The Japanese government has always been propagating the slogan "Manchuria is the lifeline of Japan" to its people, encouraging them to go there and develop the land. Being the forefront of developing Manchuria, the Southern Manchuria Railway Company (SMRC), with its unique mission, therefore becomes the focus that everyone in Japan keeps an eye on. However, since the September Incident (also known as the Mukden Incident), especially after the establishment of "Manchukuo," the situation has changed drastically. The role of "Manchukuo" in Manchuria, even its existence, becomes an issue provoking wide discussion in Japanese society and among the military. The ministry of the army and the Kanto Army argues especially vehemently. One of the central issues is the reorganization of the SMRC. Once the Kando Army dominates the "Manchukou," it is only natural for them to intend to reorganize the SMRC for taking the power of supervision.
In fact, the SMRC's monopolization in Manchuria had already caused complaints and protests among Japanese domestic business industry. Domestic business representatives in Manchuria understand the best the arbitrariness of the SMRC, for they are all witnessed it. In March 1932, Fong-tien Industry and Business Congress Institute once suggested the reorganization of SMRC. The suggestion from the routine congress, merely as a casual conversation, did not cause too strong an attention in society at that time. It was until October 1993, when the Kanto Army senior staff officer Numada Takazo made a statement to the press about the position of the Army toward the reorganization of SMRC, that resulted in great disturbance.
After the Mukden Incident, the Kanto Army not only showed unfriendly attitude toward Japanese domestic industry, but also aggressively put obstructive policies into practice, such as "control economy theory of national socialism" SMRC was then the overwhelming power of controlled economy in Manchuria. If SMRC indeed disintegrated, it was predictable that Japanese domestic business industry would lose the access to investment, and might take the wait and see attitude because of the army's intervention. Owing to those complicated elements, as soon as the case of reorganization was exposed, it incurred great counterattack. The immediate impact was the plummet of SMRC's stock value, and selling the SMRC bond became a difficult task, either. Moreover, the capital for developing Manchuria was also hindered. All the adverse reaction manifests SMRC's irreplaceable economic power, and presages the inevitable obstacle on reorganizing. But the story has not ended.
After the establishment of "Manchukuo," the Kanto Army seems to consider themselves the highest commander in Manchuria. For them, who aimed to centralize the authority of military, government, and economy, the SMRC becomes the thorn in their shoes. Besides, Japan is almost isolated by the international society after the Mukden Incident. To break through this impasse, Japan was anxious to build a Japanese-Manchurian economic union. So, there was a vital urgency to set up a project controlling the economy and business in Manchuria. The reorganization of SMRC consequently becomes thus a logical necessity.