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FTR #446 Funds and Games

By FTR - March 26, 2004 @ 8:00 am in For The Record

Recorded Feb­ru­ary 14, 2004
Lis­ten:
MP3 Side 1 [1] | Side 2 [2]
RealAu­dio [3]

High­light­ing the post­war use of Axis trea­sure recov­ered by the Allies after World War II, this pro­gram talks about these Funds and the Games that were played with (and because of) them. Par­tic­u­lar empha­sis is on the post­war use of the mas­sive amount of Japan­ese Trea­sure looted by the Japan­ese dur­ing Oper­a­tion Golden Lily. In addi­tion to being used to res­ur­rect the very mil­i­tarists, fas­cists and oli­garchs that had pros­e­cuted Japan’s war of aggres­sion, the monies were com­bined with trea­sure recov­ered from the Nazis to cre­ate an enor­mous slush fund called the Black Eagle trust. This huge repos­i­tory of clan­des­tine wealth was used to sta­bi­lize the post­war finan­cial sys­tem, finance covert oper­a­tions, and pur­chase influ­ence among America’s Cold War allies. Con­ceived of, and real­ized, by some of the most pow­er­ful Amer­i­can polit­i­cal and finan­cial power bro­kers, the Black Eagle trust ulti­mately became a source of enor­mous cor­rup­tion, as it became a “Trea­sure of the Sierra Madre”, lur­ing many indi­vid­u­als and insti­tu­tions into temp­ta­tion and, some­times, death. After dis­cussing many of the other clan­des­tine funds grow­ing out of Japan’s loot­ing of Asia, the pro­gram dis­cusses the chill­ing death threats and intim­i­da­tion that the Sea­graves (Ster­ling and Peggy) received because of their author­ship of the book upon which the pro­gram is based—Gold War­riors. (Be sure to visit their web­site [4].)

Pro­gram High­lights Include: The estab­lish­ment and oper­a­tion of the M-Fund—designed to estab­lish and per­pet­u­ate the Japan­ese reac­tionar­ies who had engi­neered Japan’s war of aggres­sion; the Yot­suya Fund—designed to finance the coer­cion, intim­i­da­tion and mur­der of the polit­i­cal oppo­si­tion in Japan; the Keenan Fund—set up to bribe wit­nesses in order to white­wash Japan­ese war crim­i­nals; Kodama Yoshio—Japanese admi­ral, gang­ster and the CIA’s main man in post­war Japan; the Showa Trust—set up to enrich Emperor Hiro­hito; the Mar­cos regime in the Philip­pines and its attempts at manip­u­lat­ing both the Japan­ese and Amer­i­can ben­e­fi­cia­ries of the Golden Lily; the Rea­gan administration’s attempts at using Golden Lily loot in the Philip­pines in order to ease the US back on to the Gold Stan­dard; the careers of Black Eagle trust archi­tects Henry Stim­son, John J. McCloy, Robert Lovett and Robert B. Anderson.

1. Begin­ning with dis­cus­sion of the com­bin­ing of Oper­a­tion Golden Lily loot with trea­sure looted by the Nazis and Ital­ian fas­cists in Europe, the pro­gram high­lights the use of this wealth to finance covert oper­a­tions and buy polit­i­cal influ­ence dur­ing the Cold War. “The treasure—gold, plat­inum, and bar­rels of loose gems—was com­bined with Axis loot recov­ered in Europe to cre­ate a world­wide covert polit­i­cal action fund to fight com­mu­nism. This ‘black gold’ gave the Tru­man Admin­is­tra­tion access to vir­tu­ally lim­it­less unvouchered funds for covert oper­a­tions. It also pro­vided an asset base that was used by Wash­ing­ton to rein­force the trea­suries of its allies, to bribe polit­i­cal lead­ers, and to manip­u­late elec­tions in for­eign coun­tries. In the late 1940’s, this agenda was seen as entirely jus­ti­fied, because the Soviet Union was aggres­sively sup­port­ing com­mu­nist and social­ist move­ments all over the world, putting the sur­vival of the cap­i­tal­ist world in peril.“
(Gold Warriors—America’s Secret Recov­ery of Yamashita’s Gold; by Ster­ling Sea­grave and Peggy Sea­grave; p. 3.)

2. “Most read­ers will be as sur­prised as we were by this infor­ma­tion. Some may be deeply trou­bled by Truman’s strate­gic deci­sion, which oth­ers may heartily endorse. It is not within the scope of this book to exam­ine that deci­sion, or to explore whether it was right or wrong. It might have been a wise deci­sion at the time, which had tragic con­se­quences in the longer term. Ours is only a pre­lim­i­nary report, and in what fol­lows we try to remain polit­i­cally neu­tral. The only pur­pose of this book is to lift the veil of secrecy, and to bring for­ward and exam­ine the unfore­seen con­se­quences, which are many, and trou­bling.” (Idem.)

3. The deci­sion to form this vast action fund of Axis trea­sure looted dur­ing World War (called the Black Eagle trust) had its gen­e­sis with the Bret­ton Woods con­fer­ence of 1944 and involved some of the key power bro­kers in the Amer­i­can power elite. “It was not Truman’s deci­sion alone. The idea for a global polit­i­cal action fund based on war loot actu­ally orig­i­nated dur­ing the Roo­sevelt admin­is­tra­tion, with Sec­re­tary of War Henry L. Stim­son. Dur­ing the war, Stim­son had a brain­trust think­ing hard about Axis plun­der and how it should be han­dled when peace came. As the tide turned against the Axis, it was only a mat­ter of time before trea­sure began to be recov­ered. Much of this war prize was in the form of gold looted by the Nazis from con­quered coun­tries and civil­ian vic­tims. To elim­i­nate any trace of orig­i­nal own­er­ship, the Nazis had melted it down, and recast it as ingots hall­marked with the swastika and black eagle of the Reichs­bank. There were other rea­sons why the gold was dif­fi­cult to trace. Many of the orig­i­nal own­ers had died, and pre-war gov­ern­ments had ceased to exist. East­ern Europe was falling under the con­trol of the Soviet Union, so return­ing gold looted there was out of the ques­tion.” (Ibid.; p. 4.)

4. These lumi­nar­ies included Sec­re­tary of War Henry Stim­son and his aides John J. McCloy, Robert Lovett and Robert B. Ander­son, about whom more will be said later on in the pro­gram. The ref­er­ence to “Santy” is to Mr. Santa Romana, a piv­otally impor­tant OSS and (later) CIA agent who helped recover much of the Japan­ese gold stashed in the Philip­pines. “Stimson’s spe­cial assis­tants on this topic were his deputies John J. McCloy and Robert Lovett, and con­sul­tant Robert B. Ander­son, all clever men with out­stand­ing careers in pub­lic ser­vice and bank­ing. McCloy later became head of the World Bank, Lovett sec­re­tary of Defense, Ander­son sec­re­tary of the Trea­sury. Their solu­tion was to set up what is infor­mally called the Black Eagle trust. The idea was first dis­cussed with America’s allies in secret dur­ing July 1944, when forty-four nations met at Bret­ton Woods, New Hamp­shire, to plan the post­war world econ­omy. (This was con­firmed, in doc­u­ments we obtained, by a num­ber of high-level sources, includ­ing a CIA offi­cer based in Manila, and for­mer CIA Deputy Direc­tor Ray Cline, who knew of Santy’s recov­er­ies in 1945. As recently as the 1990’s, Cline con­tin­ued to be involved in attempts to con­trol Japan­ese war-gold still in the vaults of Citibank.)” (Idem.)

5. Next, the pro­gram high­lights the machi­na­tions of Edward Lans­dale, one of the most impor­tant US “Black Ops” vet­er­ans of the Cold War. Lans­dale was at the epi­cen­ter of the recov­ery of the Philip­pines trea­sure sites cre­ated by the Japan­ese and opened by Santa Romana. Lans­dale briefed the high-ranking gov­ern­ment offi­cials (includ­ing Gen­eral Dou­glas MacArthur) who par­tic­i­pated in the coop­tion of the Philip­pines trea­sure sites. “After brief­ing Pres­i­dent Tru­man and oth­ers in Wash­ing­ton, includ­ing McCloy, Lovett, and Stim­son, Cap­tain Lans­dale returned to Tokyo in Novem­ber 1945 with Robert B. Ander­son. Gen­eral MacArthur then accom­pa­nied Ander­son and Lans­dale on a covert flight to manila, where they set out for a tour of the vaults Santy already had opened. In them, we were told, Ander­son and MacArthur strolled down ‘row after row of gold bars stacked two meters tall’. From what they saw, it was evi­dent that over a period of years Japan had looted many bil­lions of dol­lars in trea­sure from all over Asia. What was seen by Ander­son and MacArthur was
only the gold that had not reached Japan. Far from being bank­rupted by the war, Japan had been greatly enriched.” (Idem.)

