# Report of the Commission of Enquiry/Chapter 6

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Chapter VI.
"MANCHUKUO".
PART I.—STAGES IN THE FORMATION OF THE "NEW STATE".
Chaotic conditions resulting from Japanese occupation of Mukden.As a result of the events of September 18th, 1931, as described in Chapter IV, the civil administration of Mukden City and of the Province of Liaoning (Fengtien) was completely disorganised and even that of the other two provinces was affected to a lesser extent. The suddenness of the attack on Mukden, which was not only the political centre of all Manchuria but, next to Dairen, also the most important commercial centre of South Manchuria, created a panic among the Chinese population. Most of the prominent officials, and the leading members of the educational and commercial communities who could afford to do so, left immediately with their families. During the days following September 19th, over 100,000 Chinese residents left Mukden by the Peiping-Mukden Railway, and many who could not get away went into hiding. The police, and even the prison warders, disappeared. The municipal, district and provincial administrations at Mukden completely broke down, the public utility companies for the supply of electric light, water, etc., the buses and tramways, and the telephone and telegraph services, ceased to function. Banks and shops kept their doors closed.
Restoration of order and civil administration in Mukden City.The immediate necessity was the organisation of a municipal government and the restoration of the ordinary civic life of the city. This was undertaken by the Japanese and carried through quickly and efficiently. Colonel Doihara was installed as Mayor of Mukden, and within three days normal civil administration was restored. Several hundred police and most of the prison warders were brought back with the help of General Tsang Shih-yi, the Civil Governor of the Province, and the public utility services were restored. An Emergency Committee, with a majority of Japanese members, helped Colonel Doihara, who held his post for one month. On October 20th, the reins of municipal government were restored to a qualified Chinese body, with Dr. Chao Hsin-po (a lawyer who had studied for eleven years in Japan and was a Doctor of Law of Tokyo University) as Mayor.
​The re-organisation of Provincial Government: (1) Liaoning ProvinceThe next problem was to re-organise the provincial administration in each of the Three Provinces. This task was more difficult in Liaoning than in either of the other two, because Mukden was the centre of this provincial administration; most of the influential men had fled, and for a time a Chinese provincial administration continued to be carried on at Chinchow. It was three months, therefore, before the re-organisation was completely accomplished. General Tsang Shih-yi refuses to organise an independent Provincial Government.Lieutenant-General Tsang Shih-yi, the existing President of the Liaoning Provincial Government, was first approached on September 20th and invited to organise a Provincial Government, independent of the Chinese Central Government. This he refused to do. He was then put under arrest and released on December 15th.
Formation of a "Peace and Order Maintenance Committee" under the chairmanship of Mr. Yuan Chin-kai, Septemb. 25th.After General Tsang Shih-yi had refused to help in the establishment of an independent Government, another influential Chinese official, Mr. Yuan Chin-kai, was approached. He was a former provincial governor and a Vice-President of the North-Eastern Political Committee. The Japanese military authorities invited him and eight other Chinese residents to form a "Committee for the Maintenance of Peace and Order". This Committee was declared to have been formed on September 24th. The Japanese Press at once acclaimed it as the first step in a separatist movement, but Mr. Yuan Chin-kai publicly disclaimed any such intention on October 5th. The Committee, he said, had "been brought into being to preserve peace and order after the breakdown of the former administration. It assisted, moreover, in relieving refugees, in restoring the money market, and it attended to some other matters, solely for the sake of preventing unnecessary hardship. It had, however, no intention of organising a Provincial Government or declaring independence".
Board of Finance opened, October 19th.On October 19th, the Committee opened the Board of Finance, and Japanese advisers were appointed to assist the Chinese functionaries. The Director of the Board of Finance had to obtain the approval of the military authorities before giving effect to the Board's decisions. In the districts, the tax collectors' offices were controlled by the Japanese gendarmerie or other agencies. In some cases, they had to submit their books daily for inspection to the gendarmerie, whose approval had to be obtained for the disbursement of any monies on public objects, such as police, justice, education, etc. Any case of remittance of taxes to the "hostile party" at Chinchow was to be at once reported to the Japanese authorities. At the same time, a Financial Readjustment Committee was organised the chief business of which was to re-organise the taxation system. Japanese representatives and the representatives of Chinese guilds were allowed to take part in discussions on taxation. According to a statement in the "History of the Independence of Manchukuo", dated May 30th, 1932, and submitted to the Commission by the "Department of Foreign Affairs" at Changchun, these discussions led to the abolition on November 16th, 1931, of six taxes, the reduction of four others by half, the transfer of eight others to local governments, and the prohibition of all levies, without a legal basis.
Board of Industry established, October 21st.On October 21st, the Board of Industry was opened by the Committee, whose name was now changed to that of "Liaoning Province Self-Government Office". The consent of the Japanese military authorities was sought and obtained and a number of Japanese advisers were appointed. Before issuing any orders, the Director was required to obtain the approval of the Japanese military authorities.
North-Eastern Communications Committee.Lastly, the Liaoning Self-Government Office organised a new North-Eastern Communications Committee, which gradually assumed control of various railways, not only in Liaoning Province, but also in Kirin and Heilungkiang. This Committee was separated from the Liaoning Self-Government Office on November 1st.
Declaration of November 7th, and establishment of a Provincial Government on November 10th.On November 7th, the Liaoning Province Self-Government Office transformed itself into the Liaoning Provincial Government ad interim, ​which issued a declaration by which it severed its relations with the former North-Eastern Government and with the Central Government at Nanking. It requested the local governments in Liaoning to abide by the decrees it had issued, and announced that henceforth it would exercise the authority of a Provincial Government. On November 10th, a public opening ceremony took place.
Appointment of Supreme Advisory Board.Simultaneously with the transformation of the Self-Government Office into the Liaoning Provincial Government ad interim, a Supreme Advisory Board was inaugurated under the chairmanship of Mr. Yu Chung-han, who had been Vice-Director of the Peace and Order Maintenance Committee. Mr. Yu announced the objects of this Board as: the maintenance of order, the improvement of administration by the suppression of bad taxes, the reduction of taxation, and the improvement of the organisation of production and sale. The Board was, furthermore, to direct and supervise the acting Provincial Government, and to foster the development of local self-government in accordance with the traditions of local communities and with modern needs. It comprised sections dealing with general affairs, investigation, protocol, guidance, supervision, and an Institute for Training in Self-Government. Nearly all the important functionaries were Japanese.
Name of Province changed to Fengtien on November 20th, and General Tsang Shih-yi installed as Governor on December 15th.On November 20th, the name of the Province was changed to that of Fengtien, which had been its name before its union with Nationalist China in 1928, and, on December 15th, Mr. Yuan Chin-kai was replaced by General Tsang Shih-yi, who was released from his confinement and installed as Governor of Fengtien Province.
(2) Kirin ProvinceThe task of establishing a provincial Government in the province of Kirin was far easier. On the 23rd, the Commander of the 2nd Division, Major-General Tamon, had an interview with Lieutenant-General Hsi Hsia, the acting head of the provincial administration in the absence of General Chang Tso-hsiang, and invited him to assume the chairmanship of the Provincial Government. After this interview, General Hsi Hsia summoned the various Government organisations and public associations to a meeting on September 25th, which was also attended by Japanese military officers. No opposition was expressed to the idea of establishing a new provisional government, and a proclamation to that effect was published on September 30th. The Organic Law of the new Provincial Government of Kirin was subsequently announced. The committee system of government was abolished, and Governor Hsi Hsia took full responsibility for the conduct of government. Some days later, the principal officials of the new Government were appointed by him and some Japanese functionaries were added later. The chief of the Bureau of General Affairs was a Japanese. In the districts also, some administrative re-organisation and change of personnel took place. Out of forty-three districts, fifteen were re-organised, which involved the dismissal of the Chinese District Officers. In ten others, the District Officers were retained after declaring their allegiance to General Hsi Hsia. The others still remained under Chinese military leaders loyal to the old regime, or kept aloof from the contending factions.
(3) The Special Administrative District of the Chinese Eastern RailwayThe Chief Administrator of the Special District, Lieutenant-General Chang Ching-hui, was friendly to the Japanese. He had no military force behind him, whereas the old regime could still dispose of considerable forces both in Kirin and Heilungkiang, as well as the railway guards in the Special District itself. On September 27th, he summoned a conference in his office at Harbin to discuss the organisation of the Emergency Committee of the Special District. This Committee was formed with General Chang as Chairman and eight other members, amongst whom were General Wang Juihwa and General Ting Chao, who later, in January 1932, became the leader of the "anti-Kirin" forces, in opposition to General Hsi Hsia. On November 5th, the anti-Kirin Army, under the command of the Generals ​of Chang Tso-hsiang, established a new Kirin Provincial Government at Harbin. After General Chang Ching-hui had been appointed, on January 1st, 1932, Governor of Heilungkiang, he declared in that capacity the independence of the Province on January 7th. On January 29th, General Ting Chao took possession of the office of the Chief Administrator and placed General Chang under restraint in his own house. The latter regained his liberty when the Japanese forces came north and occupied Harbin on February 5th, after defeating General Ting Chao. From that time onwards, the Japanese influence made itself increasingly felt in the Special District.
