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there should develop between any of the High Contracting Powers a controversy arising out of any Pacific question and involving the said rights which is not satisfactorily settled by diplomacy and is likely to affect the harmonious accord now happily subsisting between them, they shall invite the other High Contracting Powers to a joint conference to which the whole subject will be referred for consideration and adjustment." After August, 1933, this treaty may be terminated at 12 months' notice.

It is difficult to conceive of any action of the United States which would force Japan to take arms in self-defense. The policy of the United States as regards China has been consistently that of the "open door," while as regards immigration she asserts her right to determine who shall be settlers in her territories. An attempt by Japan to upset this policy by force connotes aggressive action; indeed it is only by prompt and aggressive action that Japan, militarily the more prepared of the two, could hope to succeed against a power with the immense latent resources of the United States. That is to say, the choice between peace and war rests in almost any conceivable set of circumstances with Japan. In what circumstances could war appear to the statesmen of Japan to offer advantages commensurate with its risks?

Japan could no more expect to conquer the United States than she in 1904 expected to conquer Russia. The most she could hope to do would be to make the United States see, as she made Russia see, that it was not worth while to continue the struggle. As I have explained, such a war must be mainly a naval war, that is to say a war in which the power to keep fleets at sea, to reenforce them, and to make good the losses of battle would be of paramount importance. Now, I take from the Statesman's Year Book a few comparative figures of the production of the United States and Japan in a few of the essential raw materials of war:

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In fact a war between the United States and Japan would be a war be tween that one of the Great Powers which has the largest supplies of raw materials and the most highly developed industries applicable to the purposes of war, and the Great Power which has the least of both.

But it may be said that Japan could draw from Europe the steel she would require. For this she would have either to lay in sufficient stocks of raw materials before the war came or be assured of a regular supply from the Atlantic Basin. The laying up of stocks for a war which would exhaust the patience of the United States is not a possibility. It could not be done secretly and would involve a financial strain which Japan is not capable of enduring. The importation of stocks from Europe during war could only be with the good will of Breat Britain. Now, the spirit of the Four Power Pact is clear. intention is that disputes arising in the Pacific should be referred to dis cussion by conference. As a party to that Pact we would not be in the least likely to support the Power which went to war without reference to a conference. Nor is it in the leas probable that Japan, realizing her de pendence on Europe for raw material: of war would venture to proceed t extremities with the United State without first assuring herself at leas of our benevolent neutrality.

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On all these grounds, a Pacifi war in the sense of a war in volving the United States and Grea Britain is amongst the least probabl of dangers to which the world is a present exposed. May I conclude b saying that I have throughout thi article assumed for purposes of argu ment that Japan would have design which I do not think she would be a all likely to entertain.

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Is a War with Japan Possible? Yes

Condensed from The Forum (June '26)
Hector C. Bywater

HE view has been advanced that Japan and the United States can never, under any circumstances, come to blows. Briefly, the argument is this: Modern naval warfare demands an immense expenditure of material, especially steel, coal, and petroleum; of these materials America has an inexhaustible supply, while Japan's reserves are strictly limited; therefore, Japan would never dream of going to war with America. The syllogism is plausible without being wholly convincing. Its initial argument obviously has reference to the history of the World War, on the course and outcome of which produc tive resources did undoubtedly exercise a decisive influence. It does not follow, however, that all wars are governed by this factor to the same extent. Take, for example, the RussoJapanese conflict of 1904. The materi al assets at Russia's disposal were so incomparably superior to those of her antagonist that had the issue depended on this element alone, Japan's defeat would have been a foregone conclusion.

Between the conditions under which that war was fought and those that would obtain in a struggle between Japan and the United States there is an analogy close enough to merit areful study. When Japan challenged the mighty Russian Empire in 1904 he seemed, in the judgment of friends nd foes alike, to be courting certain estruction. She had practically no eserves on hand to repair her losses war material. Her industry was not et competent to build large warships I manufacture heavy artillery. Her avy was almost entirely of foreign onstruction, and if a ship above the ght cruiser type were sunk it could ot be replaced while hostilities last

yes ashole 1941

ed. Her stocks of coal, iron, and other commodities indispensable to warfare seemed altogether inadequate for a prolonged campaign. Financially, too, she stood at a grave disadvantage; Russia of those days had abundant cash and credit at command. For these reasons a Russo-Japanese war had long been scouted as impossible by many observers in the West. Yet, notwithstanding their predictions, the impossible happened, and the war continued for 19 months. Moreover, Japan was able to keep her navy and army supplied with all needful requirements right to the very end.

