Why did the number of private shareholders in South Manchuria Railway continue to rise?

<p>South Manchuria Railway saw its number of private shareholders increase by 59,787 between 1927 and 1940, a level of growth in a class by itself, but that proliferation was not due to the fact that was listed on stock exchanges across the country. The prewar Japanese stock market was beset by bad circulation of share certificates and a prevalence of off-exchange trading (transactions that took place outside the stock-market environment), and South Manchuria Railway was not immune to the effects of those limitations. On top of the characteristics defining the prewar stock market, there were also many risk factors that affected shareholders both before and after the acquisition of shares: the pre-acquisition risks that fraudulent securities dealers posed and the post-acquisition risks of a legal framework that did not provide protections for purchases in good faith and without negligence. Despite the many barriers and risk factors standing in the way of share ownership, South Manchuria Railway saw its private shareholder count surge. Fueling the increase was a “correction” process in the market. When the Manchurian Incident prompted numerous existing shareholders to distance themselves from the company and begin selling off their share certificates, the influx of available shares created a rush of opportunities to buy them—and thereby make stock investments—for individuals who had almost never been able to do so in the years prior. That opportunity gap is what drove the increase in South Manchuria Railway’s private shareholder count. Although the shift finally let a broader base of individuals buy shares, Japan’s demise in the Second World War reduced those long-coveted certificates to mere scraps of paper. The resulting damage would then shape the groundwork for the bank finance of postwar Japan. </p>