Zhang Zuolin - Manchuria's Economy Collapses

Manchuria's Economy Collapses

In March 1926 a new civil governor was appointed. His only job was to supply the Fengtian Army with large amounts of money. He issued new provincial bonds, forcing business and local communities to purchase them. Early in 1927 he even entered into the opium trade by selling expensive licenses for the sale and use of opium. Bank reserves and railway revenues were plundered, while ever more paper notes were issued. The best indicator of Manchuria's economic decline was the value of the Fengtian dollar (yuan), which had started on parity with the Japanese gold yen. In February 1928 a yen cost 40 yuan. In this winter Manchuria's economy collapsed. Workers went on strike, hungry immigrants flooded back into Shenyang because they couldn't find any work.

In June 1926 Zhang had managed to capture Beijing. A year later he proclaimed himself as Grand Marshal of the Republic of China, and thus led China's internationally recognized government. But the Nationalists, led by Chiang Kai-shek attacked his forces and in May 1928 the Fengtian Army had to retreat towards Beijing. In addition, Japan applied pressure on Zhang to leave Beijing and return to Manchuria, and underscored this by bringing reinforcements to Tianjin. Zhang left Beijing on 3 June 1928.

The next morning his train reached the outskirts of Shenyang. Here, the line passed underneath the Japanese operated South Manchuria Railroad. An officer of the Japanese Guandong (Kwantung) Army, Colonel Kōmoto Daisaku, had planted a bomb, which exploded when Zhang's train passed under the viaduct. At the Tokyo War Crimes Tribunal in 1946, Okada Keisuke testified that Zhang was murdered because the Guandong (Kwantung) army was infuriated by his failure to stop Chiang's army, which was backed by Moscow, then Tokyo's strategic rival. For two weeks Zhang's death was kept secret, while the scramble for power was decided. That is why, according to an announcement issued by the Fengtian Army, he officially died on 21 June 1928. Zhang was succeeded by the eldest son of his official wife, Zhang Xueliang.