The error into which the prophets had fallen was in confusing potential with actual resources. Russia was never able to deploy more than a relatively small part of her strength in the war zone, which lay at an immense distance from her centers of production. Had she had the prescience to double-track the Siberian Railway be. forehand, the war would probably have ended differently. As it was, all her combatant material, men as well as munitions, had to be conveyed over 6000 miles of single railway track. Great difficulty was experienced in at making good the wastage the front; with all her efforts she at no time succeeded in bringing more than a fraction of her potential force to bear on the enemy. Japan, on the other hand, fighting on her own ground, was able to throw into the contest every ounce of weight she possessed. Russia fought with one hand tied, Japan with both hands free.

A future war in the Far East, with Japan and the United States as bel. ligerents, would be waged under con ditions not very dissimilar. The term "Far East" is used advisedly, for it

is certain that Japan would confine her major activities to the Western Pacific, where she enjoys all the advantages of position. Fundamentally the problem confronting the United States would be one of transport. The consensus of professional opinion is that Japan's opening move would be to attack Guam and the Philippines in overwhelming force, perhaps simultaneously. If these territories were occupied by her in the first month of the war, as there is good reason to suppose they would be, she could await the American riposte without undue misgiving. It may be that the United States, recognizing the peculiar difficulties of it's position, would follow the line of least resistance by initiating peace negotiations. But it would have to reckon with public opinion, which would naturally regard such action' as a confession of defeat If "victory at any price" became the national slogan, the authorities would have no choice but to prosecute the war regardless of cost.

Japan's main line of defense would run from the Kurile Islands to the Philippines, with advanced positions in the Bonin, Caroline, and Marshall Islands. It would be America's task to break through this line and secure a firm foothold on ground within easy striking distance of the Japanese

coast. In no other way could victory be achieved by armed force. It is often stated, however, that America would win the war without firing a shot, by remaining strictly on the defensive in her own waters, employing her vast wealth to destroy the credit of Japan and reduce her to bankruptсу. Even if this were feasible, the process would be a long one, and it is questionable whether the patience of the American people would, survive the strain. The Washington' Government would in all probability be compelled by the pressure of public opinion to adopt a more active military policy. This, to be effective, would entail the despatch of a great expeditionary force across the Pacific, with one or more of the Japanese islands

as the objective of attack. Nowhere along the route would a friendly base be available. Moreover, the expedition would be in constant danger of attack by Japanese submarines after leaving Hawaii, and each day's prog ress toward the West would increase the desperate hazards of the voyage. Every movement of the force would be observed and reported by Japanese patrols operating from the numerous islands which flank the line of approach from the East, while the American commanders would be entirely in the dark as to the enemy's plans and the location of his main fleet. The annals of war afford no parallel to an enterprise so desperate or one so devoid of reasonable pros pect of success.

The United States would derive lit tle military advantage from her boundless resources in iron, copper coal, and petroleum. She might, of course, create new fleets and armies on a gigantic scale, but unless they could be brought into contact with the enemy their creation would be sc much wasted energy. Japan, on her part, would have no need to mak heavy inroads on her material re sources. Given adequate supplies o fuel for the fleet, she could await de velopments with equanimity.

We see, therefore, that to count o Japan's inferiority in material re sources as a positive guarante against war in the Pacific would surelbe unwise. The peace of that ocea is not menaced at present, nor nee the shadow of war ever darken itwaters if the peoples of East and Wespractise a mutual forbearance an strive to cultivate а better unde standing of each other's domest problems. If, however, they negle this duty, choosing rather to pursu invidious national policies regardle of neighboring interests, the dang of an armed crash will be very rea nor will it be mitigated by the supe ficial superiority of one party or th other in the raw materials which fee the furnace of war.

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The New Competition

Condensed from The Nation's Business (June '26)
0. H. Cheney

USINESS warfare, like war itself,

has in the past few years left the old battlegrounds and the old weapons. The business man these d days doesn't know where he is going to be hit next, or how. It is a wise man who knows his competitor.

The growth of trade associations is at an example of this. By some form

of herd instinct, men who still consider themselves competitors flock together for mutual protection from the mysterious dangers that lurk around them in the wild business jungle. They unconsciously feel that the competition between them has become of minor importance compared with the new competition.

Distribution was formerly along a straight line and competition was along other straight lines. In other words, the line of distribution was from producer through wholesaler and retailer to consumer. The lines of competition were between producers turning out similar products, between wholesalers in the same line, and between retailers selling practically identical goods.

