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The switch from the detailed but occasionally clumsy-looking techniques used by the 1920s directors to the new levels of flexibility afforded by cel animation is most clearly demonstrated by Noboro Ofuji's reworking of the Urashima Taro story, Chinkoroheihei and the Treasure Box (Chinkoroheihei Tama Tebako, 1936). Ofuji is best remembered for his idiosyncratic and highly creative use of the cut-out technique, which he perfected working alongside Junichi Kouchi. His favoured choice of medium for his cut-out work was chiyogami, a coloured paper with woodblock-printed patterns, which he used in early films such as The Story of Songoku (Saiyuki Songoku Monogatari, 1926) based on the character from Chinese literary classic Journey to the West by Wu Cheng'en; A Ship of Oranges (Mikan-sen, 1927), telling how Edo period entrepreneur Monzaemon Kinokuniya made his fortune shipping oranges from the South to the nation's capital; and Black Cat (Kuroneko, 1929), an early experiment in synced-sound techniques consisting of a one-and-a-half minute-long animation of a black cat dancing with a tabby cat to a jazz score. But though Ofuji is best known for these innovative and ornate cut-out works, he also turned to the increasingly standard medium of cel animation during the 1930s.

In Ofuji's Chinkoroheihei and the Treasure Box, a cute pup named Heihei is disturbed from his sleep by a turtle, and chases it into the sea. Here he comes across a large aquatic palace ruled over by a giant fish king. In this fantastical world, crabs operate a production line system, using their pincers to cut fish shapes from rolls of cloth. Some of the fish are inflated by a bicycle pump to make blowfish. As the underwater guardians to the palace try to run out this intruder from dry land by cutting portholes into the side of a whale in order to use it as an impromptu military submarine, Heihei manages to disguise himself by tearing off the rear half of a fish, which he climbs into to create a makeshift tail for himself, and escapes ashore.

The switch in animation methods throughout the 1930s was also matched by a gradual change in both their content and purpose. Though there's no sign of giant turtles in Murata's A Night at the Bar (Izakaya no Hitoya, 1936), the undersea fantasy milieu was again evoked as a wake-up call to the dangers of escaping reality, made during a period when austerity was actively encouraged as Japan stepped up its imperialist activities. It is a morality tale about the dangers of overindulgence, in which a sake-ridden sop collapses into a drunken reverie that sees him sinking beneath the barroom table into a magical underwater kingdom where the ghosts of ancient sword-wielding warriors guard a ship laden with hidden treasure.

Throughout the course of the decade, Japanese films became more conservative, and in the wake of the mass-influx of Western culture that had poured into the country and shaped its culture during the period of Taisho liberalization, more and more came to re-assert their own cultural identity and set of values. The shift from more whimsical subject matter was matched by an increase in narratives glorifying the exploits of former military heroes, such as Murata's Saru Masamune (1930), based on the legend of how a great Japanese swordsmith receives a sword from a tribe of monkeys after rescuing one of the monkeys from a hunter with a gun, later using it to fend off a savage wild boar, and later in Masaoka's Benkei vs. Ushiwaka (Benkei tai Ushiwaka 1939), based on a childhood episode from the life of the great Heian general Yoshitsune Minamoto.

The propaganda content became more flagrant in later films, and even the cuter characters whose identity was not steeped in legend began to serve very different roles within the narratives. Murata animated a couple of stories featuring the character of Norakuro, a black dog in the Japanese army, popularised in a series that ran from 1931 to 1941 in the youth magazine Boys' Club, and whose design owed heavily to Felix the Cat. In Corporal Norakuro (Norakuro Gochou, 1934), the character falls asleep after a visit to a yakitori stall during his day off duty, and dreams of successfully fending off an attack from an enemy squad of monkeys who attempt to make off with some valuable plans from the dogs' military compound. In later stories, Norakuro's adversaries would manifest themselves physically, not just in his daydreams.

During the so-called China Incident in 1937, Japanese and Chinese troops clashed at the Lugou Qiao (or Marco Polo Bridge) just west of Beijing. The skirmish rapidly escalated into a full-blown conflict between the two countries, and Japan found it all the more necessary to win the hearts and minds of its population for a new phase of expansionism.