6. Ulti­mately, the very clan­des­tine nature of the “Black Gold” (includ­ing the Black Eagle trust and other off-the-books funds to be dis­cussed later) led to the per­ver­sion of the use of these monies (which may have been jus­ti­fied dur­ing the early Cold War and the Soviet expan­sion­ist period). These clan­des­tine monies became the source of immense and ongo­ing cor­rup­tion. As dis­cussed in FTR#428, the M-Fund was used to buy influ­ence in the highly cor­rupt post­war Japan­ese gov­ern­ment. In 1960, Richard Nixon returned the M-Fund entirely to Japan­ese con­trol, in exchange for kick­backs to assist his 1960 elec­tion bid. “Because the Black Eagle trust and the polit­i­cal action funds it spawned remained off the books, some of these slush funds fell into the wrong hands, where they remain to this day, big­ger than ever. Accord­ing to reli­able sources in Wash­ing­ton and Tokyo, in 1960 Vice Pres­i­dent Nixon gave one of the biggest of these funds, the M-Fund, to the lead­ers of Japan’s Lib­eral Demo­c­ra­tic Party in return for their promise of kick­backs to Nixon’s cam­paign for the Amer­i­can pres­i­dency. This in itself is deeply dis­turb­ing. But the M-Fund, then worth $35-billion and now said to be worth upwards of $500-billion, has been con­trolled ever since by LDP king­mak­ers who use it to buy elec­tions, to keep Japan a one-party dic­ta­tor­ship, and to block any mean­ing­ful reforms. Sim­i­lar abuses with other secret funds are to be found all over the world. Secrecy is power. Power cor­rupts. Secret power cor­rupts secretly.” (Ibid.; p. 6.)

7. “As Japan expert Chalmers John­son nicely put it, ‘The Cold War is over. What­ever the United States may have believed was nec­es­sary to pros­e­cute the Cold War, the Cold War itself can no longer be used to jus­tify igno­rance about its costs and unin­tended con­se­quences. The issue today is not whether Japan might veer toward social­ism or neu­tral­ism but why the gov­ern­ment that evolved from its long period of depen­dence on the United States is so cor­rupt, inept and weak.’” (Idem.)

8. Return­ing to the sub­ject of the Santa Romana recov­er­ies in the Philip­pines at the end of the war, the broad­cast fleshes out the oper­a­tion, involv­ing Santa Romana, MacArthur, Lans­dale and Robert B. Ander­son. “What we do know, from two sep­a­rate high-level sources in the CIA, is that Robert B. Ander­son flew back to Tokyo with Lans­dale, for dis­cus­sions with MacArthur. After some days of meet­ings, MacArthur and Ander­son flew secretly to Manila, where they were taken by Lans­dale and Santy to some of the sites in the moun­tains, and to six other sites around Aparri at the north­ern tip of Luzon. In the inter­ven­ing weeks, Santy’s men, aided by hand-picked teams from the U.S. Army Corps of Engi­neers, had suc­cess­fully opened sev­eral of these vaults, where MacArthur and Ander­son were able to stroll down row after row of gold bars. Other sites were opened in sub­se­quent months. In all, the recov­er­ies took two years to com­plete, from late 1945 to early 1947.” (Ibid.; p. 96.)

9. “From what was seen in these vaults, and also dis­cov­ered by U.S. Army inves­ti­ga­tors in Japan, it became evi­dent that over a period of decades Japan had looted bil­lions of dol­lars’ worth of gold, plat­inum, dia­monds, and other trea­sure, from all over East and South­east Asia. Much of this had reached Japan by sea, or over­land from China through Korea, but a lot had been hid­den in the Philip­pines.” (Idem.)

10. As men­tioned above, the Santa Romana recov­er­ies and other Japan­ese loot was com­bined with Nazi gold recov­ered at the end of the war in Europe. These bul­lion trea­suries were com­bined to form the Black Eagle trust. “Washington’s ‘offi­cial’ (pub­lic) fig­ure for recov­ered Nazi gold still is only 550 met­ric tons. But Ander­son knew bet­ter. One of his busi­ness asso­ciates saw pho­tos in Anderson’s office of an Amer­i­can sol­dier ‘sit­ting on top of stacks of bul­lion that Hitler had stolen from Poland, Aus­tria, Bel­gium and France. It ended up with the Allied high com­mand and no one was allowed to talk about it.’ The same source said he was taken to the court­yard of a con­vent in Europe where 11,200 met­ric tons of Nazi looted bul­lion had been col­lected.” (Idem.)

11. “After the Nazi defeat, the OSS and other Allied intel­li­gence orga­ni­za­tions searched Ger­many and Aus­tria for art trea­sures and looted gold. Soviet troops and spe­cial units did the same in the Russ­ian zone. More is known of what hap­pened to the recov­ered art than to the recov­ered gold. When one hun­dred tons of Nazi gold were recov­ered from a salt mine near Merk­ers, Ger­many, the truck con­voy car­ry­ing it to Frank­furt van­ished; it was said to have been hijacked, but the more likely expla­na­tion is that this gold was among the bul­lion stacked in the con­vent court­yard.” (Idem.)

12. “The rea­son for all this dis­cre­tion was a top secret project some­times called Black Eagle, a strat­egy first sug­gested to Pres­i­dent Roo­sevelt by Sec­re­tary of War Henry L. Stim­son and his wartime advi­sors, John J. McCloy (later head of the World Bank), Robert Lovett (later sec­re­tary of Defense), and Robert B. Ander­son (later sec­re­tary of the Trea­sury). Stim­son pro­posed using all recov­ered Axis war loot (Nazi, Fas­cist, and Japan­ese) to finance a global polit­i­cal action fund. Because it would be dif­fi­cult if not impos­si­ble to deter­mine who were the right­ful own­ers of all the looted gold, bet­ter to keep its recov­ery quiet and set up a trust to help friendly gov­ern­ments stay in power after the war. This was infor­mally called the Black Eagle trust after the Ger­man black eagle, refer­ring to Nazi bul­lion marked with an eagle and swastika, recov­ered from under­ground vaults of the Reichs­bank.” (Ibid.; pp. 96–97.)

13. Appar­ently, some of the pre­mier fam­i­lies in inter­na­tional finance col­lab­o­rated with the for­ma­tion and oper­a­tion of the Black Eagle trust. “Accord­ing to some sources, the Black Eagle trust could only have been set up with the coop­er­a­tion of the most pow­er­ful bank­ing fam­i­lies in Amer­ica and Europe, includ­ing the Rock­e­fellers, Har­ri­mans, Roth­schilds, Oppen­heimers, War­burgs, and oth­ers.” (Ibid.; p. 97.)

14. Flesh­ing out infor­ma­tion about the archi­tects of the Black Eagle trust, the pro­gram sets forth the back­ground of Henry Stim­son, and his aides John J. McCloy, Robert Lovett and Robert B. Ander­son. The lat­ter three wielded para­mount influ­ence in the post­war world of inter­na­tional power pol­i­tics and busi­ness. “A bril­liant Wall Street attor­ney, Stim­son was a man of immense expe­ri­ence who had served in var­i­ous posts for give presidents—Taft, Coolidge, Hoover, Roo­sevelt, Truman—but he was near­ing the end of his extra­or­di­nary career. He knew Manila inti­mately, hav­ing served as governor-general of the Philip­pines in the 1920’s. Pres­i­dent Her­bert Hoover had then named him sec­re­tary of State. (Like Hoover, Stim­son thought highly of MacArthur.) By Pearl Har­bor, Stim­son was already in his sev­en­ties. He man­aged his vast wartime respon­si­bil­i­ties by del­e­gat­ing author­ity to four assis­tant sec­re­taries of War: Robert Pat­ter­son, a lawyer and for­mer fed­eral judge; Har­vey Bundy, Boston lawyer and Yale grad­u­ate; and two dynamos Stim­son called his Heav­enly Twins—John McCloy and Robert Lovett. What they all had in com­mon was their close rela­tion­ship to the Har­ri­mans and Rock­e­fellers. Lovett’s father had been had been the right-hand man of rail­way mag­nate E.H. Har­ri­man, who once tried to buy the South Manchurian Rail­way from the Japan­ese. Fol­low­ing in his father’s foot­steps, Robert Lovett worked with Averell Har­ri­man at the Wall Street firm of Brown Broth­ers Har­ri­man, han­dling inter­na­tional cur­rency and lend­ing oper­a­tions. John J. McCloy, by con­trast, was a poor boy from Philadel­phia who grad­u­ated from Har­vard Law School, joined the Cra­vath firm on Wall Street, and gained the admi­ra­tion of Averell Har­ri­man by help­ing get $77-million worth of bond issues for the Union Pacific Rail­road. (McCloy engi­neered such deals for every­one from the House of Mor­gan on down.) Work­ing for Sec­re­tary of War Stim­son, Lovett and McCloy became mid­wives at the birth of America’s post­war national secu­rity estab­lish­ment, which was closely inter­wo­ven with the finan­cial com­mu­nity.” (Idem.)

