cents that is, l/6d. per rupee. An interesting currency event was the issue of pure nickel coins to replace the existing half-silver coins. It ended the long and historical association of the rupee with silver. (2) Inflation, which continued unabated during and after the war, was for the first time halted. The total supply of money during the war had greatly increased, the note issue rising six times and demand deposits four and a half times.12 In 1947, the note circulation after reaching an all-time high of Rs. 12,538 million early in the year, gradually declined. Bank deposits still continued to expand, but at a lower pace. The total money supply (notes, coins and deposits) was, at the end of 1947, practically the same as at the end of 1946. Wartime inflation in India was, of course, mainly due to (a) the Government’s own war expenditure, and (b) expenditure ‘ recoverable ’ from Allied Powers against which sterling balances were accumulated. The peak of these balances (Rs. 17,330 million) was reached on April 5th, 1946. On December 12th, 1947, the balances stood at Rs. 15,200 million.13 These balances represent the entire foreign exchange reserves of India. Prices in the second half of the year fell for some time, but rose later. Price indices were based on control prices. Free market prices were appreciably higher. Exchange remained steady, thanks largely to tightening exchange and trade control. By purchasing power parities, the rupee in November, 1947 stood 51 per cent overvalued in term s of the pound sterling.14 (3) The pace of banking expansion, which continued high during the war, slowed down considerably. An interesting feature was that the growth of time deposits was greater than that of demand deposits, indicating apparently a decline in liquidity preference of the depositors. Taking 1938-39 as 100, the indices of the Scheduled banks moved as follows":15 I ndices of Bank Deposits Demand Time Year Deposits Deposits Total 1945-46 503·6 240·6 384·3 1946-47 558·2 299·6 440·9 On account of civil disturbances, the banks had to keep high cash reserves. The average cash ratio was as high as 14·40 per cent.16 12 Anjaria and Pinto, op. cit. 13 Indian Trade Bulletin, Ja n u ary 1, 1948. 14 Anjaria and Pinto, op. cit. 15 Report on Currency and Finance, 1946-47, Reserve Bank of India.

193 25 it is yet too early to say how banking will finally divide itself between India and Pakistan, but the position on December 5th, was as follows :16

Table 112 F in a n c ia l Po s it io n of Banks in India and P akistan, 1947 (Rs. millions)

t n e c r Time Cash e Per ce n t of w h o l e P Balances Per cent of whole of of whole of Demand Per cent of whole of Liabilities Advances Liabilities India 6,562 89 3,123 91 364 90 3,650 90 Pakistan 783 11 302 94010 388 10 It will be seen that in almost all cases the proportion between India and Pakistan is 9 to 1. (4) The Reserve Bank’s powers of inspection and control of other banks were strengthened. (5) Government announced its decision to nationalize the Reserve Bank, “ the time and manner of effecting the change ” to quote the Finance Member, “ being a matter of separate consideration in due course.” It may be added that the Government has also decided to nationalize the Imperial Bank of India, the most important commercial bank. The principal statistics are tabled below:

Table 113 F in a n c ia l and Price Statistics or I ndia, 1939-47 (End of Year Statistics) 1939 1945 1946 1947 Money supply : (Rs. billion) Currency 3·4 13·1 13·4 13·4 Deposit money (Rs. billion) 1·5 7·4 8·0 8·2 Discount rates (per cent) Reserve Bank of India 3·0 3·0 3·0 3·0 3-Month Treasury Bills 2·03 ·39 ·43 ·44 Wholesale prices (1937=100) 95 231 252 279 Cost of Living (August, 1939=100) 227 231 252 Source : International Financial Statistics, F ebruary, 1948.

Indo-China Inflationary pressure may be said to have been arrested, if not altogether stopped, in Indo-China in 1947. The budget showed only a small deficit. The note issue showed no increase. Indeed, it showed a 3 per cent decline from 1946. The decline was due to the writing off of certain issues which failed to return on being recalled. Prices (except wholesale prices of imported goods) and costs of living, however, rose higher than in 1946, indicating that inflationary pressure from other 16 ComviereeCommerce Annual for 1947.

194 sources such as increase in bank deposits and release of accumulated savings, were still in existence. The exchange rate remained steady throughout 1947. It may be explained here that Indo-China’s currency, the piastre, is on an exchange standard. Before the war it was tied to the French franc at 1 piastre for 10 francs. After the fall of France during the war, the piastre ‘ achieved some measure of autonomy,’17 and maintained fairly fixed rates with the U.S. dollar and the pound sterling, while the franc moved downwards. In December 1945, when the franc was devalued, the piastre was fixed at 17 francs. At the same time, the official rate for the U.S. dollar which was 4 piastres in 1938 was increased to 7·01. It was this revised rate which remained unchanged in 1947. Indo-China has, at present, an adverse trade balance apparently partly because of the low production (due to civil war and other causes) and partly because of high price-cost structure (due to inflation). The deficit is being covered by French Government payment on military and rehabilitation account. Consequently there is not much strain on the exchange rate. What will happen when this foreign assistance stops, is difficult to say. An important decision made during the year was to take away the note issue from the Banque de l’Indochine and vest it in what may be called a Currency Board (Institut d’Emission) appointed by the Gov- ernment. The Banque de l’Indochine, it may be explained, is the leading commercial bank in the country and not a government or a central bank. It enjoys at present the sole right of issuing notes, on the basis of course of fixed convertibility of the piastre with the franc (that is to say within the framework of the exchange standard). The new scheme (of the Currency Board) is not yet in its final form, nor have all particulars been published. But the main features seem to be as follows : (1) The Board will be the sole authority of issue. (2) The piastre will be linked to the franc on the existing parity, but the Board will have power to modify the rate ‘ according to circumstances.’ 18 (3) The Board will not be a central bank, discounting bills or controlling credit operations of other banks. Table 114 F in a n c ia l and Price Statistics of Indo-C hina, 1939-47 December 1939 December 1946 December 1947 Note issue (in million piastres) 216·3 3,100 (estimate) 3.000 (estimate) Bank deposits (in million piastres) 42 (estimate) 68 148 (provisional) Wholesale prices (Saigon) 1st half 1939=100 100 812 1,357 Cost of living (Saigon labour) 1st half 1939=100 .. 100 1,874 2,802 17 U.S. Department of Commerce, International Reference Service, Indo-China. January, 1946. 18 Report of the ‘Comite Economique’, May, 1947.

195 (4) Not less than 33 per cent of the reserve against the note issue must be in francs. Not more than 33 per cent can be in government securities (‘advances allowed to the Treasury’). The intention thus seems to be to retain the franc exchange standard with certain safeguards and a certain amount of elasticity, and not to establish a managed currency or a central bank. The principal statistics are given in Table 114. Indonesia In Indonesia notes are issued by the Java Bank. In March, 1939 the total issue in circulation was 198·6 million guilders.19 During the Japanese occupation the currency was considerably inflated. After re- occupation, the Government issued a new NEI guilder. Japanese invasion currency was withdrawn at the rate of 33 Japanese guilders to 1 new guilder while old bank and treasury notes were taken at par or credited to blocked accounts. In the post-war period, the note circulation has steadily increased, ‘chiefly because of government deficit financing At the end of 1947, the total circulation stood at nearly 1,200 million guilder.20 It was thus roughly six times the 1939 circulation. Information on prices is rather scanty, but the index of prices of 19 foodstuffs at Batavia in January 1948 (July 1938 being taken as 100) was 1,940.20 The exchange rate has also changed. Before the war the NEI guilder was at par with the Netherlands guilder (which in 1939 had an exchange value of 1·88 guilders per U.S. dollar). In 1946 the NEI guilder was devalued, following the devaluation of the Netherlands guilder. The new rate is 2·66 guilders per U.S. dollar or roughly 37· 7 U.S. cents per guilder. ‘ Contrary to pre-war custom, however, there is no undertaking now to fix this ratio by pegging the NEI guilder to the Netherlands guilder. No par was communicated to the International Monetary Fund owing to the present difficult situation.’20 This suggests that the automatic exchange standard may be modified. On 30th October, 1946, the Indonesian Republic introduced its own bank notes which, however, had no fixed parity with any other currency. Banks are still reconstructing their records and no yearly reports or balance sheets are yet published. The Government is taking measures to establish a Recovery Bank to be specially charged with supplying long-term credits. Japan The main point to report about Japan in 1947 is that inflation has continued high. The original impulse for this inflation seems to have come mainly from fall in production. Japanese industry emerged shat- tered and paralysed from the war. Production in 1947, though higher than in 1946, was still only 41 per cent of the 1930-34 annual average. 19 19StatisticaltSatistical P Pocketbookocketbook ofof IndonesiaIndonesia forfor 1941, Indonesian Bureau of Statistics, 1947. 20 Data supplied by the Indonesian Government for the present survey.

196 The fall in production, little compensated by imports, put up prices, wages and costs. Both government and employers consequently required more money. The use of more money put prices and costs still further up and so the spiral went upwards. It was, to start with at least, more a case of prices chasing wages (and other costs) than wages chasing prices. However, whatever originally caused prices to rise, the fact remains that the government has been meeting the resulting budget deficits largely by issuing notes. It did not try much to freeze or reduce wages (which would have probably checked the spiral at its beginning) or syphon off excess purchasing power by adequate taxation and borrowing. Thus although the original cause of the inflationary pressure might have been the absolute shortage of commodities, continued increases in the levels of purchasing power and government deficit financing, have been important contributory factors to it. The inflation is reflected in the increase of the National Debt on the one hand and of the Bank of Japan’s holding of government securities on the other. Since the government was unable to cover the deficits by borrowing genuine savings from the general public (which would have had a deflationary effect), it had to borrow mainly from the Bank of Japan (against which the Bank issued notes) and to some extent also from the commercial banks (which used it as a basis for expanding credit). The rather close correspondence between the two is shown below (in billion yen): Government securities Period Note issues and advances to government March 31st, 1946 to January 10th 1947 .. +188·5 +159·1 During 1947, the note issue increased by 125·7 billion, the Bank of Japan’s holding of government security by 103·9 billion and the National Debt by 117 billion. Prices. Prices have kept pace with changes in money supply. Fol- lowing the currency conversion in March, 1946 (when the old currency was recalled and new yen notes were issued at the rate of yen 100 for each person, the balance going into restricted bank accounts21), the price level remained quite steady for about eight months. But later, as the note issue expanded, it began to race upwards again, from December 1946 to April 1947 at the rate of 10 per cent per month, from May to July 1947, at 24 per cent, and thereafter more slowly. An alltime peak in effective (that is, taking into account official as well as black market prices) consumer prices was reached at the end of May 1946. Since no private foreign trading was yet allowed (all importing and exporting being done by the SCAP), the question of the fixing of a rate of exchange between the yen and various foreign currencies did not arise. A rate or rates, however, will have to be fixed as foreign trade is allowed to return to its normal channels. 21 Stewart, Economic Aspects of Allied Occupation of Japan, IPR, 1947.

