Pro-British or Anti-British?

This takes place during the Anglo-German War.

After Chamberlain's cabinet resigned following the failure of his appeasement policy, Chamberlain asked the Viscount Halifax to become prime minister. It is said that the King also wanted him to do so.

However, Edward Wood, Viscount Halifax, refused, saying, "I can't control Churchill running around on the aft deck as he pleases."

- ほうこうおんち

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Seijūrō Matsuoka is a bureaucrat.

When it came to scientific matters, he could get away with saying, "I don't know," but that wouldn't work in politics. Even in matters of diplomacy, he was expected to at least know the names of foreign VIPs. Especially for someone in the field of trade, if he couldn't recognize the name "Lord Halifax" as the former British Foreign Secretary, he would never be considered a candidate for the next vice-minister position.

'Why on earth do I have to meet with such a big shot one-on-one?'

Matsuoka struggled to keep up with the situation. Even though he was being considered for the next vice minister, he was still only at the bureau chief level.

While Matsuoka was caught in his confusion, Edward Wood, Lord Halifax, began to speak.

"I sought appeasement with Germany as well. But since Lord Churchill was determined to confront Germany, I was planning to resign. However, everything changed in September 1940. Well, in the end, I did resign as Foreign Secretary."

"I see..."

"Do you know why?"

"To be able to negotiate with Germany from a freer position, perhaps?"

"Hmm... It seems you do not understand the weight of your own country. Of course, I am involved in negotiations with Germany. However, my presence here means I am also handling negotiations with Japan."

"Sir, if that's the case, please speak with someone more appropriate in Tokyo. I am just an ordinary bureaucrat, and not even in diplomacy—I deal with trade and industry. Talking to me holds no significance."

But Lord Halifax kept his smile and continued.

"Do you not realize your own value, or are you simply playing coy? Well, either way, it doesn't matter. So, do you dislike having a conversation with me?"

'How could I possibly refuse after being asked like that!?'

Matsuoka was deeply troubled. However, he was capable of a little political maneuvering himself. Smiling, he replied, "No, Sir, my apologies. I shall accompany you for some tea-time conversation."

His experience with being shadowed by Mr. Sansom in Tokyo had taught him a thing or two about dealing with the British. If he responded too earnestly, they would skillfully take control of the conversation.

"Well then, young man, let's enjoy some tea-time conversation," Lord Halifax said as he sipped his hot tea on a lonely Arctic island. "To be honest, the United States was the optimal choice, not Japan. It's not that I dislike Japan, but back then, the neighboring country across the sea was the United States. There were no other options for a trade partner and a shared destiny."

"What about Canada? Or Mexico?"

"Canada? That's just family. They're not an equal negotiating partner, nor are they an opponent to be wary of. It's like dealing with a family member; getting them to comply with the demands of the homeland is easy. As for Mexico... well, as long as the Gulf of Mexico exists, there's nothing else we need from them."

'That's harsh!'

The British had a natural habit of making such blunt remarks.

"But then, the United States went somewhere else. As you know, in the First World War, those two million country bumpkins helped us immensely. They also supplied a huge amount of resources, but of course, we paid for that. Oh, and Japan also helped us greatly at that time. Later, you exported products that we could no longer produce domestically, which was a great help."

Even Japan was not spared from his sharp tongue. During World War I, Japan exported massive amounts of goods to Europe and made huge profits. Had Japanese products been of high quality, they could have maintained a presence in the market even after European production resumed. However, due to the low quality of Japanese industrial products, they were quickly driven out once European manufacturers recovered. The so-called "nouveau riche" who profited greatly during the war fell into ruin during the post-war economic depression.

"And how about now? Are Japanese products of a quality that we wouldn't be ashamed to sell in our country?"

'He's really poking at a sore spot.'

Thinking this while holding his cup of tea, Matsuoka replied, "Well, I believe we can meet your expectations."

"I see. Then I shall look forward to it."

Lord Halifax took another sip of tea. After placing his cup back onto the saucer, he continued speaking.

"Your exceptionally high-quality products—our country may be the only one willing to buy them at a premium. The Soviets are managing their economy to circulate domestically produced goods, and if you think you can sell your products to Germany, a nation of technology enthusiasts, you're gravely mistaken."

German-made products were synonymous with high quality. Even their weaponry was refined to an almost obsessive degree. However, this often came at the expense of mass production capabilities. Given the inconsistencies of Japanese manufacturing at the time, only the very best, carefully selected items would stand a chance in the German market.

"And if you plan to sell goods to Germany, which trading company and which ships do you intend to use?"

Germany had its own trading companies and merchant ships, some of which had already reached the Pacific. However, Matsuoka understood that Lord Halifax was speaking on a different level.

'The scale of distribution is entirely different.'

Even though the ratio had declined over time, at the start of the 20th century, British ships accounted for half of the world's total shipping tonnage.

