Site hosted by Build your free website today!

The Nan-yō Gunto Special Prefecture




Nan-yō Gunto (Southern Seas) is a group of cosmopolitan tropical islands. The indigenous people of Nan-yō Gunto are Micronesians with the balance of the population a mixture of "mainland" Japanese, Taiwanese, Filipinos, Chinese, Micronesians, some Melanesians and others. Though Japanese (with Ryukyuan accent) is dominant, Nan-yō Gunto today is a melting pot where you'll hear the languages of Chamorro, Hakka, Tagalog, English, and others. The people of Nan-yō Gunto have a reputation of being friendly, open, and warm. It is year-round summer on this Special Prefecture, with average temperatures of 26° to 28° Celsius. The northwest trade winds make the weather ideal for water-skiing or wind surfing. The entirety of the prefecture is renowned as location for diving and snorkeling.






Area: 1341.3 sq. km.


Coastline: 8,001 km. 


Maritime claims:  exclusive economic zone of 200 NM 


Climate: tropical, heavy year-round rainfall, hot and humid; islands border typhoon belt


Terrain: islands vary geologically from: high mountainous islands, low coral atolls, volcanic outcroppings, low coral limestone and sand islands, to low, coral islands usually fringed by large barrier reefs. 


Highest point: Toromuharu (Totoromu) 791 meters above sea level


Natural resources: forests, marine products, deep-seabed minerals, and coconut products.


Administrative division: 6 districts: Toshima (Marshalls), Tokarashima (Ponape), Chukku (Truk), Misarushima (Yap), Berau (Palau) and Nan-retto (Marianas).


Population: 258,908 (July 2002 est.) 


Ethnic groups: Asian (mainly Japanese, followed by Taiwanese and Chinese), Micronesian, Polynesian, Palauan (Micronesian with Malayan and Melanesian admixtures), Caucasian (2000 est.) 


Religions:   Shintoism, Buddhism, Roman Catholic, Protestant, other.


Languages: Japanese (official and common language), Trukese, Pohnpeian, Yapese, Kosrean, Ulithian, Woleaian, Nukuoro, Kapingamarangi, Marshallese, Palauan, Sonsorolese, Tob, and Angaur.


Capital:   Chibito (Saipan)





Japan had been active in the Nan-yō Gunto (South Sea Islands) since the 1880s. The Empire seized the German possessions in the Marianas, Carolines, and Marshalls at the outset of World War I in 1914. A League of Nations mandate in 1920 confirmed Japan in control of most of Micronesia, excluding only the US territories of Guam and Wake Island, and the British colonies of the Gilberts, Nauru, and Ocean Island. The United States Senate refused to ratify US membership in the League, but in 1922 the United States accepted the arrangement with Japan by the Ishii - Lansing Agreement. Japan remained a member of the League of Nations until 1935 at which time the country withdrew from the organization and kept the mandated islands as an integral part of the Japanese Empire.





The history of these two corporations is intimately linked to the history of the Nan-yō Gunto Special Prefecture. Both have been responsible of the economic development of the islands, while the central government (civilian or military) has turned Nan-yō in a true Japanese land.


Shortly after the Japanese seizure of the islands in 1914, a Japanese entrepreneur by the name of Nishimura visited Nan-yō and leased land to begin growing sugar. In 1916 land was cleared on Saipan, Japanese and Korean laborers were brought in to cultivate the land, and by 1919 a sugar refinery was constructed. This scheme failed, as did the next two attempts that Nishimura made to begin a sugar industry. An attempt by another company to build up the industry also ended in failure and the 400 Japanese immigrants that he had brought into Saipan were abandoned there. In 1921 Matsue Shunji visited the islands to explore the possibility of a sugar industry in the islands, and after some difficulty he managed to persuade Japanese investors to underwrite a new company. The company was founded in 1921 with 3,000,000 yen as capital and Matsue as its director. It was named Nan-yō Kohatsu Kabushiki Kaisha, or simply Nan-yō Kohatsu Kaisha (NKK). In the same year the company began operations on Saipan, and in the following year a sugar mill was set up there. Later operations were expanded to Tinian, Rota and Ponape. The business prospered, and by 1934 NKK had 20,000 acres under cultivation.


