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Ideological Controversy in Manchukuo - Coggle Diagram
Ideological Controversy in Manchukuo
Background and context
Japan’s Interests and Imperialism in Manchuria
Japan retained a deep respect for China’s long cultural past, “shared script and shared race” (dōbun dōshu)
rise of Chinese nationalism and growing anti-Japanese sentiment -> irreconcilable
Western intervention
Japan to adopt a form of “informal imperialism” in China
After WWI: Japan turning towards military and political intervention
Manchurian Incident (1931)
Immense interest in China economy
Manchuria supplied essential raw materials for Japanese industry and promised a vast consumer market
South Manchuria Railway Company (SMRC)
led both Japan’s strategic and business interests, shaping the region’s economic growth and migration patterns
Early reforms
1900: Manchuria’s monetary system was extremely complex and chaotic
Post Russo-Japanese War, the Yokohama Specie Bank (YSB) was entrusted with reform
Tasks: withdraw the large quantity of military scrip (gunpyō) in circulation
Ended up succeed, earned it the privilege of issuing banknotes in Manchuria, effectively making it a colonial “central bank.”
YSB played a key role in Japan’s strategy of “Dairen-centeredism”
shift Manchuria’s economic center from the Chinese-controlled port of Yingkou—frozen in winter—to the newly built, ice-free port of Dairen
YSB accelerated Dairen’s expansion, reshaping the region’s economic geography and consolidating Japanese control
Gold vs Silver
YSB’s role and its monetary policy sparked intense debate among Japanese policymakers
The debate was never fully resolved
Silver Faction (Gindate)
Represented by YSB president Takahashi Korekiyo
pragmatic, trade-oriented view
Argued that adopting silver made the most sense (Manchuria was closely tied economically to China)
Gold Faction (Kindate)
Represented by SMRC president Gotō Shinpei and Shōda Kazue of the Chosen Bank (BOC)
political and ideological argument
argued that gold standard was necessary to eliminate transaction costs for Japanese merchants, give them an exchange-rate advantage over Chinese competitors
1913, YSB was even compelled to issue a gold-denominated banknote, further increasing monetary confusion
“Sen–Man Integration” Policy
the rise of the Chosen Bank (BOC)
advantage tilted toward the Gold Faction
facilitated by political change in Tokyo with the advent of the Terauchi cabinet and the “Korea clique,” which favored more assertive expansionism and a self-sufficient, anti-Western regional bloc
1917: obtained privilege of issuing banknotes and managing the treasury in Manchuria
BOC's policies and gold faction's major challenges
Chinese authorities established provincial banks (guanyinhao) to counter foreign banks
issuance of “exchange notes” (hui-tui-p’iao) not convertible into metallic silver created a strong competitor to gold notes
Rapid expansion strained BOC’s foreign-exchange reserves.
December 1924, an estimated 67.5% of total outstanding loans at BOC’s Manchurian branches were “frozen loans” (koteikashi)
Revival of the Silver Faction
1920s, YSB staged a comeback thanks to cautious management
Tapped and utilized Chinese silver deposit
Expanded foreign-exchange business with Shanghai by managing bullion silver reserves
Used its silver bills (shōhyō) to become a key stabilizing force in the soybean economy of South Manchuria
Result: Consolidation of a “dual economic system” (nijō keizai)
Establishment of Manchukuo and Technocratic Reforms
Manchurian Incident of 1931
BOC faction argued that adopting the gold standard was an “inevitable necessity” to sever Manchuria economically and politically from China
However, Silver Faction prevailed with pragmatic arguments
Priority on Stability
Manchuria’s economy remained deeply tied to China and the Shanghai market, thus gold standard would require enormous foreign-exchange reserves
Shuto (silver faction) proposal was accepted
Central Bank of Manchuria established in June 1932
adopted a system of “managed silver-based currency”
succeeded in withdrawing and consolidating fifteen different types of banknotes in circulation
Impact of the Great Depression and External Events
U.S. Roosevelt administration’s Silver Purchase Program, launched in 1934
sharply drove up world silver prices
triggered a severe “deflationary vortex”
Manchurian yuan appreciate sharply against the Japanese yen, which had been devalued since 1931
resulting in market chaos and arbitrage speculation
Final Reform and Integration into the Yen Bloc
September 1935, when the yuan reached parity with BOC gold notes, a major reform became unavoidable
Manchurian government decided to peg the yuan to the Japanese yen, effectively merging Manchuria’s economy into Japan’s (naichika)
November 30, 1935, the “Foreign Exchange Control Ordinance” was promulgated, fixing the exchange rate at 1:1
BOC was forced to abandon its monetary presence in Manchuria, close its branches, and agree to withdraw its gold notes.
YSB was permitted to remain and continue operating as a foreign-exchange bank, ended the YSB-BOC controversy
The “utopian dream” of an independent Manchukuo ended, giving way to full incorporation into the economic and military orbit of the Japanese Empire