197 Principal financial statistics are shown below : Table 115 F in a n c ia l and Price Statistics of Japan, 1939-47 (End of year) 1939 1945 1946 1947 Note issue (billion yen) 3·7 55·4 93·4 219·1 Commercial bank deposits (billion yen) 2 0 0· 102·3 124·7 175·7 (Nov.) Retail price index (1937=100) 128·0 291·0 2,280·0 6,300·0 (Oct.) Consumer price index (Aug. 1946- March 1947=100) 97·0 282·2 Source : United Nations Monthly Bulletin of Statistics, February, 1948, Inter- national Financial Statistics. I.M.F·, March, 1948. Malayan Union and Singapore Malaya is on the sterling exchange standard, the Malayan dollar being linked to the pound at 1 Malayan dollar for 2/4d. The issue and redemption of currency is in the hands of a Currency Board appointed by the government. The changes in the note issue are shown by the following figures : (in million Malayan dollars). January, 1939 15 February, 1942 31 December, 1946 105 221·9 387·7 Source : Annual Report of the Malayan Union for 1946, Malayan Government. Judged by these figures, inflation does not seem to have been so severe in Malaya as in most of the other ECAFE countries. It should also be added that part of the rise in note issue in 1946 was due to Malayan dollar notes replacing the old British North Borneo and Sarawak currencies.22 The retail price index is reported to have been 428 in 1947, taking 1939 as 100. The Philippines In the Philippines the year 1947 started with a strong deflationary tendency. Monetary circulation and prices (as indicated by the costs of living) both fell appreciably. Circulation started rising again later in the year, but the cost of living remained low. Budgets, it may be added, were more or less balanced, the 1946 budget even showing a handsome surplus. Whether all this signals a definite deflationary movement is perhaps too early yet to say. But it is worth noting that in spite of increases later in the year, total money supply and prices at the end of 1947 stood lower than at the end of 1945. The Philippine currency was heavily inflated during the Japanese occupation, but by December 1945 after the repudiation of the Japanese issues, currency in circulation stood at about 5 times the pre-war level. Thereafter there was steady contraction throughout 1946 and part of 1947. Prices, however, fell faster than the money supply, indicating that there was simultaneously a rise in the goods supply through increased 22 Annual Report of the Malayan Union for 1946, Malayan Government, Kuala Lumpur, 1947.

198 production and imports. The Philippine peso being rigidly linked to the U.S. dollar (at 1 U.S. dollar= 2 pesos) contraction (or expansion) of currency is normally (unless interfered by trade, exchange and other controls) linked with unfavourable (or favourable) balance of pay-. ments. The Philippines have recently been importing much excess goods and services which have been partly covered by American payments on military and other accounts. But they have been also partly paid out of foreign exchange holdings, and the contraction of foreign exchange holdings is reflected in the contraction of circulation at home. The Philippine price-cost structure, although it has fallen since 1945, still seems to be too high to equalize exports and imports and there is an import-surplus pressure on the economy. This pressure is likely to continue unless money supply and prices are still further lowered. The Philippine economy has so far withstood deflation without any untoward effects, but whether it can do so consistently and any further, without affecting production and employment, is not easy to say. Certain indices of money supply and prices, 1937 being taken as 100, are given below :

Table 116

I ndices of Money Supply and Prices in the Philippines, 1939-47 (1937=100) Dec. 1939 Dec. 1945 Dec. 1946 Dec. 1947 Money supply (currency in the hands of the public plus individual bank deposits)a 327 281 (June) Total monetary circulationb 133·0 605·4 450·9 506·9 Cost of livinga 518 401 (Aug.) Wholesale pricesb 408 (Jan. 48) aFriedberg, Survey of Philippine Economy, 1948, IMF. b Data supplied by the Philippine Government. The currency being on an exchange standard, exchange rates have remained unchanged. Proposed central bank. Perhaps the most important development in 1947 was the decision to establish a central bank. So far the banking system has been decentralized and uncontrolled, and currency policy not co-ordinated with credit policy. Indeed, there has been little scope for any currency ' policy ’ at all, the currency being on the automatic exchange standard. The new central bank, (the bill for which is in final shape), will change the situation completely. The main features will be as follows : (1) It will be a state bank, managed by a board appointed by the government. The Finance Secretary will be ex-officio president of the board. (2) It will control currency (notes and coins) as well as credit. (3) In regulating money supply, it will be guided by the general economic interests of the country and not by any rigid convertibility or reserve requirements. It means therefore the abandonment of the dollar exchange standard which prevents expansion or contraction of

199 currency according to the internal needs of the country. The bank can change the existing par value of the peso.23 It can also alter the ratio of gold or foreign exchange holdings to the note issue. It can also hold reserves in inconvertible (non-gold) currencies. In this connection a novel feature in the bill is the insertion of ' guiding principles ’ according to which the bank is to regulate the money supply. They may be said to boil down to promotion of the best interest of the country, in other words full employment and maximum production. (4) It will have wide powers of credit control. It will have power to raise or lower reserve ratios of the member banks and fix upper limits to loans and investments. It will have also some power of selec- tive or qualitative credit control which is not yet common for central banks to possess. It can restrict credit given by banks to importers of certain classes of commodities (for instance luxury goods) by raising the margin of cash required for letters of credit. The bank thus would have many novel features. It is specially argued that the freedom to expand or contract currency, irrespective of gold or foreign exchange holdings, is very desirable for undeveloped economies. Under exchange standards, any excess acquisition of foreign exchange (by net exports) tends to expand currency. The internal economy should be insulated from this effect. An undeveloped economy must be able to build up foreign reserves (to be used for development later) without any harmful effects internally. The Philippine bank will have power to issue its own obligations against such additional earnings of foreign exchange, so that they can be steri- lized. Table 117 F in a n c ia l and Price Statistics in the Philippines, 1938-47 (M il l io n Pesos) Dec. 1938 Dec. 1945 Dec. 1946 Dec. 1947 Total currency in circulation 173 981 685 770 Demand deposits of (719)a (804)a banks 73 179 232 263 Total bank deposits 246 1,160 916 1,068 Cost of living (1937=100) 104c 777c 585c 411b

Source : International Financial Statistics, F ebruary, 1948. a These figures are supplied by the Philippine Government. b Average for January—September. c Average for the year. Continuous data on wholesale prices are not available. But according to figures supplied by the Philippine Government, the wholesale price index (1937=100) was 408·4 in January 1948, and 388·4 in February 1948. 23 This power seems to be qualified ‘ by the terms of the agreement between U.S. and Philippines under which the peso exchange rate cannot be changed without the agreement of the President of the U.S.A.’—Friedburg, op. cit.

200 Siam Siamese currency was heavily inflated during the war, but after the war currency in circulation has been more or less kept steady. The note issue in 1939 March, was 150 million baht.24 In January 1946, it was 2,118 million, in January 1947, 2,126 million and February 1948, 2,203 million. The issue in 1947 was thus broadly 15 times that of 1939. No price indices are available but “ unofficial sources report that cost of living was 13 times higher in 1947 than before the war.” Before the war Siamese currency was on the sterling exchange standard at 11 baht per pound. Developments during and after the war have led Siam to establish a more or less managed currency system under a central bank (The Bank of Siam). Before the establishment of the Bank, paper currency was issued by the Government. The Bank is a government bank (established in 1944) with general supervision vested in the Minister for Finance. It has the sole right of issue and in its banking department it “ will transact such kinds of business as pertain to a central bank ” (quoted from the Act). Every bank must keep with it at least 5 per cent of demand and 2 per cent of time liabilities. It is also the government’s banker. Before the war the baht was pegged to the pound sterling at 11 baht per pound. In 1946 when banks reopened for foreign transactions, the rate was fixed at 40 bahts per pound and about 10 bahts per U.S. dollar.25 There was thus a certain measure of devaluation. This official rate, however, overvalued the baht and the demand for foreign exchange exceeded the supply. And since the Government could not control all demand and supply, an open m arket rate developed. In August 1947, the open market rate was 20—22 bahts per U.S. dollar and 75—78 bahts per pound. Trade and exchange control has limited the disparity between demand and supply of foreign exchange to some extent, but has not quite removed it. “ Importers may apply for foreign exchange at the favourable official rate (1 U.S. dollar= 10 baht), but dollars may also be bought at the open market.”26 Before the war, currency reserves were naturally predominantly in sterling. At present they include a large amount of dollar assets which Siam acquired ‘by exporting rice to Korea and the Philippines and rubber, teak and tin to U.S.A.’26 On September 17th, 1947, Siam joined the ‘ Convertible Sterling Group ’ which implies that she can now in effect transfer all her current sterling freely to the Sterling Area countries and to other countries within the Convertible Sterling Group. Transfers are allowed from Sterling Area countries into the Group, but not the other way. It of course gives no convertibility of Siam’s sterling holdings into dollars.

24 Statistical Yearbook of Thailand. 1937-38 and 1938-39. 25 Siamese Economy, International Reference Service, U.S. Department of Com- merce, February, 1948. (Typewritten). 26 Ibid.

201 26 Chief financial statistics are tabled below :

Table 118

F inanc ial and Price Statistics or Sia m, 1939-48 1939 1946 1947 1948 Notes in circulation (million bahts) 150 2,118 (Jan.) 2,126 (Jan.) 2,203 (Feb.) Commercial bank deposits (million bahts) 69 761 (Jan.) 788 (Jan.) Cost of living index (1938=100) 1,037 (Dec.) Sources : Siamese Economy, U.S. Department of Commerce, 1948. Bank of Siam’s Report, 1946. Bank of Siam’s Returns, 26th February, 1948. Statistical Yearbook of Thailand, 1937-38 and 1938-39.