(4) Heilungkiang.In Heilungkiang Province, a more complicated situation had arisen owing to the conflict between General Chang Hai-peng and General Ma Chan-shan, which was described in the last chapter. After the occupation of Tsitsihar by the Japanese on November 19th, a Self-Government Association of the usual type was established, and this Association, which was said to represent the will of the people, invited General Chang Ching-hui, of the Special District, to act concurrently as Governor of Heilungkiang. As the situation around Harbin was still unsettled, and no definite agreement with General Ma had been reached, this invitation was not accepted until early in January 1932. Even then General Ma's attitude was ambiguous for some time. He co-operated with General Ting Chao until the latter's defeat in February, and then came to terms with the Japanese, accepting the Governorship of Heilungkiang out of General Chang's hands, and subsequently co-operated with the other Governors in the establishment of the new State. A Self-Government Guiding Committee was established at Tsitsihar on January 25th, and the same form of Provincial Government as in the other Provinces was gradually established.
(5) Jehol.The Province of Jehol has hitherto kept aloof from the political changes which have taken place in Manchuria. Jehol is part of Inner Mongolia. Over 3,000,000 Chinese settlers now live in the Province and they are gradually pushing out to the north the nomadic Mongols, who still live under their traditional tribal or Banner system. These Mongols, who are said to number about one million, have maintained some relations with the Mongol Banners settled in the west of Fengtien Province. The Mongols in Fengtien and Jehol have formed "Leagues" the most influential of which is the Cherim League. The Cherim League joined the Independence movement, as did also the Mongols in the Barga District, or Hulunbuir, in the west of Heilungkiang, who have often attempted to free themselves from Chinese rule. The Mongols do not easily assimilate with the Chinese. They are a proud race, and every Mongol remembers the exploits of Genghis Khan and the conquest of China by Mongol warriers. They resent Chinese over-lordship and they resent particularly the immigration of Chinese settlers, by which they are being gradually extruded from their territory. The Leagues of Chaota and Chosatu in Jehol are keeping in touch with the Banners in Fengtien, which are now ruled by committees. General Tang Ju-lin, the Governor of the Province, is reported to have assumed full responsibility for his Province on September 29th, and to have kept in touch with his colleagues in Manchuria. At the inauguration of "Manchukuo" on March 9th, Jehol was included in the new State. In fact, however, no decisive step was taken by the Government of the Province. The latest events in this Province were referred to at the end of chapter IV.
The creation of an independent "State".The local self-governing administrations thus established in all the Provinces were subsequently combined into a separate and independent "State". To understand the ease with which this was accomplished and the amount of evidence which it has been possible to bring forward of Chinese support for it when it was accomplished, it is necessary to consider the peculiar feature of Chinese organised life which in some circumstances is a strength and in others a weakness. As has been already stated in Chapter I, the community obligations recognised by the Chinese are rather ​to the family, to a locality, or to persons, than to the State. Patriotism as it is understood in the West is only beginning to be felt. Guilds, associations, leagues, armies, are all accustomed to follow certain individual leaders. If, therefore, the support of a particular leader can be secured by persuasion or coercion, the support of his adherents over the whole area of his influence follows as a matter of course. The foregoing narrative of events shows how successfully this Chinese characteristic was utilised in the organisation of the Provincial Governments, and the agency of the same few individuals was used to complete the final stage.
The Self-Government Guiding Board.The chief agency in bringing about independence was the Self-Government Guiding Board, which had its central office in Mukden. By reliable witnesses, it was stated to the Commission to have been organised, and in large part officered, by Japanese, although its chief was a Chinese, and to have functioned as an organ of the Fourth Department of the Kwantung Army Headquarters. Its main purpose was to foster the independence movement. Under the direction and supervision of this Central Board, local self-government executive committees were formed in the districts of Fengtien Province. To those various districts, as occasion demanded, the Central Board sent out members from its large and experienced staff of inspectors, directors and lecturers, many of whom were Japanese. It utilised also a newspaper, which it edited and published.
The proclamation of the Self-Government Guiding Board, Mukden, January 7th.The nature of the instructions given by the Central Board is apparent from the proclamation which it issued as early as January 7th, under date of January 1st. The proclamation stated that the North-East was faced with the need for developing, without delay, a great popular movement for the establishment of a new independent State in Manchuria and Mongolia. It described the development of its work in various districts in Fengtien Province, and outlined its plan for the extension of its activities to the remaining districts and even to the other Provinces. It then appealed to the people of the North-East to overthrow Marshal Chang Hsueh-liang, to join the Self-Government Association, to co-operate in setting up a clean administration and improving the living conditions of the people, and it ended with the words: "Organisations of the North-East, Unite! Towards the new State! Towards Independence!" Of this proclamation, fifty thousand copies were distributed.
Plans of the Chief of the Board in January.As early as January also, the Chief of the Self-Government Guiding Board, Mr. Yu Chung-han, was already making plans, together with Governor Tsang Shih-yi, for the new State which, it was reported, was to be established on February 10th. But the Harbin outbreak of January 29th and General Ma's ambiguous attitude during the conflict with Ting Chao appear to have been the main reasons for the temporary postponement of further preparations at that time.
The Mukden Conference, February 16th–17th.Later, after Ting Chao's defeat, negotiations between Lieutenant-General Chang Ching-hui and General Ma had brought about, on February 14th, a settlement according to which General Ma was to become Governor of Heilungkiang. The meeting at which the foundation of the new State was to be arranged was held on February 16th and 17th at Mukden. The Governors of the Three Provinces and the Special District were present in person, as well as Dr. Chao Hsin-po, who had played a prominent part in all the preparatory work.
At a meeting of these five men, it was decided that a new State should be established, that a North-Eastern Administrative Council should be organised which would exercise temporarily the supreme authority over the Provinces and the Special District, and, finally, that this Supreme Council should, without delay, make all necessary preparations for the founding of the new State. On the second day of the Conference, two Mongol Princes attended, one representing the Barga District (Hulunbuir) in Western Heilungkiang, the other, Prince Chiwang of the Cherim Leagues, ​representing practically all Banners, who respect this Prince more than any other leader.
The Supreme Administrative Council, February 17th.The Supreme Administrative Council was constituted the same day. Its members were Lieutenant-General Chang Ching-hui, Chairman of the Council, the Governors of Fengtien, Kirin, Heilungkiang and Jehol, and Prince Chiwang and Prince Ling Sheng for the Mongolian districts. The first decisions of the Council were: to adopt the republican system for the new "State"; to respect the autonomy of the constituting Provinces; to give the title of "Regent" to the Chief Executive, and to issue a Declaration of Independence, to be signed by the Governors of the four Provinces and the Special District, by Prince Chiwang for all the Banners, and by Prince Kueifu for Hulunbuir in Heilungkiang. The Commander-in-Chief of the Kwantung Army gave that night an official dinner in honour of the "Heads of the new State", whom he congratulated on their success and assured of his assistance in case of need.
Declaration of Independence, February 18th.The Declaration of Independence was published on February 18th. It referred to the ardent wishes of the people to have permanent peace and to the duty of the Governors, who were said to have been chosen by the people, to fulfil those wishes. The Declaration referred to the necessity for the establishment of a new State, and claimed that the North-Eastern Administrative Council had been constituted for this purpose. Now that relations with the Kuomintang and the Government at Nanking had been severed, the people were promised the enjoyment of good government. This Declaration was sent by circular wire to all places in Manchuria. Governor Ma and Governor Hsi Hsia then returned to their respective provincial capitals, but they designated representatives to meet Governor Tsang Shih-yi, Governor Chang Ching-hui, and Mayor Chao Hsin-po for the purpose of working out the details of the plan.
In a subsequent meeting held by this group, on February 19th, it was decided to establish a Republic, to lay down the principle of the separation of powers in the Constitution, and to ask the former Emperor Hsuan-Tung to become the Chief Executive. Plans for the new State.In the following days, it was decided that the capital should be Changchun; the new era of government was to be styled "Tatung"(Great Harmony), and the design of the national flag was fixed. Notification of the decisions taken was sent, on February 25th, to all provincial governments, including Jehol, as well as to the Mongol administrative offices of Hulunbuir and of the Cherim, Chaota and Chosatu Leagues. The last-named Leagues are established in Jehol. They could, therefore, as already stated, take no steps against the wishes of the Chairman of the Government of that Province.
After the Declaration of Independence and the announcement of the plans for the new State, the Self-Government Guiding Board took the leading part in organising popular manifestations of support. The State Foundation Acceleration Movement.It was instrumental in forming societies for the "Acceleration of the Foundation of the New State". It instructed its branches in the various districts throughout Fengtien, the Self-Government Executive Committees, to do everything possible to strengthen and hasten the independence movement. In consequence, the new "Acceleration Societies" sprang up rapidly, centring around the Self-Government Executive Committees.
From February 20th onwards, these newly-formed "Acceleration Societies" became active. Posters were prepared, slogans printed, books and pamphlets issued, a North-Eastern Civilisation Half-Monthly was edited and red scrolls were distributed. Leaflets were sent by post to various prominent citizens asking them to help the propaganda work. At Mukden the scrolls were distributed by the Chinese Chamber of Commerce, to be placed on the door-posts.