15. “McCloy was a trou­bleshooter and expert fixer. He said his job was ‘to be at all points of the orga­ni­za­tional chart where the lines did not quite inter­sect.’ He made end­less trips around the world dur­ing the war, solv­ing prob­lems, work­ing with states­men, bankers and gen­er­als. He was intensely involved in back­stage strat­egy and under­stood, to bor­row from Cicero, that ‘the sinew of war is unlim­ited money.’ Money also was to be the sinew of the Cold War. A wheeler-dealer, McCloy knew all the ins and outs of inter­na­tional finance. After the war he became a part­ner in the law firm of Mil­bank Tweed, which han­dled the affairs of the Rock­e­feller fam­ily and its Chase Bank, became a leader of the Coun­cil on For­eign Rela­tions, head of the World Bank, chair­man of Chase, and head of the Ford Foun­da­tion. He may have been the key player in exe­cut­ing the Black Eagle trust, the one who took Stimson’s idea and turned it into a work­ing real­ity.” (Idem.)

16. Dis­cussing Ander­son, the broad­cast notes his close asso­ci­a­tion with Clark Clif­ford. “By com­par­i­son, Robert B. Ander­son got off to an inaus­pi­cious start. Born in Burleson, Texas, on June 4, 1910, he taught high school for a while before study­ing law at the Uni­ver­sity of Texas. He was elected to the state leg­is­la­ture and appointed assis­tant attor­ney gen­eral for Texas in 1933, and state tax com­mis­sioner the fol­low­ing year. Then some­thing clicked, and Ander­son left gov­ern­ment to become an extra­or­di­nar­ily suc­cess­ful finan­cial con­sul­tant to very rich peo­ple. By the early 1940’s, he was gen­eral man­ager of the enor­mously wealthy W.T. Wag­goner estate, which owned ranch land and oil land all over Texas. Ander­son was so deft at money man­age­ment that Pres­i­dent Roo­sevelt appointed him a spe­cial aide to Sec­re­tary of War Stim­son with respon­si­bil­ity for keep­ing tabs on Axis loot­ing. Navy Cap­tain Clark Clif­ford, Truman’s aide for national secu­rity mat­ters who was briefed by Cap­tain Lans­dale, was Ander­son’ pro­tégé and inti­mate friend. Together, Ander­son and Clif­ford became major power bro­kers in post­war Wash­ing­ton.” (Ibid.; pp. 97–98.)

17. “Although Stim­son retired from pub­lic life in 1945, and McCloy also left gov­ern­ment ser­vice at that time, they and Ander­son con­tin­ued to be involved in over­see­ing the Black Eagle trust. Accord­ing to for­mer CIA deputy direc­tor Ray Cline, the gold bul­lion recov­ered by Santa Romana was put ‘in 176 bank accounts in 42 coun­tries.’ Ander­son appar­ently trav­eled all over the world, set­ting up these black gold accounts, pro­vid­ing money for polit­i­cal action funds through­out the non-communist world. Later, we closely exam­ine sev­eral.” (Ibid.; p. 98.)

18. Even­tu­ally, Ander­son became cen­trally involved in some of the CIA-linked finan­cial oper­a­tions that were at the core of some of the intelligence-related scan­dals of the 1970’s. 80’s and 90’s. Note that both George Bush Sr. and George Bush, Jr. are con­nected to the BCCI scan­dal or peo­ple who were involved in that scandal.The BCCI inves­ti­ga­tion for the U.S. Jus­tice Depart­ment was less than vig­or­ous. It was headed up by Robert Mueller, cur­rently head of the FBI. “In 1953, to reward him, Pres­i­dent Eisen­hower nom­i­nated Ander­son to a Cab­i­net post as sec­re­tary of the Navy. The fol­low­ing year he rose to deputy sec­re­tary of Defense. Dur­ing the sec­ond Eisen­hower Admin­is­tra­tion, he became sec­re­tary of the Trea­sury, serv­ing from 1957 to 1961. After that, Ander­son resumed pri­vate life, but remained inti­mately involved with the CIA’s world­wide net­work of banks, set up after the war by Paul Hel­li­well. Even­tu­ally, this led to Ander­son becom­ing involved in BCCI, the Bank of Credit and Com­merce Inter­na­tional, an Arab-Pakistani bank with CIA ties that par­layed money-laundering and the dis­creet move­ment of black gold into own­er­ship of the biggest bank in Wash­ing­ton, D.C. The col­lapse of BCCI in what the Wall Street Jour­nal called ‘the world’s largest bank fraud’ also snared Anderson’s pro­tégé, Clark Clif­ford, who was indicted for fraud. Clif­ford and his asso­ciate Rob­bert Alt­man headed First Amer­i­can Bank­shares, the BCCI front in the nation’s cap­i­tal, and were accused of using polit­i­cal patron­age to shield BCCI from full inves­ti­ga­tion.” (Idem.)

19. One of the uses of the Black Eagle trust gold was to help main­tain the sta­bil­ity of the post­war world econ­omy. Note that the authors sus­pect that the archi­tects of the trust exag­ger­ated the impor­tance of this func­tion in order to serve their own ends. “Bat­tered and bank­rupt by their long war in Europe and Asia, America’s allies had no choice but to stand aside as the U.S. Gov­ern­ment set about the ‘dol­lar­iza­tion’ of the global econ­omy. Econ­o­mists see the end of World War II as ‘year zero’ for the cur­rent sys­tem of inter­na­tional finance. Because of wide­spread sus­pi­cion that the Bank of Inter­na­tional Set­tle­ments (BIS) in Zurich had been laun­der­ing Axis loot, Bret­ton Woods set up a new cen­tral finan­cial clear­ing­house called the Inter­na­tional Mon­e­tary Fund (IMF), to act as the world’s future finan­cial clear­ing­house and mon­ey­changer. Gold was assigned a dol­lar value of $35 an ounce, and all other cur­ren­cies were val­ued against the dol­lar. This removed any doubt about the rel­a­tive posi­tion of the dol­lar and the British pound, for exam­ple. Although Britain was a part­ner in the plan, she was deep in debt to the United States. In 1941, in exchange for a $30-billion war loan, Britain had been obliged to take a back­seat in post­war plan­ning.” (Ibid.; pp. 98–99.)

20. “Each IMF mem­ber coun­try agreed on a value for its cur­rency expressed in terms of the U.S. dol­lar. Each mem­ber coun­try deposited with the IMF an amount of gold and cur­rency as reserves to be used to sus­tain the value of that cur­rency. The main func­tion of the IMF was to main­tain sta­ble val­ues for these cur­ren­cies by shift­ing funds tem­porar­ily from one to another. While it was a global orga­ni­za­tion, its most impor­tant backer was the U.S. Gov­ern­ment. Fed­eral sta­tis­tics show that at the end of the war the United States held 60 per­cent of the world’s offi­cial gold reserves, which put Wash­ing­ton in the posi­tion of being able to manip­u­late the other nations.” (Ibid.; p. 99.)

21. “By 1960, how­ever, it was evi­dent to Euro­pean mem­bers of the IMF that they would soon hold dol­lars far in excess of the offi­cial U.S. gold reserves. One solu­tion would have been to devalue the dol­lar, but Wash­ing­ton blocked this. Instead, in 1961 the U.S. joined with the cen­tral banks of Europe, Great Britain and Switzer­land to form the Lon­don Gold Pool, man­aged by the Bank of Eng­land. The ideas was that the col­lec­tive offi­cial reserves of these coun­tries would give them enough gold to inter­vene in the pri­vate mar­ket for gold, to keep the price at $35 an ounce. It worked for a while. But by 1968, France had left the Gold Pool, the British pound had been deval­ued, and pri­vate demand for gold sky­rock­eted. In a last-ditch attempt to sus­tain the Lon­don Gold Pool, the U.S. Air Force made emer­gency air­lifts of gold from Fort Knox to Lon­don. So much gold bul­lion was moved onto the weigh­ing room floor at the Bank of Eng­land that the floor col­lapsed. It was an omen, for the Gold Pool itself col­lapsed shortly there­after.” (Idem.)

