General Headquarters of the United States Army Forces, Pacific

“ 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. ”

“ 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 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”