FTR#426—Return of the Rising Sun, Part II—(One 30-minute segment) (Sources
are noted in parentheses.) (Recorded on 9/29/2003.)
Note: FTR#’s 260-316, 317, 324,
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Summary of FTR#426—(Note: The massive
volume of “For The Record” programs about 9/11 and related topics is summarized
and analyzed in the periodically-updated description for FTR#391. It is recommended that listeners use this
description and e-mail it to others. Also: The “meat” of the book “Martin
Bormann: Nazi in Exile” has been digested into an extended description for FTR#305. Listeners can now e-mail this
quintessentially important book to people around the world. In addition, the
professional history of the late Paul Manning, the book’s author, is presented in
the description “About Paul Manning.” This
enables listeners to acquaint others with Mr. Manning’s journalistic
credentials. Understanding the Bormann organization is essential to a
comprehension of the concept of “the Underground Reich.”) Supplementing information presented in FTR#’s 290, 291, 296, this program
highlights the profound corporate connections between American financial and
industrial institutions and the Zaibatsu—the
giant family trusts that controlled Japan. To recoup their investments in Japan
made before the war, American commercial giants and their allies in government,
the media and the MacArthur group within the military deliberately frustrated
attempts at reforming Japan. The Zaibatsu were returned to power. By
whitewashing the Emperor’s pivotal role in Japan’s war of aggression and the
attendant atrocities, MacArthur and his mentors preserved the Imperial
household. In addition to the economic motives for undermining Japanese
reformation, MacArthur and his allies in the State Department and the Morgan
financial and industrial group sought to establish Japan as an anti-Communist
bulwark. Ultimately, they were entirely successful, and the political figures
who had prosecuted Japan’s slaughter in the Pacific were returned to power.
Program Highlights Include: The role of
Dillon Read’s William Draper, Jr. in the restoration of the old order in Japan;
Herbert Hoover’s primary influence in the perpetuation of Japanese fascism into
the postwar period; the smearing and apparent murder of both Japanese and
Americans who stood in the way of the negation of Japanese reform.
1.
Beginning with discussion of the profound connections between American
corporations and key Japanese financial and industrial interests, the broadcast
highlights the decisive impact this relationship had in negating the breakup of
the zaibatsu (the giant Japanese
family trusts. (For more about the relationship between US corporations and the
zaibatsu, see Miscellaneous Archive Show M26, available from Spitfire.) “Imprudently, the American bureaucrats who drafted FEC-230
foolishly overlooked the vested interests of major U.S. banks and corporations
that had made huge prewar loans and investments in Japan. Morgan Bank had
provided Japan with many loans, including one of $150 million to rebuild Tokyo
after the Kanto earthquake, and the Japanese government had defaulted on
repayment of all these loans at the time of Pearl Harbor. Many other U.S.
corporations had major prewar stakes in Japan in the form of loans and direct
investments. At the end of 1941, American investment accounted for
three-quarters of the total foreign capital in Japanese industry. The largest
single direct investment, nearly half of the total, was by General Electric,
one of the Morgan extended family. GE held 16 percent of the paid-up capital of
Tokyo-Shibaura Electric, a firm linked to the Mitsui zaibatsu. Other large investments had been made by Associated Oil
in Mitsubishi Petroleum, by Westinghouse in Mitsubishi Electric, by Owens-Libby
in Sumitomo, by American Can in Mitsui, and so on. After the war, these U.S.
corporations were owed reparations, royalties and loan payments totaling more
than a billion dollars. They were determined not only to recover their
investments but to resume their profitable business operations in Japan. If
Japan’s biggest conglomerates were broken up, this would impact directly on
their American partners. If the directors and owners of these zaibatsu were condemned to death or to
long prison terms, the new management might well argue that they were not
responsible for debts incurred under a previous criminal military dictatorship.
If efforts to introduce democracy to Japan miscarried and led to a socialist or
communist takeover, past experience with Soviet Russia showed that such debts would
never be honored.” (The Yamato
Dynasty; Sterling Seagrave and Peggy Seagrave; Copyright 1999 by Peggy and
Sterling Seagrave; Broadway Books [a division of Random House] [HC]; ISBN
0-7679-0496-6; pp. 228-229.)
2.
Fear of communism and a desire to establish Japan as a bulwark against
the Soviet Union (and later Red China) had much to do with the resurrection and
sanitization of the old regime. (For more about this, see FTR#’s 290, 291, 428.) “This new rationale was taking hold in Washington and being
echoed in Tokyo, thanks to careful orchestration. Japanese government spokesmen
said that SCAP was persecuting businessmen not because they had committed war
crimes, or acquired their wealth by illegal means, but because they had been
successful. ‘We find it difficult to understand how this can be democracy . . .
the empire’s key financial and industrial figures, the men we need most to
provide a sound business development upon which real democracy must rest, are
being condemned without trial, merely because they were businessmen.’ The old
guard in the Diet (echoing Joe Grew) predicted ‘chaos and confusion’ and
communist revolution in Japan if these purges went ahead.” (Ibid.;
p. 229.)