The organisation of popular approval of independence.During the same time, the Self-Government Executive Committees in the districts summoned meetings of popular representatives, such as ​members of the local gentry, and the chairmen and prominent members of commercial, agricultural, industrial and educational associations. In addition, mass meetings were organised and parades or processions were conducted through the principal streets of the district capitals. Resolutions expressing the wishes either of the people in general or of special groups were passed at conferences of prominent local men and at the mass meetings, in which it was claimed many thousands of persons took part. These resolutions were naturally sent to the Self-Government Guiding Board at Mukden.
The Mukden resolutions favouring a New State, February 28th.After the Acceleration Societies and the Self-Government Executive Committees had been active in various districts of Fengtien, a provincial convention was organised at Mukden to give concrete evidence of the general desire of the people for the establishment of the State. Accordingly, on February 28th, a meeting was held in which about 600 persons took part, including all the district officers of the Province and the representatives of nearly all classes and organisations. This meeting issued a declaration which stated that it expressed the joy of the 16,000,000 inhabitants of Fengtien Province at the downfall of the old oppressive military caste and the dawn of a new era. As far as Fengtien was concerned, the movement had thus been brought to a conclusion.
The Independence Movement in Kirin Province.The movement in Kirin Province in favour of a new State was also organised and directed. While in the Conference at Mukden on February 16th, Governor Hsi Hsia sent a circular telegram 'to his District Officers asking them to enlighten him as to public opinion in regard to the policy to be followed by the new State. The District Officers were enjoined to give adequate guidance to the various guilds and associations in their districts. In direct response to the telegram, independence movements sprang up everywhere. On February 20th, the Kirin Provincial Government created the State Foundation Committee, which was to guide the various organisations in conducting their independence campaigns. On February 24th, the People's Association at Changchun held a mass meeting in which about 4,000 persons are reported to have taken part. They demanded the acceleration of the foundation of the new State. Similar meetings were held in other districts and also in Harbin. On February 25th, the mass meeting for the whole Province was held at the city of Kirin. About ten thousand persons were reported to have been present. A declaration was duly issued similar to that passed at Mukden on February 28th.
In Hellungkiang Province.In Heilungkiang Province, the Mukden Self-Government Guidance Board played an important part. On January 7th, after General Chang Ching-hui had accepted the governorship of Heilungkiang, he declared the Province to be independent.
The Board lent its assistance in conducting the acceleration movement in Heilungkiang. Four directing officers, two of whom were Japanese, were despatched from Mukden to Tsitsihar. Two days after their arrival, on February 22nd, they convened a meeting in the reception hall of the Government House, in which a large number of associations were represented. It was a Pan-Heilungkiang Conference, which was to decide upon the methods of preparing for the establishment of the State. It was resolved to hold a mass demonstration on February 24th.
Many thousands of persons took part in the mass demonstration at Tsitsihar, which was covered with posters, scrolls, streamers and pennants in commemoration of the event. The Japanese artillery fired 101 guns in honour of the day. Japanese planes circled overhead, dropping down leaflets. A declaration was promptly issued which favoured a republican form of government, with a responsible Cabinet and a President as the head of the State. All powers were to be concentrated in the Central Government, and the provincial governments were to be abolished, leaving districts and municipalities as the units of local government.
​By the end of February, Fengtien, Kirin, Heilungkiang and the Special District had passed the stages of district and provincial declarations. The Mongol Banners had also given their allegiance to the new State, since it was known that it would mark off special autonomous Mongol districts and would in other ways guarantee the rights of the Mongol inhabitants. The Mohammedans had already, at a meeting on February 15th, at Mukden, pledged their allegiance. The majority of the small number of unassimilated Manchus were also in favour of the new State as soon as it had become known that their former Emperor would probably be offered the post of Chief Executive.
The All-Manchuria Convention, Mukden, February 29th.After the districts and provinces had given formal support to the plan of a new State, the Self-Government Guiding Board took the lead in convening an All-Manchuria Convention, which was held at Mukden on February 29th. There were present official delegates from the provinces, the districts of Fengtien Province and the Mongol territories, and, in addition, many others, including representatives of various groups, such as the Koreans in Kirin Province and the Special District, and the branches of the Youth League of Manchuria and Mongolia: altogether over 700 persons.
Speeches were delivered and a declaration and resolution were unanimously approved, the former denouncing the previous regime, the latter welcoming the new State. A second resolution was also adopted designating as the provisional President of the new State the former Emperor Hsuan Tung, now known by his personal name as Mr. Henry Pu-yi.
Mr. Henry Pu-yi, the former Emperor, accepts the headship of "Manchukuo"The North-Eastern Administrative Council met at once in urgent session and elected six delegates to proceed to Port Arthur, to convey their invitation to the former Emperor at Port Arthur, where he had been residing since he left Tientsin in the previous November. Mr. Pu-yi at first declined it, but on March 4th a second delegation comprising twenty-nine delegates obtained his consent to accept the post for one year only. Then the Administrative Council elected its chairman, Lieutenant-General Chang Chinghui, and nine others, to be the Reception Committee. On March 5th, the Committee went to Port Arthur and was received in audience. In response to its request, the former Emperor, on March 6th, left Port Arthur for Tangkangtze, and after two days began, on the 8th, to receive homage as the Regent of "Manchukuo".
The inauguration ceremonies, Changchun, March 9th.The inauguration ceremonies were held at the new capital, Changchun, on March 9th. Mr. Pu-yi, as Regent, made a declaration in which he promised to found the policy of the new State upon the basis of "morality, benevolence and love". On the 10th, the principal members of the Government were appointed; the members of the Cabinet, the Presidents of the Board of Legislation and the Board of Control; the President and Vice-President and Councillors of the Privy Council, the Governors of the Provinces and of the Special District, the Commanders of the Defence Forces of the Provinces, and some other high officials. A notice regarding the establishment of "Manchukuo" was issued by telegram on March 12th to the foreign Powers. The declared purpose of this notice was to communicate to the foreign Powers the fundamental object of the formation of "Manchukuo" and its principles of foreign policy; and to request that they recognise it as a new State.
The date of the establishment of "Manchukuo"; Laws and Regulations.Prior to the arrival of the Regent, a number of laws and regulations, on which Dr. Shao Hsin-po had been working for some time, had been made ready for adoption and promulgation. They came into force on March 9th, simultaneously with the law regulating the organisation of the Government, while the laws which theretofore had been in effect, in so far as they were not in conflict with the new laws, or with the fundamental policy of the State, were provisionally adopted by special ordinance of the same date.
​Sources of information.This narrative of the stages by which the "State of Manchukuo" was created has been compiled from all the sources of information available. The events were reported at length, as they occurred, in Japanese newspapers, and most fully, perhaps, in the columns of the Japanese-edited Manchuria Daily News. The two documents entitled "Histoire de l'Indépendance du Mandchoukouo—Ministère des Affaires étrangères du Mandchoukouo", and "A General Outline of Manchukuo—Department of Foreign Affairs, Manchukuo", which were prepared at Changchun on May 30th by the present administration, and the "Memorandum on the so-called Independence Movement in the Three Eastern Provinces", prepared by the Chinese Assessor, have also been carefully studied. In addition, wherever possible, neutral sources of information were utilised.
Civil administration since September 18th.The measures of civil administration taken by the Japanese military authorities between September 18th and the establishment of the "Manchukuo Government", notably the control of the Banks, the administration of the public utility services and the management of the railways, indicated that, from the commencement of the operations, objects more permanent than the requirements of a temporary military occupation were being pursued. Immediately after the occupation of Mukden, on September 19th, guards were placed in or in front of all Chinese banks, railway offices, the administrative offices of public utility services, the office of the Mining Administration, and similar premises. Investigations were then conducted into the financial and general situation of these enterprises. When they were allowed to re-open, Japanese were appointed as advisers, experts, or secretaries to officials, usually with administrative powers. Many business enterprises were owned by the former administration of the Three Eastern Provinces, as well as by the provincial administrations; and, as the previous Government was regarded as are enemy Governments in time of war, no bank, no mining, agricultural or industrial enterprise, no railway offices, no public utility—in fact, no single source of revenue in which they had been interested in either their public or private capacities—was left without supervision.
Railways.As regards railways, the measures taken by the Japanese authorities from the outset of the period of military occupation were designed to settle definitely, in a manner favourable to Japanese interests, some of the questions which had long been in dispute between the Chinese and Japanese railways, and which have been described in Chapter III. The following measures were promptly taken:
    1. All the Chinese-owned railways north of the Great Wall, and the monies standing to their credit in banks in Manchuria, were seized.
    2. In order that the railways might be co-ordinated with the South Manchuria Railway, certain changes were made in the arrangement of tracks in and around Mukden, by cutting the tracks of the Peiping-Mukden Railway at the viaduct under the South Manchuria Railway, thus closing the Liaoning Central station, the Fengtien East station, the Fengtien North Gate station, and thus severing the connection with the Chinese Government railway to Kirin (later replaced).
    3. At Kirin, a physical connection was made between the Hailun-Kirin line and the Kirin-Tunhua and Kirin-Changchun Railways.
    4. A staff of Japanese technical advisers was installed in various departments of the railways.
    5. The "special rates" adopted by the Chinese authorities were abolished and the original tariffs restored, thus bringing freight rates on Chinese railways more into conformity with those of the South Manchuria Railway.
