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Why should China rescue the USA?

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Many Chinese are now asking: “Why should China rescue the US economy when America secretly recovered a lot of what Japan stole during WW2, and blocked victims from getting it back?”

Treasure stolen from China and the rest of Asia by the Japanese during World War Two (the Pacific War) was secretly stolen a second time at the end of the war by the government of the United States. Some of this war loot was recovered by the US Army inside Japan during the US occupation.

Other huge quantities of Japanese war loot were recovered by the US from the Philippines, directly during the 1945-1951 period, and later in collusion with key Japanese players in joint recoveries from the Philippines. In the first instance, 1945-1951, the US kept its recoveries secret, and blocked future legal action by victims through a deceitfully contrived 1951 Peace Treaty with Japan. The Treaty, prepared by Secretary of State John Foster Dulles, enshrined certain false assertions, which other Allied nations were bullied into accepting. The recovered war loot, being secret, never was deposited

at Fort Knox or any other government repository for the benefit of the American people, but was used to fund covert operations during the Cold War, including the acquisition of global media, or was siphoned off through private financial channels.

In the first two weeks following the surrender, before the Allies set foot in Japan, the government in Tokyo gushed money in all directions. Records discovered by Japanese journalists in the 1970s revealed that their government gave nearly 300-billion yen in war contracts, materials and stockpiles to various zaibatsu conglomerates just before the Americans arrived. So these conglomerates realized 30 per cent of their entire war profits in the first four months after the surrender.

Once US forces were in Japan, and it became evident to Japanese that the Americans were not aware of what was going on under their noses, the gusher of government money continued. Historian John Dower says this represented something in the neighborhood of 300-million tons of goods -- diamonds, gold, steel, rubber, chemicals, oil, salt, drugs and titanium, mostly looted from conquered countries. The value of these goods then was $20- billion ($200-billion in present values). The Allies turned over to the Japanese government 100-billion yen in new humanitarian stockpiles — clothing, food and medicine for distribution to the civilian population.

Instead, these goods vanished into the black market where fortunes were being made by Japanese gangsters with close ties to government leaders. Stockpiles of opium, heroin and morphine were among “medicines” that disappeared.

Strangely, nowhere in the official records of the U.S. occupation so far declassified is there any tally of Japan’s 1945 national gold reserves, plundered art and cultural objects, looted religious artifacts, personal jewelry and heirlooms, no tally of what was stolen from safe deposit boxes in twelve countries, or from family burial vaults and imperial tombs across Asia. If all this hidden information were to be made public, it would make a mockery of the Peace Treaty and of the secret negotiations conducted by John Foster Dulles.

During those negotiations, Dulles aggressively manipulated the Allies, including Great Britain. In Britain’s first draft proposal, Clause 39 read “Japan shall pay reparation [to GB] in the amount of £60-million in monetary gold over a period of three years.” (Monetary gold is gold that is kept in central banks for use by national governments to protect their currency, or to buy foreign goods.) Clause 53 of Great Britain’s draft proposed that “Japan shall restore to Governments of the United Nations concerned all monetary gold looted or wrongfully removed.” This sum was not disclosed, but the statement itself affirms that Japan did loot large quantities of gold from all the allies, not just from Britain, and should be made to return this looted treasure. Note that neither clause 39 nor clause 53 mentioned anything about “non-monetary gold” -- privately held gold taken from museums, religious orders and private citizens of those countries, including jewelry,

gold ingots, platinum and silver, artworks, and religious objects.

The British Treasury was far from happy with Washington’s assertion that Japan’s cupboard was absolutely bare. It took the following position regarding gold: “We regard the payment of Japan’s ‘gold pot’ as reparation as one of the points on which it is essential for us to be firm”. (1) As this and other statements of the British government show, there was no doubt whatever that Japan had plundered a great deal of gold, which America was then recovering both in Japan and from hidden caches in the Philippines.

The following month, April 1951, the British Foreign Office asked the prime minister for “authority to modify our attitude so that we can agree with the U.S. that the gold can remain in Japan. It is now quite clear that even if we could get the gold away from the Japanese (and agreement on this is by no means certain) there is for practical purposes no possibility of our

obtaining a share of it.” (2) In other words, the British Treasury’s original firm position was caving in, under American pressure. The official British record goes on to say that the view of the United States and SCAP (General MacArthur’s “Supreme Command” in Tokyo) was that the “gold should be left in Japan as an addition to foreign exchange resources in order to assist her general [economic] stabilization. ” (3) In the end, Britain capitulated and went even further: “We have agreed that gold should not be mentioned in the Treaty.” (4) Other Allies followed suit after similarly having their feet held to the fire.

