Occupation Without Troops: Wall Street's Half-Century Domination of Japanese Politics

By Glenn Davis and John G. Roberts

When American Occupation troops withdrew from Japan did they leave behind a truly independent country? Or did they leave in place a behindthescenes network that determined much of the course of Japanese politics for decades to come?

Painstakingly researched, by authors who have between them over fifty years of experience in Japan, this book looks at aspects of the JapanU.S. relationship that others have missed or avoided. At the heart of the book is the story of how a few men reversed the original policies of the Occupation, and went on to create a web of money and influence connecting Washington, New York, Tokyo, and Riyadh. These men set the stage for postwar bilateral relations, intrigues, and manipulations. Making their appearance on this carefullyset stage are the wellconnected arms dealer, Adnan Khasshoggi, several Japanese prime ministers, Emperor Hirohito, by way of a personal "message," the Reverend Sung Myung Moon, and the selfdescribed "world's richest fascist."

A combination of investigative journalism and scholarly research, An Occupation Without Troops provides a startling new understanding of the Japanese-U.S. relationship. This pioneering book is essential reading for anyone who hopes to gain a true grasp of relations between these two countries since World War II.

• Language: English
• Publisher: Tuttle Publishing
• Release date: Jul 9, 2012
• ISBN: 9781462903702

Book preview

AN

OCCUPATION

WITHOUT

TROOPS

This Work is dedicated

to the memory of

John Gaither Roberts

Chapter 1 originally appeared as The Rebirth of Japan's Zaibatsu, by John G. Roberts, in Insight: Asia's Business Monthly, July 1978.

Chapters 2 and 3 originally appeared as The 'Japan Crowd' and the Zaibatsu Restoration, by John G. Roberts, in The Japan Interpreter, 3-4, vol. 12, summer 1979; and America and the Making of Japan Inc., by John G. Roberts, in The Nation, February 13,1982.

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YENBOOKS

Osaki Shinagawa-ku, Tokyo 141-0032

© 1996 by YENBOOKS

All rights reserved

LCC Card No. 96-60932

ISBN: 978-1-4629-0370-2 (ebook)

First edition, 1996

Printed in Japan

Contents

Acknowledgments 9

Introduction 13

Significant Figures 17

List of Abbreviations 21

CHAPTER 1

Just a Friendly Visit 25

Just a Friendly Visit / The Stuff of Textbooks / The Rise of a Journalist / A Volatile Background / Enter the Postwar Period / Just a Friendly Dinner / Anti-Communism Flourishes

CHAPTER 2

The American Council on Japan 51

The American Council on Japan / The Japan Lobby / Power of the Media / MacArthur Loses a War of Words / The American Council on Japan Takes Shape / The Right Connections / The ACJ in Action

CHAPTER 3

The Emperor's Message 81

The Emperor's Message / A Conduit to the Emperor / The ACJ Peaks Out / Contrary to the Popular Will / Doling Out Candy / The ACJ Vanishes

CHAPTER 4

The House of Pearls 103

The House of Pearls / A Self-Made Man? / The House of Pearls as Cover / Operation Marigold / Ties to Tungsten / The CIA Is Born / From Pearl Merchant to Shipping Tycoon / Living in the Shadows / Dedicated to Nisei

CHAPTER 5

The Selling of Kishi 124

The Selling of Kishi / Far to the Right / The Southeast Asian Connection / Kishi's Three Missions / Kishi's ACJ Preening / Direct Links to the Middle East / The Four K's / Triangular Linkups

CHAPTER 6

The Oily CFR Angle 147

The Oily CFR Angle / Big Business Support / The Roots of Power / Fingers in the Occupation Pie / Focus on Crushing Communism / Cultural Exchange Programs

CHAPTER 7

Enter Private Diplomacy 166

EnterPrivate Diplomacy / The MRAComes Calling / ABold.Young Leader Appears / The CFR Connection / Yamamoto's Connections / A Trilateral Supporter / Yamamoto's Role

CHAPTER 8

Japan Returns to Asia 189

Japan Returns to Asia / The Rise of the Real Leaders / Clamoring for Independence / The Clamor Grows Louder / The ACJ's Legacy / Who Was Harry?

Afterword 211

Appendices 215

1.  The Emperor's Message 215

2.  (a) Letter from Harry Kern to Tadashi Yamamoto 217

(b) Letter from John Roberts to Tsutomu Kano 220

3.  Memorandum from Douglas MacArthur 224

4.  Brief History of the Council on Foreign Relations 227

5.  Chronology: The American Council on Japan 229

6.  Wisner's Wurlitzer and the American Council on Japan (Ca.late1940s) 236

7.  Nobusuke Kishi's Power Base 240

Bibliography 243

Index 247

PHOTOGRAPHS

follow page 128

Acknowledgments

This work came together over a twenty-year period of researching how the elites of the United States and Japan interact. So many people helped in the research it would be impossible to mention them all here.

