Remaking of Japan by the US after WWII
copyrighted June 29, 2013
This is a new section I added to the chapter "The Truman Years." It is also related to my chapter about the Black Eagle Fund and Yamashita's Gold. My theory is that this WWII loot was used by the shadow CIA to do covert operations.
Remaking of Japan by the US
From 1945 to 1948, the American forces who occupied Japan purged their Government of the right-wing militarists who had led Japan into war. But by 1949, things had changed.
When the Korean War broke out in 1950, the departure of US forces for Korea left a vacuum in the maintenance of public order in Japan. This vacuum was filled by the creation of a National Police Reserve, the predecessor of today's National Defense Force. Because of the provision in the Japanese Constitution prohibiting the maintenance of military forces, the government of Japan was totally unprepared to meet the cost of creating the new force. Gen. MacArthur solved this financial problem by allocating 20 billion yen (then about $60 million) from the M-Fund. While the exact amount of secret funding remains uncertain, sums as high as $10 million may have been spent annually between 1958 and 1960.
Well what was this M-Fund? Here is what I think it was.
It is said that in 1936 Japan's Emperor Hirohito realized that a new world war was coming. He foresaw that to defeat the United States would require extraordinary military forces backed by unprecedented financing. He organized a special team to confiscate the wealth of Asia, overseen by his brother Prince Chichibu. Japan's top yakuza boss, Yoshio Kodama, was made an admiral and put in charge of looting occupied Asia's gangsters. The Kodama's organization was code-named kin no yuri, (translated: Golden Lily), the title of one of the emperor's poems.
In October 1945, American intelligence agents learned where some of the Japanese loot was hidden. OSS spies watched as Japanese troops buried treasure on the island of Luzon and the OSS began a clandestine recovery operation that lasted until 1948. This was headed by a Filipino-American OSS contract agent, Severino Garcia Santa Romana. Santa Romana`s OSS case officer was BG Edward Lansdale. Lansdale was a member of the staff of General Charles Willoughby, who was General MacArthur's chief of Intelligence. Lansdale and Severino Garcia Diaz Santa Romana tortured Major Kojima Kashii, General Tomoyuki Yamashita's driver, until he revealed the sites of the gold. The US took the loot and that is what the M-Fund was. It was not turned into the US Treasury and was used secretly to fund a shadow CIA.
The Golden Lily loot financed the clandestine Yotsuya Fund which supported a death squad of Kodama's criminal associates, headed by a US army colonel, which targeted student leaders, liberals, leftists, union organizers, journalists and others who got in the way of the revival of capitalism in Japan. Yamashita's Gold, the Golden Lily Treasure.
For the rest of the story see my chapter "The History of the Black Eagle Fund and the start of the Shadow CIA (1940 to about 1950)"
During the Korean War, Eugene H. Dooman pulled off an audacious covert operation, bankrolled by the CIA. He grew up in Japan, the son of missionaries and he had worked at the Japanese Desk in the State Department. The American military needed tungsten, a scarce strategic metal used for hardening missiles. Japanese conservatives needed money. So the Dooman's CIA group sold tons of tungsten to the Pentagon for $10 million and smuggled it into the US. The Tungsten had been stored by from Japanese military officers during the war. The smugglers included Yoshio Kodama and Kay Sugahara, a Japanese-American recruited by the OSS from a internment camp in California during World War II.
The CIA provided $2.8 million in financing for the tungsten operation, which reaped a profit more than $2 million in profits for the CIA's secret intelligence and propaganda operations. By 1953, the CIA began working with warring conservative factions in Japan. In 1955, these factions merged to form the Liberal Democratic Party. (Source: the files of the late Mr. Sugahara and Aftermath of War: Americans and the Remaking of Japan, 1945-1952 by Howard Schonberger, a University of Maine professor)
Alfred C. Ulmer Jr., who ran the CIA's Far East operations from 1955 to 1958 said "We financed them. We depended on Japan's Liberal Democrats Party (L.D.P.) for information." He said the CIA had used the payments both to support the party and to recruit informers within it from its earliest days. The recruitment of Japanese conservatives in the 1950's and 1960's was "a pretty sophisticated business," said one CIA officer. "Quite a number of our officers were in touch with the L.D.P. This was done on a seat-by-seat basis in the Japanese parliament. A second CIA officer said the agency's contacts had included members of the Japanese cabinet.