202 C hapter X INTERNATIONAL TRADE AND FINANCE

I. T otal Val ue of Trade Owing to low productivity, small per capita income, and the inadequate transport system, the AFE region, though covering 16·3 per cent of the world’s land area and inhabited by 50·2 per cent of the world’s population,1 shared only 12·4 per cent of the world’s total imports and 13·9 per cent of the world’s total exports in the pre-war years. The detailed figures showing the over-all position of the AFE countries including Japan and Korea in pre-war world trade, are given in Table 119.

Table 119 S hare of AFE Countries in Pre- war Worl d Trade Imports Exports Year 1928 1935 1938 1928 1935 1938 (in million U.S. dollars) World Total: 35,482 21,042 24,583 32,615 19,025 21,917 AFE Countries : 4,606 2,713 3,044 4,819 2,787 3,041 Percentage Share of AFE Countries in World Total: 13·0% 12·9% 12·4% 14·6% 14·6% 13·9%

Source: Compiled from data given in League of Nations, The Network of World Trade. Despite the World Depression in the early thirties and the economic changes which occurred thereafter, the relative position of the AFE countries in the world trade, as shown by the above figures, remained fairly stable throughout the last decade. Although the external trade of the AFE region, taken as a whole, was small in terms of absolute amounts, its importance to the domestic economy cannot be neglected in some of the countries. Table 120 shows the share of exports in the national income of those countries for which national income estimates are available. As different methods and to some extent, different concepts, were used in the estimation of the national income of different countries, the figures quoted in Table 120 are not strictly comparable and can only be taken as a rough indication of the relative importance of external trade to the domestic economy in each of the countries concerned. The percentage calculated for Japan is perhaps distorted by the fact that in 1940 Japan’s national income was unduly expanded by war production, while for the same reason her exports of that year were unduly curtailed. 1 Calculated on the basis of the pre-war population and pre-war land area of the AFE ccountries,ountries, see Chapter III above and League of Nations, Statistical Yearbook, 1942-44.

203 Table 120 S hare of Exports in National Income in Sel ect ed AFE C ountries Percentage of National Value of Exports in Country Year Income Exports National (in millions) (in millions) Income Ceylon 1938 Rs. 627·1 Rs. 263·5 42·0 1947 2,009·2 „ 835·0 41·6 China 1936 CN$ 25,694 CN$ 838·8 3·3 1946 CN$ 24,737 CN$ 333·0 1·3 (at 1936 prices) (at 1936 prices) India 1942-3 Rs. 34,230 Rs. 2,109 6·2 Indonesia 1939 Guilders 2,933 Guilders 775 26·4 Japan 1940 Yen 39,800 Yen 2,743 6·9 Philippines 1938 1,163 231·6 19·9 1946 3,228 128·4 4·0

Source For national income estimates, see Chapter II above; except for China, gross national income figures are used ; for pre-war trade, figures, see League of Nations, Statistical Yearbook, 1942-44, for post-war trade figures see references below. In normal years, the share of exports in Japan’s national income should be much larger. Unfortunately, as her national income estimates for earlier years were made at factor cost,2 it is not possible to derive therefrom the percentage share of exports which were valued at market prices. For China an d the Philippines, the estimates of the post-war national income may be wide of the mark, but in view of the dislocation of the transport system and the adverse world market conditions there can be no doubt that the decline in exports ought to be greater than the general fall in domestic production. So far as the balance of trade is concerned, the AFE countries may be divided into two groups. Burma, Ceylon, India, Indo-China, Indo- nesia, Malaya, the Philippines, and Siam secured a regular export surplus in the pre-war years mainly through shipments of raw materials and food. On the other hand, China, Hong Kong, Japan and Korea were generally trade-deficit countries. The position did not change substantially in the late thirties, except that since 1938, Japan secured an export surplus and the Philippines’ balance of trade turned unfavourable. In general, the export surplus secured by the first group of countries exceeded the deficit incurred by the second group, and so the AFE region as a whole may be considered as an export-surplus area in the pre-war years, the favourable balance being used to offset the service items such as profit of foreign firms, interest charges on foreign capital, and freight payments in shipping, which, as shown elsewhere in this Survey, was dominated by vessels belonging to the powers outside this region. After the war, there was a general shrinkage of external trade, but owing to inflated prices in almost all countries, it is not possible to compare the post-war figures with the pre-war figures without suitable import and export wholesale price indices. In absolute value, how- 2 See Chapter II above.

204 Table 121 Tot al Value of Impor t s and Exports in AFE C ountries , 1938, 1946 and 1947 (in million currency u nits) 1938 1946 1947 Import Export Balance Import Export Balance Import Export Balance (Jan.-July ) Burmaa .. 207 471 +264 317 131 -186 320 318 - 2 (Rs.) Ceylonb 215 263 + 48 541 716 +175 877 835 - 42 (Rs.) (1936) (thousand) (thousand) Chinac 942 707 -235 1,501 412 -1,089 10,721 6,376 -4,345 (Yuan) (1936) Hong K o n g d 452 351 -102 934 766 -168 1,550 1,217 - 333 (HK$) (1945-46) (1946-47) Indiae .. 1,502 1,624 +122 2,916 2,664 -252 3,336 3,192 -144 (Rs.) Indo-Chinaf 195 290 + 95 310 690 +380 973 473 - 500 (Piastres) Indonesiag 486 689 +203 281 155 -126 751 333 -418 (Guilders) (1936) U.S. $ Japanh .. 2,702 2,631 - 71 526 174 -352 (Yen) (1936) Won Koreai .. 761 593 -167 2,088 1,111 - 977 (Yen) Malaya and (Aug.-Dec.) Singaporej 551 571 + 20 508 510 + 2 1,368 1,300 - 68 (Malayan $) Philippinesk 262 229 - 33 592 128 - 46 1,023 531 -492 (Pesos) Siaml 124 173 + 49 549 454 - 95 1,410 1,046 -364 (Baht) a Pre-war figures from League of Nations, Statistical Yearbook, 1942-44 ; post-war figures from private sources. b Economic Survey of Ceylon for 1947 c League of Nations, Ibid; and United Nations Monthly Bulletin of Statistics d Annual Report on Hong Kong, 1946 ; and Hong Kong official trade statistics. e League of Nations, Ibid ; and United Nations Monthly Bulletin of Statistics. f Economic Survey of Indo-China for 1947. g League of Nations, Ibid ; and United Nations, Monthly Bulletin of Statistics. h League of Nations, Ibid; and S C A P, Summation of Non- Military Activities in Japan, February, 1948; pre-war figures exclude trade with other parts of the former Japanese Empire. i League of Nations, Ibid; and South Korea Interim Government Activities, December, 1947, pre-war figures include trade with other parts of the former Japanese Empire. j League of Nations, Ibid, and Summaries of Malayan Foreign Trade- k League of Nations, Ibid ; and data supplied by the Philippine Government. I League of Nations, Ibid ; and Economic Survey of Siam, 1947. ever, as can be seen in Table 121, the trade of 1947 showed a general improvement over that of 1946 in all AFE countries. The estimates for the volume or “ quantum ” of trade, i.e., the current values of imports and exports deflated by the import and export price indices, were available for only three countries, namely, Ceylon, China and India, the indices of which are shown as follows : Table 122 I ndices of Volume of Trade of Ceyl on, C hina and India, 1945-47 Ceylona Chinab Indiac Import Import Export Import Export Export Volume of of Volume Volume ofVolume Volume of Volume Volume of Volume Volume of Volume Volume of Volume 1934-38=100 1936=100 1937=100 1945 82·6 112·1 ——77 53 1946 95·3 126·3 119 46 76 58 1947 125·5 114·9 87 56 84 59 a Economic Survey of Ceylon for 1947. b Economic Survey of China for 1947. c U nited Nations Monthly Bulletin of Statistics; the indices for 1947 represent the average of January-June only. It is important to note that, along with the general increase in the value of imports and exports, all countries in this region experienced a trade deficit in 1947, thus reversing the situation obtaining before the war. However, for some countries, exports in 1947 increased relatively faster than imports as compared with 1946. (Table 123) Table 123 V alue or E xports shown as Per cent ages of Value of Impor t s, 1946 and 1947 (A) Countries showing an increase in percentage 1946 1947 in 1947 over 1946 : Burmaa 41·4 99·5 China 27·5 59·5 Indiab 91·4 95·7 Philippines 21·7 51·9 (B) Countries showing a decrease in percentage in 1947 over 1946 : Ceylon 132·4 95·2 Hong Kong 82·0 78·5 Indo-China 222·7 48·6 Indonesia 55·2 44·4 Malayac 100·3c 95·1 Siam 82·7 74·2 a For 1947, referring to January-July only. b Referring to the financial years 1945-46 and 1946-47. c For 1946, referring to August-December only. The revival of exports can be attributed to the gradual recovery of the domestic economy in most AFE countries, while the increase in imports was due partly to increased demand for foreign material and partly to rising foreign prices. In the case of China, the improvement

206 of exports relative to imports in 1947 was largely a result of the deliberate cut in imports under a rigid quota system introduced by the Chinese Government,3 while the revival of exports played only a minor role. In Indo-China, the abnormally high exports in 1946 was caused by shipments of rubber stocks accumulated during the war. The decline in exports in 1947 in Indo-China, the only country which registered such a rapid decline, therefore, does not mean an actual shrinkage of export trade.4 Finally, the values of imports and exports quoted in this chapter are based upon official figures. Owing to the generally unsettled conditions there was widespread smuggling carried on between China, Hong Kong, Singapore and possibly other places. The extent of this illegiti- mate trade was not known, but on the basis of the official trade statistics of Hong Kong and Macao, it was estimated by one author that in 1947 imports smuggled into China from Hong Kong and Macao amounted to HK $326,000,000 or about 14 per cent of China’s legitimate imports, while exports smuggled from China to these two places were valued at HK $108,000,000, or about 10 per cent of China’s legitimate exports.5 There can be no doubt that the smuggling trade serves largely as the source of supply of black market goods as well as the mainspring of black market exchange operations in this region.

