in reality, the Soviets were creating more jobs on the railway and hiring Soviet workers. In the end, the Soviets controlled 67% of all positions on the CER. The Chinese entertained joint management until mid-1929. The change from Soviet to Chinese control started when the Chinese authorities made a radical move to try to remove Soviet management. Chinese authorities stormed the Soviet consulate in Harbin and they arrested the General Manager of the CER, his assistant, and other Soviet citizens, removing them from power in the CER. The Soviets retaliated by arresting Chinese citizens in the Soviet Union. On July 13, 1929, the Soviets sent their formal demands to the Chinese on what was happening on the CER. On July 19, they discontinued their diplomatic relations with the Chinese, suspended railway communication, and demanded for all Chinese diplomats to leave Soviet territory. By July 20, the Soviets were transferring their funds to New York. In the cities of Suifenhe and Lahususa, the Soviets were terrorizing the Chinese civilians by having their warships' guns pointed at the city and by having their planes make fly-bys. Many members of the Soviet leadership such as Kliment Voroshilov urged for a military intervention, but General Secretary Joseph Stalin initially hesitated for fear a Japanese reaction to a Soviet invasion of Manchuria. However, the Soviet consul general in Tokyo obtained information according to which Japan would stay out of the conflict if the Soviets limited any invasions to northern Manchuria and so Stalin decided to act. On 6 August, the Soviet Union created the Special Red Banner Far Eastern Army, commanded by Vasily Blyukher, with the assistance of Voroshilov. Around a fifth of the entire Soviet Armed Forces was mobilized to participate or assist the operation. By doing so, they were willing to do whatever it took to return the CER back to their control. The Chinese leadership was surprised by that turn of events, as it had not expected the Soviets to react so aggressively. Zhang quickly enlisted more troops, most importantly thousands of anticommunist Russians who lived as White émigrés in Manchuria. Some of the White Russians even organized guerrilla groups to carry the war into the Soviet Union. Conflict Small skirmishes had broken out in July but would not be considered the first major military action. The first battle happened on August 17, 1929, when the Soviets attacked Chalainor. Chinese troops retreated