3.
As discussed above, the Morgan financial and related industrial
interests were centrally involved in the capitalization of Japan after the
Kanto earthquake of 1923. It is worth noting that the Morgan group was pivotal
in lobbying against the breakup of the zaibatsu
and the structural reform of Japanese governmental institutions. (Thomas Lamont
was a key Morgan banker and a dominant influence on diplomat Joseph Grew. As
presented in RFA#10—available from Spitfire—the Morgan group was also very
close to Douglas MacArthur, who was in charge of the occupation of Japan. Both
MacArthur and the Morgan group were involved with the 1934 coup attempt against
President Franklin Roosevelt.) “In Washington, a group known as the Japan Crowd encouraged
these reversals of SCAP policy. Joe Grew was their spokesman, guided by Herbert
Hoover as well as Tom Lamont, who had raised a generation of investment bankers
to share his view of China as a corrupt place and Japan as a nation of fiscal
self-discipline. After the war, Grew retired from his post as undersecretary of
state and moved to Wall Street, where he became the leading lobbyist of the
Japan Crowd. By 1947, America’s Republican Party was in full resurgence.
Democrats were on the defensive. SCAP reforms were being aborted and all talk
of purges and retribution in Japan was silenced. Grew and the Japan Crowd
prevailed because Mao’s success in China and communist challenges in Korea,
Vietnam, Indonesia and elsewhere alarmed even liberal politicians, persuading
them of the need to build an Iron Triangle of Japan, Taiwan and Korea.” (Ibid.;
pp. 229-230.)
4.
“Conservative
American business leaders were usually careful to denounce monopolies and
cartels in principle, but they successfully fought off any effort to break up
Japan’s conglomerates in practice. Grew and his colleagues made all the right
democratic noises about reforming postwar Japan, while working energetically
behind the scenes to block all efforts at reform. These men believed that the
best hope for the future Pacific economy lay in reviving prewar trade patterns,
with America again becoming Japan’s biggest trading partner. Japan had the only
massive industrial base in Asia. Once its financial elite were fully restored
to positions of control, Japan would become an industrial bulwark against
further expansion of communism in Asia. The time frame was urgent.” (Ibid.; p. 230.)
5.
“Grew also became
co-chairman of a new lobbying group, the American Council on Japan (ACJ). The
ACJ was a political action committee set up by wealthy American conservatives
immediately after the war to lobby Washington and to fight the initiatives on
reforming Japan that were being championed by liberals—whom the ACJ scathingly
referred to as ‘New Deal Democrats’ and ‘communist fellow travelers’ . . .” (Idem.)
6.
A key figure in the resurrection of the old order in Japan was William
Draper, who was also instrumental in helping to finance the interests that
backed Adolf Hitler. After the war, Draper helped to frustrate the
decartelization of Germany (as did Herbert Hoover). (For more about Draper,
see—among other programs—Miscellaneous
Archive Show M11—available from Spitfire—as
well as FTR#’s 99, 102. For more
about Herbert Hoover, see RFA#’s 1, 2—available
from Spitfire.) “ . . . In the summer of 1947, [Harriman
associate James Lee] Kauffman visited Tokyo on behalf of Dillon Read and made a
personal assessment of the Truman administration’s secret plan for the break-up
of the zaibatsu. The secret FEC-230
documents were then leaked to Newsweek
by Undersecretary of the Army William Draper, in civilian life a senior partner
of Dillon Read. In December 1947, while America was gearing for its
presidential election campaign, Newsweek began
a series of articles denouncing SCAP-1. The magazine accused SCAP of running
amok and exceeding its authority. SCAP was trying to impose ‘ an economic theory
which has . . . no counterpart anywhere
else in the world. It is not communistic but it is far to the left of anything
tolerated in this country.’ Newsweek
went on to warn American taxpayers that this plan posed grave dangers to their
wallets. ‘Japan is costing the American taxpayers millions of dollars a year.’
Breaking up the zaibatsu would
‘weaken the Japanese economy to the point where the maintenance of Japan would
become a continual charge on the American taxpayer.’ It was vital, Pakenham
said, to get Japan back on track and make it ‘a fertile field of American
capital’ . . . ” (Ibid.; p. 231.)
7.