In its final form, the 1951 Peace Treaty tried to block any future efforts by private individuals to claim reparations. According to the British Foreign Office archives: “Canadian authorities had themselves felt that provision should have been made in the Treaty for compensation to civilian internees and indeed raised the question in Washington ... but on meeting resistance did not press the point.” (5) In conclusion, the Foreign Office noted: “If Article 16 was widened to include civilians, the amount of claimants would be so far increased (by the inclusion of Asiatic claimants) that the amount available to each would be derisory.” (6) It bears repeating that Article 14 of the Treaty reads: (7) “It is recognized that Japan should pay reparations to the Allied Powers for the damage and suffering caused by it during the war.

Nevertheless it is also recognized that the resources of Japan are not presently sufficient“. (Our italics: the cupboard was “bare”.) The Treaty stated: “Except as otherwise provided in the present Treaty, the Allied Powers waive all reparations claims of the Allied Powers, other claims of the Allied Powers and their nationals arising out of any actions taken by Japan and its nationals in the course of the prosecution of the war, and claims of the Allied Powers for direct military costs of occupation.”

So, with the sweep of a pen, the United States unfairly/deceitfully shut the door on the claims of looted countries, looted banks, looted museums, looted private citizens, of comfort women, Asian slave labor, and Allied prisoners of war. (8)

While it is clear that the 1951 Peace Treaty is invalid because it is based on lies and deceptions contrived during the occupation, every American and British government since 1945 has vigorously blocked all efforts to right the wrongs done to Japan’s victims. To this day the U.S. State Department, the U.S. Justice Department, and the Japanese Foreign Ministry invoke the 1951 Peace Treaty to block any attempt by victims to sue for the compensation so long denied them.

The 1951 peace treaty was skewed by deceits, so thousands of POWs and civilians who were forced to perform slave labor for Japanese corporations received no compensation for their suffering. To shield Japan from demands for war reparations, John Foster Dulles met privately with three Japanese to work out the Treaty terms. One of the three, Miyazawa Kiichi, later served as Japan’s prime minister and repeatedly as its minister of finance, whose daughter was married to a senior US State Department official and CIA agent. According to Article 14 of the Treaty, “It is recognized that Japan should pay reparations to the Allied Powers for the damage and suffering caused by it during the war. Nevertheless it is also recognized that the resources of Japan are not presently sufficient.” To reinforce the claim that Japan was broke, Article 14 stated that “the Allied Powers waive all reparations claims of the Allied Powers and their nationals arising out of any actions taken by Japan.” By letting themselves be bullied into signing the Treaty, Allied countries concurred that Japan’s plunder had vanished down a rabbit hole, and all Japan’s victims were out of luck.

Washington’s role is all too clear in the way the Peace Treaty was bullied through. Professor John Price sums it up: “the U.S. monopolized and abused the treaty preparations.” (9)

As we now know, Japan was not bankrupted by the war. By 1951, six years after the war and while Germany was still staggering, Japan’s economy was stronger than it had been during the best business years before the war. Carlos Romulo, head of the Philippine delegation to the peace conference, “demolished the U.S. argument that Japan lacked the ability to pay for economic reasons.” (10) Japan’s industrial activity was 32 percent above pre-war levels, its fiscal position showed a surplus, and its balance of trade had moved into the black. In discussions between U.S. monetary experts and Japan’s Finance Minister Ikeda Hayato just before the peace conference, he admitted to a budget surplus of over 100-billion yen and planned to use 40-billion of it as a tax-rebate to Japanese taxpayers.