​During the period between September 18th, when the North-Eastern Communications Committee ceased to function, and the date of the creation of the "Manchukuo Ministry of Communications", the Japanese authorities assumed entire responsibility for the administration of the railways.
Other public utilities.Measures of a similar kind, which went beyond those which were necessary for the protection of the lives and property of their nationals, were taken by the Japanese in respect of the public electricity supplies at Mukden and Antung. Also, in the period between September 18th and the establishment of "Manchukuo", the Japanese authorities made changes in the administration and management of the Chinese Government telephone, telegraph and wireless services which would ensure their intimate co-ordination with the Japanese telephone and telegraph services in Manchuria.
Conclusions.Since September 18th, 1931, the activities of the Japanese military authorities, in civil as well as in military matters, were marked by essentially political considerations. The progressive military occupation of the Three Eastern Provinces removed in succession from the control of the Chinese authorities the towns of Tsitsihar, Chinchow and Harbin, finally all the important towns of Manchuria; and following each occupation, the civil administration was re-organised. It is clear that the Independence Movement, which had never been heard of in Manchuria before September 1931, was only made possible by the presence of the Japanese troops.
A group of Japanese civil and military officials, both active and retired, who were in close touch with the new political movement in Japan to which reference was made in Chapter IV, conceived, organised and carried through this movement, as a solution to the situation in Manchuria as it existed after the events of September 18th.
With this object, they made use of the names and actions of certain Chinese individuals, and took advantage of certain minorities among the inhabitants, who had grievances against the former administration.
It is also clear that the Japanese General Staff realised from the start, or at least in a short time, the use which could be made of such an autonomy movement. In consequence, they provided assistance and gave direction to the organisers of the movement. The evidence received from all sources has satisfied the Commission that, while there were a number of factors which contributed to the creation of "Manchukuo", the two which, in combination, were most effective, and without which, in our judgment, the new State could not have been formed, were the presence of Japanese troops and the activities of Japanese officials, both civil and military.
For this reason, the present regime cannot be considered to have been called into existence by a genuine and spontaneous independence movement.
PART II.—THE PRESENT GOVERNMENT OF "MANCHUKUO"
The Organic Law."Manchukuo" is governed in accordance with an Organic Law and a Guarantee Law of Civil Rights. The Organic Law prescribes the fundamental organisation of the governmental organs. It was promulgated by Ordinance No. 1 issued on March 9th, the first year of Tatung (1932).
The Regent is head of the State. All executive power is vested in him, and he has also the authority to overrule the Legislative Council. He is assisted by a Privy Council, which is to advise him upon important affairs.
A characteristic feature of the Organic Law is the separation of governmental power into four divisions or departments: the Executive, the Legislative, the Judicial and the Supervisory.
The Executive Department.The functions of the Executive department are carried out, under the direction of the Regent, by the Premier and the Ministers of State, who together form a State Council or Cabinet. The Premier supervises ​the work of the Ministries and, through the powerful Board of General Affairs, has direct charge of their confidential matters, personnel, accounting and supplies. Subordinate to the State Council are various bureaux, especially the important Advisory Bureau and the Legislative Bureau. Executive power is thus largely concentrated in the hands of the Premier and the Regent.
The Legislative Department.The legislative power is vested in the Legislative Council. Its approval will be necessary for all laws and revenue Acts. But should it reject any Bill, the Regent may ask the Council to re-consider its decision and, if it should again reject it, the Regent, after consulting the Privy Council, shall decide the matter. At present, however, no law has yet been passed for the organisation of the Council, with the result that laws are drafted by the State Council and become effective after the Privy Council has been consulted and the approval of the Regent has been obtained. So long as the Legislative Council is not organised, the Premier's position is predominant.
The Judicial Department.The judiciary comprises a number of law courts, divided into three grades, the Supreme Court, Higher Courts, and District Courts.
The Supervisory Department.The Supervisory Council supervises the conduct of officials and audits their accounts. The members of the Council may not be dismissed except for a criminal offence or disciplinary punishment, and may not be subjected to suspension or transfer of office or reduction of salary against their wishes.
Provinces and Special Districts.For purposes of local government, "Manchukuo" is divided into five provinces and two special districts. The provinces are Fengtien, Kirin, Heilungkiang, Jehol, and Hsin-An or Hsingan. The last-named, which contains the Mongol districts, is subdivided into three areas or subprovinces, so as to conform to the traditional Banner system and the union of Banners into Leagues. The special districts are the old Chinese Eastern Railway, or Harbin district, and the newly established Chientao, or Korean district. By means of this administrative division, the important minorities, Mongols, Koreans and Russians, are to be guaranteed, as far as possible, special administration in conformity with their needs. Although the Commission made several requests to be shown a map of the area claimed to be included in the "State of Manchukuo", this was not provided, but a letter was received giving the boundaries of the "State" as follows:
   "The new State is bounded on the south by the Great Wall, and the Mongol Leagues and Banners in the same comprise Hulinbuir and the Leagues of Cherim, Chaota and Chosatu and their Banners."
At the head of the provinces are Civil Governors. But since it is desired to concentrate executive power in the Central Government, they are to be given no authority over either troops or finance. In the provinces, as well as in the central government, the General Affairs Department holds a controlling position. It is in charge of confidential matters, of personnel, accounting, correspondence, and matters which do not come under other departments.
Districts and municipalities.Provinces are divided into districts. These are administered largely by district self-government offices, which have under their direction various governmental departments, particularly that of General Affairs. Municipal governments exist at Mukden, Harbin, and Changchun. At Harbin, however, it is planned to create a Greater Harbin, which will include both the Russian and the Chinese cities. The Special Railway District is to be abolished. Part of it will be included in Greater Harbin, and the remainder, stretching east and west along the Chinese Eastern Railway, is to be added to Heilungkiang and Kirin Province.
The "Government of Manchukuo" regards the provinces as administrative areas, and the districts and the municipalities as units of finance. ​It determines the amount of their taxes and passes upon the budget. All local revenues must be paid into the Central Treasury, which will then supervise the proper disbursement. These revenues may not be retained, in whole or in part, by the local authorities, as was customary under the old regime. Naturally, this system has not as yet been brought into satisfactory operation.
Japanese officials and advisers.In the "Government of Manchukuo", Japanese officials are prominent, and Japanese advisers are attached to all important Departments. Although the Premier and his Ministers are all Chinese, the heads of the various Boards of General Affairs, which, in the organisation of the new State, exercise the greatest measure of actual power, are Japanese. At first they were designated as advisers, but more recently those holding the most important posts have been made full Government officials on the same basis as the Chinese. In the Central Government alone, not including those in local governments or in the War Office and the military forces or in Government enterprises, nearly 200 Japanese are "Manchukuo" Officials.
Japanese control the Board of General Affairs and the Legislative and Advisory Bureaux, which in practice constitute a Premier's Office, the General Affairs Department in the Ministries and in the Provincial Governments, and the Self-Government Directing Committees in the Districts, and the police departments in the Provinces of Fengtien, Kirin, and Heilungkiang. In most bureaux, moreover, there are Japanese advisers, counsellors and secretaries.
There are also many Japanese in the railway offices and in the Central Bank. In the Supervisory Council, Japanese hold the posts of Chief of the Bureau of General Affairs, Chief of the Control Bureau, and Chief of the Auditing Board. In the Legislative Council, the Chief Secretary is a Japanese. Finally, some of the most important officials of the Regent are Japanese, including the Chief of the Office of Internal Affairs and the Commander of the Regent's bodyguard.
The aims of the Government.The aim of the Government, as expressed in the proclamation of the North-Eastern Administrative Committee of February 18th, and of the "Government of Manchukuo" of March 1st, is to rule in accordance with the fundamental principle of "Wang Tao". It is difficult to find an exact English equivalent for this phrase. The interpreters provided by the "Manchukuo" authorities translated it "love", but scholars give the meaning as the "kingly way", which may have many shades of meaning. Traditionally, the Chinese have used the expression "Wang Tao" as antithetical to "Pa Tao", which latter expression as discussed by Dr. Sun Yat-sen in his "San Min Chu Yi" (Three People's Principles), connotes reliance upon physical force and compulsion. Sun Yat-sen explained that "Wang Tao", therefore, was the antithesis of "Might makes right ".
The policy of the Self-Government Guiding Board, the chief agency in the creation of the new Government, was continued by the Advisory Bureau, which had superseded it. Military officers were not to be allowed to interfere in matters of administration. Regulations governing the qualifications for Government service are to be enacted and appointments are to be made on the basis of the ability of the candidates.
Taxation.Taxation is to be reduced and placed on a legal basis, and reformed in accordance with sound principles of economics and administration. Direct taxes are to be transferred to the District and Municipal Governments, while the Central Government is to secure the income derived from indirect taxes.
​The documents supplied by the Changchun authorities state that a number of taxes have already been abolished, while others have been reduced. Hopes are expressed that readjustment of Government enterprises and Government-owned resources will increase revenue and that the eventual reduction of the military forces will lessen expenditure. However, for the time being, the financial position of the new State is unsatisfactory. Guerilla warfare has kept military expenditure high, while, at the same time, the Government is not receiving revenues from various normal sources. Expenditure for the first year is now roughly estimated at $85,000,000, against revenue $65,000,000, showing a deficit of $20,000,000, which it is intended to cover by a loan from the newly established Central Bank as explained hereafter.