II. D ir e c t io n of Impor t s and Exports While the direction of trade differed widely in each of the AFE countries, the pre-war trade statistics of the whole region, if taken together, indicate two general features. First, the portion of trade carried on within the AFE region was fairly large. Second, the metropolitan powers in the Southeast Asiatic countries generally took Table 124 P re- war Trade within AFE R egion Imports Exports 1928 1935 1938 1928 1935 1938 US$ million US$ million Aggregate Value of Trade of AFE Coun- tries 4,606 2,713 3,044 4,819 2,787 3,041 Trade within AFE Region 2,128 1,263 1,397 1,951 1,116 1,300 Percentage of Intra- Regional Trade in Aggregate Value of Trade 46·2% 46·6% 45·9% 40·5% 40·0% 42·7% Source: Compiled from data given in League of Nations, The Network of World Trade. Macao was included in the AFE region. 3 After the war, most AFE countries continue import and export control in one form or another. For a general survey of the trade-control machinery in the ECAFE countries see Chapter II, U.N. Document E/CN·11/84. 4 Economic Survey of Indo-China for 1947. 5 Y . L. Wu, ‘An Estimate of smuggled trade between China and Hong Kong aandnd MMacaoacao ,' The EconoEconomicmic Review (in Chinese) February, 1948.1948.

207 a leading share in imports and exports. The large intra-regional trade was due partly to the vast territory and population covered by the AFE region and partly to the special bilateral relations, which, owing to geographical, historical and other factors, existed between such countries as Ceylon and India, China and Japan, and Hong Kong and China. Large amounts of trade were also carried on by Siam and Malaya with other South-east Asiatic countries. Table 124 gives the portion of intra-regional trade in the aggregate value of the trade of the AFE countries, The fact that the principal exports of the AFE countries consisted of raw materials which were largely bought by highly industrialized countries outside this region, while the manufactured articles, exported by AFE countries, such as cotton textiles, generally found better reception within this region than in other parts of the world, accounts for the higher percentage of intra-regional trade in imports and exports. Of particular importance to the intra-regional trade was the manufactured goods of Japan. Owing to her rapidly growing industrial capacity, Japan took an increasing share in the imports of other AFE countries in the last decade, but as an indication of slow economic development in other AFE countries exports to Japan remained relatively stable. The detailed figures are given in Table 125.

Table 125

J apan's Share in Pre- war Trade of AFE Countriesa Imports from Japanb Exports to Japanb 1928 1935 1938 1928 1935 1938 US$ million US$ million Burma and Indiad 60 82 63 126 84 59 Ceylon 3 5 6 1 1 1 China (including Manchuria) 241 192 346 202 100 143 Hong Kongc 23 21 6 6 6 1 Indo-China 2 2 2 9 4 3 Indonesia 39 56 41 26 19 15 Malaya 11 17 7 20 31 31 Philippines 13 12 12 7 5 8 Siam 2 12 9 2 2 1 Total Value of Trade with Japan 394 399 492 399 252 262 Total Value of Trade with all countries .. 3,506 1,958 2,240 3,873 2,038 2,217 Japan’s Share in pre-war AFE trade 11·2% 20·4% % 10·3% 12·4% 11·8% a Compiled from data given in League of Nations, The Network of Trade. b Including Korea and Taiwan. c Including Macao. d Burma was separated from India in 1937, but all trade figures given here cover both Burma and India. The trade relations which existed between the AFE countries and their respective metropolitan powers were of varying importance. The reliance of the Philippines on the United States was extremely heavy,

208 while on the other extreme lies the trade between Hong Kong and the United Kingdom, which appeared to be relatively small. Detailed figures of individual countries will be shown in Table 132, and aggregate totals are given in Table 126 below : Table 126 S hare of Met r opol itan Powers in Pre- war Trade of AFE Countriesc Imports Exports 1928 1935 1938 1928 1935 1938 US$ million US$ million AFE Tradea with all countries 2,556 1,399 1,578 3,040 1,659 1,802 AFE Tradea with Metropolitan Powersb 790 393 481 652 465 561 Share of Metropolitan Powers 30·9% 28·1% 30·5% 21·4% 28·0% 31·1% a Representing trade of the following AFE countries: Burma, Ceylon, India, Indo-China, Indonesia, Hong Kong (including Macao), Malaya and the Philippines. b Metropolitan powers refer to the United Kingdom for Burma, Ceylon, India, Hong Kong and Malaya ; France for Indo-China ; the Netherlands for Indonesia ; and the United States for the Philippines; Macao’s trade with Portugal was negligible. Dominions and colonial possessions of Metropolitan Powers are not included. c Calculated from data given in League of Nations, The Network of World Trade. No comparable data in terms of U.S. dollars, as calculated by the League of Nations, were available for Korea, but according to Japanese trade statistics, Japan’s share in Korea’s imports and exports in 1935 and 1938 was exceedingly high :6 Table 127 K orea’s Trade, 1935 and 1938 Imports Exports 1935 1938 1935 1938 Yen million Yen million Korea’s trade with all countries .. 659·4 1,055·9 550·8 879·6 Korea’s trade with Japan 558·8 921·3 485·9 710·5 Japan’s share in Korea’s trade .. 84·7% 87·3% 88·2% 80·8% Thus, prior to the war, Korea’s economy was closely integrated with the economy of Japan, and this fact explains, to some extent, the eco- Table 128 U.S.A.’s S hare in Pre- war Trade of AFE C ountries Imports Exports 1928 1935 1938 1928 1935 1938 U.S.$ million U.S.$ million AFE trade with all countries 4,606 2,713 3,044 4,819 2,787 3,041 AFE trade with US.A. 615 454 558 1,070 548 486 U.S.A.’s share in AFE trade 13·4% 16·7% 18·3% 22·2% 19·7% 16·0% 'Source : Same as preceding tables. 6 League of Nations, Statistical Yearbook, 1942-44. 209 27 nomic difficulties which are now facing Korea, as she strives to achieve political and economic independence. Apart from intra-regional trade and trade with metropolitan powers, the AFE countries carried on considerable trade with the United States. The summary figures for the whole-region are given in Table 128. It is interesting to note that owing to large shipments of raw materials, such as rubber from Malaya, sugar from the Philippines, and tea from Ceylon, the AFE region as a whole maintainted an export surplus with the United States until 1938, when large imports of American goods into China and Japan for war purposes turned the balance of trade of the whole region into a deficit. The immediate after-effect of the war was the fall in the total imports and exports and the concentration of trade with a small number of countries whose productive capacity remained relatively unimpaired and whose reconversion ran ahead of others. As most of the AFE countries were devasted by the war, the intra-regional trade showed a marked decline in 1946. In 1947, however, China and India made noticeable improvement in trade with other AFE countries, although the percentage shares remained much lower than in the pre-war years. Table 129

P ost- war Trend of Intra-R egional Trade in AFE R egion (Percentages in total value of Imports and Exports) Import from AFE Countries Export from AFE Countries 1938 1946 1947 1938 1946 1947 Burmaa .. 64·0 N A. . N.A. 70·5 N.A. N.A. Ceylonb .. 58·1 N.A. N.A. 5·2 N.A. N.A. China, including (1935) (1935) Manchuriac 55·7 17·8 19·4 51·0 41·4 49·9 (1935) (1935) Hong Kongd .. 75·1 69·5 51·0 83·8 82·3 68·5 (1945-6) (1946-7) (1945-6) (1946-7) Indiae .. 30·0 1·8 7·4 21·9 8·3 11·2 Indo-Chinaf 26·4 29·2 11·1 26·5 15·1 36·2 (Jan.-Jun.) (Jan.-Jun.) Indonesiag .. 32·5 NA. 9·2 33·0 N.A. 6·9 (1936) (1936) _ Japanh .. 35·3 — 5·7 43·9 54·7 Koreai 95·8 N.A. 61·3 97·4 N.A. 64·8 Malayaj .. NA. 52·0 27·3 N.A. 24·4 Philippinesk 16·7 4·1 5·3 9·5 16·0 8·1 Siaml .. 64·9 86·9 N.A. 83·3 72·3 N.A. a Pre-war figures from League of Nations, International Trade Statistics. b Economic Survey of Ceylon for 1947. c Pre-war figures from League of Nations, The Network of World Trade; post-war figures from Chinese Maritime Customs, Monthly Returns of Foreign Trade, Dec. 1947. d P re-w ar figures include Macao, from League of Nations, Ibid; post-war figures from Hong Kong Monthly Trade Statistics. e P re-w ar figures from League of Nations, International Trade Statistics; post- war figures from Accounts Relating to the Sea-borne Trade and Navigation of British India, March 1946 and Jan. 1947. 1946-47 figures represent ten months from April 1946 to J a n u a ry 1947. f Covering India Hong Kong, Singapore, China. Japan, and Indonesia only, from Economic Survey of Indo-China for 1947.

210 One of the factors which accounted for the shrinkage of intra-regional trade was low imports and exports of Japan. It is, however, important to note that although Japan’s trade in 1947 was comparatively small, the fact that, according to a rough estimate, about 55 per cent of her exports went to the AFE countries, seems to indicate that the Japanese goods, in spite of adverse market conditions, were still in great demand in the AFE countries. The revival of Japanese trade, therefore, will be one of the most important developments which should be taken into consideration in the study of the prospects of trade in this region. Contrary to the tendency of intra-regional trade, the trade of AFE countries with the United States was relatively on the decrease in 1947,

Table 130

T rade of AFE C ountries with the United States :

1946 and 1947 As C ompared with 1938 (Percentages in total values of imports and exports) Imports from U.SA. . Exports to U.S.A. 1938 1946 1947 1938 1946 1947 Burma 3·6 NA. N.A. N.A. N.A. Ceylon 2·3 7·8 12·8 13·4 12·6 14·4 China (including (1935) (1935) Manchuria) 14·3 57·2 50·2 16·8 38 7 23·3 Hong Kong 13·5 12·8 19·3 10·3 10·9 12·5 (1945-6) (1946-7) (1945-46) (1946-7) India 7·4 28·0 17·3 8·3 25·6 23·1 Indo·China 5·4 21·9 19·3 8·7 29·2 7·9 (Jan.-Jun.) (Jan.-Jun.) Indonesia 12·7 — 38·7 14·2 — 19·8 (1936) (1936) Japan 30·7 — 91·9 22·5 — 11·6 (1936) (1936) Korea 1·2 NA. . 12·8 0·2 N.A. 4·8 Malaya 3·2 NA. . 10·1 30·1 N.A. 33·9 Philippines 87·0 86·0 77·6 60·0 57·3 Siam 4·8 61 N.A. 0·3 12·5 N.A.