The governor of the Bank of Japan pleaded with U.S. authorities to take custody of US $200-million dollars worth of gold holdings because he feared “that the Filipinos might try to attach the gold as reparations.” (11)

John Foster Dulles allowed other Allied nations such as the Netherlands to secretly acquire special conditions on reparations. These agreements were considered so sensitive that Washington withheld these documents as “top secret” for the next 50 years. The Dutch gambit only came to light in 2000. The problem with the 1951 Treaty terms, as the Dutch

government expressed it, was that “it would appear the Dutch Government was, by the act of signing..., giving up without due process the rights held by Dutch subjects.” Dulles grudgingly agreed to give Dutch citizens the right to

make separate claims against the Japanese government. Speaking of this secret deal with the Dutch government, a U.S. Senator remarked “Dulles and the others ...realized article 14 (ii) was wrong. Then in an effort to cover it all

up to satisfy the Dutch, he buried it. He classified it and kept it classified for 50 years to keep these [victims] from having the right to go to court. That is what he did. That is what the U.S. Government did. That is wrong, and we need to correct it.” (12) Then he added: “Our own government would not give these documents to our own soldiers. What an outrage that is.”

Eventually, the Dutch government did secretly negotiate reparations from Japan that resulted in Tokyo paying $10-million in 1956. 13 But $10-million was only a drop in the bucket. In 1952, the U.S. Senate Foreign Relations Committee admitted that claims of Asian nations alone could total “as much as $100-billion” (1952 values). (14)

This is exactly the amount of gold one Japanese imperial prince estimated was hidden by Golden Lily in the Philippines. If all this were not enough, the chain of evidence was willfully destroyed by the American and Japanese governments. Before the Occupation began in 1945, Japan burnt great quantities of war records and documents. Skies all over the islands were filled with smoke. In 1946, millions of pages of Japanese government and military records were transferred to Herbert

Hoover -- which is peculiar as Hoover was at the time a private citizen, not a government official. He was, as we revealed in The Yamato Dynasty, a chief mover in whitewashing Emperor Hirohito, shifting all blame for the war to General Tojo, and putting Japan’s war criminals back in power. Hoover shipped these records to the Hoover Institution in California, but half a

century later their location remains a total mystery. Another huge collection of Japanese documents was transferred to the CIA in the late 1940s. After the CIA had removed “sensitive” documents, the rest were turned over to the National Archives. The State Department then decided, amazingly, to return them all to Japan. Despite protests from scholars, only 10 percent were microfilmed first, and these doubtless were laundered to erase evidence of looting, bribery and collusion.

Of the captured Japanese documents that were turned over to the National Archives for study by researchers, there were puzzling gaps in the records. In 1950, James William Morley, a professor of history at Union College, was disappointed and surprised to find that “Large as the collection is, it clearly does not represent all of the records of these ministries and their

predecessors. Very few files are complete; many, no doubt, are entirely missing. Probably some were hidden or destroyed and others retained by interested occupation and other United States government authorities for current use. A few of the obvious deficiencies are the almost complete absence of the official Army General Staff Headquarters histories of Japan's major expeditions and war, and the startling paucity of materials relating to the Manchurian Incident, the China Incident, and the Great East Asia War."

Judging from the documents Morley found at the National Archives, it would be hard to prove that there ever had been a war. Since Professor Morley completed his survey, the bulk of the records kept in other agencies also were returned to the Japanese Government. The government of Japan was even given the privilege of requesting specific documents from the State Department, including “evidence collected" for war crimes trials. (Even today, as the process of declassification of

Japanese war crimes records is taking place in Washington, the State Department was about to grant a request from the government of Japan to allow Japanese officials to review these documents before they will be released.) Only about 5% of the captured documents were copied or retained, the other 95% were simply returned to Tokyo, where today they remain under lock and key. American officials in charge of the record transfers to Japan "forgot" to make specific provisions for any future access to these papers.

(1) Britain’s Ministry of the Treasury’s remarks about Japan’s “gold” are from Foreign Office Records 371/92533 p. 118.

Public Records Office.

(2) “authority to modify our attitude” is from from British Foreign Office Records 371/92540 p. 11, April. Public Records


(3) $200 million in gold in Japan is from Britain’s first treaty draft, clause 53 is quoted from Foreign Office Records

371/92545 p. 66, reporting on a meeting in Washington D.C. which took place on April 26, 1951. Public Records


(4) ”Gold should not be mentioned in the Treaty” is quoted from Foreign Office Record 371/92555 p. 115.

(5) Canadian efforts to provide for compensation to civilians and the way in which she was thwarted by the United States

government is from the Foreign Office 371/92591, p. 48 27 August 1951. Public Records Office.

(6) British Foreign office discussions about extending Article 16 benefits to include civilians is found in Foreign Office 371/92591 p. 4. Public Records Office. See also the ABCIFER website abcifer.com/ww2/newpage1.