The Government declared its intentions, as financial conditions improve, to spend as much as possible of its revenue upon education, public welfare, and development of the country, including reclamation of waste land, exploitation of mineral and forestry resources, and extension of the system of communications. It states that it will welcome foreign financial assistance in the development of the country, and that it will adhere to the principles of Equal Opportunity and of the Open Door.
Education.The Government has already begun to re-open primary and secondary schools, and it intends to train a large number of teachers who will thoroughly understand the spirit and policies of the new State. A new curriculum is to be adopted, new text-books compiled, and all anti-foreign education abolished. The new educational system will aim to improve primary schools and to stress vocational education, the training of the primary school-teachers, and the teaching of sound ideas as to sanitary living. The teaching of English and Japanese is to be compulsory in the middle schools, and of Japanese is to be voluntary in the primary schools.
Justice and police.The "Manchukuo" authorities have decided that, in the domain of justice, the interference of administrative authorities should not be tolerated. The status of judicial officers is guaranteed by the law, and their salaries are to be adequate. The qualifications for judicial positions will be raised. Extra-territorial rights, for the time being, will be respected, but the Government intends to start negotiations with foreign Powers for their abolition as soon as adequate reforms in the present system shall have been effected. The police are to be properly selected, trained and paid, and completely separated from the Army, which is not to be allowed to usurp police functions.
The Army.Re-organisation of the Army is planned, but, since at present it consists largely of the old Manchurian soldiery, caution is felt to be necessary in order to avoid increasing discontent and mutiny.
"Manchukuo" Central Bank opened its head offices in Changehun and branches in many other Manchurian cities on July 1st, 1932.The Central Bank of "Manchukuo" was established on June 14th, and officially opened its doors for business on July 1st. The Bank has its head offices in Changchun, the capital of "Manchukuo", and branches and sub-branches to the number of 170 in most of the cities of Manchuria.
The Bank was organised as a joint-stock company with a charter to run for thirty years. Its first officers were Chinese and Japanese bankers and financiers. It was empowered to "regulate the circulation of the domestic currency, maintain its stability and control the financing service". The capital of the bank was authorised at $30,000,000 (silver) and permission was given it to issue notes against a specie reserve of at least 30%,
The Central Bank absorbed all of the old provincial banks, including the Frontier Bank.The old provincial banks, including the Frontier Bank, were amalgamated with the new Central Bank, and their entire businesses, including affiliated enterprises, were turned over to it. Provision was further made for liquidating the non-Manchurian branches of the old provincial banks.
​In addition to what it will be able to salvage from the old banks, the Central Bank has a Japanese loan reported at 20,000,000 Yen and a subscription to its capital of $7,500,000 (silver) from the "Manchukuo Government" on which to establish itself. The Bank has planned to unify all the Manchurian currencies by redeeming them for new notes at rates which have been officially prescribed as from July 1st, 1932. New currency to be based on the silver dollar, but whether it will be convertible is not clear.These new notes are based on the silver dollar and are to be covered to the extent of at least 30 per cent by silver, gold, foreign currencies or deposits. Whether or not the new currency is to be convertible on demand and without limit into hard money is not made clear in official pronouncements. The old notes will be permitted to circulate for two years from the passage of the Conversion Act, but will not be valid after that time.
Present Manchurian currencies essentially what they were prior to September 18th, 1931.The order for the new Central Bank notes has been placed with the Japanese Government, but thus far neither the notes nor the new hard money are in circulation. The present currencies of Manchuria remain what they were prior to September 18th, 1931, with the exception that the notes are being surcharged with the signature of Mr. Yung-hou (the President of the new Central Bank) as they pass through the various banks.
"Manchukuo's" unification programme based on inadequate supply of hard money.It is not clear how the new "Manchukuo" Bank can hope to accomplish its ambitious programme of unifying and stabilising all the present Manchurian currencies with the limited amount of capital at its disposal. The resources inherited from the old provincial banking institutions with the addition of a loan from Japanese banks and a subscription to its capital from the "Manchukuo Government" seem entirely inadequate for the purpose. Moreover, it is not clear on what basis the financial relations between the Bank and the "Manchukuo Government" will be established. According to the preliminary "Manchukuo" budget supplied to the Commission by the Finance Minister, "Manchukuo" expects to face a deficit of over 20,000,000 Yuan during its first year of existence. According to the Minister, this was to be covered by a loan from the Central Bank (not then in existence). A Government which subscribes 7,500,000 Yuan to its bank and then borrows over 20,000,000 Yuan from it to balance its budget is not establishing either its Central Bank or its budget on a sound financial basis.
Central Bank more likely to unify the currencies than to make them convertible.Unless the Central Bank can obtain more actual hard money than it now appears to possess, it can hardly hope to unify and stabilise all Manchurian currencies on a convertible silver-dollar basis. Even if it were to succeed in creating a currency which was uniform though not convertible, it would possibly have accomplished something, but even a uniform currency the stability of which is not guaranteed by conversion falls short of the requirements of a sound monetary system.
The Japanese extend their control over the Chinese Public Utility System.In regard to various public utilities, as well as in regard to the railways, arrangements have been made which have tended to link up the Chinese and Japanese systems. Before the outbreak at Mukden, the Japanese were anxious to bring this about, but the Chinese consistently refused to give their consent. Between September 18th, however, and the formation of ​"Manchukuo", steps were at once taken to realise the wishes of the Japanese as already mentioned in the first section of this chapter. Since the formation of the "new State", the policy of the "Manchukuo Ministry of Communications" seems to be to enter into agreements with the South Manchuria Railway Company for the exploitation of at least some of the main railway lines under its authority.
The Chinese Telephone, Telegraph and Radio Systems.The Chinese telephone, telegraph and radio systems in Manchuria, being entirely Government-owned, had their own executives and, in addition, were subject to a unified control by the North-Eastern Telephone, Telegraph and Radio Administration. Since September 18th, all three of these systems have been brought into closer co-operation with existing Japanese systems throughout Manchuria. Moreover, arrangements have been made between the Japanese and the North-Eastern Telegraph Administration for through telegrams from or to any place in Manchuria and to or from any place in Kwantung Leased Territory, Japan, Korea, Formosa, and the South Sea Islands. Between the principal centres in North Manchuria and the Japanese post offices at Dairen, Mukden and Changchun, direct circuit lines have been constructed to ensure the quick transmission of messages.
Japanese "kana" messages have been given especially low rates. To learn to handle Japanese "kana" syllables, special training is being given to the Chinese staff, and it is planned to have Japanese clerks gradually join the Chinese telegraph workers at the chief centres. Thus, every facility has been given to favour telegraphic intercourse between Manchuria and the whole Japanese Empire. Naturally, the commercial connections between the countries are thereby greatly strengthened.
The Salt Gabelle. The Japanese military authorities took control, in September 1931, of the funds of the Salt Gabelle.After the events of September 18th–19th, the Japanese authorities issued orders to the offices and banks in which the revenue of the Salt Gabelle was retained that no payment from these funds was to be made without their consent.
Supervision over the Salt Gabelle was insisted upon on the ground that the greater part of the revenue from this source, though nominally national, had in fact been retained by Marshal Chang Hsueh-liang's Government. Income from this source, in 1930, had amounted to about $25,000,000 silver, of which $24,000,000 had been retained in Manchuria. Only $1,000,000 had been remitted to the Inspectorate-General of the Salt Gabelle in Shanghai.
Marshal Chang Hsueh-liang agreed in 1928 to pay the Manchurian quota.After Marshal Chang Hsueh-liang had joined the National Government in December 1928, he agreed to pay the monthly quota of $86,600 silver which had been fixed as the amount due from Manchuria towards the loans secured on the Salt Gabelle. Somewhat later, in April 1930, a revised table was announced in which the Manchurian monthly quota was raised to $217,800. Because of local pressure upon the Manchurian finances, however, Marshal Chang requested a postponement of the new assignment. At the time of the Mukden incident, his arrears amounted to $576,200. The first remittance at the new rate of $217,800 was actually made on September 29th, 1931, by consent of the Japanese Army officers. Since then, to March 1932 inclusive, the newly-established authorities in Manchuria have remitted to the Central Government, not only these monthly quotas, but also the quota arrears left unpaid by Marshal Chang Hsuehliang. The surplus from the Salt revenue, however, they regarded as Manchurian, and not national, income, and therefore considered that they were justified in retaining it for local purposes.
The seizure of Salt funds at Newehwang (Yinkow) in October and November 1931.After the Mukden Committee for the Maintenance of Peace and Order had been transformed into the Provincial Government ad interim, it ordered the District Salt Inspectorate at Newchwang to transfer all its funds to the Provincial Bank for disbursement by the Board of Finance. According to Chinese official reports, the Bank of China at Newchwang was likewise, ​on October 30th, forced to give up the Salt funds on deposit, amounting to $672,709.56 silver without authority from the original depositors. A receipt was given in the name of the Liaoning Finance Board, which was signed only by the Japanese adviser to that Board.