Much first-hand knowledge about the reclusive, semi-secret American Council on Japan was provided by those who either participated directly in the group or who were connected with its activities. One ACJ participant, Takeshi Watanabe, pointed out mistakes and incorrect conclusions in our manuscript, and even provided copies of personal letters to and from Kay Sugahara, which helped our research immensely. Although not involved directly in the ACJ, ex-diplomat Toshiro Henry Shimanouchi also provided letters and photos. We are grateful to both men for their invaluable assistance.

In the latter part of the story, which deals with private diplomacy and the activities of semi-secret groups such as the Trilateral Commission and the Council on Foreign Relations, we are grateful to Tadashi Yamamoto for his patience and understanding. Although basically disagreeing with our analysis, Yamamoto San was big-9 hearted and liberal enough to read our manuscript, adding his comments and criticisms. He also provided photos from a TLC meeting in Tokyo, all of which added a great deal to the accuracy of our text on his Japan Center for International Exchange.

We would especially like to thank several professors in both countries for their assistance and support; Marius Jansen, Chalmers Johnson, Michael Schaller, Herbert Bix, and Eiichi Shindo. John Roberts' old friend and pen pal Howard Schonberger, the late professor from the University of Maine, did much of the groundbreaking research on the ACJ and should be so credited. He gracefully shared his research with us and for that we are grateful.

Many discoveries about the ACJ and its nefarious activities resulted from conversations with fellow journalists at the Foreign Correspondents Club of Japan over the years. We would like to thank Robert Whiting, Greg Davis, Dennis Holden, Tim Porter, Murray Sayle, Peter Hadfield, Peter McGill, Tom Gill, and many others. The late and great Mainichi journalist Koji Nakamura provided much of the original inspiration to tell this story, even though we could find no publisher during the chilly Cold War period. The librarians at the Foreign Correspondents Club should also be mentioned for their categorical memories, which helped greatly in locating published materials.

The authors express special thanks to writer David E. Kaplan for his consistently accurate analysis and criticism. His understanding and feel for describing unseen forces at work in both Japanese and American society were immensely helpful in the preparation of the final manuscript. His success with Yakuza and Fires of the Dragon was a special inspiration.

Special thanks is also extended to old Japan hand and author Boye Lafayette De Mente, and to radio talent Matt Shea, for kindly proofing the final draft. Kudos also to translator for the Japanese version, Naomi Moriyama (nee Matsuzaka), who not only rendered the manuscript into lively Japanese but also acted as an editor for the English version, making invaluable suggestions on how to re-arrange the text for better readability. She also checked on the accuracy of Japanese spellings, dates, and much more, far beyond the call of duty.

Finally, I would like to add a special thank you to all those fine people in the American Chamber of Commerce in Japan who read our manuscript. Thanks especially to Glen Fukushima, who knows the story well, and to Robert Skipp Orr, whose specialized knowledge of Japan gave us new insights into familiar territory. Lastly, thanks to Pam Warnken, the public affairs officer at Atsugi Naval Air Station who provided historical files on the base's history and photos of General Douglas MacArthur, when he first landed in Japan.

Photos appearing in the book are courtesy of: 1. The Daily Yomiuri; 2. Mainichi Newspapers; 3,4. The Foreign Correspondents' Club of Japan; 5. Visual Arts International; 6. Public Affairs Office, Atsugi Naval Air Station; 7,8. The Japan Center for International Exchange; 9,10. Visual Arts International; 11,12. Toshiro Henry Shimanouchi; 13,14. Mainichi Newspapers; 15. United Press International; 16. Visual Arts International; 17-20. Kyodo Photo Service.

Introduction

Now that the Cold War is finally over, the postwar history of Japan must be rewritten. Most of the historical works currently available reflect a victor's justice mentality, particularly those scholarly tomes produced by Japanologists originally trained by the intelligence community. Their role in history was to rule Japan, not necessarily through understanding but by applying the brute force of the Occupation, which lasted from 1945 until 1952. The subsequent works of these scholars can hardly be called objective, yet their prefabricated views of America-Japan relations have always been considered the norm.

Even before the end of the Pacific War, there were ongoing factional struggles within the United States State Department concerning policies toward Japan after its inevitable surrender. This struggle continued during the U.S. Occupation of Japan, with one side clearly in the ascendancy.

