Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #446 Funds and Games

Record­ed Feb­ru­ary 14, 2004
MP3 Side 1 | Side 2

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.)

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 as 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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