the Chinese farmer who is the ultimate buyer of clothing dyed in China. Imports of indigos and sulphur blacks for the first half of the year were about the same as in 1936, but imports of aniline dyes advanced. Hostilities interrupted the trade in the affected areas. For a short period interior districts served through Hangchow had a fair trade, límited only by difficulties of transportation to the districts. Trade through Central and North China came almost to a complete standstill in November and December.

Destruction of cotton spinning and waving mills is curtailing the local supply of material to be dyed in China, and prospects for 1938 are uncertain. Where districts can resume more or less normal life and where a resumption of farming is possible, trade will follow fairly promptly.

The 17 factories producing sulphur black, which had an estimated output of 17,000,000 pounds in 1936, were reported destroyed. The small production of such coal-tar products as cresols, cresylic acids, phenol, and naphthalene stopped in August.

Imports of Coal-Tar Dyes Into China in 1936 and 1937

PHARMACEUTICALS AND MEDICINALS

It was estimated that sales of pharmaceuticals and medicinals in the first 8 months of 1937 were well ahead of the corresponding period of 1936, but during the last 3 months of the year the volume was only 25 percent of that for the corresponding 1936 period. It was impossible to supply demand for goods to the interior, except that which might be sent by parcel post over devious routes. Purchases were curtailed to day-to-day requirements. Large quantities of medicines were reported lost by fire in the Nantao section of Shanghai. A considerable volume of business was done through Hong Kong for Central and West China. Many dispensaries in the Shanghai-Nanking area were closed or destroyed, as well as hospitals in various parts of China. At Canton there was little change in value of imports, compared with 1936. Price differences favored German goods, slightly, at the expense of American products.

At Hong Kong a new ordinance, amending the law relating to poisons and the registration of pharmaceutical chemists, was effective

January 1, 1938. The pharmaceutical section brings the old laws of Hong Kong into line with existing English practice.

Imports of ginseng dropped from 3,104,946 hectograms valued at 1,507,571 gold units in 1936 to 2,846,427 hectograms valued at 1,354,306 gold units in 1937. Direct imports from the United States advanced from 159,694 hectograms in 1936 to 187,528 in 1937; from Kwantung Leased Territory, 409,432 to 584,769; from Korea, 281,688 to 311,510; and from Japan, 348,405 to 446,618, whereas receipts from Hong Kong declined from 433,355 hectograms in 1936 to 275,559 in 1937.

Imports of medicinals and drugs, not specified, advanced 3 percent, to a total of 4,840,384 gold units in 1937, of which Germany supplied 2,181,479 gold units and the United States 640,611-increases of 24 and 17 percent, respectively.

PAINTS AND ALLIED PRODUCTS

The domestic paint and varnish manufacturing industry at Shanghai suffered heavily; two of the principal Chinese plants were wrecked, and both Chinese and foreign plants were out of production from August to December.

Gums and waxes imported during 1937 were valued at 4,581,536 gold units, an increase of 18 percent over 1936. The United States continued to lead the trade in resins, supplying practically the entire amount of imports of this product.

FOREIGN TRADE

With the exception of tung oil, and relatively small amounts of miscellaneous commodities such as medicinals, essential oils, and musk, exports of chemicals and allied products are unimportant. Total exports advanced from 86,388,500 yuan ($25,700,000) in 1936 to 105,438,900 yuan ($31,220,000).

Notwithstanding hostilities, exports of tung oil continued to be shipped and amounts sent to the United States were the highest on record. Total exports of tung oil advanced from 86,738 metric tons valued at 73,378,654 gold units in 1936 to 102,979 metric tons valued at 89,845,563 gold units in 1937. The United States continued to be by far the largest consumer, direct shipments having been 64,113 metric tons in 1937, and probably the bulk of shipments to Hong Kong amounting to 21,236 tons, were for the United States. Exports to other leading countries in 1937 were: Germany, 4,281 tons; France, 3,715; Great Britain, 3,683; Australia, 545; Denmark, 498; Belgium, 336; Japan, 747; and the Netherlands, 600.

Imports of chemicals and allied products rose from 46,035,283 gold units ($30,889,500) in 1936 to 47,665,300 gold units ($31,745,000) in 1937. Germany supplied 40 percent of the total imports, Japan and the United Kingdom, each, 14 percent, and the United States, 13 percent.

JAPAN

Assistant Commercial Attaché Paul P. Steintorf, Tokyo

During the first half of 1937, energy in Japan was centered on the munitions-production program, which is closely related to various important chemicals. General industrial activity also was very high, greatly increasing the demand for industrial chemicals. Military activity in China during the latter half of the year further accelerated the development of the chemical industry in Japan and created a new demand for many products. The entire industrial structure was placed on a full war-time basis, involving rigid Government regulation of production, distribution, and prices, and necessitating various adjustments in production to meet war demands. These conditions have stimulated efforts toward the attainment of self-sufficiency with respect to all important materials. Evidence of this trend in the chemical industry is apparent in the coal liquefaction and poweralcohol programs formulated during the preceding year. Although there was progress in these fields, neither reached the production stage. The synthetic fiber plant, although not strictly a chemical undertaking, is another example of the Government's program to attain self-sufficiency. During the year various laws were promulgated providing for the compulsory mixture of staple fiber with wool and cotton, thus increasing the demand for this fiber.

