7C v • • c/f v-3 F--iem k! i / mmsm. .V. ilh *> Zhongguo S t Ingye sSi . *■. *. :♦*■• 4 * , «■,, ^ ^ * ■* • , tc ’ *$- Tt n V**•«': * Chinese Busifiess History* \rr. ?/*. Fall 2005, Volume 15, Number 2 ISSN 1090-834X The Role of Private Companies in the Expansion of Japan’s Interests in Manchuria in the 1920s: The Case of the Toa Kangyo Company (Toa kangyo kabushiki kaisha) by Yoshiki Enatsu Japanese Companies in Manchuria after the Russo- oku Company (Toyo takushoku kabushiki kaisha), the Japanese War Bank of Chosen (Chosen ginko), the Yokohama Specie nnhrough the 1905 Treaty of Portsmouth, Japan ac- Bank (Yokohama shokin ginko) and others. These Japa­ X quired from Russia a lease of the southern tip of nese companies were expected to play a substantial role Liaodong Peninsula (Kanto-shu) and ownership of the in expanding Japan’s interests in Manchuria. Financed Russian-built South Manchurian Railway (Minami by these companies and banks, many Japanese business Manshu tetsudo or Mantetsu). Then, in concluding the groups and individuals were also engaged in commerce, Russo-Japanese Agreements in 1907, 1910, and 1912 mining, industry, agriculture, transportation and other and asserting its Twenty-One Demands on China during enterprises in Manchuria. the First World War, Japan began to extend its influence Although these business companies and individuals in southern Manchuria and eastern Inner Mongolia. were supposed to follow Japan’s national policy, namely Japan, however, did not have sovereignty there except the expansion of Japan’s interests in Manchuria, they for Kanto-shu and the lands belonging to Mantetsu. were engaged in business for their own financial gain. Until the establishment of Manzhouguo (Manchukuo) in These Japanese companies and individuals had close 1932, local governments of Manchuria under the Qing, relations with their Chinese counterparts. Many of these the Republic and the Zhang Zuolin and Zhang Xueliang Chinese were influential officials in the local govern­ regimes ruled Manchuria. These Chinese governments ments of Manchuria. These Chinese, as government of­ successively tried to check Japanese infringement upon ficials, carried out the national policy of China and tried their territory. to head off the expansion of Japanese influence in Man­ Under the above conditions, the Japanese govern­ churia. At the same time, they pursued their own profit ment established such companies and banks as the as owners of business companies, and they had close South Manchurian Railway Company, the Toyo Takush- relations with Japanese companies and individuals. For Chinese Business History is Going Online! In spring 2006, Chinese Business History will move to the University of Massachusetts, Dartmouth and become an online publication at: www.umassd.edu/cas/history/cbh This is the last paper issue. See page 11 for more information. Digitized by the Hong Kong Institute for the Humanities and Social Sciences . *'■ - 1 —*1, *3 example, Zhang Zuolin. Yu Chonghan and other power­ kaisha). The head of this project ful officials had their own companies and did business was Kurachi Tetsukichi. the with Japanese companies. former vice-minister of Foreign The land problem w as one of the major diplomatic is­ A Hairs who played an important sues between Chinese and Japanese governments in those role in Japan's annexation of days. A large area of land in Manchuria w as indispens­ Korea in 1910. The company able for Japanese companies. They needed land for their aimed to establish a large area agriculture, mining, industry, commerce, and other eco­ of paddy fields in southern nomic enterprises. The Japanese government demanded Manchuria. Koreans in the Yoshiki I natsu that the Chinese government entitle Japanese companies area were expected to work as and individuals to purchase and own land freely. Howev­ tenant peasants in the company's er. the Chinese government strictly prohibited foreigners farmlands. Company farmlands were supposed to (Japanese) from owning land. produce a large amount of rice for the Japanese market, After the Russo-Japanese War. a large area of the land important because a shortage of rice was a serious formerly held by the Qing court, its princes, and Mongol problem in Japan at that time. The company also claimed princes was reorganized as “official land" (gucmdi). Then that establishment of the farmlands would contribute these official plots w'ere sold to private citizens. After the to the settlement of the economic problems of the 1911 Revolution, the local governments of Manchuria Korean people there. However, other sections of the disposed of the former official lands more extensively Japanese government such as the Bureau of Colonization and earned a large amount of revenue from these under­ (Takushokn-kyoku) strongly opposed the establishment of takings. By this time, the Qing court and its nobles w ere the company. For example, the Bureau of Colonization powerless to oppose these projects. Many prominent of­ planned, with the Toyo Takushoku Company, to establish