22. The authors note that the Black Eagle trust served to keep the price of gold arti­fi­cially high, in a man­ner sim­i­lar to the oper­a­tions of the Dia­mond Car­tel asso­ci­ated with the De Beers fam­ily and the Gold Car­tel iden­ti­fied with the Oppen­heimers. “The invis­i­ble Black Eagle trust set up by Stimson’s team, beefed up by bul­lion from the Santa Romana recov­er­ies, cre­ated a sep­a­rate pool of black gold that put an extra floor under the post­war econ­omy, and gave Wash­ing­ton and its allies covert finan­cial lever­age. There are cer­tain sim­i­lar­i­ties between this trust and the Dia­mond Car­tel iden­ti­fied with De Beers, or the Gold Car­tel iden­ti­fied with the Oppen­heimer fam­ily of South Africa. Accord­ing to informed sources, these sim­i­lar­i­ties exist for good rea­son and on many dif­fer­ent planes. The Dia­mond Car­tel was able to amass huge quan­ti­ties of stones, and yet keep prices arti­fi­cially high by lim­it­ing to a trickle the num­ber of dia­monds reach­ing the mar­ket, main­tain­ing the impres­sion of extra­or­di­nary rar­ity. In a sim­i­lar way, the black gold car­tel could hold many thou­sands of met­ric tons of gold bullion—far more than the offi­cial gold supply—keeping gold prices arti­fi­cially high while dis­creetly using deriv­a­tives of this gold as a clan­des­tine slush fund.” (Idem.)

23. “If the recov­ery of this huge mass of plun­dered gold was known only to a trusted few, those coun­tries and indi­vid­u­als that had been robbed by the Nazis, the Fas­cists, or the Japan­ese, would not sue to recover it. Also, the argu­ment was made that the exis­tence of so much black gold, if it became pub­lic knowl­edge, would cause the fixed price of $35 an ounce to col­lapse. As so many coun­tries now linked their cur­ren­cies to the U.S. dol­lar, and the dol­lar was linked to gold, cur­rency val­ues through­out the world might then plum­met, caus­ing finan­cial dis­as­ter. But so long as it was kept secret, gold prices could be kept at $35 an ounce, and cur­ren­cies pegged to gold would be sta­ble. Mean­while, the black gold would serve as a reserve asset, bol­ster­ing the prime banks in each coun­try, and strength­en­ing the gov­ern­ments of those nations.” (Ibid.; p. 100.)

24. The “black gold” placed the United States in a posi­tion of pri­macy, as it could use the bul­lion to exert lever­age on gov­ern­ments and finan­cial insti­tu­tions. “As a safe­guard, the black gold placed in those banks was ‘ear­marked’ or strictly lim­ited in the uses that could be made it. This enabled Wash­ing­ton to bring pres­sure, from time to time, on those gov­ern­ments, cen­tral banks and prime banks. So long as a coun­try and its lead­ers coop­er­ated with Wash­ing­ton, and remained allied to it in the Cold War, the sleep­ing bul­lion would pro­vide the asset base for patron­age. Gold bearer cer­tifi­cates and other deriv­a­tives could be given as gifts or bribes, with­out actu­ally giv­ing away the bul­lion itself. Ben­e­fi­cial trusts could be set up in behalf of cer­tain states­men, mil­i­tary lead­ers, or polit­i­cal fig­ures, or their fam­i­lies. In the hands of clever men like Ander­son and McCloy, the pos­si­bil­i­ties were end­less. From time to time, as more bul­lion ws recov­ered from Golden Lily vaults in the Philip­pines, quan­ti­ties of the bul­lion would be offered in strictest secrecy to cen­tral banks, or to con­sor­tiums of pri­vate buy­ers.” (Idem.)

25. Even­tu­ally, this “black gold” became a source of tremen­dous cor­rup­tion, as banks became addicted to the use of these funds and abused their cus­tomers in a most pro­found way. “In later chap­ters we will see numer­ous doc­u­mented instances when these under­ground funds sur­faced as huge bribes, or were used to buy elec­tions, famously in Italy, Greece, and Japan, but prob­a­bly in other coun­tries as well. Some inter­na­tion­ally famous banks appear to have become addicted to hav­ing bil­lions of dol­lars of black gold in their vaults. So addicted that they refuse to sur­ren­der the bul­lion, and in some cases have stooped to swin­dling the orig­i­nal own­ers or their heirs, by denounc­ing their doc­u­ments as coun­ter­feit. Indeed, some own­ers claimed that not only were they told their doc­u­ments were fake, but were given veiled threats of mur­der if they pressed their claims. In some cases the banks may have made such heavy use of these black gold reserves that they no longer are in a posi­tion to relin­quish the bul­lion with­out going under.” (Idem.)

26. Turn­ing from dis­cus­sion of the Black Eagle trust, the pro­gram high­lights the for­ma­tion and use of Golden Lily-derived funds in Japan, admin­is­tered by the US and later the Japan­ese. The first major fund here is the Mar­quat or “M-Fund”, used to manip­u­late and con­trol the post­war Japan­ese polit­i­cal land­scape. In par­tic­u­lar, the M-Fund was used to shore up the Japan­ese oli­garchs who had directed and prof­ited from Japan’s bru­tal war of aggres­sion and to sta­bi­lize the post­war Japan­ese econ­omy. “In this con­text of intense cor­rup­tion and art­ful mis­rep­re­sen­ta­tion, it was inevitable that the polit­i­cal action funds Amer­ica set up in Japan would be diverted. But the cor­rup­tion, dis­hon­esty, and moral turpi­tude can­not be blamed only on the Japan­ese. Amer­i­cans were involved in divert­ing the funds, ben­e­fited from their abuse, and may still be ben­e­fit­ing today in a mul­ti­tude of ways.” (Ibid.; p. 109.)

27. “Three under­ground funds were con­trolled by Amer­i­can offi­cials dur­ing the occupation—the M-Fund, the Yot­suya Fund and the Keenan Fund. Accord­ing to Takano Hajime, the M-Fund was named after Gen­eral William Fred­eric Mar­quat, chief of SCAP’s Eco­nomic and Sci­en­tific Sec­tion. In the­ory, Mar­quat headed America’s pro­gram to pun­ish and reform Japan­ese busi­nesses that had gorged on war prof­i­teer­ing. In real­ity, Marquat’s biggest pub­lic rela­tions headache was how to help them con­ceal these obscene prof­its, which by cus­tom were shared with the impe­r­ial fam­ily. His­to­rian John Dower explains that Mar­quat ‘assumed respon­si­bil­ity for noth­ing less than super­vis­ing all devel­op­ments in finance, eco­nom­ics, labor, and sci­ence, includ­ing the dis­so­lu­tion of zaibatsu hold­ing com­pa­nies and the pro­mo­tion of eco­nomic decon­cen­tra­tion. Every major gov­ern­ment finan­cial and eco­nomic insti­tu­tion reported to his sec­tion, includ­ing the Min­istry of Finance, the Min­istry of Com­merce and Indus­try, and the Bank of Japan.’” (Idem.)

28. “Lit­tle has been writ­ten about Mar­quat, who usu­ally is por­trayed as an ami­able nin­com­poop, unfit for the job. This hardly comes as a sur­prise. Like Willoughby and Whit­ney, Mar­quat was one of MacArthur’s inner-circle ‘The Bataan Boys,’ whose chief qual­ity was undy­ing loy­alty. John Gun­ther said Mar­quat ‘pays lit­tle atten­tion to the jar­gon of his present field; once he . . . turned to his first assis­tant dur­ing a heavy con­fer­ence on eco­nomic affairs, say­ing ‘What is mar­ginal econ­omy, any­way?’” (Idem.)

29. “Mar­quat was sup­posed to dis­solve the banks and con­glom­er­ates that financed Japan’s war and prof­ited from it. Despite purely cos­metic changes and the break-up and sale of sev­eral small con­glom­er­ates, the biggest war prof­i­teers were let off with­out even a slap on the wrist. Gen­eral Mar­quat was also in charge of clos­ing down and pun­ish­ing Japan’s bio­log­i­cal and chem­i­cal war­fare ser­vice, Unit 731. Instead, the U.S. Gov­ern­ment secretly absorbed Unit 731, mov­ing most of its sci­en­tists, per­son­nel, and doc­u­ments to U.S. mil­i­tary research cen­ters like Fort Diet­rick in the Mary­land coun­try­side. All infor­ma­tion about its activ­i­ties, includ­ing bio­log­i­cal war­fare atroc­i­ties, and hor­rific exper­i­ments on fully con­scious vic­tims, was with­held by Wash­ing­ton from the Amer­i­can and Japan­ese pub­lic, and from the Tokyo War Crimes Tri­bunals. All Unit 731’s records held by the U.S. Gov­ern­ment are still top secret.” (Ibid.; p. 110.)

30. “So while he was sup­posed to be mak­ing Japan more demo­c­ra­tic, Mar­quat was doing the oppo­site. The M-Fund was cre­ated to buy elec­tions for Japan­ese politi­cians so far to the right that they were solidly anti-communist. Japan was the most highly indus­tri­al­ized coun­try in Asia; Wash­ing­ton wanted it to be a cap­i­tal­ist bas­tion against com­mu­nism, for its econ­omy to thrive so there would be no need for labor unions, left­ist orga­niz­ers, or rev­o­lu­tion. This was the view of Amer­i­can con­ser­v­a­tives who thought Pres­i­dent Roo­sevelt was a com­mu­nist, and believed that Britain should have allied itself with Ger­many and Japan, and gone to war against the USSR. As a con­se­quence of this think­ing, plans to reform Japan were trun­cated or aborted. (One major excep­tion was land reform, suc­cess­fully com­pleted before it could be halted.)” (Idem.)