Nan-yō Kohatsu Kaisha also took over the phosphate mining activities in Nan-yō. The Angaur mines were put under the jurisdiction of the Japanese military following the seizure of the islands from Germany. In 1922 the Japanese government finally purchased all mining rights and equipment in the western Carolines. Sometime after this, NKK obtained mining rights in Angaur and eventually Babeldaob and Fais as well.


In addition to a monopoly on sugar production and phosphate mining, NKK also began commercial fishing operations, the production of marine products, and cultivation of starch, hemp, cotton and other crops. The company had 8000 employees, almost all of them Japanese nationals, and was responsible for 9000 dependents by the mid-1930s. NKK was the largest company in the islands, a Japanese version of the Jaluit Gesellschaft, and ruled commerce in the Mandate together with Nan-yō Boeki Kaisha.


Nan-yō Boeki Kaisha (NBK), whose pedigree could be traced back to Spanish times, complemented the business activities of NKK. The origins of NBK lay in the early trading companies that pioneered Japanese trade in Nan-yō in the 1890s. When the most successful of these early firms, Nan-yō Boeki Hioki Goshi Kaisha, merged with another later arrival in 1906, NBK was born. For almost a decade before the Japanese occupation of Nan-yō, it was the dominant Japanese trading interest in the islands.


NBK prospered under the Japanese mandate. It controlled all of the copra trade and did some business in fish and marine products, besides running a string of 32 retail stores throughout the islands that employed 700 natives. NBK and NKK both received government subsidies, and between them they had 50,000 acres under cultivation (about one-third of all the arable land in Nan-yō).


At the end of the Soviet-Japanese War, the Imperial Japanese Navy assumed the responsibility of administering the islands until civilian rule could be restored. From the very outset, Japanese military policy was a reaction to what was perceived as the menace of the US Navy, therefore the transformation of the Mandate into a Special Prefecture. After the collapse of the League of Nations in 1946, the Japanese government annexed outright the Mandate, movement opposed for the US, whom even menaced with military intervention; but after a few years, Japanese diplomatic efforts gained the US recognition of the annexation of the Mandate. Since those days, this two companies (NKK and NBK) has controlled economically the prefecture, but had been forced to share their power with the Imperial Japanese Navy.


Under its administration, Nan-yō became an area of experimentation for new weapons: missile test ranges were constructed and the first Japanese atomic bomb was detonated in Biatok in 1950. At the same time, the assimilation of the native habitants was taken seriously by the IJN. They hoped that with a clever policy and controlled immigration from “mainland” Japan –especially from the Okinawa and Kyushu prefectures- the prefecture would be secured for the Empire and avoid another failure as in Korea and Taiwan. Compulsory primary education, imposition of the Japanese as official and exclusive language, and development of the infrastructure in the islands slowly turned these lush tropical islands into an extension of Japan.


The Merdeka War and its aftermath:


Until the early 1950s the Micronesian islands primarily served the Japanese civilian economy, and in 1957 it was organized as a Special Prefecture. But the political situation between Japan and the Netherlands East Indies aggravated. Toward the end of the decade the emphasis shifted and a military build up commenced. Airfields, harbors, ammunition depots, gun emplacements, barracks, and fuel storage facilities were constructed.


By December 1958, the Japanese military had completed their preparations for offensive air and naval operations. Micronesia was to be a major staging area in the Merdeka War. Palau filled that role in the attacks on Celebes and Irian Jaya. From Saipan, air and naval forces were launched against Borneo. Other islands became the base for amphibious landings and in air strikes against diverse points on the Dutch colony.