In order to frustrate attempts to reform Japan and establish a true
democracy, the reactionaries described above deliberately undermined the
officials attempting to bring about change in Japan. “ . . . Herbert Hoover had earlier warned
[MacArthur aide] Bonner Fellers that the State Department was sending ‘a bunch
of communists’ to Tokyo, along with some ‘fellow travelers.’ At the time
Fellers was very busy suborning General Tojo and other key witnesses. Hoover
was living in an apartment at the Waldorf Astoria Hotel in New York City, where
he met regularly with Grew, Kern and the others. He encouraged them to attack
SCAP, while at the same time secretly giving advice to MacArthur and Fellers,
and passing questions to Hirohito. During this whole period, Hoover continued
to lead MacArthur to believe that he had a serious chance of being nominated as
the Republican presidential candidate or, at the very least vice-president.
This made MacArthur acutely sensitive to Newsweek’s
charges that SCAP was pursuing goals that were virtually communistic . . . Accordingly, MacArthur weeded out the
remaining liberals and New Dealers from its ranks, turned SCAP-1 and into SCAP-2,
and followed the prophylactic course dictated by those who held his future in
his fists.” (Ibid.; p. 232.)
8.
Ultimately, the above-mentioned William Draper played a critical role
in destroying Japanese reform. “The death-blow to reform came soon afterward. In February
1948 the American government sent two Wall Street bankers to Japan to decide
whether liberal reforms should go ahead or not. The outcome was predictable.
The Draper-Johnston mission—led by banker Percy Johnston and Undersecretary of
the Army William Draper—spent two weeks in Japan, then announced its
recommendations. Draper knew little about Japan but, as he was on leave from
his position as a vice-president of Dillon Read, it was only natural that he
was anxious to protect its investments and those of related firms. Earlier, he
had made a name for himself by rescuing German industry from the ‘excessive
zeal’ of U.S. occupation forces in Europe. Percy Johnston was an executive of
New York’s Chemical Bank, which had longstanding ties with Mitsui Bank. So this
was like sending foxes to inventory the hen house. What Japan really needed,
they said, was not to be punished for waging a merciless war, but to be
restored to economic power as quickly as possible. The Japanese themselves
could not possibly have said it better.” (Ibid.; pp. 232-233.)
9.
“Of the original
list of 325 Japanese companies that were to be reorganized, only 20 remained on
the Draper-Johnston list. No Japanese banks were to be restructured. The
ambitious American plan to reform Japan’s economy and government was suffocated
in the cradle in less than three years. As a precaution, the great zaibatsu banks did change their names
for a while. Mitsubishi Bank temporarily became Chiyoda Bank, Sumitomo Bank
became Osaka Bank, Yasuda Bank became Fuji Bank, and so on. (The boom brought
about by the Korean War, 1950-1953, quickly returned them to profitability, and
made it possible to resurface their carefully hidden assets without attracting
attention. Prime Minister Yoshida called the Korean War ‘a gift from the
gods.’)” (Ibid.;
p. 233.)
10.
Even attempts at effecting reparations to the victims of the war were
largely negated, as the zaibatsu and
their American business partners successfully appropriated much of the funds
earmarked for reparations in order to shore up their own respective situations.
“In the
immediate postwar scramble for reparations, the Japanese zaibatsu, including the wealthy families toward whom [Truman
adviser Edwin] Pauley was so sympathetic, and who (like postwar prime minister
Tanaka, for example) had profited enormously from the war and hid their
profits, submitted their own claims for compensation for wartime damage to their armaments factories. These claims came to
more than $5 billion, and many were paid. Compare that to the $1 billion paid
to victims.” (Ibid.; p. 296.)
11.
“Instead of cash
payments to conquered countries, Japan was ordered to send industrial
equipment. Even these token reparations were suspended by Washington when the
equipment was claimed as collateral for bonds issued before the war by American
firms including Morgan Bank and Dillon Read, who were at the head of a long
line of U.S. corporations with big prewar investments in Japan. By the early
1950’s, Japan owed Morgan nearly $600 million in unpaid interest, penalties and
principal just for the 1924 earthquake loan. This did not include other huge
sums for other loans that Morgan, and members of its extended family, had made
before 1940.” (Idem.)
12.