As might be expected, the successful faction of U.S. and Japanese scholars, government leaders, and military officers who had participated in the making of Occupation policy subsequently enjoyed the privilege of writing its history. Their largely uniform and one-sided characterizations, reflecting obsolete, Cold War attitudes, have only recently come to be challenged by a new generation of Japanologists who came to Japan to study, not to rule.

But still this cadre of elite scholars and their well-indoctrinated disciples tend to hold sway over bilateral relations, ever explaining Japanese history in a fashion that clearly reflects the official State Department line, changed only ever so slightly in the past fifty years. Publications differing from the official line have been discouraged at best and suppressed at worst. At the slightest evidence of opposition from dissident colleagues, these establishment Japanologists close ranks menacingly.

This strategy fits hand-in-glove with the so-called Japan Lobby, a hawkish faction in the State Department and the Pentagon, which usurped power during the Occupation. The beneficiaries of this covert take-over have exerted decisive influence over America-Japan relations ever since.

The central objective of this work, therefore, is to outline the power structure behind the American Council on Japan and its willing adherents in Japan. We intend to describe the evolution of this power structure, identify the persons involved, and explain how the American Council on Japan consistently and purposefully circumvented, obstructed, or torpedoed the democratic process to achieve its objective of maintaining Japan as a dutiful American Cold War ally, the most important blockade to Soviet and Chinese communist expansionism in Asia.

In classifying the participants in this semi-secret council, it is immediately apparent that the most important are connected directly or indirectly with American big business. Therefore this work will focus on the development, extent and influence of this group on the Japanese social structure, and its role in the official and unofficial channels of communication between Japan and the United States.

To achieve this goal, we devote particular attention to persons and organizations in the ACJ's operations in Japan, and their connections with the Japanese and American economic and political elite.

Our story goes back to the early pre-war period when east-coast elites centered on Wall Street began spinning their elaborate web of personal connections in Japan. In the early postwar period, it was these same elites who played a leading role in shaping U.S. government policy toward a war-ravaged Japan. The same highly sophisticated apparatus is still pulling strings today, as will be demonstrated in the latter part of this work. We strongly feel that the revolutions in eastern Europe, the crumbling of communism in the Soviet Union and the dissipation of Cold War attitudes have isolated these hawks in Japan and America, undermining their raison d'être. And that is precisely why this virtually ignored story must be told at this time. The victor's justice of postwar history must be replaced by an objective analysis of the facts undertaken by independent scholars and researchers.

Based upon original documents, published and unpublished materials, interviews and diaries, this work is not intended to be an expose; with curiosity and patience, anyone could have drawn similar conclusions. It is aimed instead at replacing the empty theorizing and outworn cliches of academic literature on the subject and at building factual bridges for reaching bolder, more realistic interpretations of the most crucial period in the American-Japanese experience.

Above all, this work will not be academic, theoretical, or schematic. We intend to identify and describe real organizations and personages by name, with candid evaluations of their characteristics and significance as well as their inter-connections, secret or otherwise. Whenever possible, we will identify the sources and amounts of funds provided, with special attention to indirect or covert funding by Japanese and American conduit foundations, commissions, or governmental agencies.

We believe this work is long overdue and will fill a conspicuous void in the annals of postwar Japanology. In recent publication history, it has become increasingly obvious that cracks have started to appear in the literary dam created by Japanologists within the Japanese and American elite in the postwar period. The increasingly meaningless continuation of U.S. military support for Japan as the bastion of anti-communism in Asia in the face of the democratization of Asian communist powers underlines the importance of our analysis.

SIGNIFICANT FIGURES

Max Bishop (1908-94)

A former language officer in the American Embassy in prewar Tokyo, Bishop later became a personal friend of General Douglas MacArthur. He also played a leading role in the inner circle of the American Council on Japan.

William R. Castle

(1878-1963) A prewar ambassador to Japan who had been undersecretary of state under President Herbert Hoover. Castle was a member of the ACJ's inner circle who was a constant letter writer to Harry Kern and other lobby stalwarts.

Eugene Dooman (1890-1969)

A counselor in the American Embassy in Tokyo under Ambassador Joseph Grew in the pre-war period. Like his boss, Dooman returned to the United States for a career in the State Department. He was decorated by the Japanese government, presumably for helping save the Emperor System. Another of the ACJ's inner circle, although some historians argue he was the epicenter of the group.

John F. Dulles (1888-1959)

Secretary of State between 1953 and 1959, whose influence was used by the ACJ to further their political aims. A strident anti-communist, Dulles attended Harry Kem's private dinner in Tokyo in June 1950, just days before the outbreak of the Korean War.