Fortunately, the Merdeka War was brief thanks to the amphibious blitzkrieg tactics launched by the Imperial Japanese Navy and Army. After the war, the economy of Nan-yō stagnated. Its importance for the central government was limited to be the first line of defense of the Empire in the Pacific. Then, the islands´ economy developed around the necessities of the Imperial Japanese Navy, which cede the control of the islands to the central government in 1961. It was until the year 1998, when the OTEC (Ocean Thermal Exchange Technology) was tested in a pilot project started off the coast of  Chukku island, that the economic perspectives in the islands improved.


Economic overview:


Copra industry


The copra industry was begun in Nan-yō in the early 1870s, several years before the islands were placed under colonial rule, and has continued down to the present. Amid the many changes that foreign powers have introduced in development policy and commercial products, copra has remained almost the only constant. Sugar and phosphate have come and gone, but copra endures as an island product. Even more important, the copra industry has always been one that has brought direct benefits to Nan-yō habitants. Indeed, part of the reason that copra has had such a long history is that it is essentially a part of the rural semi-subsistence economy. It requires no great capital investment, no special skills, and no reorganization of time to fit wage employment demands.


The early development of the copra industry has already been sketched in this economic history. Following the establishment of the first colonial governments in Nan-yō, the copra industry continued to flourish despite severe fluctuations in the market price of copra in the early 1880s and a long decline until the turn of the century. German firms did most of the business in copra during this time except in the western Carolines where O'Keefe dominated until his death in 1901. The Japanese traders that were being settled on the islands during the 1890s gained a growing share of the trade, however.


The years of German colonial rule were good ones for the copra industry in Nan-yō. Copra production doubled during this period, from about 6.5 million pounds around the turn of the century to 13 million pounds by 1913. The value of copra exports reached 2 million marks by the end of German rule. One factor responsible for this growth may have been the steady climb in the price of copra during this period; it rose from 276 marks per ton in 1900 to 530 by 1913. Another factor was undoubtedly the German policy of having all adults plant coconut trees (generally 4 to 10 a month was the quota). This practice was first initiated in the Marshalls during the 1890s and afterwards extended to the Carolines when the Germans gained control of these islands.


Copra production in the Marshalls and the eastern Carolines grew steadily during German times, except in 1906 and 1907 on account of damage that trees suffered in the great typhoon of 1905. Production in the west was much more uncertain, however. Copra production came to a standstill on Yap in 1900 and 1901 because of an insect that was killing trees there, and it was stopped again between 1906 and 1908 because of drought. It was years before these problems were eliminated completely, and Yap never regained its former position as a chief source of copra.


Under the Japanese government, the copra output in Nan-yō continued to increase. The Japanese, like the Germans, encouraged the planting of coconut trees and provided regular steamship service for the collection of copra. A network of Nan-yō Boeki Kaisha trading stations and stores traded in copra and offered imports in exchange. Despite the enormous productive efforts that the Japanese made in sugar and marine products, copra exports again doubled during the years of the Mandate. From 13 million pounds a year that was being produced at the end of German rule, exports rose to 26 million pounds during the mid-30s. The all-time high for copra production in Nan-yō occurred in 1937 when the islands turned out about 34 million pounds. Even so, the income from copra amounted to no more than 8% of the total export value at this time. Sugar and dried bonito as a cash product eclipsed copra.


Copra exports were understandably hurt by the Soviet-Japanese and the Merdeka War, but by the mid-50s production returned to approximately the same level as during prewar times. Throughout the subsequent years copra exports ranged between 20 and 30 million pounds a year and were the main source of income. In 1977 Palau began operating a copra processing plant, and the following year another processing plant opened in the Marshalls. This brought about a significant increase in the value of copra exports, even though the Palau plant shut down within a few years. Total coconut oil and copra exports for the  Nan-yō Special Prefecture are estimated at about $5 million a year at present.


