Echoes Dispatches From Economic History
Caption: Japanese invade Manchuria, March 1932 Source: AP Images
Japan's Chinese Puppet State
On Sept. 15, 1932, Imperial Japan and the new state of Manchukuo, the renamed Manchuria, signed a one-page “defensive alliance,” the New York Times reported. The document authorized Japan to provide “both the internal and external defense of the region it had seized earlier that year."
Japan claimed the government it had established was free and independent, but world opinion was almost unanimous in judging Manchukuo a “puppet” state. The Economist asked how the League of Nations, the U.S. or the Soviet Union would respond to this “naive and barbaric Japanese insolence.”
The story of how Japan got involved in this sparsely populated region in northeastern China is an illuminating one -- for understanding both the Great Depression and the turbulent years that followed.
Until the 1930s, few in the West knew much about Manchuria. Facing huge economic and demographic pressures, Japan was much better informed. Its corporations had been investing in the region for decades, building railways, factories, mines and trade centers.
Japan at the time had the highest documented fertility rate in the world, twice that of the U.S. Its population was expected to grow by one-third in a generation, to 85 million, even as Japan’s entire farmable land was “less than half that of the State of Iowa,” the Times reported.
In contrast, Manchuria’s population of 30 million occupied 460,000 square miles, a territory larger than France and Germany combined, and made the area an irresistible target for Japanese expansion.
New York Times reporter Hugh Byas estimated Japan’s Manchurian assets at $900 million in 1932, including an experimental plan for developing 5.8 billion tons of oil-shale deposits. In 1930, workers extracted 30,000 tons of heavy oil from crushed rock.
Mining engineer O. L. Cranfelt reported valuable gold ore in the north, along with silver, copper and iron deposits, and “enormous timber reserves,” the New York Times wrote. To the south lay fertile districts for producing wheat, meat and sugar beets.
By 1932, Japan’s economy was crumbling. The nation’s economy depended heavily selling raw silk to the U.S. and manufactured cotton goods to China,” Time magazine reported. The Great Depression reduced U.S. exports by half and Chinese exports by a third, a collapse intensified by Chinese boycotts of Japanese imports.
Moreover, 10 large companies “managed every economic structure in Japan and controlled the liquid assets of the nation” through banks allied with manufacturers and merchants, the New York Times reported.
Yet citizens felt “less antagonism toward the bankers and industrialists than toward Japan’s politicians.”
Military radicals believed that “only by a new Japanese orientation in Manchuria could the nation be saved from an economic debacle.”
And the military was increasingly taking matters into its own hands. Japan's army and navy moved in early 1932 to seize Harbin, Manchuria’s principal port. When Japanese politicians -- fearing international economic and political consequences -- proved less than enthusiastic about the seizure, military cadets assassinated Prime Minister Inukai Tsuyoshi on May 15.
Now, as the New York Times summarized the situation: Japan was going “Back To Asia” in a militarized expansionism driven by desperate necessities.
(Philip Scranton is a Board of Governors professor of the history of industry and technology at Rutgers University, Camden, and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
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