(7) The text of the San Francisco Treaty can be found online.

(8) 700,000 victims still alive. See Henk Zeeman “Don’t Forget the Japanese” in Sunday Start Times, June 16, 1996. Available at elibrary.com

(9) “Monopolized and abused” is from John Price “A Just Peace? The 1951 San Francisco Peace Treaty in Historical

Perspective”. JPRI Working Paper No. 78: June 2001. Available at the JPRI website.

(10) “Romulo demolished” see John Price “A Just Peace?”

(11)Japan’s economic status in 1951, Romulo’s role, conversations of Finance minister Ikeda, the 100-billion yen budget

surplus and the $200-million in gold in the Bank of Japan. Drawn from John Price, “A Just Peace.”

(12) Senator Smith’s remarks are included in the Congressional Record, September 10, 2001 pages S9209-S9246. This

contains the text of the Senate debate on the issue and is available online from the U.S. Congress website.

(13) The signatories to the Treaty waived “all reparations claims”, but recently declassified documents show that Dulles

“in negotiating this clause, also negotiated a way out of it.” Because of the reparations clause, Korea, China and the

Soviet Union refused to sign the agreement and for a time it looked like the Netherlands was also going to refuse.

Dulles was frightened that if the Netherlands refused that this might encourage the United Kingdom, Australia and New

Zealand to follow suit. Just hours before the Treaty was signed, Dulles arranged a confidential exchange of letters

between Dutch foreign minister Dirk Stikker and Prime Minister Yoshida Shigeru of Japan. In these letters, the

government of Japan stated that it did “not consider that the Government of the Netherlands by signing the Treaty has

itself expropriated the private claims of its nationals so that, as a consequence thereof, after the Treaty comes into force

these claims would be non-existent.” The revelations about Dulles providing for a secret clause to allow for reparations

agreements. See Steven C.Clemons, “Recovering Japan’s Wartime Past and Ours,” THE NEW YORK TIMES, 10

September 2001. The article is also available at www.asiamedia.ucla.edu. It is also the source for the quote from the

Stikker Yoshida letters.

(14) “As much as $100-billion” is from the U.S. Senate Committee on Foreign Relations, report of February 14, 1951 as

quoted in Uldis Kruze, San Francisco and the 1951 US-Japan Treaty Conference, San Francisco: University of San

Francisco, 2001. The pamphlet prepared for the 50th anniversary celebration was regarded by many people as another

statement by apologists for Japan’s actions during World War Two. Ironically, Mr. Kruze includes many quotes from

contemporary sources that support our contention of Japan’s looting of Asia and he even goes so far as to say the “peace

treaty was kind to Japan.” The pamphlet also includes a photograph of Dulles at the Asian Art Museum in San

Francisco, where an exhibit of art treasures had been assembled for the peace treaty signing. The exhibit was prepared

by Dr. Jiro Harada, head of the former Imperial Household Museum. Dr. Harada had presided over the imperial

collections since the 1920s. In 1937, only a few months before the Rape of Nanking, the Imperial Household Museum

was inaugurated. Here, the priceless mansucripts, art and religious treasure of Asia, looted by the Japanese, were stored

and exhibited as part of the imperial treasures. At the end of the war, the Occupation authorities hastily renamed it the

National Museum, but Dr. Harada continued as its chief. Today, Korea and many other Asian countries continue to

petition the government of Japan for the return of art works looted from their citizens, religious organizations and

private collections.

Edited by Sterling Seagrave
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In 1946, Hirohito (having been quietly exonerated himself) was allowed by Washington to privately exonerate all key Japanese officials from any risk of trial for war crimes, with the exception of a few “show trials” conducted by MacArthur’s military tribunals, placing all blame on Tojo, who was hanged.

At the same time, MacArthur acted to end all other US war crimes investigations throughout Asia-Pacific; by mid-1947 the US was secretly urging all Allied governments to stop their own tribunals and investigations.

The British government complied, issuing instructions that “no further trials of war criminals should be started after 31 August 1948.”

Secret communications from the foreign ministries in Ottawa, London, The Hague, Canberra, Auckland, reveal the extent to which Washington was able to abort these investigations and criminal proceedings.

The excuse given for closing them down was strategic urgency following the USSR’s successful test of its own atom bomb in the spring of 1946, and the increasing likelihood of a communist victory in the Chinese civil war. But the Soviet atom bomb test was hardly a surprise, nor was a victory by Mao in China. Both had been expected for a long time. So these justifications were falsely exaggerated to hide other reasons for Washington reversing itself -- to shield Japan from being held accountable for its crimes.

