I wish to offer my explanation on the potentiality of the national power of our Empire. In my opinion we do not have to worry about the moral strength of the nation or the manpower which constitutes the source of our national strength regardless of any situation which may confront us in the future. Our main problem is maintaining stockpiles of materials.
From the first our national economy has been founded and developed on trade with the United States, Britain and with countries within the sphere of British influence. Thus, we have been relying on supplies from abroad for most of the critical materials.
To cope with the worst situation, which it is realized will come sooner or later, I have been trying, since the outbreak of the China Incident, to have the economy of this country reject its dependence upon the overseas sources by planning the exploitation of resources and the development as well as the boosting of productive power, within the self-sustaining sphere. However, as a result of the rapid change in the world situation since the outbreak of the war in Europe, especially of the aggravation of the relationship between Japan and the United States since last summer, it is expected that, despite the fact that the development and boosting of the productive power of this country has not
reached a sufficient level, we shall have to be fully prepared to rapidly from ourselves of economic dependence on the United States and Britain.
For this reason, critical materials have been purchased amounting to 660,000,000 yen since the latter part of last year. It the same time, we have tried to supplement the deficiency by taking advantage of our relations with Germany and the Soviet Union. The outbreak of war between Germany and the Soviet Union this June, however, forced us to abandon this line of action. Accordingly, the material potentiality of the Empire's national strength has been forced to depend entirely upon her own productive power and that of Manchuria, China, French Indo-China and Thailand, which are under the influence of our armed forces, and also upon the already accumulated critical materials.
Consequently, under the present situation of total economic rupture with the United States and Britain, the potentiality of our national strength will be weakened day by day. The reserve of liquid fuel, which is a matter of importance, will be depleted by next June or July, regardless of the strict wartime restrictions which may be imposed on civilian demands. Therefore, it is absolutely necessary for the self-existence of the Empire to make a definite decision and establish and stabilize a firm economic foundation.
If the establishment of such an economic foundation must be executed by military strength, our national productivity is expected to decline for the time being to about one-half of the present productivity
due to surface transportation capacity and other causes. Consequently, from the point of view of materials, I think utmost efforts must be made to shorten the period of productive declination and, at the same time, plane must be drawn up immediately to exploit the successes gained from military achievements.
If the strategic points in the Southern area can be secured by us in three or four months, it is estimated that we would be able to acquire some supplies of petroleum, aluminum ore, nickel, raw rubber and tin in about six months or thereabouts and utilize them fully after two years. However, since those plans depend upon military successes, there might be some occasions when things would not develop as expected. Therefore, we have been conducting research on means to cope with such a situation.
High octane gas, cobalt and a few other critical materials may be difficult to obtain even though the Southern area is occupied, but they will not constitute a great obstacle to the maintenance and strengthening of national strength since research has already been undertaken on the production of their substitutes and since strict restriction has been enforced on their consumption.