31. Shoring up Japan as an anti-communist bul­wark was the over­all goal of the appli­ca­tion of the M-Fund, and the other funds to be dis­cussed below. Again, in order to do this, the very fas­cists and oli­garchs most respon­si­ble for Japan’s war of aggres­sion were returned to power and poten­tial oppo­nents and dis­si­dents neu­tral­ized, often vio­lently. “The first big appli­ca­tion of the M-Fund was in the late 1940’s when a Social­ist gov­ern­ment hap­pened to win elec­tion in Japan—a devel­op­ment that aston­ished, pan­icked, and gal­va­nized SCAP. Imme­di­ately, great sums were dis­trib­uted by SCAP to dis­credit the Social­ist cab­i­net, and to replace it with a regime more to Washington’s lik­ing. Later, when Tokyo con­sid­ered estab­lish­ing rela­tions with the People’s Repub­lic of China, sums again were dis­bursed to get Japan back on the right track. When Yoshida Shigeru became prime min­is­ter, Wash­ing­ton relaxed because Yoshida was trusted, con­ser­v­a­tive, and per­son­ally very rich. Dur­ing his period as prime min­is­ter, the M-Fund was called the Yoshida Fund. (In a con­ver­sa­tion in 1987, White House national secu­rity advi­sor Richard Allen said: ‘All my life I’ve heard of a thing called the Yoshida Fund—I think that’s the same thing as the M-Fund.’)” (Idem.)

32. One of the resources com­bined with the M-Fund was the enor­mous cache of war loot acquired by Kodama Yoshio (also known as Yoshio Kodama), a Japan­ese under­world king­pin who became a pri­mary func­tionary in the Japan­ese Empire and the post­war Japan­ese power polit­i­cal stage. Kodama worked very closely with the CIA and became one of the early prime-movers within the Uni­fi­ca­tion Church. (Note that the Uni­fi­ca­tion Church has a close con­nec­tion with George Bush Sr. and Jr. See FTRs 84, 291.) “Another great for­tune dis­cov­ered by U.S. intel­li­gence ser­vices in 1946 was $13-billion in war loot amassed by under­world god­fa­ther Kodama Yoshio who, as a ‘rear admi­ral’ in the Impe­r­ial Navy work­ing with Golden Lily in China and South­east Asia, was in charge of plun­der­ing the Asian under­world and rack­e­teers. He was also in charge of Japan’s wartime drug trade through­out Asia. After the war to get out of Sug­amo Prison and avoid pros­e­cu­tion for war crimes, Kodama gave $100-million to the CIA, which was added to the M-Fund’s cof­fers. Kodama then per­son­ally financed the cre­ation of the two polit­i­cal par­ties that merged into Japan’s rul­ing Lib­eral Demo­c­ra­tic Party (LDP), strongly backed to this day by Wash­ing­ton.” (Ibid.; p. 8.)

33. Kodama was on excel­lent terms with Emperor Hiro­hito, who assisted with the acqui­si­tion of the $13-billion fund Kodama even­tu­ally com­bined with the M-Fund. Kodama was the king­pin of the Japan­ese drug trade dur­ing, and after, World War II. The drug trade was one of the pri­mary sources of Kodama’s largesse. “Another source of under­ground funds was Kodama, who was reported to have amassed some $13-billion in war loot for his per­sonal use. This included two truck-loads of dia­monds, gold bars, plat­inum ingots, radium, cop­per, and other vital mate­ri­als. In order to curry favor with MacArthur’s men, Skukan Bun­shun said at war’s end ‘Kodama had a good por­tion of [his] valu­ables trans­ported to the vault of the Impe­r­ial Fam­ily in the Impe­r­ial Palace.’ Despite his life­long involve­ment in mur­der, kid­nap­ping, drugs and extor­tion, Kodama is said to have been regarded by Emperor Hiro­hito as a true patriot, pos­si­bly because of the great sums he gen­er­ated for Golden Lily. This may explain why Japan’s top gang­ster was per­mit­ted to hide some of his loot in palace vaults. But it goes deeper to include nar­cotics.” (Ibid.; p. 108.)

34. “In the spring of 1945, Kodama made a quick trip to Tai­wan to see that its many heroin fac­to­ries were dis­man­tled for return to Japan, along with remain­ing stocks of heroin and mor­phine. On his return, Kodama was assigned to be a spe­cial advi­sor to the emperor’s uncle, Prince Higashikuni, who served as Japan’s prime min­is­ter briefly at the start of the U.S. occu­pa­tion. Accord­ing to Kodama’s own mem­oir, imme­di­ately after the sur­ren­der, Higashikuni had ‘two or three of us coun­cilors arrange a meet­ing and secretly, unknown to his cab­i­net min­is­ters, [Higashikuni] vis­ited Gen­eral MacArthur in Yoko­hama.’ Kodama pro­vides no details of what tran­spired at this meet­ing, or whether he accom­pa­nied the prince.” (Idem.)

35. Kodama worked very closely with the CIA. “Kodama then spent two years in Sug­amo Prison as an indicted war crim­i­nal, but was mag­i­cally released in mid-1948 when he made a deal with Gen­eral Willoughby to give the CIA $100-million (equal to $1-billion in today’s val­ues.) This pay­ment bought Kodama his free­dom from prison and from any pros­e­cu­tion for war crimes. The money was placed in one of the secret slush funds con­trolled by the CIA sta­tion at the U.S. Embassy. Sub­se­quently, Kodama was put directly on the CIA pay­roll, where he remained for many years, until his death in 1984. Tad Szulc of The New York Times wrote, ‘Kodama had a work­ing rela­tion­ship with the CIA.’ Chalmers John­son said Kodama was ‘prob­a­bly the CIA’s chief asset in Japan.’” (Idem.)

36. “While lit­er­ally an employee of the U.S. Gov­ern­ment, Kodama con­tin­ued to over­see Japan’s post­war drug trade. Heroin labs were moved back not only from Tai­wan, but from North China, Manchuria and Korea. Chi­nese who had col­lab­o­rated with Japan in drug pro­cess­ing and dis­tri­b­u­tion, were given sanc­tu­ary and began oper­at­ing from Japan­ese soil. Two of the three major play­ers in Asian nar­cotics soon died: Nation­al­ist China’s gen­eral Tai Li was assas­si­nated in a 1946 plane crash; Shang­hai god­fa­ther Tu Yueh-sheng died in Hong Kong of nat­ural causes in 1951. Kodama was left Asia’s top druglord, while on the U.S. pay­roll. This could have been embar­rass­ing, for Japan’s dom­i­nant role in nar­cotics was widely known and undis­puted, but a Cold War hush descended over it like an Arc­tic white­out. Dur­ing the occu­pa­tion, U.S. pro­pa­ganda char­ac­ter­ized Asia’s drug trade as exclu­sively the enter­prise of left­ists and com­mu­nist agents. In truth it was dom­i­nated by Kodama in Japan, and by Gen­er­alis­simo Chi­ang through the KMT opium armies based in the Golden Tri­an­gle, who were under the direct con­trol of the Generalissimo’s son, Chi­ang Ching-kuo, the KMT chief of mil­i­tary intel­li­gence at that time. (The two top KMT opium war­lords in the Golden Tri­an­gle, Gen­eral Tuan and Gen­eral Li spoke to us openly of this.)” (Ibid.; pp. 108–109.)

37. Next, the pro­gram turns to dis­cus­sion of the Yot­suya Fund, used to manip­u­late the Japan­ese under­world. A pri­mary goal of this manip­u­la­tion was to enlist the Japan­ese crim­i­nal element—the deadly yakuza in particular—in order to crush polit­i­cal dis­sent and oppo­si­tion. This repres­sion was extremely bru­tal, involving—among other institutions—the Can­non Agency. The Can­non orga­ni­za­tion was essen­tially an assas­si­na­tion con­sor­tium cre­ated to elim­i­nate dissidents–Japanese, Amer­i­can and British—who opposed the rein­sti­tu­tion of the fas­cists and oli­garchs who had directed Japan’s war of aggres­sion. “Very dif­fer­ent from the M-Fund was the Yot­suya Fund. This was set up to manip­u­late and steer Japan’s under­world, and to finance ‘wet work’—extortion, kid­nap­ping, and mur­der. Gen­eral Willoughby, MacArthur’s ‘lov­able fas­cist’ and head of G-2 at SCAP, con­trolled the Yot­suya Fund and worked ener­get­i­cally with Kodama and his legions of yakuza to sup­press any kind of left­ist activ­ity or pub­lic protest dur­ing the occu­pa­tion. Because democ­racy tol­er­ated dis­sent, the con­cept of democ­racy head­long been regarded by Japan’s rul­ing elite as ‘a poi­so­nous idea from the West.’ In Japan, even the mildest kind of dis­sent was not tol­er­ated. Dur­ing the McCarthy era in Amer­ica, the sup­pres­sion of dis­sent became syn­ony­mous with anti-communism.
But the witch­hunt in Japan dur­ing that epoch was far more severe, and bloody.” (Ibid.; p. 110.)

