The Japanese were completely shut out from the European colonies. In the Philippines, Indo-China, Borneo, Indonesia, Malaya, Burma, not only were Japanese activities forbidden, but even entry. Ordinary trade was hampered by unnatural discriminatory treatment.... In a sense the Manchurian outbreak was the result of the international closed economies that followed on the first World War. There was a feeling at the back of it that it provided the only escape from economic strangulation.56The infamous Yosuke Matsuoka stated in 1931 that "we feel suffocated as we observe internal and external situations. What we are seeking is that which is minimal for living beings. In other words, we are seeking to live. We are seeking room that will let us breathe."57 Ten years later he was to describe Japan as "in the grip of a need to work out means of self-supply and self-sufficiency in Greater East Asia." He asks: "Is it for the United States, which rules over the Western Hemisphere and is expanding over the Atlantic and the Pacific, to say that these ideals, these ambitions of Japan are wrong?"58
Western economic policies of the 1930s made an intolerable situation still worse, as was reported regularly in the conferences of the Institute of Pacific Relations (IPR). The report of the Banff conference of August 1933 noted that "the Indian Government, in an attempt to foster its own cotton industry, imposed an almost prohibitive tariff on imported cotton goods, the effects of which were of course felt chiefly by Japanese traders, whose markets in India had been growing rapidly."59 "Japan, which is a rapidly growing industrial nation, has a special need for ... [mineral resources] ... and is faced with a serious shortage of iron, steel, oil, and a number of important industrial minerals under her domestic control, while, on the other hand, the greater part of the supplies of tin and rubber, not only of the Pacific area but for the whole world, are, by historical accident, largely under the control of Great Britain and the Netherlands."60 The same was true of iron and oil, of course. In 1932, Japanese exports of cotton piece-goods for the first time exceeded those of Great Britain. The Indian tariff, mentioned above, was 75 percent on Japanese cotton goods and 25 percent on British goods. The Ottawa conference of 1932 effectively blocked Japanese trade with the Commonwealth, including India. As the IPR conference report noted, "Ottawa had dealt a blow to Japanese liberalism."
The Ottawa Commonwealth arrangements aimed at constructing an essentially closed, autarchic system; the contemporary American policy of self-sufficiency proceeded in a similar direction. The only recourse available to Japan was to try to mimic this behavior in Manchuria. Liberalism was all very well when Britannia ruled the waves, but not when Lancashire industry was grinding to a halt, unable to meet Japanese competition. The Open Door policy was appropriate to an expanding capitalist economy, but must not be allowed to block American economic recovery. Thus in October 1935, Japan was forced to accept an agreement limiting shipments of cotton textiles from Japan to the Philippines for two years, while American imports remained duty-free. Similarly, revised commercial arrangements with Cuba in 1934 were designed to eliminate Japanese competition in textiles, copper wire, electric bulbs, and cellophane.61
The 1936 IPR conference continues the story. Writing on "trade and trade rivalry between the United States and Japan," William W. Lockwood observes that American preponderance in Philippine trade "is attributable in large degree to the Closed Door policy of the United States, which has established American products in a preferential position. Were Japanese business men able to compete on equal terms, there is no doubt but that Japan's share of the trade would advance rapidly."62 At the same time, American tariffs on many Japanese items exceeded 100 percent.
Japan did not have the resiliency to absorb such a serious shock to its economy. The textile industry, which was hit most severely by the discriminatory policies of the major imperialist powers, produced nearly half of the total value of manufactured goods and about two thirds of the value of Japanese exports, and employed about half of the factory workers. Though industrialized by Asian standards, Japan had only about one seventh the energy capacity per capita of Germany; from 1927 to 1932, its pig-iron production was 44 percent that of Luxemburg and its steel production about 95 percent.63 It was in no position to tolerate a situation in which India, Malaya, Indochina, and the Philippines erected tariff barriers favoring the mother country, and could not survive the deterioration in its very substantial trade with the United States and the sharp decline in the China trade. It was, in fact, being suffocated by the American and British and other Western imperial systems, which quickly abandoned their lofty liberal rhetoric as soon as the shoe began to pinch.
The situation as of 1936 is summarized as follows by Neumann:
When an effort to set a quota on imports of bleached and colored cotton cloths failed, President Roosevelt finally took direct action. In May of 1936 he invoked the flexible provision of the tariff law and ordered an average increase of 42 percent in the duty on these categories of imports. By this date Japan's cotton goods had begun to suffer from restrictive measures taken by more than half of their other markets. Japanese xenophobia was further stimulated as tariff barriers [rose] against Japanese goods, like earlier barriers against Japanese immigrants, and presented a convincing picture of western encirclement. The most secure markets were those which Japan could control politically; an argument for further political expansion ... against an iron ring of tariffs.64It is hardly astonishing, then, that in 1937 Japan again began to expand at the expense of China. From the Japanese point of view, the new government of North China established in 1937 represented the intention of the Japanese to keep North China independent of Nanking and the interest of the Chinese opposed to colonization of the North by the dictatorial Kuomintang.65 On December 22, 1938, Prince Konoye made the following statement:
...Japan demands that China, in accordance with the principle of equality between the two countries, should recognize the freedom of residence and trade on the part of Japanese subjects in the interior of China, with a view to promoting the economic interests of both peoples; and that, in the light of the historical and economic relations between the two nations, China should extend to Japan facilities for the development of China's natural resources, especially in the regions of North China and Inner Mongolia.66There were to be no annexations, no indemnities. Thus a new order was to be established, which would defend China and Japan against Western imperialism, unequal treaties, and extraterritoriality. Its goal was not enrichment of Japan, but rather cooperation (on Japanese terms, of course). Japan would provide capital and technical assistance; at the same time, it would succeed in freeing itself from dependence on the West for strategic raw materials.
Japanese leaders repeatedly made clear that they intended no territorial aggrandizement. To use the contemporary idiom, they emphasized that their actions were "not intended as a threat to China" and that "China knows that Japan does not want a wider war," although, of course, they would "do everything they can to protect the men they have there."67 They were quite willing to negotiate with the recalcitrant Chinese authorities, and even sought third-power intervention.68 Such Japanese leaders as Tojo and Matsuoka emphasized that no one, surely, could accuse Japan of seeking mere economic gain. In fact, she was spending more on the war in China than she could possibly gain in return. Japan was "paying the price that leadership of Asia demands," they said, attempting "to prevent Asia from becoming another Africa and to preserve China from Communism."69 The latter was a particularly critical matter. "The Japanese felt that the United Front and the Sino-Soviet pact of 1937 were steps toward the destruction of Nationalist China and the Bolshevization of East Asia."70 The Japanese were, furthermore, quite willing to withdraw their troops once the "illegal acts" by Communists and other lawless elements were terminated,71 and the safety and rights of Japanese and Korean residents in China guaranteed.