Phosphate industry


Phosphate was first discovered in Nauru (then a part of the German protectorate in the Marshalls) in 1899. The Pacific Phosphate-Company, a joint Anglo-German concern in which Germans held one-third of the stock, began mining operations in 1902. The Jaluit Company was given a free 10% share in the company and royalties on-all phosphate that was mined. The mine increased its output rapidly between 1908 and 1912, and phosphate production soon became a far more important source of foreign exchange than copra. By 1911, phosphate exports accounted for 5,308,000 marks out of a total export value of 6,271,000 for eastern Nan-yō. Hence, phosphate constituted 85% of the value of all exports.


Phosphate was also found on Angaur, and mining operations began there in 1908 with the formation of the Deutsche Sudsee Phosphat A.G. This government-owned German consortium bought almost the entire island from the chiefs of Angaur for 1200 marks or 60), and the people were relegated to the southeast corner of the island. Production increased quickly from 8,600 tons in 1909 to 90,000 tons in 1913. In 1911, the value of phosphate exports were 1,250,200 marks out of a total export value for the western part of Nan-yō of 1,646,242. This represents 76% of the total export value of the western islands.


By the end of German rule, the two mines were producing about 200,000 tons of phosphate yearly at a value of nearly 9 million marks, or 90% of the total export value. The Nauru mine, the more productive and larger of the two, paid export taxes to the German government on the phosphate it shipped out. The German government, on the other hand, retained profits from the Angaur mine. Phosphate was by far the most lucrative industry under the Germans.


At first Chinese laborers were brought into Nauru to work in the mine, but when they proved sickly and uncooperative, natives were recruited for this work. The same was true of the mine that opened on Angaur. A quota was set for islands in the eastern Carolines, and company officials in collaboration with the German administration signed up men from each place and transported them to the mines. Laborers signed on for six months at a time, worked 6 days a week and 9 hours a day, and earned 17 marks a month. It appears that there were about 1300 natives employed in the mines, 800 of them working in Nauru and 500 in Angaur. These included in 1911 about 100 Ponapean prisoners who had been deported following the Sokehs rebellion.


At the outbreak of World War I, the British seized Nauru and afterwards kept control of the mine there. Meanwhile, the Japanese took over the Angaur mine together with the rest of the Carolines, and Japanese military authorities continued mining operations almost without interruption. In 1922 the Japanese government formally purchased the mine and all equipment from the Germans for 1.7 million yen. For a time, the South Seas Bureau itself supervised mining activities, but in 1931 the Bureau leased mining rights to Nan-yō Kohatsu Kaisha.


For the first 20 years of Japanese rule, 1914-1935, phosphate production remained about what it had been during the last years of German administration: 60-90 thousand tons a year. It was only in 1935 and 1936 that phosphate production rose sharply, due to expansion of activities on Angaur and the opening of new mines on Fais and Peleliu. During the late 30s between 120 and 200 thousand tons of phosphate were produced a year -- double the output of the early years of Japanese administration. Mining activities continued during the war, although dropping sharply in 1944.


The Japanese, like the Germans before them, employed native laborers in the mine. In fact, this was the major source of wage employment during this period. The salary (13 yen monthly) and the term of contract (6 months) were comparable to those under the Germans. Working conditions in the mine were also similar. The Japanese seem to have averaged about 360 native laborers a year, fewer than the number the Germans employed since the Japanese had 100 of their own people working in the mines.


At the end of the Soviet-Japanese war, the IJN continued the sale phosphate from the mines without resuming actual digging, because there was a considerable amount of stored phosphate on Angaur. Japanese employees were contracted to do this work; few natives were involved. For a few years following the start of civil administration in 1961, mining operations were of the reestablished and an average of 130,000 tons was exported each year. Finally, in June 1965 operations ceased altogether.


Fishing industry


The fishing industry as such began under the Japanese. Prior to that time, there had been some attention paid to beche-de-mer, shark fin and other products for sale in China, but this trade had never been cultivated by a colonial administration in any systematic way.