“In 1951, an
official from Japan’s Ministry of Finance arrived at Morgan headquarters at 23
Wall Street, saying, ‘I have come to honor my signature.’ At this time no
Japanese bureaucrat had the power to make such a statement. Japan was still an
occupied country and nothing of this sort could have been said without the
explicit approval of General MacArthur. In any event, the official went on to
say that Japan had not defaulted on a loan in two thousand years. Refinancing
and servicing was arranged through Smith Barney and Guaranty Trust. Smith
Barney had already joined the Morgan family when it suffered financial
reversals during the Depression, and Guaranty Trust had been a Morgan ‘ward’
since the 1920’s. Thus Morgan not only benefited by getting its loans repaid,
but by having its subsidiaries collect commissions for restructuring the same
loans. In the end, there was nothing fair about the way Japan’s (acknowledged)
postwar resources were allocated. People who were physically the victims of
Japanese brutality were completely upstaged by big corporations that commandeered
all the money made available. By 1952, Tokyo had repaid all prewar investments
by United States corporations, and compensated them for all property damage—so
these American firms made a profit on the war even in Japan.” (Ibid.; pp. 296-297.)
13.
In order to frustrate Japanese reform, MacArthur and his aides saw to
it that Emperor Hirohito was absolved of all war guilt. As seen in FTR#290, as well as M26, the Emperor bore a great
responsibility for the Japanese aggression and atrocities of World War II. One
of the ways in which MacArthur whitewashed the Emperor was to impugn the
character of anyone who implicated him or his family in war crimes, even a
member of the imperial royal family, Prince Konoe. The Prince’s character was
assassinated, and his own biological death followed shortly thereafter—an
alleged “suicide.” Two aides to Prince Asaka, who directed the Rape of Nanking,
also died under strange circumstances. “When [MacArthur aide General Bonner] Fellers discovered
something negative about Hirohito, he literally set about destroying the
source. Naturally Prince Konoe was intimately informed, and when Fellers heard
what Konoe had to say about Hirohito’s guilt, he denounced the prince as ‘a rat
who’s quite prepared to sell anyone to save himself, and even went so far as to
call his master the emperor ‘the major war criminal.’ Thereafter, Fellers,
[Grew protégé Max] Bishop and Macarthur took an intense dislike to Prince Konoe
and, with no further justification, added his name to the list of war criminals
to be prosecuted. One of the few statesmen who had tried to talk Hirohito into
seeking an early peace, and who had earlier volunteered to go to Switzerland to
arrange secret peace talks, Prince Konoe now was blackballed by the Americans
and hounded to despair in a vicious campaign of backbiting and innuendo. He was
informed (falsely) that his name had now been moved to the top of the list of
war criminals, and that he faced imminent arrest and imprisonment. One December
16, 1945, he was found dead in his home. Most sources quote him saying he would
not submit to the indignity of trial. The official ruling was suicide, but
scholars Meirion and Susie Harries, among others, believe that Prince Konoe was
murdered. They offer compelling evidence against suicide. For one thing,
Generalissimo Chiang wanted Konoe’s name removed from the list of potential war
criminals. Konoe was not on the British list. American sources indicate that
Konoe was, in fact, never a serious candidate for trial. Joseph Keenan, who
became head of the Tokyo tribunal, regarded Konoe as a ‘confidential informant’
of the greatest importance. Yet as the Harrieses note, ‘There was no shortage
of people at every level of the Japanese government who would have preferred
Konoe not to testify.’ Other crucial witnesses also died conveniently before
the trials commenced. Two of Prince Asaka’s staff who carried out his orders at
the Rape of Nanking died suddenly of ‘heart trouble’ at the end of 1945, before
trials got under way.” (Ibid.; pp. 208-209.)
14.
“America’s
oligarchs had rescued Japan’s oligarchs. Although it was absurd to see the
Pacific War as only a minor historical aberration, they were intent upon
restoring things in Japan as they were before the war. George Kennan said: ‘We
had purposely relieved our erstwhile opponents of every shred of responsibility
for what was now to come.’ The elite simply tucked the bitter pill in their
cheek to spit it out the moment the Americans were gone.” (Ibid.; p. 236.)
15.
Another highly suspicious death was that of State Department official
George Atcheson, consistently at odds with the reactionary policies of
MacArthur and his staff. “Given a priceless opportunity, the American occupation had
done little to change Japan. What was intended to be a victory of Western democracy
over Japanese fascism became a struggle between American liberals and American
conservatives, with many casualties. One of them was George Atcheson, the
senior State Department adviser in Japan. Although he was resigned to ‘the
short solution,’ he had his enemies, more than he knew . . . In August 1947,
when MacArthur’s inner circle was making the final turnabout from SCAP-1 to
SCAP-2, George Atcheson decided he had to go back to Washington personally to
report to the Secretary of State and the White House what was afoot. He
gathered several members of his staff together and set out by government plane
across the Pacific, bound for Honolulu. After passing lonely Johnston Island
but well short of Hawaii, the plane that had been fully fueled mysteriously ran
out of fuel and went down. One of the survivors said that, as the plane fell,
Atcheson shrugged, shook his head sadly and said, ‘It can’t be helped.’”
(Ibid.; pp. 236-237.)