Japan was not only the most industrialized nation in East Asia but also the most anti-communist, therefore it could be America’s bastion against the two largest communist states. It was inevitable that this would become an obsession of rightwing Americans, after the death of the progressive President Roosevelt brought the resurgence of GOP reactionaries. But that, too, was long expected.

Where war crimes investigators persisted, General Charles Willoughby, MacArthur's chief of counter-intelligence, used blunt instruments. His hand is visible in a number of mysterious deaths among the investigators.

In Hong Kong, two war crimes investigators, Colonel Cyril Wild and the civilian prosecutor Rex Davies, died when their plane exploded as it reached altitude after takeoff. Curiously the official crash investigation records contain no condition report of the engines. A similar aircraft explosion at altitude near Guam killed George Atcheson, a US political advisor to

MacArthur who opposed the sharp swerve to the right. These explosions in midair had all the hallmarks of the OSS altitude-detonation bombs also used in 1946 to eliminate KMT Secret Police Chief Dai Li, an adversary of OSS chief “Wild Bill” Donovan.

In Singapore, Britain’s Colonel H.E.R. Smith was about to start hearings in absentia of the notorious Japanese mass-murderer, Colonel Tsuji Masanobu. Smith had already overseen investigations, trials and successful convictions of more than 200 Japanese war criminals. Colonel Tsuji was at that time living comfortably in Tokyo working for General Willoughby. On the eve of the Tsuji hearings, Smith received a series of death-threats against him and members of his family. He was told by the British Provost Marshal that the threats originated with a group of Japanese terrorists, who had also been used by Willoughby inside Japan. British intelligence was so alarmed, they whisked Smith out of Singapore and gave him a new identity. As “Colonel Craig-Hallam” he lived another 52-years.

In the Dutch East Indies, the Japanese had put thousands of Allied prisoners into woven bamboo “pig-baskets”, loaded on trucks and dumped into rivers to drown, or put on barges and dumped into the ocean. Dutch and Australian investigators gathering dossiers on these war crimes were forced to abandon their work and were silenced.

Another target was Colonel Arvo Thompson, who was “minding” Japan’s Unit 731 scientists, given blanket immunity from prosecution in exchange for turning over their expertise to America's own CBW program.

As he learned more grisly details about what Japan had done with biological weapons during the war in China, Thompson apparently rebelled at the idea of exonerating the “monsters”, and died suddenly under mysterious circumstances. Wu Tien-wien, a scholar who devoted years of his life to the subject of Unit 731, discovered information that Thompson committed “suicide”, but it was not clear whether it was “assisted suicide”. It proved impossible to find any record of his place of burial. A few years later, Thompson's colleague, Frank Olson, a biochemist working for the CIA, was murdered after learning that the US Army was using Japanese anthrax from Unit 731 as a weapon in the Korean War. Three days after handing in his resignation in protest, Olson was dead. What was labeled suicide in his case was subsequently proved during a forty-year long investigation to have been murder. Olson was bludgeoned to death, and his body thrown out a hotel window. The CIA has since admitted to foul play in Olson's death, stopping just shy of accepting responsibility.

Aside from these and other similar cases, the US Army and their British counterparts forced all men returning from Asia-Pacific combat zones to sign statements that they would not reveal anything about Japanese war crimes or atrocities they had suffered or observed. This unscrupulous intervention blocked their involvement in any future lawsuits that might expose Japan’s hiding of war loot in the Philippines or Japan, where Japanese corporations like Mitsubishi used POWs and civilians as slave labor to dig tunnels and vaults.

In short, much darker motives lay behind the whitewash, cover-up, and silencing of ongoing investigations.


It is an inescapable fact that from the beginning of the US occupation of Japan, General MacArthur, President Truman, John Foster Dulles, and others, knew all about the stolen treasure in Japan and the continuing extraordinary wealth of the Japanese elite, despite losing the war.

In an official report on the occupation prepared by MacArthur’s headquarters and published in 1950, there is a startling admission: “One of the spectacular tasks of the occupation dealt with collecting and putting under guard the great hoards of gold, silver, precious stones, foreign postage stamps, engraving plates, and all currency not legal in Japan.

