agitation.
While the Kwantung Army labored to strengthen Japan's strategic position on the continent, the mighty South Manchurian Railway (Mantetsu) undertook to open Manchuria to economic exploitation. A semipublic concern created in 1906 to manage the former Russian railway network with a capitalization of 200 million yen (increased to 440 million in 1920), Mantetsu was easily Japan's largest corporation. Mantetsu quickly expanded the Russian-built railway into an enterprise of staggering proportions. In addition to running freight and passenger services, the company operated coal mines at Fushun and Yantai as well as harbor and port facilities at Andong, Yingkou, and in the hub of Japanese activities in the Northeast, Dalian. Mantetsu maintained warehouses for goods and hotels for travelers; it administered the railway zone, which involved running schools and hospitals, as well as collecting taxes and managing public utilities. The research wing of Mantetsu became the center of Japanese colonial research, generating studies on all aspects of imperial policy throughout the formal and informal empire. Within a decade of operation, Mantetsu began to launch a string of subsidiary corporations. These included Dalian Ceramics, Dalian Oil and Fat, South Manchurian Glass Company, Anshan Iron and Steel Works, electric light companies and gas plants in the major cities, a shale oil factory, a machine workshop, and plants to mill flour and refine sugar.14
For the first twenty-five years of its existence Mantetsu was an extremely profitable enterprise. Company assets rose from 163 million yen in 1908 to over a billion in 1930. A rate of return of 20 to 30 percent for all but a few of these years meant that not only was it the largest of Japan's companies, but frequently the most profitable as well.15 During the 1920s yearly revenue for this single company averaged 218 million yen, a sum equal to about a quarter of total Japanese tax revenue.16 The great majority of company revenue (75 percent) was generated by freight services.17 While the railway transported significant quantities of millet, sorghum, and coal, the key to Mantetsu profits was soybeans—exported to Europe for manufacture into vegetable fats and oils, and to Japan for fertilizer and feed. Mantetsu's development of the soybean trade reshaped Manchuria's agricultural economy into a heavily commercialized export economy reliant on the production of a single crop. It was the classic pattern of an extractive, colonial economy Soybean production increased four times between 1907 and 1927, by which time half the world's supply came from Northeast China. By monopolizing transportation and storage facilities, Mantetsu was able to charge premium rates on export-designated agricultural produce and maintain the company's extraordinary profitability.18
By 1931, large numbers of Japanese had acquired an immediate taste of empire in service to one of these two institutions. Since the Kwantung Army was not composed of a permanent garrison unit, but rather was made up of regional divisions rotated for two-year postings, officers and conscripts from all over Japan saw service in Manchuria. By 1930, divisions based in Utsunomiya, Kyoto, Himeiji, Zents
Brought over to carry out the rapidly expanding activities of Mantetsu, the Japanese civilian population of Manchuria grew rapidly from 16,612 in 1906 to 233,749 in 1930.22 Together with their dependents, Mantetsu employees accounted for about a third of this population; a large fraction of the rest were involved in commercial operations indirectly dependent on Mantetsu. Indeed, everyone's livelihood was reliant on the continuation of Mantetsu activities, just as company services—transportation, housing, sewage, electricity, entertainment, and much more—were an omnipresent feature of expatriate life in Manchuria.23
Mantetsu gave to the Japanese civilian population a predominantly elite, overwhelmingly urban cast. After briefly experimenting with importing unskilled labor from Japan, the company abandoned higher-priced Japanese workers in favor of the economies of Chinese labor. This meant that Mantetsu's Japanese work force—grown from 10,754 in 1910 to 21,824 in 1930—was of an exclusively elite character: it was an aristocracy of skilled laborers, white-collar workers, professionals, managers, and administrators.24 The private commercial and manufacturing sector that sprouted from Mantetsu's foundations did not alter the sociological balance in the Japanese community. The private sector divided into two groups, one of giant firms like the Mitsui Trading Company, the Yokohama Specie Bank, and the
Like the memories of sacrifice on the battlefield and evocations of pride in service to the Kwantung Army, participation in the economic project in Manchuria created fertile ground for the imperial imagination, generating visions of colonial privilege and cosmopolitanism. In the strategic imperatives of the Kwantung Army, “managing Manchuria” meant quelling civil unrest and manipulating the warlords. In the economic mission of Mantetsu, it signified managing the soybean trade, tending to company investments, servicing the Japanese community, and controlling Chinese society. Such was the apprehension of Mansh keiei on the eve of the Manchurian Incident—the product of an empire built to the strategic and economic specifications of the Kwantung Army and Mantetsu.
After eighty years of experience with the diplomacy of imperialism, two imperial wars, and a thirty-five-year-old colonial empire, Japan had at its disposal a sophisticated understanding of international law, an army practiced in colonial warfare, and a seasoned colonial bureaucracy. This represented the overall accumulation of Japanese imperial capital in 1931. In Manchuria itself, twenty-five years of investment had produced the well-entrenched sphere of influence that spread out from the colonial core in the Kwantung Leased Territory, anchored by the multifarious investments of Mantetsu and guarded by the Kwantung Army. A quarter of a million Japanese lived in this partially informal empire; many more had come once and returned home. Yet compared with the efforts that followed, all this would seem inconsequential—a short preamble to the extraordinary history of Manchukuo. Something changed in 1931, and with this change empire building took on a new urgency, a new audacity, and a new vision.
THE CHALLENGE OF CHINESE NATIONALISM
The immediate forces behind Japan's shift in gears emerged out of the breakdown, in the late 1920s, of the system of imperialist diplomacy in China. On the Chinese political front, the character of the civil war changed as the corrosive warlord conflicts gave way to a struggle between nascent Nationalist and Communist organizations to mobilize popular support and lead the unification of the country, with critical implications for foreign powers. Republican China's first modern political party, the Nationalist party, or Guomindang, was originally organized in 1912 by anti-Manchu revolutionaries associated with Sun Zhongshan (Sun Yat-sen). After moving through a series of