The new Kirin Provincial Government also seized the Salt Revenue.The new Kirin Provincial Government took similar steps with regard to the Salt Transportation Office of Kirin and Heilungkiang. According to Chinese official report, it demanded the transfer of the Salt revenue to its provincial treasury. When the Chief of the Office refused, he was detained for some days and replaced by a nominee of Governor Hsi Hsia, who, on October 22nd, forcibly took possession of the Office, while the Auditorate Office was closed under Governor Hsi Hsia's orders. In this case, too, the Salt funds deposited in the Bank of China and the Bank of Communications were claimed by the new Kirin authorities and, on November 6th, were transferred to the Provincial Bank. Since then, Salt funds have from time to time been withdrawn and expended by the local authorities, while the monthly quotas have been sent regularly to Shanghai. From October 30th, 1931, to August 25th, 1932, for which period Chinese official figures are available, Salt revenue amounting to $14,000,000 silver was retained in Manchuria.
The Salt Administration throughout Manchuria continued to function, although under the restrictions described and under supervision, until March 28th, when the Minister of Finance of the "Manchukuo Government" ordered that the deposits, accounts, documents, and other properties belonging to the Inspectorate should be handed over on the following day to the Salt Comptroller of "Manchukuo", and that the collection of Salt revenue, which was originally undertaken by the Bank of China, should be transferred to the Bank of the Three Eastern Provinces. He stated that those officials who wished to continue their service in the Salt Gabelle Administration of the "Manchukuo" should report their names to the Salt Comptroller's Office, and promised that their applications would receive serious consideration provided they first renounced allegiance to the Government of the Republic of China.
The "Government of Manchukuo" took over the administration of the Salt Gabelle.On April 15th, the District Inspectorate at Newchwang was dissolved by force. The Director and Deputy-Director were put out of office. The premises were occupied, and safes and documents and seals were seized. The remaining officials were requested to continue their service, but they are all reported to have refused. A number of those who had been in the Salt Administration followed the Director to Tientsin and waited for further instructions from Shanghai. The work of the former Salt Inspectorate in the Three Eastern Provinces was thus completely taken over by the new Comptroller's Office of "Manchukuo". The new Government, however, has stated that it is prepared to continue to pay its equitable proportion of the sums required for the service of the foreign loans secured on the Salt revenue.
The Customs.Since the Customs funds collected in Manchuria had always been remitted to the Central Government, the Japanese military authorities did not interfere with the Customs administration nor with the remittance of funds to Shanghai. Interference with this revenue was first made by the "Manchukuo Government" on the ground that their State was independent.
Customs revenue in Manchuria.One of the first acts of the North-Eastern Administrative Committee, which was established on February 17th as the Provincial "Government of Manchukuo", was to instruct the Superintendents of Customs at the Manchurian Treaty ports that, although the Customs revenue belonged of right to "Manchukuo" and would, in the future, be under the control of the Committee, for the time being the Superintendents and Commissioners of Customs should carry on their duties as usual. They were informed that a Japanese Customs Adviser had been appointed at each Manchurian ​port for the purpose of supervising the general Customs administration. The ports concerned were Lungchingtsun, Antung, Newchwang and Harbin, together with some sub-stations, at which the revenue collected in 1931 amounted respectively to Hk. Tis. 574,000, 3,682,000, 3,792,000, and 5,272,000. The port of Aigun, which is still outside the sphere of control of the "Manchukuo Government", is functioning under the Chinese Customs Service. The port of Dairen, in the Kwantung Leased Territory, has a distinct status. The fact that the Customs revenue collected in the Manchurian ports, including Dairen, amounted in 1930 to 14.7 per cent and in 1931 to 13.5 per cent of the total for all China shows the importance of Manchuria in the Chinese Customs Administration.
The procedure by which the "Manchukuo" authorities took over the entire Customs administration in Manchuria is well illustrated by the action taken at Antung, which has been described as follows by the Inspectorate-General of Customs:
The "Government of Manchukuo" took over the Customs Administration and Revenue, March–June 1932.A Japanese Customs Adviser was appointed to the Antung Customs Office in March, but he took no active steps until the middle of June, when he sent definite orders from the "Manchukuo" Ministry of Finance to the Bank of China that Customs funds were no longer to be remitted to Shanghai. On June 16th, four armed "Manchukuo" police, accompanied by the Assistant Superintendent of Police, a Japanese, visited the Bank of China and informed the Manager that they had come to guard the revenue. On June 19th, the Bank of China handed over to the Bank of the Three Eastern Provinces Tls. 783,000, and informed the Commissioner that this action was taken as a result of force majeure.
On June 26th and 27th, a Japanese Adviser of the "Manchukuo Government" demanded that the Customs House at Antung should be handed over to him. The Commissioner refused, but "Manchukuo" police, all Japanese, forced the Commissioner to leave the Customs House. The Commissioner, however, still attempted to carry on the Customs work in his home, since 80 per cent of the Antung Customs revenue is collected in the railway area, hoping that the Japanese authorities would not permit interference within this area. But the "Manchukuo" police entered the Japanese railway zone, arrested a number of Customs staff, intimidated the others, and forced the Commissioner to suspend the Chinese Customs Service.
The Customs situation at Dairen.Until June 7th, the Dairen Customs revenue was remitted to Shanghai at intervals of three or four days, but, under date of June 9th, the "Manchukuo Government" gave notice that these remittances should no longer be made. When no further funds reached Shanghai, the InspectorGeneral of Customs took up the matter by telegraph with the Japanese Commissioner at Dairen. As a result, the Commissioner refused to send on the Customs receipts on the ground that the Chief of the Foreign Section of the Government of the Japanese Leased Territory had advised him that the remittance of the Customs revenue might severely affect Japanese interests. The Inspector-General therefore, on June 24th, dismissed the Dairen Commissioner for insubordination.
The "Manchukuo Government", on June 27th, appointed the dismissed Commissioner and the members of his staff as "Manchukuo" officials, to serve in their former positions. It had threatened to establish anew Customs House at Wafangtien, on the frontier of the Leased Territory, if the Japanese authorities should prevent them from taking charge of the Dairen Customs. The Japanese authorities of the Leased Territory did not oppose the passing of the Customs administration into the hands of the newly appointed "Manchukuo" officials. They maintained that the problem did not concern Japan, but was an issue solely between "Manchukuo" on the one hand and the Government of China and its Dairen Commissioner on the other.
​The view of the "Manchukuo Government" regarding the Customs.The "Manchukuo Government" maintains that, since "Manchukuo" is an independent State, it exercises, of right, complete jurisdiction over the Customs administration of its territory. But it has stated that, in view of the fact that various foreign loans and indemnities were based upon the Chinese Customs revenue, it is prepared to pay its equitable proportion of the annual sums necessary to meet these obligations. It hopes that, after depositing this amount in the Yokohama Specia Bank, there will be a Customs surplus for 1932–33 available for local use of about $19,000,000 silver.
The Postal Administration in Manchuria.The Japanese military authorities in Manchuria, after September 18th, did not greatly interfere with the Post Office, apart from exercising a certain censorship of newspapers and letters. After the establishment of "Manchukuo", the Government desired to take over the postal services of the territory, and appointed, on April 14th, special officers to take charge of the transfer of the Postal Administration. On April 24th, it applied for permission to join the International Post Union, for which it has not yet qualified.
As the Postal Commissioners refused to surrender their offices, the status quo was for some time respected, although "Manchukuo" supervisors were placed in certain offices with a view to exercising a measure of control. The "Manchukuo Government", however, finally decided to issue its own stamps and to discontinue the use of the Chinese stamps. By ordinance of the Ministry of Communications of July 9th, it informed the public that the new stamps and cards would be offered for sale on August 1st. At this stage, the Chinese Government ordered the Postal Commissioners to close the office in Manchuria and to give the staff the choice of receiving three months' pay or of returning to designated bases in China for service at other places. The "Manchukuo" authorities, in turn, offered to take into their service all the postal employees who wished to remain, and promised to guarantee their financial and other rights acquired under the Chinese Administration. On July 26th, the "Manchukuo Government" took over completely the postal service throughout Manchuria.
The treatment of private property.The "Manchukuo Government" has stated that it will respect private property and all concessions awarded by either the Central Government of China or by the former Government of Manchuria, provided the concessions were legally granted in accordance with the laws and regulations previously in force. It has also promised to pay the lawful debts and obligations of the former administration and has appointed a Commission to pass upon claims of indebtedness. In regard to the properties belonging to Marshal Chang Hsueh-liang and some of the other prominent leaders of the former regime, it is yet too early to state what action will be taken. According to Chinese official reports, all the personal property of Marshal Chang Hsueh-liang, General Wan Fu-lin, General Po Yu-lin, and certain others has been confiscated. The "Manchukuo" authorities, however, take the view that, since the former Government officials used their power to amass wealth for themselves, they are not yet prepared to recognise property thus acquired as properly "private property". A careful investigation is being made of the possessions of the former officials. This is reported to have been finished as far as Bank deposits are concerned.
Comments.Having thus described the organisation of the "Manchukuo Government", its programme, and some of the measures it has taken to affirm its independence from China, we must state our conclusions regarding its operations and its principal characteristics.