In 1939, the number of merchant ships (over 100 tons) was as follows: The United Kingdom: 6.722 ships; The United States: 2.853 ships; Germany: 2.459 ships; Japan: 2.337 ships. In terms of total tonnage capacity, the United Kingdom led with 17.891.000 tons, while Germany had 4.483.000 tons. Surprisingly, despite having fewer ships, Japan had a higher tonnage than Germany at 5.630.000 tons.

When it came to maritime insurance, the British almost monopolized the industry, rendering Germany's position insignificant.

Moreover, Germany's primary market was within Europe itself. This was a key difference from Britain, which had vast overseas colonies. Even Hitler, with his vision of expanding Lebensraum, primarily thought in terms of land-based expansion. While he was knowledgeable about economics, his focus remained on a pan-European economic sphere rather than a global-scale economy (globalism). Fundamentally, he had no desire for "inferior nations'" cheap products to flood into Germany and threaten domestic industries. In contrast, Churchill—despite his frequent insults, branding others as "inferior, superstitious, foolish, and smelly"—still understood the importance of allowing foreign goods to circulate within the British economy. This made Churchill a quintessential politician of a maritime trading nation like Britain.

'So basically, he's saying that even if we produce high-quality goods, Germany will shut us out, while Britain will buy them.'

High-quality products would become rivals in Germany. However, as of 1942, Japanese products were not yet at a level to compete. The British, on the other hand, sometimes prioritized quantity over quality. Moreover, the level of scrutiny applied to products differed significantly between Germany, whose market was primarily within Europe, and Britain, which had a global empire spanning multiple continents.

The trade volume ratio between Japan and Britain was incomparable to that of Germany. According to the Ministry of Finance data from 1939, before the disappearance of North America:

- Trade with Britain: 2,79%

- Trade with British Hong Kong: 3,82%

- Trade with British India: 6,88%

- Trade with Australia: 2,55%

- Trade with Egypt: 1,25%

- Trade with South Africa: 0,33%

Excluding the now-defunct Canada, trade with British territories and the Commonwealth accounted for 17,62% of Japan's total trade. Meanwhile, trade with Germany was only 0,70%.

Within continental Europe, deciding whether to increase trade with Britain or Germany could be a simple matter of preference. However, the importance of markets in Hong Kong, India, and Australia cannot be ignored.

Even so, trade with Manchukuo accounted for 14,98% of the total trade volume, while trade with China's Kwantung Leased Territory was 21,14%, exceeding trade with Europe. Based on numbers alone, one could argue that the debate between Britain and Germany was merely a rounding error.

However, looking at the product categories, imports from Manchukuo largely consisted of soybeans, cotton, coal, and iron. In contrast, Britain's colonies supplied tin, raw rubber, and oil. Despite their lower percentage, British-controlled resources from the south could not be underestimated.

Japan's trade with Britain resulted in a trade deficit. The earnings from textile exports were being spent entirely on industrial raw materials. If these could be obtained at lower prices...

This line of thinking made the idea of southern expansion very appealing. If Japan seized and annexed those resource-rich territories, imports would no longer be necessary. Britain's response to this temptation was: "If you seize resources from others and manufacture products, who do you think will buy them?"

One possible answer was selling to Manchukuo. However, Britain had a countermeasure ready—opening the Indian market.

'They're truly a formidable opponent...'

Listening to the British perspective, it almost seemed as though Japan could ignore Germany and the Soviet Union and enjoy a prosperous future by focusing solely on trade with Britain and its colonies.

'But they can't be trusted.'

Matsuoka knew this well. The British never acted without securing their own benefits. If Japan was lured into their schemes without caution, it could result in serious losses later.

One concern had been weighing on his mind, and he suspected it might be where Britain's trap lay.

"So, how will our countries handle trade settlements?"

"Naturally, in pound sterling."

"Then you're suggesting that our country should be incorporated under the sterling system?"

"That wouldn't be such a bad thing."

"Is that so?"

"Indeed. After all, the US dollar no longer exists—along with its issuing country."

"In other words, pound sterling will become the sole international settlement currency. You want Japan to adopt the sterling system early—is that what you're saying?"

"You're quick to understand. That's precisely it. As I said earlier, it wouldn't be a bad thing, would it?"

"If pound sterling is the only settlement currency, it can be issued in unlimited quantities. Without the dollar, its value won't decline. Fixing the yen to pound sterling could provide similar benefits, correct?"

"Exactly. You see the logic, don't you?"

"I do. But there's a significant problem with your settlement currency."

"And what might that be?"

"Before the Great Depression, the world operated on the gold standard. Even now, the gold standard hasn't completely disappeared. If too much pound sterling is issued, its credibility will be lost. At that point, wouldn't the world revert to gold?"

Lord Halifax smiled.

Interesting.

There was no point in engaging with someone who couldn't push back. Even though economics wasn't his forte, he had brought several promising young economic advisors with him.

"Let's continue this discussion elsewhere. This place is a salon for scientists. As social scientists, we should move to a more appropriate setting with the right documents. There's no need to rush."

On an Arctic island, a different kind of battle—one fought with diplomacy and economics—was about to begin.

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The next chapter will be on August 6 at 17:00.

- ほうこうおんち