Can Japan Pay Damages?

Morally it is right that the nation guilty of international banditry should reimburse its victims. But there are practical limits beyond which such payments cannot go. After defeat, Japan will be too impoverished to meet these vast obligations in either money or goods.

Large-scale payments in gold and currency can be a menace to both victor and vanquished. They may wreck the financial system of the defeated country and upset international exchange to the detriment of the winners.

Reparations in goods or the tools of production are another matter. It is probable that Japan will be required to transfer wealth in this form to its “moral creditors,” especially China. But Japan’s ability to pay with manufactured goods depends upon the recovery of its industries after the war.

German labor is being used in Europe to help rebuild devastated areas. But in the Far East, where the supply of labor is almost unlimited, it is unlikely that similar demands will be made upon Japan. As a more practical measure to help in the rebuilding of China, Chinese economists recommend the transfer to their government of all frozen Japanese cash balances in the United States and the British Empire.

Many experienced economists do not believe in stripping Japan bare by a merciless reparations policy. The Japanese will not surrender the industrial equipment and goods demanded of them except under compulsion. Reparations will be a continued source of ill will between Japan and her conquerors. And it would be undesirable to have this friction go on indefinitely. These experts believe, therefore, that a total sum should be fixed, within Japan’s capacity to pay, and that it should be paid within a reasonable time limit, perhaps ten years.