One flagrantly propagandist work was Taro Overseas (Kaikoku Taro Shin Nihon-jima Banzai, 1938 - Hiromasa Suzuki), in which the eponymous hero is awakened from his idle slumber by a chicken pecking at his head, and, packing his bags, enlists in the navy leaving his old folks at home. He takes off across the ocean in a tiny boat crewed by a rabbit, a monkey, and a dog with the Japanese 'hinomaru' flag flying at full mast. After a series of adventures where they are pitched against sharks and whales, they land on a tropical island where they rescue a tribe of natives from an attack by a savage lion and later discover a shining gold nugget. The natives, in repayment for being saved, willingly submit themselves in the service of the Japanese empire and the cartoon ends with Taro overseeing them as they labour diligently at the newly founded gold mine, a sign proclaiming "Shin Nihon Jima" (New Japan Island) planted by the side. Again, the characters are drawn in a far more simplified style than that of the animated characters of the 1920s, with Taro sporting an over-sized spherical head like the popular contemporary anime character Anpanman. Interestingly, the natives of the unnamed south sea island on which Taro and his troops land are racially caricatured with the same non-pc gangling, rubber-lipped, grass-skirted depictions that can be found in Western animation at the time - for example the Disney films Trader Mickey (1932) and Mickey's Man Friday (1935) - suggesting that in order to nurture its own imperial ambitions, Japan was still very much reliant on Western imaginings of what its future colonial subjects might be like.

The animal travellers who accompany Taro Overseas recall one of the core Japanese legends put to the service of wartime animation, that of Momotaro. Sanae Yamamoto's 9-minute Momotaro is the Greatest (Nihonichi no Momotaro, 1929) had introduced the character in an early animated version of the Japanese folktale, a straightforward retelling of the myth of the young boy born from a peach and raised by a poor woodcutter and his wife, who along with his army of a dog, a monkey and a pheasant, voyage to Ogre Island (Onigashima) where they defeat the giant demonic guardians and return home with their buried treasure. The character would achieve an iconic status through the 1930s and 40s, the mythological basis of the story making it particularly suitable for employing in service of wartime propaganda, with Momotaro acting as Japanese pop-cultural counterpart to America's Mickey Mouse.

In Murata's Aerial Momotaro (Sora no Momotaro), made in 1931 during the early days of Japan's expansion, the legendary peach boy jumped into a plane with his merry band of animal colleagues and flew down to Antartica, fighting off a giant eagle en route. By the time of Mitsuyo Seo's Momotaro, Eagle of the Sea (Momotaro no Umiwashi), released in 1942, the year after the attack on Pearl Harbour, he was leading his animal cohorts by the squadron-load on bombing raids against the Americans (all portrayed to look like Bluto from the Popeye cartoons) from his aircraft carrier base. At 38 minutes in length, the film is considered to be Japan's first feature length animation, and in terms of its technical virtues, is nothing short of a masterpiece. The opening shots set the tone of the piece; as dark, ominous clouds gather above the sea and the prow of the ship cuts majestically through the swelling waves, the ship's rabbit crew are introduced standing on deck in impressive looming silhouette. In the following of sequence, segregated ranks of pheasants, monkeys, and rabbits stand to attention, as Momotaro stands imperiously addressing his troops, before the animals all scamper to their planes and carry out their attack. Some visual tomfoolery, such as the ongoing rivalry between the dog and monkey, serve to leaven the mood of the piece, but overall the film has a grave and austere aura about it. Momotaro's exploits reached their apogee in the 74-minute epic of animated wartime propaganda, Momotaro's Divine Troops of the Ocean (Momotaro Umi no Shinpei, 1945, also by Mitsuyo Seo), produced by Shochiku, where along with his army of pheasants, monkeys and rabbits, he rousts the British forces from Southern Asia.

With the passing of the Film Law in 1939, the Japanese government took a more active role in governing the content of the films able to be released in Japan, and animation became a suitable tool to whip up a nationalistic fervour in young viewers. Though films like Yoshitaro Kataoka's Our Marines (Bokura no Kaiheidan, 1941), a comical naval recruitment tale with its scenes of on-deck bonhomie amongst the sailors and final image of an octopus rising from the waves to give them a passing salute, served to make military life look jolly good fun, wartime animation was for the most part relentlessly bleak and oppressive.

