War and Trade in Japan Japan , has made little
progress this week in her advance on Hankow. The city itself; and the Canton-Hankow railway have been severely bombed, and the Yangtze forts below Kiukiang heavily bombarded ; but the Chinese entertain some hope that the advance along the river may be held. In the North, the Yellow River floods have risen owing to heavy rainfall, and Chinese guerillas have now adopted the policy of breaching dykes in the rear of the Japanese lines. The war operates increasingly as a cause of economic change in Japan. Like Germany, she finds that increasing armaments lead to difficulties in maintaining her export trade, while increasing the demand for raw materials. A foreign exchange fund of 300,000,000 yen has now been established to subsidise exports and the purchase of raw materials, and domestic consumption of cotton goods is to be diverted to rayon, so that Japan's cotton manufactures may be used entirely for export. The pressure of the war forces Japan increasingly to adopt the devices of a dosed economy ; but such devices must in the end react disastrously on her export trade, on which she is so dependent, and unless her export trade can be maintained and increased she will have difficulty in paying for the war and in providing. the capital for developing and reorganising her conquests in China.
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