The Japanese government encouraged immigration to the islands belonging to the South Seas Mandate in order to offset demographic[which?]

[citation needed] The earliest immigrants operated as traders, although most of the later settlers worked as fishermen, farmers or conscript labourers.

Many of them assumed leading roles in the political, public and business sectors after World War II; they constitute a large[quantify] minority within the FSM itself.

The first recorded contact between the Japanese and Pacific Islanders (believed to be Micronesians) was reflected in the Kokon Chomonjū, when eight men arrived at Okinoshima (an ancient town in the former Izu Province) in July 1171.

In an 1895 study, Alexander noted similarities between the cultural traditions, vocabulary and pre-Christian beliefs between Pohnpeian and Kosraeans.

They set up a small store peddling Japanese wares under strict conditions imposed by the Spanish, and returned to Japan in December because of dwindling funds.

[13] A few Japanese, notably Koben Mori, began socialising with the Chuukese and led semi-nomadic lifestyles until 1896 before gaining the protection of Spanish guards.

[14] The Japanese businessmen that were based in Moen were repatriated from Micronesia in 1900, a year after Spain ceded its sovereignty to Germany as part of the German–Spanish Treaty of 1899.

[20] In Chuuk, another hundred Japanese businessmen settled at Toloas by the late 1920s to cater to governmental and business interests.

A tuna canning factory was set up at Pohnpei in 1930, and Japanese settlers from the Tōhoku region and Hokkaido came in greater numbers after that.

The civilian government persuaded twenty-four families to establish a farming commune at Palikir in 1931, but the settlers faced problems adapting to the tropical climate and bringing their vegetable produce to Kolonia for sale.

More settlers followed suit, and an anthropologist, Umesao Tadao reported that the farming settlement in Pohnpei was well established by 1941.

Some conscript and contract labourers from mainland Japan, Okinawa and Korea hired to build naval facilities at Chuuk and Pohnpei contributed to the increasing immigrant population in the central and eastern Carolines.

The civilians were repatriated first, while the soldiers stayed on as Prisoners of War to carry out repair works to the islands' infrastructure until 1946.

The American military government permitted some thirty-three[fn 4] Japanese and Korean settlers to remain with their families, but this was allowed only under exceptional circumstances.

[23][34] Within the first few years after the war, some former Japanese settlers formed philanthropic organisations to promote public understanding and memory of Japan's colonial legacy in Micronesia.

These organisations arranged visitation trips for the former settlers to the Carolines, usually with the purpose of maintaining kinship ties with their Japanese–Micronesian descendants.

[35] Japanese–Micronesians assumed leading positions in the public and private sector, particularly in Chuuk where there is a substantial percentage of Micronesians with Japanese ancestry.

[43] An 1899 census counted a total of 30 Japanese nationals, mainly businessmen living in the Caroline Islands, with the majority being located in Pohnpei, Chuuk and Palau.

[47] Japanese arrivals to Micronesia remained modest until the 1920s, following which the islands experienced a quick increase in the number of immigrants, especially in Pohnpei.

[4] In 2001, the director of Japan's Institute for Pacific Studies Izumi Kobayashi estimated that at least 23% of FSM's population was of Japanese ancestry.

[61] Pacific historian, Francis X Hezel SJ, also noted how the Japanese encouraged Christian missionary activities in Micronesia.

[66] However, regular use of Japanese was discouraged when Micronesia came under United Nations trusteeship, and people of mixed Japanese–Micronesian heritage switched to English and various Micronesian languages.

[67] Japan's economic influence has led cultural organisations to promote learning Japanese among FSM citizens.

[15] Contraband products like alcohol and weapons were also illegally traded, and the Spanish administration made futile attempts to suppress these activities.

[71] The rate of copra production reached twelve thousand tons per year by the 1920s, and had an export value of two million yen.

A few Japanese businessmen also set up firms to oversee the plantation of cash crops, including copra, rice and pineapples.

[75] Japanese tourists began to visit the islands from the 1960s onwards, and private businesses were allowed to invest in hotel construction and fisheries.

[78] Racial segregation was practiced from the early days of civilian rule, and policies were enforced to restrict Micronesians in the education, work force, health care benefits and civil service to inferior positions as compared to their Japanese counterparts.

The local populace was classified according to ethnicity, with the Japanese at the top of the social strata, followed by the Okinawans, Koreans, with the Micronesians at the bottom, although some scholars argued that the Micronesians were accorded a more privileged position than the Koreans, who were often subjected to abuse by the Japanese authorities.