Takeo Fukuda (1905-95)

Prime minister of Japan between 1976 and 1978. Fukuda, an ultra-conservative and pro-American faction leader of the Liberal Democratic Party, was very close to Harry Kern and sympathized with the aims of the ACJ.

Joseph C. Grew (1880-1965)

U.S. Ambassador to Japan from 1932 through 1941, when the Pacific War broke out after Japanese planes bombed Pearl Harbor, Hawaii. After the war, Grew was one of the central figures of the ACJ, working out of the State Department.

Adrian Khasshoggi (1935-)

Influential Middle East merchant and arms dealer who acted as advisor to the Saudi Arabian royal family. Fervently anti-communist, the U.S.-educated Khasshoggi contributed heavily to Richard M. Nixon's 1972 re-election campaign for president. Very involved in Japan and South Korea, Khasshoggi acted as one of Harry Kern's prime sources of information on Middle Eastern events.

James Lee Kauffman (1886-1968)

An American lawyer who taught at Tokyo Imperial University before the war and later became a key figure of the ACJ's inner circle of policy and decision makers. He was also decorated by the Japanese government, presumably for his efforts to preserve the Emperor System.

Harry F. Kern (1913-96)

The central figure in the ACJ, the lobbying group of Americans and Japanese which reversed the democratic reforms of the Occupation. War/Foreign editor of Newsweek who went on to publish his own journal on Middle Eastern affairs for wealthy businessmen and governments called Foreign Reports. Member of Rockefeller dominated Council on Foreign Relations.

Nobusuke Kishi (1896-1987)

The ACJ's point man inside the Japanese political system. Former A-Class war criminal who went on to become prime minister in 1957 and was responsible for much reactionary legislation until being pushed out of office in 1960 by massive demonstrations by leftist students. Kishi sacrificed his political career to extend the U.S.-Japan Mutual Security Treaty.

Yasumasa Matsudaira (1893-1957)

A former marquis and brother-in-law of the head of the Mitsui family who had served as Grand Master of Ceremonies in the Imperial Court. He had participated in the major decisions of World War II and was a very useful pipeline to the imperial court that the ACJ manipulated to carry off the coup of passing around the Emperor's Message. Matsudaira was a participant in Harry Kern's dinner party for J.F. Dulles just before the Korean War broke out.

General Douglas MacArthur (1880-1964)

World War II hero who was assigned the task of leading the Occupation forces as Supreme Commander for the Allied Powers. He became the target of the ACJ for his steadfastness in carrying out democratic reforms, which were weakening the old guard and financial cliques. MacArthur was fired by President Truman in 1950 for insubordination, an act which deeply shocked the Japanese who did not realize it was possible for a general to be fired.

Compton Pakenham (1893-1957)

Newsweek Tokyo Bureau Chief who spent much of his time introducing leading Japanese to Harry Kern. Always careful to protect the identity of his Japanese sources in his dispatches and letters, Pakenham was a regular visitor with high officials at the Imperial Palace, the Ministry of Finance, the Foreign Ministry, and the rural police. He became the English teacher of Nobusuke Kishi and was at the very center of Kern's circle of friends.

Renzo Sawada (1888-1970)

Also present at the pivotal pre-Korean War dinner party in late June 1950. Diplomat Sawada was a Christian convert who had married a daughter of the Mitsubishi mibatsu (financial clique). He later became Japan's envoy to the United Nations. Although a minor player, Sawada was nonetheless important to the aims of the ACJ in Japan.

Kay Sugahara (1909-88)

Former OSS officer who formed the House of Pearls where the Japan Lobby began as the guns of World War II fell silent in the Pacific in August 1945. Known as the nisei Onassis, Sugahara struck it rich in tungsten trading and later in the shipping business. He was a key player in the ACJ with his good friend Eugene Dooman.

Takeshi Watanabe (1906-)

Grandson of a former finance minister who became liaison between American Occupation officials and the Finance Ministry. Watanabe served as director of the International Monetary Fund and the World Bank before being elected as president of the Asian Development Bank. He was very close to David Rockefeller and played a key role on the Japanese side of the Trilateral Commission. The ninety-year-old former diplomat sometimes gives speeches on the Occupation period and bilateral relations.

Tadashi Yamamoto (1936-)

President of the Japan Center for International Exchange, a private diplomacy group in Tokyo. The JCIE maintains very strong connections with U.S. foundations, especially those supported by the Rockefellers. Yamamoto has played a behind-the-scenes role in postwar private diplomacy with such groups as