INCREASED DEMANDS

Reports on the trade for the year indicates that war demands were so great that imports of essential chemicals reached a new high point. This means that attainment of self-sufficiency was postponed by the sudden demand and that progress in this direction is not measurable by the trade figures.

Trade during the year was on an abnormal and arbitrary basis. Imports were subject to severe restrictions throughout the year, under the Foreign Exchange Control Law which was operated actually on a strict quota basis, and exchange permits were issued only for items not produced, or capable of being produced, in Japan. The only exceptions to this rule were items needed for military purposes. These restrictions operated as an indirect form of protection to the domestic industry, amounting in many cases to an embargo on imports. Imports of various chemicals also were limited by the Emergency Foreign Trade Control Law enforced in October. This law also affected exports of a few items.

It is impossible to comment intelligently on research or new processes, since it is the policy to treat all discoveries as national assets and not to be generalized by the securing of patents and the sale of patent rights. Probably the most significant progress during the year was made in coal-tar derivatives, a field wherein Japan has been comparatively weak, but little information is available concerning developments.

The industrial chemical field was characterized by considerable activity, and production was 25 percent above that of 1936. Despite expanded production, imports advanced considerably and exports likewise gained, but to a much smaller extent.

In the field of artificial fertilizers there was continued rapid development in domestic production, but, as in preceding years, there was an even greater increase in consumption, with the result that anticipated overproduction failed to materialize. The industry was markedly affected by Government control and supervision, leading to expansion in production of various fertilizers. Imports of fertilizers again were high, and exports increased materially.

The synthetic dyestuffs industry made progress in the development of new intermediates and higher grade colors but apparently failed to keep pace with demand, with the result that imports again established a new high. Exports of the cheaper colors were sharply curtailed as a result of the conflict in China, that being, by far, the most important market.

Little information concerning drugs and medicinals is available, but production continued to expand and, to a certain extent, self-sufficiency was attained. Imports were lower because of control measures, but exports increased.

INVESTMENTS IN CHEMICAL INDUSTRY

Investments in the chemical industry were active in 1937. The report of the Bank of Japan showed a total of 647,265,000 yen involved in plans for the promotion and extension of chemical enterprises during the year, more than a fourfold increase over 1936, and substantially larger than the figure for any other industrial group. Emphasis was placed on the extension of existing concerns, this group accounting for 60 percent of the total capital involved, but there was a larger relative increase in the capitalization of new companies. These figures cover the entire Japanese Empire but include only corporations capitalized at 100,000 yen or more. Data from the same source show an even greater increase for the first 8 months of 1937, with a total of 509,113,000 yen involved in capital increases, compared with 81,213,000 yen for the corresponding period of 1936. Decreases

in capital amounted to 4,197,000 yen in the 1937 period and 6,490,000 in the 1936 period. Under this grouping, however, are included paper, pulp, rayon, and several other chemical-process industries.

PROFITS

Available figures indicate some improvement in profits of chemical concerns during 1937, a reversal of the trend of the 2 preceding years. The report of the Japan Hypothec Bank showed average earnings for 1,833 chemical concerns, equivalent to 16 percent of paid capital during the first half of 1937, with an average dividend rate of 9 percent. Figures for the last half of 1937 are not procurable, but profits were substantially larger, since prices advanced sharply and consumption was much greater.

Profits and Dividends of Japanese Chemical Concerns

Wages in the Japanese chemical industry moved downward from 1931 through 1934, but were practically stationary in 1935 and have been slightly upward since then. Average nominal daily wages during December 1937 ranged from 0.59 yen for female workers in match factories to 2.21 yen for male workers in ammonium sulphate plants, according to statistics compiled by the Department of Commerce and Industry. The average for eight groups was 1.68 yen per day, compared with 1.62 for December 1936. The monthly average for 1937 was 1.65 yen, compared with 1.59 yen for 1936. These published figures are merely nominal and are misleading in that they fail to include various indirect labor costs which are customary under the Japanese system. These indirect charges add about 50 percent to the nominal wage scale. Even making allowance for indirect costs, wages are extremely low as judged by American standards.

Average hours of labor during December 1937 ranged from 9.33 hours per day for female workers in match factories to 11.01 for male workers in mills producing foreign-style paper. The average for eight chemical groups was 10.24 hours per day, a slight decline from the figure of 10.33 for December 1936.

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