General Headquarters of the United States Army Forces, Pacific

“ Inflation must first be sterilized at the source. This means that all economic and political decisions must be directly related to cost and the production needs of the economy.
It is not easy for a government to reduce its own spending in terms of subsidies, investments, and other general expenses. Nevertheless, it has to be done and awkward decisions cannot be set aside. Government expenditures have to be limited to the resources from available taxes. Reduction of taxes is the end result of reduction in government expenditures. ”

“ The facts are that the spending power in existence is too large for the supply of goods and services left over after satisfying the requirements of the government, exports, capital programs and war termination costs.
Under present conditions if the people are to have or to consume more it can only come from reducing these requirements or as a gift from the United States. Therefore, any relaxation in favor of the domestic economy must be offset by a tightening up somewhere else and every consideration in favor of the domestic economy must be accompanied by offsetting proposals of retrenchment. ”

“ It is the height of folly to point with pride at an increasing production index or increasing exports which may actually represent only increased U.S. aid, increased subsidies and increased deficits. Too much attention is being given merely to raising the totals of production and exports without regard to cast or net results. Too little attention is being given to the need for creating the greatest possible net production and using imported raw materials so as to create the greatest possible amount of net exports. ”

“ The tax revenues in the present budget are at the already existing tax rates applied to a higher level of income and prices. This is one of the products of inflation.
The attainment of the revenue objective under the taxes set forth in the budget is essential to meet the expenditures provided for in the budget.
The tax rates themselves are high but the effective collection under the rate are low. There is a real need for greater equity in tax administration. ”

“ Everyone complains about the high price effects of inflation but wants to keep on getting his own slice of government funds. Inflation is always considered bad for other people but individuals want to keep for themselves whatever personal benefits they mistakenly believe arise from it. Increased subsidies, increased wages and increased government expenditures go hand in hand with higher prices to consumers and higher taxes. ”

“ It should be remembered that a government can neither spend nor give away except what it first acquires from someone. Governments only spend other people's money. Wealth must be created before it can be divided.
The Japanese people should demand a balanced bedget and should then direct their attention to the elimination of excessive expenditures, wastefulness, subsidies, over employment and the general dependence on government instead of individual or group accomplishment. It is these which must be revised to produced later tax reductions. ”

“ There can be no permanent substitute from the resources of another nation for the efforts required from the Japanese Government and the Japanese people to meet their own problems. To live as a self-supporting and not a dependent nation Japan must accumulate capital by savings and economy, it must supplement its limited internal resources with materials and products only available from other sources and it must be able to pay for them from expanding exports. ”

“ One leg of the "stilts" has been built from subsidies. These have been hidden in the transactions of the foreign trade account and have not been clearly shown in the budget. Actually they are government grants to particular producers, or consumers, from the government tax revenues collected from all of the people and from the proceeds of the U.S. aid furnished Japan. Now these actions will be made clear and grants of tax money to reduce prices of special goods or products to consumers will be seen. ”

“ The average man cannot be induced to practice thrift unless his government sets the example. No government can expect from its people virtues which it does not itself practice.
Some salutary anti-inflation readjustments and developments are not only necessary but desirable for the longer run good of the Japanese economy. It cannot afford to waste any existing elements of strength and supporting the unrealistic distortions and dislocations of an inflationary trend. ”

“ The creation and implementation of a balanced budget is the first requirement of the Nine Point Stabilization Program. As such it is the unqualified obligation of every political party and every individual. It should have been made an integral part of each party platform. It is a Japanese national problem, not a political party problem. ”

“ There should be a general recognition that an increasing part of the national output will be needed for years ahead to replace the free goods now coming from the United States, which cannot come forever. ”

“ But no tax rate will be equitable or effective until each individual is willing and is required to pay his proper share of the tax burden. Modification of the existing tax rates can be justified only when the people wholeheartedly do their part in meeting their tax liability.
The administrative requirement is to insure that every individual pays his full legal tax debt. The honest tax payer should not be penalized by being forced to carry the load of the tax evaders. The profits of the tax evaders and the black market operators should be the first and most vigrously attacked. ”

“ Also it must not be overlooked that government investments and expenditure are rarely as productive as private investments and expenditures of the same amount. In a shortage economy every resource, whether money, labor or material, drawn off for unnecessary or non-productive purposes tends to add to inflationary pressures. ”

“ The nation continuously has been living beyond its means. There has been a general disposition in the Japanese government to accede to any demand to spend more and more and to attempt to spend every source of income more than once. ”

“ It is for these fundamental reasons that every individual citizen has to make it a personal as well as national goal to produce more and to save more.
There is no other way for the individual or the nation to have more. ”

“ If this is to be accomplished, there must be less of thinking solely in terms of how much U.S. aid will be forthcoming and more thinking of increased production, decreased costs and greater exports. To substantially increase exports will require continued limitations on domestic consumption and an emphasis on the needs of the export consumer rather than that of the domestic consumer. While the domestic need for consumer and capital goods is real and apparent, internal rehabilitation and expansion necessarily falls into second place behind the need for a priority of exports. ”

“ Bu the taxes are paid by all of the people and except for subsidies granted to hold down the price of basic foods consumed by all the people, the tax proceeds going into subsidies are distributed for the benefit and protection of special groups of people. ”

“ Japan's population has been increased by repatriation and concentrated to its homeland. There is a large net gain in population each year. These are serious problems. Their effects reach everywhere and they cannot be quickly or easily overcome. ”

“ To meet the problem it will be necessary for the Japanese Government to assume and exercise the power and find the means to discharge its responsibilities to the nation, to the United States, and to the Allied Powers. ”

“ Any measurement of the direct and indirect losses resulting from the war will clear show that Japan cannot afford to dissipate capital. It has suffered severe physical loss and damage and economic and financial dislocations. ”

“ Subsidies are exposed in the budget so as to clearly place the responsibility for their use in the Japanese government and to ensure that appropriate action will be taken to reduce and finally eliminate them. ”

“ That is why wage stabilization is a fundamental factor in general stabilization. But while it must be remembered that wages increase by arithmetical progression, prices increase by geometrical progression. ”

“ Member of Detroit Board of Commerce (and has been a director) ; a Director of Economic Club of Detroit since its organization; member of Detroit Committee of Council of Foreign Relations; member of Corporations Gifts Committee and Director of Detroit Metropolitan Community Chest; Trustee Greater Detroit Hospital Fund; and has acted on several other civic enterprises. At present a sponsor of Detroit CAR Committee, and during war acted on several war-time committees, such as Defense Savings Committee and Victory Fund Committee. ”

“ Whatever the problems may be here they will be approached and considered by everyone concerned solely on the basis of local conditions and the fundamental requirements for achieving and effective financial and economic stabilization under the conditions relating to Japan alone. ”

“ President of Michigan Bankers' Association during 1944-45 association year; active for years on many of its committees; member of association of Reserve City Bankers, active on several of its committees, Chairman of Board of Trustees of Banking Research Association twice, and held other offices in this organizations; a Director of Federal Reserve Bank of Chicago from 1938 through 1944; and a member of Advisory Committee of Detroit Loan Agency for Reconstruction Finance Corporation since 1937. ”

“ Sept. 18, 1946 received Medal for Merit, highest civilian war award, from Secretary of War Robert P. Patterson. Medal for Merit is awarded only by President of US for "Exceptionally meritorious conduct in the performance of outstanding services in the war", and ranks with military Distinguished Service Medal ”