ficials, such as Zhang Zuolin. were engaged in the dispo­ farmlands in eastern Inner Mongolia. Each Japanese sition of official land and made a huge profit from these ministry already had its own interests in Manchuria. projects. These officials sometimes succeeded in estab­ As a result, the scheme to found the Manshu Kangyo lishing their ownership of the former official lands. For Company collapsed. example, Zhang Zuolin himself became one of the big­ At the meeting of the first Eastern Conference in gest landlords in Manchuria after the 1911 Revolution. May 1921, the Japanese government set its basic policy Even though the local governments of Manchuria toward China and took another step toward expanding its banned Japanese from owning land, some powerful influence over southern Manchuria and Inner Mongolia. Chinese officials were secretly involved in the covert Japanese government officials and business groups again business of selling land to the Japanese. As a result, some tried to establish a private company for land purchase parcels of what was formerly official land w ere actu­ and its management there. The Toa Kangyo Company ally sold to Japanese individuals and companies. Under was founded in December of 1921 with capital of the above conditions, the Japanese government founded ¥20.000,000. The head office was located in the building companies whose purpose was to purchase and manage of the Toyo Takushoku Company in Tokyo and moved to large areas of land in Manchuria. Because Japan did not Fengtian city (present day Shenyang) in 1922. Kurachi have sovereignty over Manchuria, its government tried Tetsukichi became president of the company. The Toyo to execute its land policy through the activities of private Takushoku Company, the South Manchurian Railway companies there. Company, and the Okura Company (Okura-gumi) were the major stockholders. A small number of individuals Establishment of the Toa Kangyo Company such as Kurachi Tetsukichi, Arai Taiji, Pak Yong-hyo, From November 1919 to December 1920, some and Yi Wang-yong also held stock in the company. officials of the Japanese Ministry of Foreign Affairs Pak and Yi were well-known Korean aristocrats who worked on a plan to establish a company to be called the collaborated with Japanese authorities at the time of Manshu Kangyo Company (Manshu kangy o kabushiki Korea’s annexation by Japan. continued on page 9 2 Digitized by the Hong Kong Institute for the Humanities and Social Sciences V . • -*• ... * • ;-V-tT V - -■ JL^, —- jfc.... •x • • .> A; » • f. Gi jfc. .A ■ f. > Free Banking and Currency Competition 1 in Early Twentieth Century Manchuria by Thomas R. Gottschang Introduction issuing currency—too attractive to allow free banking; /^Vne of the most interesting episodes of modem Chi countries have instead created central banks with monop­ nese economic history was the situation in Manchu­ olies over the issuance of currency and strong regulatory ria2 in the early twentieth century, when political control powers over private banks and other financial institu­ was fragmented and multiple currencies were in use, yet tions. It is therefore rare to find cases of real free banking the economy experienced rapid economic growth and experience that can be examined to compare practice real development in terms of industrialization, expan­ with theory. sion of trade, and rising output per capita. One aspect International Competition for Control and Development of this unusual situation was the emergence of vigorous of Manchuria competition between the feng-piao—the currency of the In order for a situation of free banking to exist, two dominant regional Chinese government, the Fengtian conditions must be present. First, the economy and fi­ regime of the warlord Marshal Zhang Zuolin—on the one nancial institutions must be advanced enough to support hand; and yen notes issued by the Bank of Chosen and modem banks and the widespread use of paper cur­ the Yokohama Specie Bank in support of Japanese busi­ rency. Second, there must be no official monopoly bank ness activities on the other. By the 1920s, Manchuria’s or agency exerting regulatory control over the banking modern banking sector provided a fascinating example of system. In early twentieth century Manchuria, both con­ the phenomenon of “free banking,” a situation in which ditions arose due to the weakness of the Chinese central banks function under little or no regulation, issue their government and the struggle for both economic and own paper currencies, and are constrained only by the political dominance by the Fengtian regime, Russia, and forces of market competition. Japan. “Free banking” is a topic of interest to students of Russia acquired a major interest in Manchuria in the economic history and monetary economics because in 1890s, when the government of the faltering Qing dy­ theory it is a way to create and manage a money supply nasty agreed to allow construction and operation of two through market mechanisms alone, with no government key Russian railways directly through Manchuria.