Even though the bulk of this wealth was collected and placed under United States military custody by Japanese officials, undeclared caches of these treasures were known to exist.”

MacArthur’s staff knew, for example, of $2-billion in gold bullion that had been sunk in Tokyo Bay, later recovered. 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. Kodama specialized in looting platinum for his own hoard. As this was too heavy to airlift to Japan, Kodama also helped himself to the finest gems looted by his men, taking large bags of gems to Japan each time he flew back during the war.

After the war, to get out of Sugamo Prison and avoid prosecution for war crimes, Kodama gave over $100-million in US currency to the CIA. He was also, amazingly, put on General Willoughby’s payroll, and remained on the CIA payroll for the rest of his life, among other favors brokering the Lockheed aircraft deal that became a major scandal for Japan’s Liberal Demopcratic Party. Kodama personally financed the creation of the postwar political parties that merged into the Liberal Democratic Party (LDP), strongly backed to this day by Washington.

Both Kodama and his underworld associate Sasakawa Ryiochi, were then involved with the CIA in joint recoveries of Japanese war-loot from the Philippines.


On September 2, 1945, after receiving official notice of Japan’s surrender, General Yamaxxxxa and his staff emerged from their mountain stronghold in the Kiangan Pocket on Luzon, and presented their swords to a group of U.S. Army officers led by Military Police Major A.S. ‘Jack’ Kenworthy, who took them to Bilibad Prison outside Manila. Because of gruesome atrocities committed earlier by Admiral Iwabuchi Kanji’s sailors and marines in the city of Manila (after Yamaxxxxa had ordered them to leave the city unharmed), the general was charged with war crimes. During his trial there was no mention

of war loot. But there was a hidden agenda.

Because it was not possible to torture General Yamaxxxxa physically without this becoming evident to his defense attorneys, members of his staff were tortured instead. His driver, Major Kojima Kashii, was given special attention. Since Yamaxxxxa had arrived from Manchuria in October 1944 to take over the defense of the Philippines, Kojima had driven him everywhere.

In charge of Kojima’s torture was a Filipino-American intelligence officer named Severino Garcia Diaz Santa Romana, a man of many names and personalities, whose friends called him ‘Santy’. He wanted Major Kojima to reveal each place to which he had taken Yamaxxxxa, where bullion and other treasure were hidden.

Supervising Santy was Captain Edward G. Lansdale, later one of America’s best-known Cold Warriors. In September 1945, Lansdale was 37 years old and utterly insignificant, only an advertising agency copywriter who had spent the war in San Francisco writing propaganda for the 0SS. In September 1945, chance entered Lansdale’s life in a big way when President

Truman ordered the OSS to close down. To preserve America’s intelligence assets, and his own personal network, OSS chief Donovan moved personnel to other government or military posts. Captain Lansdale was one of fifty office staff given a chance to transfer to U.S. Army G-2 in the Philippines.

There, Lansdale heard about Santy torturing General Yamaxxxxa’s driver, and joined the torture sessions as an observer and participant.

Early that October, Major Kojima broke down and led Lansdale and Santy to more than a dozen Golden Lily treasure vaults in the mountains north of Manila.


While Santy and his teams set to opening the rest of these vaults, Captain Lansdale flew to Tokyo to brief General MacArthur, then on to Washington to brief President Truman. After discussions with his cabinet, Truman decided to proceed with the recovery, but to keep it a state secret.

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.

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.

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 1990s, Cline continued to be involved in attempts to control Japanese war-gold still in the vaults of Citibank.)

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 50 years (1895-1945) Japan had looted many billions of dollars in treasure from all over Asia. A far longer period than Germany had to loot Europe. Over five 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. What was seen by Anderson and MacArthur was only some of the gold that had not reached Japan after 1943, when the US submarine blockade of the Home Islands became effective. From this it is obvious that what was looted by Japan on the Asian mainland from 1895-1943 had reached Japan and been tucked away there in what the US Army statement called “undeclared caches of these treasures ... known to exist” .

Far from being bankrupted by the war, Japan had been greatly enriched, and -- thanks to Washington’s intervention -- used this treasure to rise like a phoenix from the ashes, while its victims struggled on for decades.

The gold recovered in the Philippines was not put in Fort Knox to benefit American citizens. There has been no audit of Ft. Knox since 1950.