Source : See footnotes un d e r Table 129.

g Pre-war figures from League of Nations, The Network of World Trade; post- war figures refer to Hong Kong and Singapore only, from Java Gazette, Ja n u ary , 1948. h Pre-war figures from UN Document E/CN.11/82, Table 1 showing Pre-war Concentration of Trade of Different ECAFE Countries; post-war figures from SCAP, Summation of Non-Military Activities, February 1948. i Pre-war figures from UN Document E/CN.11/82, op. cit., post-war figures for South Korea only, from South Korea Interim Government Activities, January, 1948. j Pre-war figures from League of Nations, The Network of World Trade ; post- war figures from Summaries of Malayan Foreign Trade. k Pre-war figures from League of Nations, The Network of World Trade ; post- war figures from the Yearbook of Philippine Statistics, 1946, and data supplied by the Philippine Government. l Pre-war figures from League of Nations, The Network of World Trade; post- war figures from Economic Survey of Siam for 1947.

211 as compared with 1946. This was due to the revival of production in other countries, which were gradually able to recover their lost ground in the foreign market, while on the other hand, the gradual drainage of dollar exchange induced some governments to reduce purchases in the United States. Table 130 gives the post-war change in percentage shares of the United States in the trade of the AFE region and Table 131 gives the balance of trade of AFE countries with the United States in 1946 and 1947, as compared with 1938. It will be seen from the latter table that while the balance of trade of China and India with the United States showed an improvement in 1947, other countries like Ceylon, Indo-China and the Philippines found this position worsened during the year, as compared with 1946. Table 131

B alance of Trade of AFE C ountries with U.S.A.,

1946 and 1947 as Compared with 1938a (in million currency units) 1938 1946 1947 Imp. Exp. Bal. Imp. Exp. Bal. Imp. Exp. Bal. Burma 535+ 30 N.A. N.A. Ceylon (Rs.) NA. . 42 90 + 48 112 120 + 8 China (Yuan) b .. 151 87 - 64 858d 160d -698d 517d 163d - 354d Hong Kong N.A. 120 84 - 36 299 152 -1 4 7 (HK$) 1945-6 Apr. ’4 6 - J a n . ’47 India (Rs.) 144 134 + 20 674 616 - 58 402 559 +157 Indo-China (Piastres) 10 25 + 15 68 202 +134 186 38 -148 Indonesia (Jan.-Jun.) (Guilders) 60 89 + 29 — — — 125 29 - 96

Japan (Yen)c 915 425 - 4 9 0 —— — 484 20 -4 6 4 Korea NA. . N.A. 268 53 - 2 1 5 _ Malaya (M.$) 17 173 +156 — — 138 439 +301 Philippines (Pesos) 181 179 -2 515 77 -438 880 304 -5 7 6 Siam (Baht) 6 1 - 5 34 57 - 23 N.A.

a For source of data, see footnotes under Table 129. b For 1938, not including M a n ch u ria; for 1947, values com puted at 1946 prices. See Economic Survey of China, 1947. c For 1938, including K orea and Taiwan, d In billion currency units. The trade relations between the AFE countries and their former metropolitan powers did not change much since the end of the war. The change in political status of some AFE countries may eventually affect their economic relations with the former metropolitan-powers, but it is yet too early to tell to what extent the effect will be. Detailed figures of percentage shares in all related countries are shown in Table 132.

212 Table 132

Trade of AFE Countries with Former Existing Met r opol ita n Powers; 1946 and 1947 as Compared with 1938a (Percentages in total value of imports and exports) Imports from Metropolitan Exports to Metropolitan Powers Powers 1938 1946 1947 1938 1946 1947 Burma 18·8 NA. N.A. 13·2 N.A. N.A. Ceylon 22·1 21·3 20·1 53·6 56·0 36·6 (1935) (1935) Hong Kong 6·5 4·7 10·6 7·4 3·1 (1945-6) (1945-6) (1945-46) (1946-7) India 31·4 25·4 38·8 33·7 28·3 25·4 Indo-China 52·9 37·4 57·0 47·3 51·0 45·5 (Jan.-Jun.) (Jan.-Jun.) Indonesia 22·8 N.A. 13·7 20·3 N.A. 63·7 Malaya 18·8 N.A. 19·3 14·7 N.A. 1 6 1· Philippines 68·2 87·0 86·0 77·6 60·0 57·3 a For the meaning of Metropolitan Powers, see footnote b under Table 126. For sources, see footnotes under Table 129.

III. Composition of Impor t s and Exports As diverse methods are used by the governments in the classification of commodities, it is not easy to make a comparative study of the Table 133 C omposition of Trade of Sel ect ed AFE C ountries, 1938-47 (In percentages) Imports Exports Raw Raw Food Food Materialse Materials Manufactures Manufactures Ceylona 1938 .. 49·7 7·6 42·8 70·7 28·9 0·5 1946 .. 51·6 7·6 40·8 58·0 41·6 0·4 1947 .. 55·7 5·0 39·2 72·6 26·9 0·5 Indiab 1944-5 .. 9·3 57·5 31·9 21·9 25·6 51·1 1945-6 .. 9·3 48·4 40·5 21·1 32·1 43·6 1946-7 .. 15·6 25·8 58·3 18·6 33·4 46·6 Malayac 1947 .. 34·4 20·0 45·6 11·5 67·8 21·7 Siamd 1938 .. 13·0 11·4 71·8 59·9 39·1 1 0· 1946 .. 22·6 11·6 64·7 75·7 22·1 2·2 a The Ceylon Trade Journal, January 1948. b Indian Trade Bulletin, 1947 A nnual Review Number, Ja n u ary 1, 1948. c Summaries of Malayan Foreign Trade, December, 1947. d Pre-war figures from Statistical Yearbook of Thailand, 1937-39; and Economic Survey of Siam for 1941. e For Siam and India, raw materials include fuels; for Malaya mineral oils are classified as manufactures.

213 composition of trade covering all countries in the AFE region. In the trade statistics of four countries, namely, Ceylon, India, Malaya, and Siam, imports and exports are grouped under four common headings: — (1) Food, drink and tobacco; (2) raw materials and produce and articles mainly manufactured ; (3) articles wholly or mainly manufactured ; and (4) living animals. As the fourth group is generally very small, only the first three groups may be quoted for comparison. The general pattern of trade of economically undeveloped countries is the predominance of raw materials in the exports and of manufactures in the imports. The percentage share of raw materials and manufactures in the import and export trade, therefore, may be roughly used as a comparative index to measure the stage of economic development in different countries. From Table 133 it can be seen that Ceylon, Malaya, and Siam rely heavily on imports for the supply of manufactures, while their exports mainly consist of food and raw materials. In the case of Ceylon and Malaya, foodstuff, drink, etc., also take a large share in imports. On the other hand, a large portion of India’s exports was in the form of manufactures, while raw materials occupy an important place in her imports. During the war years the percentage of manufactures in India’s exports increased and that of raw materials showed a decline. This was due to an increase in demand for manufactured articles abroad as well as an expansion of consumption of raw materials at home for the production of war supplies. In the years 1945-46 and 1946-47, however, the proportion of raw materials in India’s exports tended to rise at the expense of manufactures, thus reversing the war-time trend and pointing to a return to the pre-war pattern. The classification of articles of import and export in China is made along somewhat different lines. The comparative shares of different groups of commodities in 1946 and 1947, as computed from China’s trade statistics, are given as follows :7 1946 1947 per cent per cent Imports: Textile products and raw materials .. 32·2 24·9 Chemicals and raw materials 22·3 25·6 Capital goods and materials 18·4 25·1 Food .. 11·1 7·5 Sundry 16· 0 16·9 100·0 100·0 Exports: Raw materials 34·8 30·3 Animal and fishery products 27·4 21·3 Manufactured goods 22·5 34·6 Agricultural products 15·3 13·8 100·0 100·0 The decreased percentage of textiles in 1947 imports was the result of the government policy to reduce import quotas for non-essential goods. On the other hand, the increased share of manufuctured goods in ex- 7 Economic Survey of China, 1947.

214 ports in 1947 may be attributed to increased exports of cotton fabrics, which took about 15·3 per cent in the total value of exports in 1947, as against 0·81 per cent in 1946. Apart from the composition of trade of individual countries, the post-war trend of the quantitative changes of the principal articles of commerce also deserves attention. The staple products exported by this region before the war were rubber, tin, sugar, tea, coconut products, rice, cotton and cotton textiles and silk. The general situation has remained unchanged since the end of war, but, as a result of the fall in domestic production and the dislocation of world market there has been a noticeable decrease in the quantities exported. As some of the AFE countries depend upon export trade as the chief source of income, the shrinkage of exports not only sets a limit to the speedy recovery of domestic economy, but also creates difficulties in the balance of payments. In the export trade of South-east Asia rubber probably occupies the foremost place. So far as quantities are concerned, both Ceylon and Malaya appear to have fared well in the post- war trade, as can be seen from Table 134 :

Table 134

P re- war and Post- war Export of Rubber from Sel ect ed AFE Countries (In m etric tons)

Country 1938 1946 1947

Ceylona 51,990 103,400 82,155 Indo-Chinab 58,023 136,979d 51,962 Indonesiac 321,600 — 72,745f Malayad 535,342 559,147 968,947 Siame 47,309 1,616 13,238 Total 1,014,264 801,142 1,189,047

a The Ceylon Trade Journal, January, 1948. b Economic Survey of Indo-China, 1947. c Economic Review of Indonesia, Feb., 1948. d Supplied by the Special Commissioner in South-east Asia. e Economic Survey of Siam for 1947. f Ju ly 1946 to June 1947. The heavy post-war export of rubber partly represents the disposal of stocks accumulated during the Japanese occupation. It also indicates the existence of large pent-up demand in the countries which had been put off from South-east Asia during the war. Under the competition of synthetic rubber, however, the large shipments of rubber were made possible only at low prices. To a high-cost producing country like Ceylon, the effect of low world price of rubber was disastrous. With the termination of Britain’s bulk-purchase contract in October 1946, the Govern- ment of Ceylon found it necessary to keep up the domestic price by buying up all rubber offered for sale at a guaranteed floor price, which was consistently higher than the world price until December 1947. The guarantee was a great help to the producers but represented a heavy

215 burden on the Government’s finance. Fortunately, with the world price rising above the guaranteed domestic price in December 1947, the sub- sidy scheme became unnecessary and was formally ended in January 1948.8 Next in importance to the South-east Asiatic countries was the export of tin, but unlike rubber, post-war tin exports still remained much lower than the pre-war level, although there was substantial improvement in 1947 over 1946. Detailed figures are given in Table 135: — Table 135