38. “Despite being head of G-2, at this late stage in his career Willoughby was involved in dirty tricks rather than intelligence-gathering or counter-espionage. Among other things, his Yot­suya Fund financed a Korean Liai­son Office that sent spies into North Korea, Red China and the far east­ern USSR.” (Ibid.; pp. 110–111.)

39. “Yot­suya, the dis­trict for which Willoughby named his under­ground fund, was a seedy Tokyo ten­der­loin pop­u­lated in the post­war years by gang­sters, pros­ti­tutes, and bottom-feeders, a hub for the black­mar­ket, awake all night with ille­gal gam­bling casi­nos and attached broth­els. (Today Yot­suya has changed, and is famous for bars fre­quented by uni­ver­sity stu­dents and com­pany exec­u­tives.) Kick­backs from post­war dives like the Man­darin Club, a casino and brothel in Yot­suya run by Amer­i­can Ted Lewin, a pal of Kodama, funded the Can­non Agency, Willoughby’s dirt­i­est and wettest oper­a­tion in Japan. Named for U.S. Army Colonel J.Y. Can­non, this was a mil­i­tary ver­sion of Mur­der Incor­po­rated, a death squad.” (Ibid.; p. 111.)

40. “Jack Can­non arranged the beat­ing and killings of stu­dent lead­ers, lib­er­als, left­ists, social­ists, labor union orga­niz­ers, schol­ars, jour­nal­ists, and any­one else who got in the way. Can­non worked closely with Machii Hisayuki, Kodama’s Korean lieu­tenant who headed the eth­nic Korean tosei-kai gang of yakuza. Jack Can­non ini­tially worked for the U.S. Army’s Counter-Intelligence Corps, or CIC. His job was to fer­ret out and to mur­der dis­si­dents. A Nisei inter­preter employed by Willoughby’s ATIS, who once had helped Can­non blow open a safe, recalled that the colonel always behaved like ‘a movie style gang­ster.’ Once the Can­non Agency was set up, Jack Can­non became some­thing that would have chilled the blood of most Amer­i­cans. He is thought to have been behind the kid­nap­ping of a promi­nent left-wing writer, Kaji Wataru. Also attrib­uted to him was the tor­ture, dis­mem­ber­ment, and mur­der of Shi­moyama, the pres­i­dent of Japan’s national rail­roads whose body was found scat­tered along the rail­way tracks. When­ever he needed a hand, Can­non called on Machii’s Korean yakuza. He also was sus­pected of arrang­ing plane crashes that took the lives of British and Amer­i­can diplo­mats and mil­i­tary offi­cers who were inves­ti­gat­ing the links between Willoughby and indicted war crim­i­nals like Kodama and Colonel Tsuji Masanobu. When the job was so wet and dirty that it had to be com­pletely divorced from Wash­ing­ton, Willoughby bypassed Can­non and brought in a mur­der squad called KATOH, the acronym of five Japan­ese Army offi­cers who did sur­gi­cal assas­si­na­tions for money.” (Idem.)

41. “To be sure, what makes this even more dis­turb­ing is that Willoughby was judged by U.S. Army con­tem­po­raries to be incom­pe­tent, para­noid, and con­gen­i­tally dri­ven to cover up his mis­judg­ments. As most doc­u­ments relat­ing to Willoughby’s activ­i­ties still are kept hid­den by the U.S. Gov­ern­ment half a cen­tury later, we may rea­son­ably sup­pose that there is yet more dis­turb­ing infor­ma­tion on his mes­sianic activ­i­ties.” (Idem.)

42. Admin­is­tered by civil­ian, rather than mil­i­tary, per­son­nel the Keenan fund was used to bribe wit­nesses in order to exon­er­ate those war crim­i­nals and insti­tu­tions deemed essen­tial for the real­iza­tion of U.S. anti-communist pol­icy in the post­war period. “The Keenan Fund, by con­trast, was con­trolled by a civil­ian: Joseph B. Keenan, another MacArthur inti­mate who was chief pros­e­cu­tor in the Tokyo war crimes tri­als. Pre­vi­ously, Keenan had been chief of the U.S. Jus­tice Department’s crim­i­nal divi­sion, where he acquired a rep­u­ta­tion for ‘gang-busting’ and heavy booz­ing. His appoint­ment as chief war crimes pros­e­cu­tor in Tokyo was crit­i­cized because he was not con­sid­ered a good enough lawyer, knew noth­ing of Asia, and was a shame­less head­line seeker. Many thought Keenan got the job because Pres­i­dent Tru­man dis­liked him and wanted him out of Wash­ing­ton.” (Idem.)

43. Keenan (for whom the fund was named) was assisted by Gen­eral Tanaka Takayoshi, a promi­nent Japan­ese war crim­i­nal. “In Japan, Keenan’s per­sonal assis­tant was none less than Gen­eral Tanaka Takayoshi, the bull-like tariki ronin who was Gen­eral Doihara’s alter-ego in Manchuria, the cold-blooded manip­u­la­tor of Pu Yi’s young Empress Eliz­a­beth. Tanaka spent the late 1930’s and early 1940’s in Shang­hai with Doi­hara, run­ning covert oper­a­tions. Like Doi­hara, he per­son­ally car­ried out many indi­vid­ual mur­ders. The idea that he was suited to babysit America’s chief war crimes pros­e­cu­tor in post­war Tokyo is black humor at its best.” (Ibid.; p. 112.)

44. “It was com­mon gos­sip among jour­nal­ists in Tokyo (as it had been in Wash­ing­ton) that Keenan had a severe drink­ing prob­lem, and ‘liked the ladies’ exces­sively. Gen­eral Tanaka took charge of Keenan’s date book, accom­pa­nied him to inns and broth­els to carry out these assig­na­tions and, when Keenan passed out, got him safely home.” (Idem.)

45. “Unlike the broad man­dates of the M-Fund and the Yot­suya Fund, the Keenan Fund had a nar­row and spe­cific func­tion. Sim­ply put, it was used to bribe wit­nesses to fal­sify their tes­ti­mony. Unlike the swift pun­ish­ment meted out to Gen­er­als Yamashita and Homma in manila, the War Crimes Tri­bunal in Tokyo dragged on for three years, while a lot of horse-trading took place. The Tri­bunal had been estab­lished to try Gen­eral Tojo and other senior mil­i­tary and civil­ian lead­ers for com­plic­ity in Japan’s cruel aggres­sion. Although the Tri­bunal was labeled an inter­na­tional com­mis­sion, the whole oper­a­tion was car­ried out exclu­sively by MacArthur’s inner cir­cle. In the char­ter estab­lish­ing the Tri­bunal, MacArthur invested him­self with broad pow­ers, and the Tri­bunal was kept under his sole and exclu­sive author­ity. As a final touch, the char­ter (writ­ten by MacArthur and Keenan) stated, ‘the Tri­bunal shall not be bound by tech­ni­cal rules of evi­dence.’” (Idem.)

46. “Accord­ingly, MacArthur’s men were able to con­trol access to the defen­dants, to sub­orn who­ever they wished, and to arrange omis­sions of evi­dence. Money changed hands secretly to assure scape­goats that their fam­i­lies would be cared for. As we doc­u­mented in The Yam­ato Dynasty, the pri­vate papers of MacArthur’s mil­i­tary sec­re­tary Brigadier Gen­eral Bon­ner Fellers reveal that he per­son­ally sub­orned wit­nesses, got them to fal­sify their tes­ti­mony, and made sure that Emperor Hiro­hito was not brought to trial. On Jan­u­ary 25, 1946, MacArthur sent a secret telegram to Army Chief of Staff Dwight Eisen­hower say­ing the ‘inves­ti­ga­tions’ con­ducted by SCAP could not sup­port any crim­i­nal charges against Hiro­hito: ‘No spe­cific and tan­gi­ble evi­dence has been uncov­ered with regard to [the emperor’s] exact activ­i­ties which might con­nect him in vary­ing degree with the polit­i­cal deci­sions of the Japan­ese Empire dur­ing the last decade . . .’ Doc­u­ments we found in the MacArthur Memo­r­ial in Nor­folk, Vir­ginia, show that MacArthur and Bon­ner Fellers con­spired with for­mer pres­i­dent Her­bert Hoover to guar­an­tee that Hiro­hito would escape pun­ish­ment of any kind, and that Gen­eral Tojo would fal­sify his tes­ti­mony to take all respon­si­bil­ity for the attack on Pearl Har­bor. Inter­me­di­aries, includ­ing Admi­ral Yonai, were paid large sums from the Keenan Fund to nego­ti­ate with Tojo and guar­an­tee his per­jury, In his papers, Gen­eral Fellers proudly describes his meet­ings with Yonai to set up the false tes­ti­mony. (Dur­ing the war, inci­den­tally, Admi­ral Yonai was the imme­di­ate supe­rior of Rear Admi­ral Kodama.)” (Idem.)