According to Ray Cline and others, between 1945 and 1947 the gold bullion recovered by Santy and Lansdale was discreetly moved by ship to 176 accounts at banks in 42 countries. The gold was trucked to warehouses at the U.S. Navy base in Subic Bay, or the U.S. Air Force base at Clark Field.

Preference went to the U.S. Navy because of the weight of the bullion. Secrecy was vital. If the recovery of a huge mass of stolen gold became known, the market price of gold would plummet, and thousands of people would come forward to claim it, and Washington would be bogged down resolving ownership.

The secrecy surrounding these recoveries was total. Robert Anderson and CIA agent Paul Helliwell traveled all over the planet, setting up these black gold accounts, providing money for political action funds throughout the noncommunist world. 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 “black banks”, set up by Paul Helliwell. Eventually, this led to Anderson being involved in the scandal of BCCI, the Bank of Credit and Commerce International, a Pakistani bank with CIA ties.

No one made better use of the recoveries than Lansdale. For his role in enabling the Black Eagle Trust, Lansdale became the darling of the Dulles brothers and their Georgetown coven, which included key officials in the CIA during the years it was run by Allen Dulles. Writing to the U.S. Ambassador in Manila, Admiral Raymond Spruance, Allen Dulles called Lansdale “our mutual friend”. In the early 1950s, Allen Dulles gave Lansdale $5-million to finance CIA operations against the Huks, rural peasant farmers fighting for land-reform in the Philippines. When he sent Lansdale to Vietnam in 1954, Dulles told Eisenhower he was sending one of his “best men”. In the late 1950s, he was in and out of Tokyo on secret missions with a hand-picked team of Filipino assassins, assassinating leftists, liberals and progressives.

Lansdale was also close to Richard Nixon, and headed efforts to assassinate Cuba’s Fidel Castro. Without exception, Lansdale’s Asian adventures were costly failures. But Washington’s effort to boost the LDP in Japan was a big success.

Long time Tokyo correspondent Robert Whiting described “a secret billion-dollar slush fund … equivalent to nearly 10 percent of Japan’s 1950 GNP. ... The Japanese government also sold [on the blackmarket] great stockpiles of gold, silver and copper …which they had concealed in early 1945 in anticipation of Japan’s defeat.”


After the fraudulent 1951 Japan Peace Treaty was inflicted on Asia, there was a lull of twenty years before President Ferdinand Marcos began making new recoveries of Japanese war loot, working with Kodama and Sasakawa.

Tokyo offered to help Filipinos repair war damage with ‘free’ infrastructure projects, including irrigation systems in odd places, and roads that took unlikely routes through the mountains. Japanese salvage firms offered to remove the hulks cluttering up Manila Bay, and to dredge and restore the battered bay front; in the course of this work they salvaged ships that had been scuttled at the docks with bullion aboard.

Japanese corporations built factories throughout the Philippines, with very deep excavations. In them, Filipino workers on assembly lines put together TVs, tape recorders, computers, refrigerators and air conditioners, which were then shipped to Japan in remarkably heavy crates. According to a CIA source, the Agency knew that gold bullion was being smuggled out of

the Philippines this way, but did not interfere. Instead, the CIA and White House leaned on Marcos to share his part of the gold recoveries, in exchange for cash and US debt instruments.

When he was elected president in 1965, Marcos was approached directly by Japanese underworld fixer Sasakawa Ryoichi, offering to do joint recoveries of war loot. A crony of Kodama, Sasakawa knew the location of a number of major vaults. For a substantial cut, Marcos could grant presidential authorizations. When Marcos balked at turning over all his own

hoard to President Reagan, CIA Director William Casey had Marcos kidnapped and put in house arrest in Hawaii. Marcos died before he could be forced to reveal the locations of his hoard, which had been reburied in six vaults known only to Marcos loyalists.

As part of America’s secret deal with Japan, a billion-dollar gold bullion trust fund was set up at Sanwa Bank in Osaka in behalf of Emperor Hirohito and the imperial family. Sanwa Bank was 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.

According to journalist Paul Manning who had access to SCAP records during an early stage of the U.S. Occupation, the emperor already had $1- billion in gold and currency hidden in overseas accounts before Pearl Harbor.

Significantly, Sanwa Bank was one of three Japanese banks left untouched by the US occupation. Ferdinand and Imelda Marcos 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.)