P re- war and Post- war Export or Tin fr om Sel ect ed AFE Countries (In m etric tons)

Country 1938 1946 1947

Chinaa 11,300g 1,560 4,115 Indo-Chinab 2,318 413 135 Indonesiac : Ore 19,200 Metal 7,300 20,305f Malaya and Singapored: Metal .. 62,166 7,720 2 32,585 Siame 20,362 1,680

a Pre-war figures from League of Nations, Internationa Trade Statistics ; post- war figures from Chinese Maritime Customs, op. cit. b Economic Survey of Indo-China, 1947. cPre-war figures from League, Ibid.; post-war figures from Economic Review of Indonesia, February, 1948. d Supplied by Special Commissioner in South-east Asia, eEconomic S u r v e y of Siam for 1947. f Ju ly 1946 to Ju n e 1947. g 1936. Singapore continued to be the smelting centre of tin, but since the end of war, the import of tin ore into Singapore amounted to 664 and 4,581 metric tons in 1946 and 1947 respectively, as against 28,209 and 42,290 metric tons in 1938 and 1939 respectively. The increase in tin exports from Singapore in 1947 was largely the result of the revival of tin-mining in Malaya, while the production of tin ore in other AFE countries continued to be unsatisfactory. Among food products, which formed the mainstay of exports from the AFE countries, were sugar, tea, and coconut products. Detailed figures of the post-war exports, as compared with the pre-war figures, are given in Table 136. Although almost all AFE countries grow rice, rice production was not evenly distributed in proportion to the population; hence there were considerable movements of rice within the region. Generally, Burma, Indo-China, and Siam are three rice-surplus countries, while other countries have to rely on imported rice to varying degrees. The situation was made worse by the war devastation which resulted in sharp

8 Economic Survey of Ceylon for 1947.

216 Table 136

P re- war and Post- war Export of Sugar, T ea and Coconut Products fr om 28

S el ect ed AFE C ountriesa

(In metric to n s)

Ceylon China India Indonesia Japan Malaya Philip- pines Sugar 1938 6,753d 1,196,600 178,740b 868,300 1946 465 7,188e 1947 857 l,852f 7318 18,850 Tea 1938 106,931 34,000c 159,500 81,800 16,440c 1946 132,349 6,891 165,125e 1947 130,301 16,493 148,493f 3,393g 2,788 Copra 1938 76,400 563,400 189,000 342,100 1946 39,400 635h 389,985 1947 30,200 129,134g 7,281 1,000,095 Coconut Oil 1938 76,600 N.A. N.A. 165,600 1946 43,700 N.A. 5,714 1,522 1947 43,000 N.A. 43.949 18,145 a For sources, see footnotes under Tables 129 and 134. bMainly from Taiwan, which was included in Japanese trade statistics before the war. c 1936. d 1944-45. e 1945-46. f 1946-47. g July 1946 to June 1947. h July to D ecem ber. fall in production in both deficit and surplus areas. The movements of rice within the region after the war are summarized in Table 137. Table 137

M ovement s of Ric e to and fr om AFE C ountriesa (In 1,000 metric tons) Export Import Country 1934-38 1946 1947 1938b 1946 1947

Burma 2,537c 431·4 803·5 Indo-China 1,357 98·4 43·4 Siam 1,392·9 449·6 394·6 Ceylon 539·0 275·6 243·3 China 406·6 213·5 26·2d Hong Kong NA. . 80·5 86·5 India-Pakistan .. N.A. 366·0 435·5 Indonesia 333·0 98·3 88·1d Korea N.A. N.A. 37·7d Malaya 828·0 275·0 262·0 Philippines 9·6 222·3 69·6d a Except import figures for 1938, data are supplied by the Special Commis- sioner in South-east Asia. b League of Nations, International Trade Statistics. c 1936-38 average. dJanuary to September. Table 138

P re- war and Post- war Impor t and Export of Raw Cotton and Cotton Text iles fr om China, India and Japan. Raw Cotton Cotton Yarn Cotton Fabrics Import Export Import Export Import Export (1,000 m. tons) (m. tons) (million metres) Chinaa 1936 41·0 36·8 600·0 8,988·0 31·5 39·7 1946 281·3 0·1 159·3 142·0 _d 1·5 1947 121·2 — 16·7 3,484·0 _ d 57·0 Indiab 1938 130·7 463·0 14,000·0 18,600·0 N.A. 170·0 1945-6 .. 87·4 138·0 _e _e 2·9 390·5 1946-7 .. 100·6 165·6 _e _e 14·9 280·4 Japanc 1936 912·6 — N.A. 24,527 N.A. 2,402·0f 1946 157·0 — N.A. 2,030 N.A. 9·9 1947 102·8 — N.A. 10,609 N.A. 329·0 a Chinese Maritime Customs, The Trade of China, 1936; and Monthly Returns of the Foreign Trade of China, December 1947 ; export figures of cotton fabrics converted from weight at 1 metre equal to 0·14-0·2 kilograms. b Figures for 1938 from League of Nations, op. cit.; post-war figures, from Indian Trade Bulletin. c Figures for 1938 from League of Nations, op. cit.; post-war figures from Japanese Economic Statistics, F eb ru ary 1948. d Figures in linear measurement not available. e Separate figures not available. f Million square metres.

218 Next to food, there were also large intra-regional movements of clothing materials, notably cotton textiles. China, India and Japan supplied other AFE countries with large quantities of cotton textiles, but, on the other hand, Japan and, after the war, China too, had to import large quantities of raw cotton for their textile industry. The pre-war and post-war imports and exports of raw cotton and cotton textiles of these three countries are shown in Table 138. It is important to note that notwithstanding great loss in equipment and the general handicap in production, Japan still led the AFE countries in the export of cotton textiles in 1947. However, owing to the lack of detailed figures of imports, given in comparable units of measurement, for other AFE countries, it is impossible to ascertain, at this stage, to what extent the export of the above three major cotton-textile producing countries may be able to satisfy the clothing requirements of this region. The other notable textile export from Asiatic countries was raw silk, but since the end of war, silk trade remained at a very low level. Japan exported 5,180 and 946 metric tons in 1946 and 1947 respectively as against 30,300 metric tons in 1936. Similarly, China’s silk export fell from 3,794 metric tons in 1936 to 1,601 and 1,676 metric tons in 1946 and 1947 respectively. It is probable that with the emergence of nylon products, silk may not be able to regain its pre-war place in the international markets.

219 C hapter XI

BALANCE OF PAYMENTS

I. G eneral Feature Information on balance of payments, particularly for recent years, is very limited, but from what is available, the following general observations may be made. 1. Practically the whole region is suffering from heavy deficits on Current account. The only exception seems to be the Philippines. Even the Philippines have a deficit on merchandise account, but it is at present more than counterbalanced by U.S. military and rehabilitation expenditures within the country. If this expenditure dries up or seriously declines, the Philippines will probably have to face serious foreign exchange difficulty in maintaining the present level of imports. From this point of view, even the position of the Philippines does not seem to be inherently very strong. 2. High as they are, the figures of the deficits by themselves do not give a full idea of the difficulties which the various countries are experiencing. Ordinarily, a deficit on current account is a fairly good measure of a country’s foreign exchange shortage. Unless it can be covered by foreign borrowing or sale of foreign securities or depletion of foreign reserves, i.e., by some operation on capital account, the country will be forced to reduce its imports. In the ECAFE countries, however, the position, if we analyse the content and context of the deficit, will be found to be more serious than what the bare figures suggest. In the first place, it should be remembered that the countries are nearly all debtor countries. They have no sizeable foreign investments or foreign balances to draw upon. On the contrary, they have generally large foreign investments, both of entrepreneur and rentier type, within themselves and have therefore heavy annual liabilities on that account. It is true that a few of them, for instance India and Ceylon, accumulated fairly substantial foreign balances during the War. But there are various internal and external difficulties in drawing upon these balances. Externally, the balances, being in sterling or franc, are now largely blocked or inconvertible into dollars. Internally, being largely currency reserves, withdrawal will imply either deflation or substitution of external securities by internal. Both have their difficulties. In any case, it is well to remember that the acquisition of these balances has not changed the net debtor status of these countries. They do not seem to offset foreign investment within the country completely, or even to any large degree.1 The countries therefore have still large net liabilities outwards. All told, the balances cannot thus be regarded as much of a solution of the problem of current deficits. 1B.1 B. R. Shennoy, Sterling Balances of the Reserve Bank of India, 1947.

220 It was largely because of their debtor status that the countries of the region used to have normally in pre-war days an export surplus. The surplus went to pay for the service of the foreign debt (in interest, dividends and amortization) and also for; shipping, banking, insurance and other invisible imports. The countries themselves had few, if any, invisible exports. When the surplus was not quite sufficient for these charges, either the profits earned on the investments had to be partially reinvested within the country or further foreign capital had to be borrowed. It was in this way that the accounts were balanced, and no serious exchange shortage was normally ‘experienced. The position of China and Japan was rather different. China had normally an import and not export surplus, although she had absorbed a lot of foreign capital. This was possible because of large remittances from overseas Chinese. The other countries of the area did not have this source of income. Japan had normally an import surplus which did not, however, fully equal her net earnings on services (shipping, banking, etc.) and consequently left her a positive balance on current account, which was utilized for making investments abroad.2 However, leaving China and Japan out, export surplus was the general rule. During the War the surplus increased considerably because of (a) deliberate cutting down of imports and (b) the almost insatiable war demand for exports. Today that normal export surplus has not only disappeared, but given place to heavy import surpluses. Yet, the countries mostly remain debtors and without any large or readily available foreign balances. Secondly, the deficits have taken place when the level of foreign trade is at a particularly low level. If it had taken place when trade was high, for instance when imports included a certain amount of luxu- ries, it would have caused less strain and hardship. But imports, if deflated by the rise in prices, were in 1947 in most countries (except perhaps in the Philippines) much below the normal pre-war level. The pre-war level itself, it should be remembered, was by no means high. The present imports may thus be regarded more or less as the absolute minimum. The bulk of them consists of food and other essential commodities which can hardly be cut down any further. It will be tragic if the countries concerned are unable, for foreign exchange shortage, to maintain even this level of imports. This shows how much darker in colour the deficit really is than it seems. 3. The overall deficits are accompanied by serious dollar deficits. This makes the position more difficult. As long as currencies were multilaterally convertible, the currency composition of the deficits did not matter. A deficit in one currency could be made good by a surplus in another and only the net deficit remained as the problem. Today, however, “ soft ” currencies are more or less inconvertible into “ hard.” This has hit the ECAFE countries rather badly. They were, most of them, normally not exporters to the U.S.A. (directly or through entrepot countries). Now they have to