47. ” A num­ber of key wit­nesses who resisted sub­or­na­tion died vio­lently, or under sus­pi­cious cir­cum­stances. Fellers and MacArthur intensely dis­liked Hirohito’s close advi­sor and one-time prime min­is­ter, Prince Konoe, one of the few states­men who had tried to talk Hiro­hito into seek­ing an early peace. Fellers denounced the prince as ‘a rat who’s quite pre­pared to sell any­one to save him­self [and who had even called] his mas­ter the emperor ‘the major war crim­i­nal.” Konoe was black­balled by MacArthur’s men and hounded to despair by a cam­paign of back­bit­ing, dis­in­for­ma­tion, and innu­endo. For exam­ple, he was falsely informed that his name had been added to the list of war crim­i­nals, and that he faced immi­nent arrest, impris­on­ment, and hang­ing. On Decem­ber 16, 1945, Prince Konoe was found dead in his home under sus­pi­cious cir­cum­stances. Most sources say he would not sub­mit to the indig­nity of trial, and the offi­cial rul­ing was sui­cide, but it appears to have been one of the first post­war episodes of ‘assisted sui­cide.’ Schol­ars Meirion and Susie Har­ries, among oth­ers, believe that Prince Konoe was mur­dered because he rep­re­sented a dan­ger to the plans of MacArthur to exon­er­ate Hiro­hito. Other cru­cial wit­nesses who died con­ve­niently before the tri­als began were two of Prince Asaka’s staff who had first-hand knowl­edge of Asaka’s instruc­tions for the Rape of Nanking. At the end of 1945, both these aides sud­denly devel­oped ‘heart trou­ble’ and died.” (Ibid.; pp. 112–113).

48. “Bribes from the Keenan Fund also were used to pre­vent tes­ti­mony about Japan’s bio­log­i­cal and chem­i­cal war­fare pro­gram, and the vast scale of loot­ing car­ried out by the impe­r­ial family’s Golden Lily oper­a­tion. We now know that the U.S. gov­ern­ment and other Allied gov­ern­ments brow­beat POW’s when they were lib­er­ated from Japan­ese slave labor camps. They were bul­lied into sign­ing secrecy oaths before they were allowed to go home, forced to swear that they would not reveal any­thing they knew about war loot­ing or about the chem­i­cal and bio­log­i­cal weapons test­ing of Unit 731. Even men who had been vic­tims of Japan­ese med­ical exper­i­ments were forced to take this oath. At the time, they were told it was their patri­otic duty to remain silent. Today they are real­iz­ing that they were vic­tim­ized by their own gov­ern­ments, which were less inter­ested in jus­tice than in stay­ing in power, and prepar­ing for the com­ing Cold War.” (Ibid.; p. 113.)

49. Yet another of these clan­des­tine funds that derived from the Golden Lily loot was the enor­mous Showa Trust, admin­is­tered by Emperor Hiro­hito him­self and set up with the assis­tance of Gen­eral Dou­glas MacArthur. In the 1980’s Fer­di­nand and Imelda Mar­cos attempted to black­mail the Japan­ese and Amer­i­can gov­ern­ments in con­nec­tion with the Showa Trust. They wanted a piece of the action and, as we will see, this led to their ouster later in the decade. “In the early 1980’s, there was another bizarre devel­op­ment, when Fer­di­nand and Imelda learned of an extra­or­di­nary secret account set up with Golden Lily plun­der after the Pacific War. This was the billion-dollar gold bul­lion trust at Sanwa Bank in Osaka, set up in the names of Gen­eral MacArthur and Emperor Hiro­hito, men­tioned in Chap­ter Nine. Japan­ese call it the MacArthur Fund, while Amer­i­cans call it the Showa Trust, using the name of Hirohito’s reign period. Sanwa Bank is one of Japan’s old­est, and Hiro­hito owned a large chunk of its stock from before World War II. The trust appears to have been set up by Robert B. Ander­son shortly after he toured the Golden Lily trea­sure sites in the Philip­pines with MacArthur and Lans­dale. Although MacArthur’s name is iden­ti­fied with it, it does not appear to have been intended to ben­e­fit MacArthur, at least not directly.” (Ibid.; p. 194.)

50. “As for Hiro­hito, accord­ing to jour­nal­ist Paul Man­ning who had access to SCAP records dur­ing an early stage of the U.S. Occu­pa­tion, the emperor had $1-billion in gold and cur­ren­cies hid­den in over­seas accounts since before the war. The emperor was pulling in $50-million a year in inter­est from over­seas invest­ments dur­ing the U.S. occu­pa­tion, and SCAP finan­cial advi­sors were aware of these income-producing assets. Sig­nif­i­cantly, Sanwa bank was one of three Japan­ese banks left untouched by Gen­eral Marquat’s Eco­nomic and Sci­en­tific Sec­tion of SCAP. The other two were Toki Bank and Dai-Ichi Kangyo Bank, involved in the Tanaka Club dis­burse­ments grow­ing out of the M-Fund. Today, Sanwa Bank adver­tises its world­wide bank­ing oper­a­tions with the slo­gan ‘We’ve come a long way.’ Indeed.” (Idem.)

51. “Fer­di­nand and Imelda learned of the Showa Trust at Sanwa Bank while comb­ing through Santy’s papers after his death. Accord­ing to doc­u­ments we repro­duce, by 1981 the Showa Trust was gen­er­at­ing over $300-million in inter­est every quar­ter, or over one bil­lion dol­lars of inter­est annu­ally. As one of the bank’s own­ers, the emperor was doubt­less get­ting a favor­able rate of inter­est. (These doc­u­ments were found in Marcos’s pri­vate safe in Mala­canang Palace after he was removed from power, and con­fis­cated by the Philip­pine gov­ern­ment.)” (Idem.)

52. “The Mar­coses imag­ined that if they played their cards right, they could gain access to the Showa Trust, or at least divert some of its inter­est pay­ments in their direc­tion. It would be acutely embar­rass­ing to Tokyo and to Wash­ing­ton if news of the joint account leaked, for sev­eral rea­sons. First, Tokyo still main­tained the pre­tense that Hiro­hito was so impov­er­ished at war’s end that the diet had to vote him an annual salary of $22,000 to keep him afloat. Sec­ond, Japan’s LDP was at that moment wal­low­ing in yet another great scan­dal involv­ing Tanaka’s bribe-taking and since 1945 would require fancy foot­work, given repeated dec­la­ra­tions that Japan had been flat broke. . . .” (Ibid.; pp. 194–195.)

53. The Mar­coses had recov­ered many of the Golden Lily trea­sure sites in the Philip­pines and that gold was the source of their enor­mous per­sonal wealth. In yet another episode in which the “black gold” of Golden Lily played an impor­tant role in post­war eco­nomic maneu­ver­ing, the Mar­coses failed to coop­er­ate with the Rea­gan administration’s plan to uti­lize Mar­cos Golden Lily gold to help back its “Rain­bow Dol­lars” plan. “Tokyo prob­a­bly com­plained to Wash­ing­ton about this threat, and it prob­a­bly con­tributed to the down­fall of the Mar­coses soon after­ward. But the main rea­son Wash­ing­ton finally gave up on Mar­cos was the fail­ure of Reagan’s Rain­bow Dol­lars. Pres­i­dent Rea­gan declared at the begin­ning of his admin­is­tra­tion that he would restore the gold stan­dard, aban­doned by Nixon in 1971, and intro­duce a new gold-backed cur­rency called Rain­bow Dol­lars. In the decade since Nixon’s action, the United States had expe­ri­enced peri­ods of rag­ing infla­tion, reces­sion, and killing inter­est rates. Reagan’s rem­edy ws to go back on the gold stan­dard. Trea­sury Sec­re­tary Don­ald Regan said this would bring about a ‘roar­ing boom.’” (Ibid.; pp. 195–196.)

54. “So many dol­lar ban­knotes were in cir­cu­la­tion that if they sud­denly became con­vert­ible to gold, as was the case before 1933, Wash­ing­ton could be swamped with demands for bul­lion. The solu­tion was a two-tier sys­tem. Rain­bow Dol­lars would replace green­backs grad­u­ally, but ordi­nary peo­ple could not walk in and exchange them for gold. There would be spe­cial issues of Rain­bow Dol­lars, con­vert­ible to gold when held by cen­tral banks.” (Ibid.; p. 196.)

