Manchuria had a population of three million in 1850. China feared that both Japan and Russia would occupy the area and encouraged its people to settle in this region. By 1900 the population had grown to nine million.
The Japanese military argued that it needed to control Manchuria as security against a possible attack from the Red Army. In September 1931 the Japanese Army invaded Manchuria. The Chinese government appealed to the League of Nations under Article 11 of the Covenant. China also appealed to the United States as a signatory of the Kellogg Pact.
Robert Cecil, Britain's official delegate to the League of Nations, proposed an inquiry to deal with the dispute. Henry L. Stimson, the US Secretary of State, advised against this as he believed it would upset the Japanese government. However, eventually it was agreed that the League of Nations would establish a commission of inquiry under the chairmanship of Lord Lytton.
In March 1932 Japan renamed Manchuria as Manchukuo ("land of the Manchus"). Only Germany and Italy recognised the new state. The Lytton Report was published in October 1932. The report acknowledged that Japan had legitimate grievances against the Chinese Government. However, the report condemned the Japanese invasion of Manchuria and refused to recognise Manchukuo as an independent state. When the League adopted the report Japan resigned from the organization.