2 Balance of Payments, 1938, League of Nations, 1939.

221 import more from the dollar countries because supplies are mainly available there, and they find it difficult to use any surplus which they have with sterling (or other soft currency) countries to settle deficits with the dollar area. Britain had undertaken to restore convertibility of sterling on 15 July 1947, but after a short-lived spell of convertibility, sterling became again inconvertible on 20 August 1947. The dollar deficits thus became a problem independently of overall deficits. And most ECAFE countries have or are tending to develop substantial dollar deficits. 4. The deficit is the result of a combination of unfavourable factors. The most important of these seems to be the fall or insufficient recovery of production. The production apparatus has not yet recovered from the destruction or heavy depreciation suffered during the War. Not only factories, but mines and plantations also have suffered capital depreciation. 20 per cent of the rubber trees, for instance in Ceylon, were slaughter-tapped and became useless long before their time. In China and, to a lesser extent, in Indonesia and Indo-China, internal warfare is still crippling production. In India, communal troubles and heavy refugee movements have slowed down production considerably. Labour discontent, partly due to inflation, has also been an important factor. Inflation has further directly tended to reduce exports and increase imports by raising the external value of the currency over the internal. The general stiffening of import restrictions in importing countries has also automatically restricted exporting freedom for exporting countries. While in all this way, export capacity has fallen or remained low, import needs and costs have, on the other hand, gone up. Low domestic production has made it impossible to replace imports by local goods to any appreciable extent. Further, import prices have gone up higher and higher, making the terms of trade increasingly unfavourable. For instance, in December 1947 import prices were 47·9 per cent higher than export prices in Ceylon (taking 1934-38 as the base) and 134·0 per cent higher in China (taking 1936 as the base) .3 Yet, because the imports are mostly foodstuffs and other essentials, the quantity imported could not be reduced. Urgent development programmes also had to be implemented to some extent, which meant demand for imported capital goods and raw materials. Consumer demand for imports also increased because of liberation of pent-up demand. While in this way the visible trade balance turned adverse, little relief was forthcoming from the invisible side. As already said, these countries had normally very little invisible exports, the only exception being China which used to receive substantial remittances from overseas Chinese. But this has now considerably dried up because the Chinese in Southeast Asiatic countries from whom this remittance Usually came are still (a) unable to remit much, or (b) are with- holding remittances because of fluctuations in Chinese exchange. China and the Philippines have received considerable gifts (in cash and kind)

3 FroFrom m ddata a ta in the Economic Surveys of Ceylon and China for 1947, ECAFE Secretariat.

222 on relief and rehabilitation account, but the other countries have bene- f i ted little from this source. On the other hand, the invisible imports have still remained high. Net exports during the war of course helped some countries to reduce foreign debt and build up foreign balances. India, for instance, was able not only to repay practically the whole of her sterling debt, but build up a substantial sterling reserve. But, as already explained, these foreign balances neither in their capital value have changed the debtor status of the various countries, nor in their income value made them net invisible exporters. It is well to remember that invisible items on the whole occupy a minor role in these countries. The balance of payment is mainly determined by the balance of trade. 5. Information on capital items is even more limited than on the current ones. Known capital movements do not seem to cover the whole of the deficit on current account. However, from what is known, it seems to have been mainly covered by (1) drawing on foreign balances accumulated either during the war (examples, India, Ceylon and China), and (2) obtaining foreign loans (examples, Siam, Burma, China, Indonesia). Between December 1946 and December 1947, Ceylon’s foreign balances fell by Rs. 313 million while India’s (foreign assets of the Reserve Bank) by Rs. 1,040 million. But that on the whole an acute shortage of foreign exchange still remained, is proved by (a) the existence (in certain countries in spite of devaluation) of high black market rates, (b) further drastic restrictions on imports and (c) holding up of much-needed reconstruction and development programmes. It is possible that the situation will improve in 1948. Exports are in different stages of recovery. The import prices have also probably passed their peak. But in spite of all these favourable signs, it is difficult to think how without liberal foreign loans, particularly in dollars, the countries of the region can tide over their foreign exchange shortage.

II. C ountry Summar ies Details for individual countries, in so far as information is available, are given below. Burma : In pre-war days, Burma used to have an average annual export surplus of some 275 million rupees. Even this apparently did not quite cover the earnings of foreign capital, because much undistributed profits used to be still left in the country to go into new investments. Pre-war foreign investments in the major industries were estimated to be £47-2 million.4 In 1946 Burma could export very little and consequently had a very heavy import surplus. In 1947 her export capacity considerably recovered, but was still much behind pre-war standards. She has re-

4 Reconstruction of Devastated Areas, Country Study, Burma, Jan. 1947, C/CN.l/Sub.l/C2/W10.

223 ceived a rehabilitation loan of £ 3 2 ·9 million from the U. K. to help her solve to some extent her foreign exchange problem. Ceylon: Ceylon normally used to have a surplus on merchandise (visible) account which just about offset her deficit on non-merchandise (invisible) account. During the war, she was a net exporter of goods and services and accumulated handsome foreign balances. How the tide has been rapidly turning in the post-war period is shown in the table below : Table 139 C eyl on's Balance of Payments on Current Account, 1938-475 (Rs. million) Exports Imports Visible Invisible Total Visible Invisible Total Balance 1938 .. 289 26 315 234 108 342 - 27 1945 .. 666 471 1,137 608 215 823 +314 1946 .. 765 195 960 684 224 908 + 52 1947 .. 889 77 966 944 190 1,142 -176 The increase in imports has been mainly due to increase in the cost of rice and cotton textiles. Regarding rice, cost increased staggeringly. Although imports in quantity were half of 1938, cost was 2½ times. It may also be mentioned here that Ceylon is a net exporter to dollar countries, thanks mainly to her rubber exports. But her dollar earnings go into the Empire dollar pool and she is not free to draw on them as she likes. Therefore, she has at present also a dollar shortage in addition to the general foreign exchange shortage. The detailed balance for 1947 was as follows :5 Table 140 C eyl on's Balance of Payments on Current Account, 1947 (Rs. m illion) Credit Movements Debit Movements Merchandisea 889 944 Interest and Dividends 24 115 Other Services 53 75 Gold Coin and Bullion 8 Total 966 1,142 Balance -176 a Including parcel post. The deficit has been met mainly by drawing upon the accumulated sterling balances. But the limit to which these balances can be easily or wisely drawn, seems near, if not already reached. The country therefore seems to be heading for an acute foreign exchange shortage. China : China’s estimated balance of payments for 1946 and 1947 (on combined current and capital account) is given in Table 141.6 It will be seen that visible imports far exceed visible exports and on known current account items, aggregate foreign income is far short 5 Economic Survey of Ceylon for 1947 6 Economic Survey of China for 1947.

224 of aggregate foreign expenditure. A large part of the deficit is unaccounted for. China, as already mentioned, had normally an import surplus, thanks mainly to remittances from overseas Chinese. This source of revenue has now considerably shrunk. The items Post-War Lend-Lease Materials and UNRRA Relief Goods are gifts and did not call for any out-payments in foreign exchange. That is why they have been entered as offsetting items on both sides. However, but for these gifts, China’s balance of payments position would have been much worse. Another item of foreign aid, namely, U.S. Forces Surplus Goods, is not entered in the balance sheet, because “ it was to balance the war expenses of the U.S. Forces in China.” Table 141

C hina’s Balance of Payments, 1946-1947 * (U.S. $ million)) Outpayments 1946 1947 Merchandise imports recorded 562 451 Plus : Smuggling and undervaluation 116 93 Government imports 187 150 Foreign debt service 25 45 Foreign remittances 5 5 Chinese expenditure abroad 10 10 Post-war Lend-Lease materials (offsetting item) 53 53 Cost of transporting Lend-Lease materials 15 15 UNRRA relief goods 270 254 China’s share in UNRRA’s administration budget 11 11 Post-war relief to overseas Chinese 5 5 Total 1,259 1,092 Inpayments Merchandise exports recorded 190 214 Plus : Smuggling and under (—) declaration 28 32 Overseas Chinese remittances, recorded 36 14 Plus : Remittances through illicit channels 40 60 Foreign expenditure in China Diplomatic, consular and armed forces 60 30 Philanthropic 13 13 Tourist 10 10 Post-war Lend-Lease materials (offsetting item) 53 53 UNRRA relief goods (offsetting) item) 270 254 Foreign loansa 30 65 Unaccounted forb 529 347 Total 1,259 1,092 * Economic Survey of China for 1947, ECAFE S ecretariat. a Actually obtained by China. b Mostly depletion of Government exchange reserve abroad. India India normally had an export surplus to cover out-payments on account of foreign services and investments in the country. She became a large net seller of services and goods during the War, and was not only able to repay practically her entire sterling debt, but also to accu- mulate considerable sterling balances and buy back some British investments in the country. From the point of view of balance of payments, the peak favourable year was perhaps 1945-46. The estimate

225 29 for that year (incidentally, the latest year for which a private estimate is available) is given below.7 Table 142 India’s Bal ance of P ayments for 1945-46 (In Rupees million) Receipts Payments Current Trade 2,648·6 2,410·4 Service Items (interest on Govt. and Reserve Bank’s .. investments, recoverable war expenditure) 3,570·1 77·4 Other Items (net balance of invisible transactions on private account) 818·3 Gold 2·8 Currency notes 62·6 Total 7,102·4 2,487·8 Capital Purchase of sterling securities 3,609·1 Repurchase of Domestic Sterling Securities Provident Fund Contributions Abroad Changes in Deposits (with UK Govt.) for Amortizaiton 34·4 of Debt Grand Total 7,136·8 6,099·5 It will be seen that there was (from known items) a big surplus on current account which was partly utilized in purchasing sterling securities. After 1945-46, however, the position completely altered and there was “ a substantial deficit ” in 1946.-47.8 An important cause of the deficit was rising food imports which exceeded Rs. 1,000 million as compared with Rs. 240 million in 1945-46 and Rs. 140 million in 1944-45. Not only was there a global deficit, there was also a substantial deficit with the U.S. In the fiscal year 1946-47 (ending March 1947) it was Rs. 150 million. In the next 8 months (ending November 1947,), it was roughly Rs. 495 million.8 With the other hard currency countries also there was a deficit. Previously, it may be mentioned, the country had “a substantial surplus ” with the U.S.* Indo-China Before the War, Indo-China had normally an export surplus which almsot exactly offset (during 3 years 1935 to 1937 her out-payments in interest and dividends.9 The League of Nations estimate of her balance on current accounts for 1937 was as follows : The capital balance showed a net outward movement of 337 million francs. No post-war estimates are available, but in 1947 Indo-China had a heavy adverse balance on merchandise account (500·3 million pias-