Almost from the very beginning, Japan decreed that all fishing by non-natives was to be licensed and supervised by the government. Native fishing rights and procedures were reportedly not affected by this regulation, and fishing for local consumption was carried on throughout the period. Apparently, the natives were not affected by the buildup of the Japanese fishing industry for good or for ill.


In 1922 the Japanese initiated a study of marine products and a survey of all islands with an eye to developing a thriving industry. As Japanese immigration into the islands stepped up, the fishing industry began to grow. The government provided a subsidy for any group of expatriates who wanted to do tuna fishing. With the subsidy, which provided for a motorboat and equipment, the men were required to sell their catch to the firms that processed and sold the fish. The fishing industry was built upon many independent, small groups rather than a single large monopoly.


In 1926, Japanese firms (principally NKK) began to produce and export katsuobushi, or dried bonito. This grew steadily through the 1930s until the industry reached its high-water mark in 1940 with an export value of 8.7 million yen. Other forms of marine produce were exported, some of them providing a considerable income, but this was virtually the only fish as such that was exported. The rest of the commercial catch, which rose to 32 million pounds in 1936, was undoubtedly sold for consumption in the islands. Some of this fish was canned at the plants on Truk and Jaluit.


It is worth noting that the commercial catch between 1930 and 1940 averaged 26.5 million pounds. The two biggest fishing centers of this time were Palau and Truk, each with an average catch of over 8 million pounds, while Ponape and Saipan both did less than half that business with a catch that averaged 3 or 4 million pounds in each place. The average yearly catch of tuna between 1930 and 1940 was 26 million pounds, with the following distribution by districts:


Palau: 8,864,000 lbs.

Yap: 75,000 lbs

Marianas: 4,097,000 lbs

Truk: 9,490,000 lbs

Ponape: 3,617,000 lbs

Marshalls: 397,000 lbs.


The fishing industry was lightly affected by the war and it continued to steadily growing. Yet, the real buildup of the industry did not begin until 1957. Exports grew slowly to 13,950,000 yen by 1967 before they began to fluctuate wildly.


In the meantime, a company known as Nan-yō Seafood Company (NSC) opened operations in Palau in 1964 with a 1500-ton freezer-storage plant and a fleet of eight tuna vessels. Its fleet grew to as many as 16 vessels at times, and ten years after it began it was bringing in 20 million pounds a year at a value of 450 million yen. This was double its average catch for the first five years of its activities. NSC continued to operate at a level of about 20 million pounds per year until the company closed its Palau plant in 1982.


With the recent closing of NSC, the annual commercial catch has dropped to an estimated 1 million kilos. There have been a number of recent attempts to export frozen fish to Guam and the Philippines, but it is hard to estimate an annual value for these exports. There are plan to built fish farms, which will take the pressure of over-fishing off the prefecture's wild sea life, which is in the midst of an unprecedented and catastrophic collapse.




The recent installation of the first OTEC (Ocean Thermal Exchange Technology) plant off the coast of  Truk island had been a significant boost in the Nan-yō Special Prefecture economy. This system utilizes the temperature differential between the warm surface waters and the cold bottom currents in Nan-yō vast oceanic dominion. Similar to current off-the-shelf refrigeration technology, it is relatively easy to design and implement. It takes only three years to build an OTEC plant, while conventional coal plants take up to a decade to complete. The fuel is inexhaustible because it’s indirectly solar, there are hundreds of thousands of square kilometers of necessary temperature differential, and  it is free. The OTEC plants will be configured in many useful hybrid forms: some of these will produce electricity (eliminating imported oil) with fresh water as a valuable byproduct for drinking and agriculture. Cold nutrient-rich bottom water (pumped up to the surface as part of the energy harnessing process) will be diverted to fish farms which will grow high quality protein at three times the efficiency of beef. Other hybrid OTEC plants (still in research and development stage) will produce hydrogen or ammonia fuels, either of which can be easily used in automobiles and produce only water vapor  or nitrogen  when burned.