55. “To make this work, Amer­ica needed a large stock of gold, enough to manip­u­late gold prices. If the price fell too low, Wash­ing­ton would buy gold to keep cur­rency val­ues sta­ble. If the price rose too high, and cen­tral banks demanded bul­lion from Wash­ing­ton, the gov­ern­ment would release bul­lion into the mar­ket, depress­ing the price. This was Reagan’s essen­tial plan. The change to Rain­bow Dol­lars also would mean that peo­ple hoard­ing illicit cash, such as heroin and cocaine druglo­rds, would have to exchange their old cur­rency for new, so money would come out of hid­ing. The result could help reduce the fed­eral deficit.” (Idem.)

56. “Pres­i­dent Rea­gan pri­vately asked Fer­di­nand to lend part of his hoard of black gold to back Rain­bow dol­lars. As usual, he could charge a com­mis­sion for lend­ing his gold to Rea­gan. Unfor­tu­nately for Mar­cos, he demanded a higher com­mis­sion than the White House thought fair. Accord­ing to our sources, includ­ing one who was on the White House staff at the time, Rea­gan was dis­mayed that his old friend had let him down.” (Idem.)

57. In com­bi­na­tion with Mar­cos’ attempts to black­mail the Japan­ese over the Showa Trust, his recal­ci­trance over the Rain­bow Dol­lars project led to his ouster. “Given the con­cur­rent attempt to black mail Tokyo over the Showa Trust, Reagan’s advisors—particularly Casey—argued that Mar­cos had gone too far. The time had come to depose him, and in the process divest him of the mass of bul­lion he still had salted away. Casey swung into action. In the months that fol­lowed, Peo­ple Power took to the streets of Manila, mobs demand­ing that Mar­cos step down.” (Idem.)

58. “As pop­u­lar clamor increased in the streets, Casey is said to have flown to Manila with Trea­sury Sec­re­tary Regan, CIA econ­o­mist Pro­fes­sor Frank Hig­don, and attor­ney Lawrence Krea­gar. The pur­pose of the meet­ing, accord­ing to a Mar­cos aide, was to con­vince Fer­di­nand to turn over 73,000 met­ric tons of gold. Casey and Regan were giv­ing Mar­cos a last chance. Regan report­edly told Mar­cos that he must sign over the gold in return for 80 per­cent of the value in U.S. debt instru­ments, 20 per­cent in cash. Sens­ing that the end ws nigh, Mar­cos wanted 80 per­cent in cash, only 20 per­cent in debt instru­ments. When hag­gling proved fruit­less, Pro­fes­sor Hig­don is said to have told Mar­cos he would be out of power ‘in two weeks’. Indeed, weeks later Mar­cos was in Hawaii, effec­tively under house arrest.” (Idem.)

59. The pro­gram con­cludes with a chill­ing look at the death threats and intim­i­da­tion that the authors of Gold War­riors received over the pub­li­ca­tion of this and other books. “Many peo­ple told us this book was his­tor­i­cally impor­tant and must be published—then warned us that if it were pub­lished, we would be mur­dered. An Aus­tralian econ­o­mist who read it said, ’ I hope they let you live.’ He did not have to explain who ‘they’ were.” (Ibid.; p. X.)

60. The pro­gram relates the ret­ri­bu­tion vis­ited on whistle-blowers who dis­closed the gold belong­ing to Holo­caust vic­tims that was left in Swiss banks. Note that Carla del Ponte, who charged Jean Ziegler with trea­son, is the lawyer for Bank Al Taqwa’s Youssef Nada. “Japan’s loot­ing of Asia, and the hid­ing of this war-gold in Amer­i­can banks, is closely linked to the issue of Holo­caust gold hid­den in Swiss banks. Reveal­ing the secrets of either is a dan­ger­ous busi­ness. Jean Ziegler, a Swiss pro­fes­sor and par­lia­men­tar­ian, did much to expose five decades of offi­cial amne­sia in his book The Swiss, the Gold and the Dead. After pub­lish­ing it and tes­ti­fy­ing in 1998 before the U.S. Sen­ate Bank­ing Com­mit­tee about Jew­ish assets in Swiss banks, he was charged with ‘trea­son’ by Swiss Fed­eral Pros­e­cu­tor Carla del Ponte. The charge was brought by twenty-one financiers, com­mer­cial lawyers, and politi­cians of the far right, many of them major stock­hold­ers in large Swiss banks. They accused Ziegler of being an accom­plice of Jew­ish orga­ni­za­tions who ‘extorted’ vast sums of money from Switzer­land.” (Idem.)

61. “Ziegler is only one of many who have been per­se­cuted for putting ethics before greed. Christophe Meili, a Union Banque Suisse (UBS) secu­rity guard, was threat­ened with mur­der and the kid­nap­ping of his wife and chil­dren after he tes­ti­fied before a U.S. Sen­ate com­mit­tee about doc­u­ments he res­cued from UBS shred­ders. He and his fam­ily were given asy­lum in Amer­ica.” (Idem.)

62. The Sea­graves relate the threats and harass­ment they received over the author­ship of some of their pre­vi­ous books. “We have been threat­ened with mur­der before. When we pub­lished The Soong Dynasty we were warned by a senior CIA offi­cial that a hit team was being assem­bled in Tai­wan to come mur­der us. He said, ‘I would take this very seri­ously, if I were you.’ We van­ished for a year to an island off the coast of British Colum­bia. While we were gone, a Tai­wan hit team arrived in San Fran­cisco and shot dead the Chinese-American jour­nal­ist Henry Liu.” (Idem.)

63. “When we pub­lished The Mar­cos Dynasty we expected trou­ble from the Mar­cos fam­ily and its cronies, but instead we were harassed by Wash­ing­ton. Oth­ers had inves­ti­gated Mar­cos, but we were the first to show how the U.S. Gov­ern­ment was secretly involved with Mar­cos gold deals. We came under attack from the U.S. Trea­sury Depart­ment and its Inter­nal Rev­enue Ser­vice, whose agents made threat­en­ing mid­night phone calls to our elderly par­ents. Arriv­ing in New York for an author tour, one of us was inter­cepted at JFK air­port, pass­port seized, and held incom­mu­ni­cado for three hours. Even­tu­ally the pass­port was returned, with­out a word of expla­na­tion. When we ran Free­dom of Infor­ma­tion queries to see what was behind it, we were grudg­ingly sent a copy of a telex mes­sage, on which every word was blacked out, includ­ing the date. The jus­ti­fi­ca­tion given for this cen­sor­ship was the need to pro­tect gov­ern­ment sources, which are above the law.” (Ibid.; pp. X, XI.)

64. “Dur­ing one harass­ing phone call from a U.S. Trea­sury agent, he said he was sit­ting in his office watch­ing an inter­view we had done for a Japan­ese TV network—an inter­view broad­cast only in Japan­ese, which we had never seen. After pub­lish­ing The Yam­ato Dynasty, which briefly men­tioned the dis­cov­ery that is the basis for Gold War­riors, our phones and email were tapped. We know this because when one of us was in a Euro­pean clinic briefly for a med­ical pro­ce­dure, the head nurse reported that ‘some­one pos­ing as your Amer­i­can doc­tor’ had been on the phone ask­ing ques­tions.” (Ibid.; p. XI.)

65. “When a brief extract of this book was pub­lished in the South China Morn­ing Post in August 2001, sev­eral phone calls from the edi­tors were cut off sud­denly. Emails from the news­pa­per took 72 hours to reach us, while copies sent to an asso­ciate nearby arrived instantly. In recent months, we began to receive veiled death threats.” (Idem.)

66. “What have we done to pro­voke mur­der? To bor­row a phrase from Jean Ziegler, we are ‘com­bat­ing offi­cial amne­sia.’ We live in dan­ger­ous times, like Ger­many in the 1930’s when any­one who makes incon­ve­nient dis­clo­sures about hid­den assets can be branded a ‘ter­ror­ist’ or a ‘trai­tor. . . .’” (Idem.)

67. “Despite the best efforts of the Amer­i­can and Japan­ese gov­ern­ments to destroy, with­hold, or lose doc­u­men­ta­tion related to Golden Lily, we have accu­mu­lated thou­sands of doc­u­ments, con­ducted thou­sands of hours of inter­views, and we make all of these avail­able to read­ers of this book on two com­pact discs, avail­able from our web­site www.bowstring.net so they can make up their own minds. We encour­age oth­ers with knowl­edge of these events to come for­ward. When the top is cor­rupt, the truth will not come from the top. It will emerge in bits and pieces from peo­ple like Jean Ziegler and Christophe Meili, who decided they had to ‘do some­thing.’ As a pre­cau­tion, should any­thing odd hap­pen, we have arranged for this book and all its doc­u­men­ta­tion to be put up on the Inter­net at a num­ber of sites. If we are mur­dered, read­ers will have no dif­fi­culty fig­ur­ing out who ‘they’ are.” (Idem.)

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