The old competitive methods ranged from price-cutting to arson, including slander, bribery, espionage, man-stealing and fomenting strikes. But nowadays, when two men in the same line meet, they start talking about cooperative advertising or standardizing sizes, eliminating unnecessary styles, uniform cost accounting or standard terms to the trade. They may even talk of a merger.

The new competition is, broadly, pressure for distributive outlets; where this pressure was formerly exerted within certain established channels, the intensity of competition has broken these down and is making its own channels. The basic reasons for

these terrific and newly directed pressures are, of course, the surplus plant capacity available for production and the tremendous progress in exploitation through advertising, publicity and salesmanship.

This competition may be observed with the producer of the raw material. The dairy farmers join a league which buys milk routes and milk-product and ice-cream plants, entering into competition with their own customers. A copper mining company buys a brass factory. Manufacturers become dissatisfied with the volume which they are selling through wholesalers and begin to sell direct to the retailers, as in the grocery field.

Both manufacturers and wholesalers enter into competition with the retailers by organizing chains of retail stores. They go even further and try to eliminate the retailer and sell through house-to-house canvassers, as in the case of hosiery or household appliances; further still, they try to eliminate the canvasser by using the mails.

The retailer himself, by multiplying his stores, assumes the function of the wholesaler and competes with him. The most striking examples of the chain-store system are, of course, in groceries, dry goods, variety goods, tobacco and the like. Independent retailers combat chain competition by organizing group buying associations or combining their buying power through resident buyers, as in the dry goods field. Chain and group retailers go even further and enter the producing field, entering into competi tion with the manufacturer, and frequently the wholesaler does likewise.

This tendency to control the source of supply goes still further back along the lines of production and distribu

tion; automobile manufacturers buy parts plants, Henry Ford buys and builds steel, textile and glass plants, sugar refiners buy cane plantations, tire manufacturers buy rubber and cotton plantations, canners subsidize fruit and vegetable growers.

But this intra-industrial competition is only one type of the new competition. There is the competition between two divisions of the same general industry which produce commodities used alternatively. This type we may call inter-commodity competition.

When the weary rent-payer decides to build, he becomes the object of competition between lumber, brick, stone, Portland cement, tile and new combinations-not to forget slate, treated wood shingle, asbestos, copper, zinc and asphalt compositions for the roof. When his wife answers the call of spring with a new dress she is confronted by the competition of cotton, wool, silk and rayon and the almost countless number of varieties and combinations of these. And the number of products which compete for a place on the dinner table is even less calculable.

In the same category, for instance, is the competition of fuel oil with coal; of the motion picture with the theater, the radio and the book; of the automobile, bus and truck with the railroad and the street-car; of magazine, newspaper and billboard for advertising. That this type of competition is increasingly recognized is proved by the growth of trade associations and of their constructive cooperative activities on behalf of all interested in a particular commodity or service, and sometimes of destructive efforts against competing interests.

But, again, inter-commodity competition is also not one-way competition. There is a natural tendency of almost every kind of store to follow the liberality of the drug store in interpreting its function. Only Mr. Wrigley knows all the different available outlets for chewing gum. Real estate and automobiles are being sold by department stores. There are hundreds of products which are sold in

hardware, drug, grocery and depart ment stores.

Instalment selling is the dominant manifestation of this inter-industrial competition. The ways of spending money have been multiplied a thousand-fold. Realizing that this week's pay envelope is pretty well exhausted, manufacturers and merchants are making organized attempts to assure themselves a good share of next week's. "The automobile industry did it; why can't we do it?" This is the logical question which one industry after another is asking itself and answering in the affirmative. Who can deny that the present prosperity of the automobile industry is the result of time-payment sales when full threequarters of the vehicles sold are financed? Who can deny to the cloth. ing manufacturers, to the paint manufacturers, the right to sell on time? But what can be done about it if the aggregate of instalment buying goes too far? What is too far? The answers to these questions will have to be faced by business in the next few years.

Did we have to wait for the delightful debate between Florida and California to realize that there is competi tion between communities for popula tion? What of the frequent competition between factories for labor? What of the competition between industries for investors?

Overshadowing all these types of competition in the vastness of its effects is international economic com petition. Every day brings new evidence that the distributive pressure of nations is becoming more intense. It is difficult to prophesy what the next few years will bring.

Only a few scattered individuals at present realize the import of these developments which must inevitably assume vital intensity in the next decade. The drama of the new competi tion becomes more absorbing, more vivid, more hectic. It becomes universal in its sweep. It is impossible for anyone to see it all, because we are all actors as well as audience. And, unless we can break away and see clearly, it may be too much for us.

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