The CIA, using large amounts of cash, reinstated former war criminal Yoshio Kodama and hand-picked one of Japan's Prime Ministersin order to suppress communist/socialist movements. Kodama had extensive yakuza ties and huge amounts of capital made in the black markets in China. ($175 million estimated). The Tokyo CIA station reported on September 10th, 1953, "(Kodama) is a professional liar, gangster, charlatan, and outright thief .and has no interest in anything but the profits." It still didn't keep the CIA from doing business with him up to that time and behind the scenes later. The chapter also notes how the CIA was able to ensure that Kishi Nobusuke became Japan's prime minister and the chief of its ruling party.
There is no doubt that Kodama returned to Japan in 1945 from China as the former head of the Navy's Kodama Kikan (Kodama Agency) a fabulously rich war profiteer. He transferred stolen diamonds and platinum before he went to prison to Hatoyama Ichiro and Kono Ichiro, and the funds these materials produced when sold by Ichiro, about $175 million, financed the creation of the Liberal Party.
The go-between in this famous operation was the kuromaku Tsuji Karoku, whom the Diet questioned in 1947 about the alleged use of former military and black market funds to influence politics. There is also little doubt that when Kodama was released from US prison on the day after the convicted war criminals were executed, he had been recruited by and was working for U.S. intelligence. On that matter Tad Szulc has written, "Intelligence sources say that Kodama had a working relationship with the CIA from the time he was released from a Japanese prison in 1948." Also a former (US Occupation of Japan) Supreme Commander for the Allied Powers (SCAP) official, Hans Baerwald said, "[Kodama's] release from imprisonment allegedly was tied to his becoming an agent of the American intelligence services in general, and ultimately the Central Intelligence Agency in particular." (Szulc, New Republic, April 10, 1976, p. 11; Baerwald, Asian Survey, September 1976, pp. 817-18.)
On April 4, 1976, the New York Times summarized what Kodama did for the CIA and for Lockheed: "There was more evidence of the agency's (CIA's) apparently ubiquitous involvement: its officials knew 20 years ago that the Lockheed Aircraft Corporation bribed Japanese politicians in connection with the sale of F-104 fighter planes to the Japanese Government. In a period of 20 years (1956 to 1975) Lockheed paid $12.6 million to top Japanese officials to sell $700 million worth of aircraft. About $1.5 million was spent to win the F-104 contract away from Grumman Aircraft in the late 1950's. It is not known whom the agency told about the bribes. It reportedly did not inform officials of Grumman, or the State Department."
Evidence in a variety of open and still classified U.S. government documents strongly indicates that early in 1958, President Dwight D. Eisenhower, making what he and his aides earlier called a "big bet," authorized the CIA to provide secret campaign funds to Japanese Prime Minister Kishi Nobusuke--formerly an accused war criminal--and selected members of the Liberal Democratic Party. This fateful decision followed Nobusuke's June 1957 visit to the United States, where he had addressed both Houses of Congress, thrown out the first pitch at a New York Yankees baseball game, and joined Eisenhower in a round of golf at an otherwise racially segregated country club. In private discussions, the president and Secretary of State John Foster Dulles also gave Nobusuke a crucial political reward: their pledge to renegotiate the unpopular 1951 security treaty imposed upon Japan as the price of ending the Occupation.
Given the fact that as a member of General Tojo's cabinet in 1941, Nobusuke had co-signed the declaration of war against the United States. As minister of Commerce and Industry and later head of the Munitions Ministry, he had overseen the forced conscription of hundreds of thousands of Korean and Chinese laborers and been responsible for military production. When American Occupation troops entered Japan in August 1945, they arrested Nobusuke as a suspected Class A war criminal and he spent three years in Sugamo Prison under investigation.
Nobusuke's release from prison in December 1948 reflected the dramatic reversal of Occupation priorities during the previous 18 months. Also Some of the rehabilitated Japanese politicians had had close contacts with yakuza in addition to Yoshio Kodama
Although the Kennedy administration in 1961 continued secret payments to the LDP and other parties, it viewed trade expansion as a better way to stabilize Japan and bind it to the United States. President John F. Kennedy's advisers envisioned a future in which Japan doubled or tripled its exports to the US, making Japan so dependent on American consumers that it could never contemplate neutrality! But just as support for Kishi Nobusuke had unintended consequences, this trade strategy contributed to an economic transformation.
The Black Eagle Fund parts one to four