7 AAnjaria n jaria and Pinto, Notes on the Statistics of India’sIndia's Balance of Payments, International Monetary Fund, 1947.1947. 8 Budget Speech of the Finance Minister, Feb., 1948. 9 Balance of Payments 1938, League of Nations, 1939. * On purely merchandise account, according to figures given in the Accounts of Sea-borne Trade of India for January 1947, there was a surplus balance of Rs. 157 million with the U.S. in the period April 1946 to January 1947. (See Table 141 above). 226 Table 143 Indo-China’s Bal ance of Payments, 1937 (million francs) Credit Debit Merchandise 2,611 1,562 Interest and Dividends 24 863 Other Services Remittances of immigrants 134 Tourist Expenditure 10 82 Expenditure on National Defence 335 35 Other 85 176 Gold 70

Total 3,135 2,852 Balance +283 tre s). She had also a deficit with the U.S. In 1946, however, strange as it may seem, she had a big favourable balance of trade. This was mainly due to the export of rubber stocks accumulated during the war. Indonesia Indonesia normally had a large export surplus which helped to pay for the invisible items she owed to Netherlands. She also had a specific surplus with the U.S. In 1939, her exports to U.S.A. were 157·2 million guilders and her imports from U.S.A. were 63·7. Even this does not give a full measure of her dollar earnings. In addition to direct export to U.S. she used to send large quantities through Singapore. She was an important source of dollars for the Netherlands.10 Table 144 I ndonesia’s Balance of Payments, 1939 (Million guilders) Receipts (Exports) Expenses (Imports) Merchandise .. 749 Imports 536 Gold 9 Increase in Indonesian gold Decrease of gold possession abroad 20 abroad .. 44 Interest and Dividends .. 179 Correction of export value .. 28 Sea-borne passenger traffic .. 12 Tourists 3 Delegations .. 22 Government receipts in Tourist expenditure .. 12 Netherlands .. 22 Payments to Directorates Govt. contribution to the cost of abroad .. 22 the Navy .. 10 Pensions .. 40 Other 9 Other 8

Total .. 874 Total .. 849 Redemption of Loans .. 41 New capital investment .. 18 Purchase of Investments Increase in floating debt in abroad .. 12 Netherlands .. 42 Remittance of Insurance premia, etc 8 Short term credits and unexplained _ differences Short term credits and unexplained — differences .. 23 Total .. 60 Total .. 84 Grand Total .. 933 Grand Total .. 933 Her balance of payments for 1939 is shown below:11 No post-war estimates are available, but it is known that in 1947 she had a heavy overall adverse balance of trade. Total imports were 750· 7 million guil- 1019 Netherlands East Indies in the Netherlands Economy, IMF., MMay ay 1947. 11 Statistical Pocketbook of Indonesia for 1941, Govt. BBureau ureau of Statistics, 1947. 227 ders and total exports 333·0, leaving an import excess of 417·7 million guilders.12 She had also a deficit with the U.S. The loan of 100 million dollars from the U.S. was of great help, but did not solve the problem of foreign exchange shortage. Japan Japan’s balance of payments on current account is at present necessarily very adverse, since her production and export capacity is still only a fraction of that of the pre-war and her essential import needs are still very great. The deficit is being made good by Allied Powers, mainly by U.S. appropriations. On trade account which is practically the whole of her current account now, she was expected to have in 1947 a deficit of the order of U.S. $352 million (estimated imports 526 million and exports 174 million).13 It is well to remember that Japan’s foreign trading is still entirely controlled by the SCAP. The volume of imports and exports is determined by the SCAP and not necessarily on purely economic considerations. If private trading was allowed and an exchange rate evolved, what the proportions of export and imports would have been, cannot be said. Quite probably the gap between the two would have been greater and the problem of exchange shortage much more acute. Regionally, Japan had in 1947 a small positive trade balance with non-dollar countries, but since her requirements came from U.S., there was a heavy dollar deficit. The surplus with the non-dollar area could little compensate the deficit with the dollar area. The non-convertibility of sterling after the middle of the year, made things worse for her. It is difficult to see how without large appropriations of convertible foreign exchange through foreign credits, private or governmental, which she can use for importing raw materials and capital goods, she can solve the problem of her foreign exchange shortage. Philippines The Philippines seem to be the only country in the region which has at present a favourable balance of payments and sufficient foreign exchange resources. This exceptional position is due largely to the heavy volume of U.S. government payments (Army and Navy expenditure, back-pay of Philippine Army, rehabilitation payments, etc,). Both for 1946 and 1947, the receipts on this head exceeded the receipts on all other heads put together. The current level of imports has also been high. 1947 import would compare favourably with th at of 1939, even if deflated by the rise in prices. Indeed, the Joint Philippine- American Finance Commission recommended “ a program of import control to reduce non-essential imports.”14 In 1946, however, the position was much less favourable. The balance of payments (on current account) as estimated by the Joint Philippine-American Commission showed really a deficit of 356 million pesos, which was met by a decline in foreign balances to that extent.15

12 Foreign Commerce Weekly, U.S. Dept.D ep t. of Commerce,Com m erce, MayM ay 1948. 13 InformInformation ation from SCSCAP, A P, Summation of Non-Military Activities in Japan, February,F ebruary, 1948. 14 Joint Philippine-American Finance Commission Report, 1947. 15 Ibid., p. 93.

228 The Philippines, it should be added here, have been receiving large direct transfers of surplus property from the U.S. not calling for any foreign exchange payments at all. The balance for 1947, current and capital accounts combined, is presented below.16 As it is, the balance shows a surplus of 69·9 million pesos. If the items were separated into current and capital accounts, the current receipts would be 1,266·4 and current payments 1,309· 2, showing a deficit of 42·8 million pesos. The capital receipts would be 158·7 and payments 46·0, showing a surplus of 112·7 million pesos. The surplus being mainly a dollar surplus, the Philippines have no dollar problem at all. The key factor in the Philippine balance is U.S. government expenditure. According to projections made by the Joint Philippine- American Finance Commission, this item would considerably shrink by 1951. It is probable that thereafter the Philippines would have considerable foreign exchange difficulties. Table 145 P hilippines’ B alance of Payments, 1947 (m illion pesos) Receipts Exports .. 531 Gold 4·5 Freight 14·5 Sugar Processing Tax 12·9 U.S. Army and Navy expenditures .. 483·5 Pensions to War Veterans 52 Foreign diplomatic expenditures 3·5 Interest and dividends on Philippine Investments abroad 6·4 Long-term investment (sugar) 16 Remittances of Filipinos in Hawaii and U.S. 30 Tourist expenditures 15 War Damage Commission payments 2 9 6· Other U.S. Government expenditures 10·5 United States loans 120 Receipts from sale of U.S. bonds 22·7 U.S. Tax refunds 10 Transfer under Surplus Property Agreement including redemption of emergency currency 50 UNRRA 3 Other 10 Total . . 1,425·1 Payments Commercial imports .. 1,022·7 Interest and dividends 7·5 Expenditures of Philippine Government abroad 2·5 Contributions to Fund and Bank 36 Freight and insurance 125·5 Tourist expenditures 23 Remittances of foreign residents 100 External debt services (arrearages in sinking fund contributions) 18 Amortization of long term capital 10 Other 10 Total .. 1,355·2 Surplus 69·9 16 Data supplied by the Philippine Government for the Survey.

229 Siam Before the War, Siam was normally a large net exporter, the exports being round about 150 per cent of the imports. She also normally had an export surplus with the Americas.17 On aggregate known current items, she had from 1934-35 to 1937-38 large surpluses which could not be accounted for by known debit capital movements. The difference is thought to be explained by private remittances of Chinese and other immigrants to their families abroad,18 In the post-war period she has been experiencing adverse trade balances and judging by known items, also adverse balances of payments. The merchandize deficit increased from 94·9 million baht in 1946 to 363·7 million baht in 1947. The main reason is considered to be the over-valuation of the baht.19 The balance of payments on current account for 1946 was estimated to be as follows.20 Table 146

S ia m ’s Balance of Payments, A pr il 1946—M arch 1947 (million baht) Inward (credit) Outward (debit) Merchandise 445·2 553·8 Remittances 2·5 2·3 Gold 89·1 ·9 Total 536·9 557·0 Deficit .. - 20·1 For 1947, the following estimate has been given.21 S ia m ’s B alance of Payments for 1947 (million baht) Credit Debit Trade 1,045·6 1,114·2 Services ·6 14·7 Remittances 2·8 16·1 Gold 295·2 Total 1,049·0 1,440·2 Deficit -391·2 It is pointed out, however, that (a) exports were probably much larger, there being large-scale smuggling of rice, tin, gold and other commodities and (b) outward remittances by Chinese residents were not included in the estimate. “ It may be assumed, therefore, that the deficit was more apparent than real.”21 The fact that it was caused largely by importation of gold also reduces its seriousness considerably. Siam, it may be added, has received a loan of 10 million dollars from the U.S. and 50 million rupees from India. This has helped to relieve her exchange shortage to a large extent. That the position towards the end of 1947 had considerably improved is shown by the fact that the open market rate for the baht was substantially higher than at the beginning of the year. 17 Statistical Yearbook of Thailand, 1937-38 and 1938-39. 18 Balance of Payments 1938, League of Nations. 19 Econimic Survey of Siam for 1947, ECAFE Secretariat. 20 Bank of Siam’s Report for 1946. 21 Economic Survey of Siam for 1947, ECAFE Secretariat.

G. S. PRESS, MADRAS