The programme of this "Government" contains a number of liberal reforms the application of which would be desirable, not only in Manchuria, but also in the rest of China; in fact, many of these reforms figure equally in the programme of the Chinese Government. In their interviews with ​the Commission, the representatives of this "Government" claimed that, with the help of the Japanese, they would be able to establish peace and order within a reasonable time and would thereafter be able to maintain it permanently. They expressed the belief that they would be able to secure the support of the people in time by assuring them an honest and efficient administration, security from bandit raids, lower taxation as the result of reduced military expenditure, currency reform, improved communications and popular political representation.
But, after making every allowance for the short time which has hitherto been at the disposal of the "Manchukuo Government" for carrying out its policy, and after paying due regard to the steps already taken, there is no indication that this "Government" will in fact be able to carry out many of its reforms. To mention but one example: there seem to be serious obstacles in the way of the realisation of their budgetary and currency reforms. A thorough programme of reforms, orderly conditions and economic prosperity could not be realised in the conditions of insecurity and disturbance which existed in 1932.
As regards the "Government" and the public services, although the titular heads of the Departments are Chinese residents in Manchuria, the main political and administrative power rests in the hands of Japanese officials and advisers. The political and administrative organisation of the "Government" is such as to give to these officials and advisers opportunities, not merely of giving technical advice, but also of actually controlling and directing the administration. They are doubtless not under the orders of the Tokyo Government, and their policy has not always coincided with the official policy either of the Japanese Government or of the Headquarters of the Kwantung Army. But in the case of all-important problems, these officials and advisers, some of whom were able to act more or less independently in the first days of the new organisation, have been constrained more and more to follow the direction of Japanese official authority. This authority, in fact, by reason of the occupation of the country by its troops, by the dependence of the "Manchukuo Government" on those troops for the maintenance of its authority both internally and externally, in consequence, too, of the more and more important role entrusted to the South Manchuria Railway Company in the management of the railways under the jurisdiction of the "Manchukuo Government", and finally by the presence of its consuls, as liaison agents, in the most important urban centres, possesses in every contingency the means of exercising an irresistible pressure. The liaison between the "Manchukuo Government" and Japanese official authority is still further emphasised by the recent appointment of a special ambassador, not officially accredited, but resident in the capital of Manchuria, exercising in his capacity of Governor-General of the Kwantung Leased Territory a control over the South Manchuria Railway Company and concentrating in the same office the authority of a diplomatic representative, the head of the Consular Service, and Commander-in-chief of the Army of Occupation.
The relations between "Manchukuo" and Japan have hitherto been somewhat difficult to define, but the latest information in the possession of the Commission indicates that it is the intention of the Japanese Government to define them before long. A letter dated August 27th, 1932, addressed to the Commission by the Japanese Assessor, states that the Special Ambassador, General Muto, "left Tokyo on August 20th for Manchuria. On arrival he will commence negotiations for the conclusion of a fundamental treaty concerning the establishment of friendly relations between Japan and Manchuria. The Government of Japan regards the conclusion of this treaty as a formal recognition of "Manchukuo".
PART III.—THE OPINIONS OF THE INHABITANTS OF MANCHURIA.
Attitude of the inhabitants of Manchuria.It was one of the objects of the Commission to ascertain the attitude of the inhabitants of Manchuria towards the new "State". Owing to the circumstances in which the enquiry had to be made, however, the obtaining of evidence presented some difficulty. The danger, real or supposed, to the Commission from bandits, Korean Communists, or supporters of the new Government who might be angered by the presence of the Chinese Assessor on account of his criticisms of that regime, provided a reason for exceptional measures of protection. There were no doubt occasional real dangers in the unsettled conditions of the country, and we are grateful for the efficient protection with which we were provided throughout our tour. But the effect of the police measures adopted was to keep away witnesses; and many Chinese were frankly afraid of even meeting members of our staff. We were informed at one place that, before our arrival, it had been announced that no one would be allowed to see the Commission without official permission. Interviews were therefore usually arranged with considerable difficulty and in secrecy, and many informed us that it was too dangerous for them to meet us even in this way.
In spite of these difficulties, we were able to arrange private interviews with business-men, bankers, teachers, doctors, police, tradesmen and others, in addition to our public interviews with "Manchukuo" officials, Japanese consuls and military officers. We also received over 1,500 written communications, some delivered by hand, the majority sent by post to different addresses. The information so received was checked as far as possible from neutral sources.
Deputations and prepared statements.Many delegations representing public bodies and associations were received, and usually presented to us written statements. Most of the delegations were introduced by the Japanese or "Manchukuo" authorities, and we had strong grounds for believing that the statements left with us had previously obtained Japanese approval. In fact, in some cases persons who had presented them informed us afterwards that they had been written or substantially revised by the Japanese and were not to be taken as the expression of their real feelings. These documents were remarkable for the studied neglect to comment either favourably or otherwise upon Japanese participation in the establishment or maintenance of the "Manchukuo" administration. In the main, these statements were concerned with the relation of grievances against the former Chinese administration and contained expressions of hope and confidence in the future of the new "State".
Letters.The letters received came from farmers, small tradesmen, town workers and students, and related the feelings and experiences of the writers. After the return of the Commission to Peiping in June, this mass of correspondence was translated, analysed and arranged by an expert staff specially selected for the purpose. All these 1,550 letters, except two, were bitterly hostile to the new "Manchukuo Government" and to the Japanese. They appeared to be sincere and spontaneous expressions of opinion.
Officials of the "Manchukuo"The higher Chinese officials of the "Manchukuo Government" are in office for various reasons. Many of them were previously in the former regime and have been retained either by inducements or by intimidation of one kind or another. Some of them conveyed messages to the Commission to the effect that they had been forced to remain in office under duress, that all power was in Japanese hands, that they were loyal to China, and that what they had said at their interviews with the Commission in the presence of the Japanese was not necessarily to be believed. Some officials have remained in office to prevent their property from being confiscated, as has happened in the case of some of those who have fled into China. ​Others, men of good repute, joined in the hope that they would have power to improve the administration, and under promise of the Japanese that they would have a free hand. Some Manchus joined in the hope of getting benefits for persons of Manchu race. Some of these have been disappointed and complained that no real authority was conceded to them. Lastly, a few men are in office because they had personal grievances against the former regime or for reasons of profit.
Minor and local officials.The minor and local officials have in the main retained their offices under the new regime, partly because of the necessity for earning a living and supporting their families and partly because they feel that if they go worse men might be put in their place. Most of the local magistrates have also remained in office, partly from a sense of duty to the people under their charge and partly under pressure. While it was often difficult to fill the higher posts with reputable Chinese, it was an easy matter to get Chinese for service in minor posts and local offices, though the loyalty of the service rendered in such circumstances is at least questionable.
Police.The "Manchukuo" Police are partly composed of members of the former Chinese police, partly of new recruits. In the larger towns, there are actually Japanese officers in the police, and in many other places there are Japanese advisers. Some individual members of the police who spoke to us expressed their dislike of the new regime, but said they must continue to serve to make a living.
Army.The "Manchukuo" Army also consists in the main of the former Manchurian soldiers re-organised under Japanese supervision. Such troops were at first content to take service under the new regime provided they were merely required to maintain local order. But, since they have on occasions been called upon to engage in serious warfare against Chinese forces and to fight under Japanese orders side by side with Japanese troops, the "Manchukuo" Army has become increasingly unreliable. Japanese sources report the frequent defection of "Manchukuo" forces to the Chinese side, while the Chinese claim that one of their most reliable and fruitful sources of warlike supplies is the "Manchukuo" Army.
Business-men and bankers.The Chinese business-men and bankers who were interviewed by us were hostile to "Manchukuo". They disliked the Japanese; they feared for their lives and property, and frequently remarked: "We do not want to become like the Koreans." After September 18th, there was a large exodus of business-men to China, but some of the less rich ones are now returning. Generally speaking, the smaller shopkeepers expect to suffer less from Japanese competition than do the larger merchants and manufacturers, who often had profitable relations with the former officials. Many shops were still closed at the time of our visit. The increase in banditry adversely affected business in the countryside, and the machinery of credit has largely broken down. The announced Japanese intention to exploit Manchuria economically, and the numerous visits of Japanese economic missions to Manchuria in the last few months, have caused apprehension among Chinese business-men, in spite of the fact that many of these missions are reported to have returned to Japan disappointed.
Professional classes: doctors, teachers, students.The professional classes, teachers and doctors, are hostile to "Manchukuo". They allege that they are spied upon and intimidated. The interference with education, the closing of Universities and some schools, and the alterations in the school text-books, have added to their hostility, already great on patriotic grounds. The censorship of the Press, post and opinion is resented, as is also the prohibition of the entry into "Manchukuo" of newspapers published in China. There are, of course, Chinese who have been educated in Japan who are not included in this generalisation. Many letters were received from students and young people directed against "Manchukuo".