The enemy was everywhere, infiltrating the nation or scheming at its borders. Literal representations of the "Western Devil", monocled foreign fops wearing top hats and tails and tweaking finely-oiled handlebar moustaches, parachuted in from high above, furtively sneaking around disrupting the bucolic idyll where the Japanese farmer diligently toiled in Sanae Yamamoto's Defeat of the Spies (Supai Gekimetsu, 1942), as Roosevelt and Churchill pored over their charts and plans in their secret war room. It was left to Japan to liberate not only herself, but the whole of Asia from such oppressors. Long Live Japan (Nippon Banzai, 1943), directed by Hajime Maeda and Kazugoro Arai opens with stunning silhouette images of the various peoples of Asia blissfully going about their business - Chinese children with their coolie hats and Indians with their turbans milling beneath the palm fronds and drinking from coconuts. Meanwhile the Western forces are scheming how to carve up the territories of the East between them. The film continues as a series of incidents and sketches, mixing live action footage of Winston Churchill, scenes of planes taking off and aerial bombardment with animated sequences such as two boatloads of Japanese marines landing on a beach where two British soldiers are smoking cigarettes. As they flee, the Brits are pelted with a hail of bullets, and the rain begins to fall, washing the Union Jack pattern from their deserted flag. Elsewhere, natives cluster around a bonfire of burning US flags, whilst in a final scene shown in silhouette, the cigar drops from Churchill's mouth, setting fire to the British flag lying at his feet.

Even when the war is not addressed, films like Kintaro's Training Day (Hiromasa Suzuki, 1940) remain incredibly po-faced. In this 9-minute work Kintaro, a muscular young lad with the symbol "kin" (metal) emblazoned on the front of his leotard, plays master of ceremonies to a sumo tournament between a group of assorted woodland creatures, The wrestling bout is preceded by a particularly serious, in every sense of the word, exercise session - As Markus Nornes points out in his book Japanese Documentary Film: The Meiji Era Through Hiroshima, the group exercise scene was an almost mandatory part of any Japanese film at the time, emphasizing group unity and collective strength.

The propagandistic purposes of such films in no way invalidates their merit as accomplished pieces of film art. With the wealth of resources and encouragement made available by the government at this time, animation progressed in leaps and bounds during the early half of the 40s, as some genuinely stunning pieces of work were realised. Kenzo Masaoka, who had already driven the industry onwards in the early 1930s was put to service by Shochiku as one of the animators who worked on Momotaro's Divine Troops of the Ocean. In 1943 he was responsible for the hauntingly poetic Spider and Tulip (Kumo to Churippi, 1943), which affords a chilling glimpse of the national mindset at the time. Fifteen minutes in length, the simple narrative focuses on the attempts of a gangling, crooning spider, sitting ominously overhead in his web, to serenade a sweet-looking ladybird to her demise. The film unfolds as a musical, with the ladybird singing back her responses to him, and the spider, face blackened to look like an America jazz singer, clearly standing in to represent the inherent dangers in Western culture. Meanwhile, dark clouds are looming above and the wind begins to pick up, building up into an impressive rainstorm. The ladybird flees across the background landscape of photographed flowers, with the spider pursuing her on a strand of web. As the storm breaks in incredibly well-realised detail to a soundtrack of howling wind and lashing rain, the ladybird is sheltered in the bell flower of a kindly tulip, representing the strong, sturdy Japan, as the spider is swept away by the wind.

The Japanese Imperial Army's defeat by the Allied Forces in 1945 and the country's subsequent occupation brought about numerous changes. As Kyoko Hirano details in her book Mr. Smith Goes to Tokyo, these were reflected in animation just as much as in live action movies, as the nation's filmmakers found themselves once again under control from the government, but now steered in the opposite direction.

Masao Kumagawa's The Magic Pen (Maho no Pen, 1946) represents a thinly veiled allegory alluding to the regenerating possibilities of the West. In it, a baseball-capped young war orphan and his faithful pooch come across a discarded doll, which he takes home and stitches up. As he studiously buries his head in his schoolbook, the doll comes to life and begins flirting with him in English. Producing a magic pen, she begins drawing items that become real; first of all, a bowl of fruit, then converting his old wooden shack to a new modern house of Western design. Before long, the pair have transformed their entire environment.

As the Occupation censors striving to ensure that filmmakers imparted "democratic values" throughout their work, one of the chosen scenarios encouraged by the Occupation censors was sketches centred around the all-American sport of baseball. Although at least one baseball movie, Oira no Yakyu had been made by Yasuji Murata in 1930, the sport, being of foreign origin, had fallen out of favour with the establishment as Japanese society became increasingly self-obsessed throughout the course of the next decade. The 11-minute Animal Baseball Match (Dobutsu Daiyakyu-sen, 1949) was a typical example of a genre of sports-based animation that flourished under the new regime, also bearing distinction of being the first directorial work of Taiji Yabushita, who would later play a critical role in the first Japanese colour feature, Legend of the White Serpent.

With traditional subject matter prohibited for source material, Japanese animation went in two directions. The first was in a return to whimsical morality tales featuring animal protagonists rendered in a fluid, Disney-esque manner in works such as Hajime Maeda's A Trouble in the Forest (Niwatori to Tomodachi, 1947) or Hideo Furusawa's Carry the Hatchet (Masakarikatsuide, 1948). The second was in its usage of folk tales from other countries, including two adaptations of Hans Christian Andersen's story The Little Match Girl in 1947: Sanae Yamamoto's impressive silhouette animation of the same name and Noboro Ofuji's Chinese-style rendition, Dream of a Snowy Night (Yuki no Yoru no Yume). The Arabian Nights also proved an enduring source of inspiration and one of its episodes later formed the basis for Iwao's monochrome feature Princess of Baghdad (Bagudaddo-hime, 1948), which even in the tragically fragmented state in which it survives today, remains an impressive precursor to the more ambitious works that would arrive about a decade later.

One film that did at least retain a Japanese iconography was Masaoka's beautiful Sakura - Spring Fantasy (Sakura - Haru no Genzo, 1946), which adopted a very similar style to Spider and Tulip with its invocations of the elemental forces of weather and beautiful backdrops of flowers and landscapes, though used a far more freeform and lyrical approach to narrative. Its running time is composed of a series of visual incidents, set to a score of Weber's Invitation to a Dance. A butterfly boy awakes on a cherry blossom, taking off into the air to flutter closer to a beautiful butterfly girl. The pair circle each other flirtatiously, as petals drift downwards around them. We follow the drifting petals as they flurry through the air, scattering into a river below on which a punt containing a group of beautiful girls wearing kimonos is drifting downstream. A black and a white puppy gambol in a nearby field at the river's edge, interrupting their play to give chase to a nearby black cat. Petals lie scattered on the ground, as the group of kimonoed beauties, who have now disembarked, frolic around beneath this floral canopy of cherry blossoms. A balloon floats through the sky against the falling tide of petals, which swirls into a series of vortexes, the air assuming a viscous quality, like water. As the two butterflies alight on the balloon and ride with it upwards again through the sky, raindrops begin to fall. A visual poem, much like Disney's Fantasia (1940), this bona-fide masterpiece was never released theatrically, though stands out as a landmark in animation technique.

Emerging from the ashes of post-War ruin, with the days of Norakuro, Taro, Mao and Momotaro pretty much gone for good, Japanese animation's founding fathers still managed to continue making bold steps in pushing both the industry and the art onwards and upwards. Ofuji created an early short colour cel animation, Flower and Butterfly (Hana to Cho, 1954). His work gained appreciative nods from none other than Pablo Picasso and Jean Cocteau when his multi-coloured cellophane silhouette ensemble Whale (Kujira, 1952), a remake of his 1927 work of the same name, won the second prize at the 1952 Cannes Film Festival, and his next work, Ghost Ship (Yureisen, 1956) brought him to further international acclaim when it snatched the first prize at the 1956 Venice Film Festival. On the other hand, Yamamoto and Yabushita went to push the field in a more commercial direction with their early feature-length colour animations at Toei Animation.

One wonders if, at the time, any of these directors could have imagined the current state that the industry would grow into. With animation as one of the nation's biggest cultural exports, directors such as Mamoru Oshii and Katsuhiro Otomo continue to push the medium in search of new levels of realism and way past the thematic and intellectual boundaries of the nation's live action cinema. At the same time, the films of Hayao Miyazaki at Studio Ghibli have begun to earn serious acclaim and success at the global box office.

It's been tempting for Western audiences to assume that these modern works have sprung up from nowhere as if by magic, but the box of treasures unearthed at Puchon in 2004 reveals that Japan possesses as long and as bountiful a legacy in the animated medium as virtually any other country you could name in the world, and there's no hint of the good times coming to an end any time soon.