​Farmers and town workers.Evidence regarding the attitude of farmers and town workers is divergent and naturally difficult to obtain. Opinion among foreigners and educated Chinese was to the effect that they were either hostile or indifferent to "Manchukuo". The farmer and worker is politically uneducated, usually illiterate, and normally takes little interest in the Government. The following reasons were advanced by witnesses for the agricultural populations being hostile to "Manchukuo", and were confirmed in some of the letters received from this class of person. The farmers have good grounds for believing that the new regime will lead to an increased immigration of Koreans, and possibly of Japanese. The Korean immigrants do not assimilate with the Chinese, and their methods of agriculture are different. While the Chinese farmer mainly grows beans, kaoliang and wheat, the Korean farmer cultivates rice. This means digging canals and dykes and flooding the fields. If there are heavy rains, the dykes built by the Koreans are liable to burst and flood neighbouring Chinese land, ruining the crops. There have also been constant quarrels in the past with Koreans over land ownership and rents. Since the establishment of "Manchukuo" the Chinese allege that the Koreans have often ceased to pay rent, that they have seized lands from the Chinese, and that the Japanese have forced the Chinese to sell their lands at an unfavourable price. The farmers near the railways and towns have suffered from orders forbidding the planting of kaoliang—a crop which grows to ten feet in height and favours the operations of bandits—within five hundred metres of railway lines and towns. The falling-off of the seasonal migration of labourers from China proper, due to the economic depression and accentuated to some extent by the political disturbances, continues. The public lands, usually available on terms to immigrants from China, have now been taken over by "Manchukuo".
Since September 18th, 1931, there has been an unparalleled growth of banditry and lawlessness in the countryside, partly due to disbanded soldiery and partly due to farmers who, having been ruined by bandits, have to take to banditry themselves for a living. Organised warfare, from which Manchuria, compared to the rest of China, had been free for many years, is now being waged in many parts of the Three Provinces between Japanese and "Manchukuo" troops and the scattered forces still loyal to China. This warfare naturally inflicts great hardships on the farmers, especially as the Japanese aeroplanes have been bombing villages suspected of harbouring anti-"Manchukuo" forces. One result has been that large areas have not been planted, and next year the farmer will find it harder than ever to pay his taxes. Since the outbreak of disorders, large numbers of the more-recently-established immigrants from China have fled back inside the Wall. These material reasons, when added to a certain ingrained dislike of the Japanese, caused many witnesses to tell us that the Chinese farmers, who constitute the overwhelming mass of the population of Manchuria, suffer from and dislike the new regime, and that their attitude is one of passive hostility.
As regards the townspeople, in certain places they have suffered from the attitude of Japanese soldiers, gendarmes and police. Generally speaking, the behaviour of the Japanese troops has been good, there being no widespread lootings or massacres, though we have received in our letters complaints of individual brutality. On the other hand, the Japanese have been vigorous in suppressing elements that they believed to be hostile. The Chinese allege that many executions have taken place, and also that prisoners have been threatened and tortured in Japanese gendarmerie stations.
It was, we were told, impossible to stimulate in the towns a show of popular enthusiasm for the inauguration ceremonies of "Manchukuo". ​Generally speaking, the attitude of the town population is a mixture of passive acquiescence and hostility.
Minorities.While we found the Chinese majority either hostile or indifferent to the "Manchukuo", the new Government receives some support from among various minority racial groups in Manchuria, such as the Mongols, Koreans, White Russians and Manchus. They have in varying degrees suffered oppression from the former administration, or economic disadvantage from the large immigration of Chinese in the last few decades, and, while no section is entirely enthusiastic, they hope for better treatment from the new regime, whose policy in turn is to encourage these minority groups.
Mongols.The Mongols have remained a race apart from the Chinese and have, as already stated, preserved a strong race-consciousness, as well as their tribal system, aristocracy, language, dress, special modes of life, manners, customs and religion. Though still mainly a pastoral people, they are increasingly engaged in agriculture and in the transportation of products by carts and animals. The Mongols bordering Manchuria have suffered increasingly from Chinese immigrants who obtain possession of and cultivate their lands from which they are being gradually extruded. This leads to chronic and unavoidable ill-feeling. Mongol delegations we received complained also of past sufferings from the rapaciousnsss of Chinese officials and tax-gatherers. The Mongols of Inner Mongolia have seen Outer Mongolia pass under the influence of the U.S.S.R., whose extension to Inner Mongolia they dread. They wish to preserve their separate national existence against the encroachments of the Chinese on the one hand and the U.S.S.R. on the other. Placed in this precarious position, they have greater hope of preserving their separate existence under the new regime. It must be observed, moreover, that the Princes are mainly dependent for their wealth on fixed property and on their special privileges, and that they therefore tend to become amenable to de facto authorities. A deputation, however, of Mongol Princes was received by the Commission in Peiping and stated their opposition to the new regime. At present, the connection between the Mongols bordering on Manchuria and the "Manchukuo Government" is undefined, and the "Manchukuo Government" has so far refrained from interfering in their administration. While the support of certain of these Mongol elements at present is genuine, if cautious, they are quite prepared to withdraw it should the Japanese prove a menace to their independence or economic interests at some future date.
Manchus.The Manchus have been almost completely assimilated with the Chinese, although in Kirin and Heilungkiang there still exist small and politically unimportant colonies of Manchus who, though bilingual, remain distinctly Manchu. Since the establishment of the Republic, the remnants of the Manchu race lost their privileged position: although the Republic promised to continue the payment of their subsidies, they were paid in depreciated currency, and were therefore forced to take up farming and trade, in which they had no experience. The few distinct Manchu groups that remain may cherish hopes that, with the establishment of "Manchukuo", whose backers spoke so often about the inhabitants of Manchuria being distinct in race from those of the rest of China, and in which the last of the Manchu Emperors is the chief executive, they may once more get privileged treatment. Persons of Manchu race have entered the Government with such hopes, but Chinese witnesses in Manchuria alleged that these office-holders have been disillusioned by finding all the power in Japanese hands and their own proposals ignored. Although there may still exist some sentimental loyalty to the ex-Emperor among persons of Manchu blood, there does not exist any race-conscious Manchu movement of any significance. They have been so largely assimilated with the Chinese that, although efforts have been made to recruit Manchus for the administration ​and to stimulate Manchu race-consciousness, this source of support for the new Government is not sufficient to give it any title to represent the people.
Koreans.In the past, there has been much friction between Korean farmers backed by the Japanese authorities on the one hand, and Chinese officials, landowners and farmers on the other. There is no doubt that, in the past, Korean farmers suffered from violence and extortion.
The Korean deputations which appeared before the Commission generally welcomed the new regime, but we cannot say to what extent they were representative of their community. In any case, those Koreans who are political refugees having emigrated to escape Japanese domination might not be expected to welcome an extension of that domination. These refugees have proved a fertile ground for Communist propaganda, and maintain contact with the revolutionary groups inside Korea.
White Russians.Of all the minority communities in Manchuria, the small colony of White Russians—at least 100,000 in number—in and around Harbin has suffered the most in recent years. Because they are a minority community with no national Government to protect them, they have been subjected to every kind of humiliation by the Chinese officials and police. They are in conflict with the Government of their own country and are, even in Manchuria, in constant anxiety on that account. The richer and more educated members of their community can earn a livelihood, but they have been liable to suffer whenever the Chinese authorities have thought some advantage was to be gained from the U.S.S.R. at their expense. The poorer members find it very hard to make a living and have suffered continually at the hands of the police and the Chinese courts. In a province where taxes are assessed by a process of bargaining, they have been made to pay a higher portion of their assessed taxes than their Chinese neighbours. They have experienced many restrictions on their trade and movements and have had to pay bribes to the officials to have their passports examined, their contracts approved or their land transferred. It is not to be wondered at that many members of this community, whose condition could not well be made worse, should have welcomed the Japanese and now entertain hopes that their lot may be improved under the new administration.
We received a deputation of White Russians when we were in Harbin, as well as many letters, and we gathered from them that they would support any regime which would guarantee to them:
    (1) The right of asylum;
    (2) An honest and efficient police administration;
    (3) Justice in the law courts;
    (4) An equitable system of taxation;
    (5) Rights of trade and settlement, not dependent on the payment of bribes;
    (6) Facilities for educating their children. Their requirements in this respect were chiefly efficient teaching of foreign languages to enable them to emigrate, and good technical education to enable them to obtain business employment in China.
    (7) Some assistance regarding land settlement and emigration.
Conclusions of the Commission.Such are the opinions of the local population conveyed to us during our tour in Manchuria. After careful study of the evidence presented to us in public and private interviews, in letters and written statements, we have come to the conclusion that there is no general Chinese support for the "Manchukuo Government", which is regarded by the local Chinese as an instrument of the Japanese.
* ↑ The more important appointments have meanwhile been announced in the Manchuria Government Gazette.
* ↑ See special study No. 4, annexed to this Report.
* ↑ It is quite possible that this was intended to be "Yuan".
* ↑ According to the preliminary budget furnished the Commission by the "Manchukuo" Finance Minister on May 5th, 1932.
* ↑ This and the following items in the budget were given as Yen in an interview by the "Manchukuo" Finance Minister with a Commissioner, but in the English translation of "A General Outline of Manchukuo" presented by the Department of Foreign Affairs, Manchukuo, they are given in terms of Yuan. The Commission therefore takes the liberty of using Yuan rather than Yen in its reference to this and the following budgetary items. The fact that the Chinese symbol for Yuan is the same as the one which the Japanese employ for the Yen has been a constant source of difficulty in dealing with the English and French translations supplied the Commission by both the Chinese and Japanese.
* ↑ See special study No. 5, annexed to this Report.
* ↑ A Japanese phonetic script.
* ↑ See special studies Nos. 4 and 5, annexed to this Report.
* ↑ See also Chapter III and special study No. 9, annexed to this Report.