Bluntly put, the terrible secret is that for over half a century some officials of the US Government – not least of them its presidents – greatly advanced their careers by receiving stolen goods, made unscrupulous use of covert funds, and continue to collude with Tokyo. Justification always has been “national security”. In plain English, it’s conflict of interest. Politicians, diplomats, bureaucrats, military officers, businessmen, have been involved in falsification and manipulation of facts and records. Whether cynical or misguided, they aided and abetted extraordinary corruption.

In September 2001, The Economist reported that the Gold Anti-Trust Action Committee “has uncovered evidence that the American government, assisted by others, has somehow ‘lent’ thousands of tons [of gold bullion] to speculators and bullion banks, notably Citibank and J.P. Morgan Chase, to depress the gold price.” Conflict of interest is evident in all these instances.


In 1952, the U.S. Senate Foreign Relations Committee admitted that claims of Asian nations against Japan could total “as much as $100-billion” (1952 values). Japan paid only $3-billion in reparations. Even today, Germany continues its program of compensation and reparations, but Japan has dug in its heels and said it was all settled in by the Dulles Peace Treaty in 1951.

Its position is backed adamantly by the US State Department, determined to block compensation payments even to U.S. citizens, even to former POWs.

Britain, having parroted Washington by declaring that all this was ‘settled’ in 1951, reversed itself in 2001, by agreeing to pay – from its own tax revenues – a £10,000 one-time settlement on former British POWs of Japan and their heirs. This may seem humane, but it sidesteps the real question of why Japan continues to be shielded from paying. It also does not

satisfy the demands of British POWs and internees for an official apology from Japan.

On the other hand, since 1945, Tokyo has passed fifteen laws giving its own nationals compensation of $400-billion. Among those receiving compensation and pensions were indicted war criminals. Japanese sociologist Tanaka Hiroshi said, “We are generous with ourselves, stingy with others, [and] our policy on war compensation is manifestly unfair to foreigners, and unrepentant of the past.”

Washington has paid compensation to Japanese civilians interned unjustly in America during the war. Each internee, even babies born at the end of this period, was awarded $20,000. Most of them were complete innocents and their lives were, in many cases, damaged or destroyed by the internment. But not one was forced to perform slave labor.

Since 1999, more than thirty lawsuits have been filed in California courts by survivors of the Bataan Death March and other POWs who were forced to provide slave labor for Japanese companies. They were focused in California because the state legislature had extended the period when such claims could be filed. The US Government then had the cases transferred to

a federal court in San Francisco, where most of these suits then were rejected in September 2000 by Federal Judge Vaughn Walker. Judge Walker said they were ‘barred’ by the terms of the 1951 Peace Treaty, the same stonewalling used by Tokyo and Washington.

Hard as it may be to believe, the State Department argued on the side of Japanese corporations in these cases. Walker summed up his decision by stating that the 1951 Peace Treaty had “exchanged full compensation of plaintiffs for a future peace”. In other words, Japan and America were allowed to keep all the treasure stolen from China and the rest Asia between 1895-1945 in return for future peace?

Japan expert Dr. Chalmers Johnson reacted by pointing out that since the treaty was signed in 1951, at least ten million people and 55,000 Americans have died in Asian wars. By those facts alone, he rightly called Judge Walker’s statement “one of the more abysmal moments of denial”.

Some fought back. In March 2001, U.S. Congressmen Mike Honda (D. San Jose) and Dana Rohrabacher (R. Huntington Beach) introduced a bill, “Justice for Prisoners of War Act” before the U.S. Congress. The bill had strong bipartisan support and by August 2002 had 228 co-signers including House whips for both parties. Honda’s bill called for “clarification of the

wording of the 1951 Peace Treaty” to keep the State Department from deviously interfering in victims’ lawsuits.

The bill would have removed a key legal barrier used in Judge Walker’s rejection of the slave-labor lawsuits. Article 26 of the 1951 treaty reads: “Should Japan make a peace settlement or war claims settlement with any State granting that State greater advantages than those provided by the present Treaty, those same advantages shall be extended to the parties to

the present Treaty.”

In other words, if Japan were ever to give another country greater advantages for war claims than those granted in the treaty, then it had to extend such terms to all forty-eight countries that signed the treaty. Yet as we now know, a secret deal was arranged by Dulles for the Dutch government to receive $10-million from Japan. Therefore, Article 26 was already met by Japan’s secret deal with the Dutch -- why it was kept secret.

Both Switzerland and Burma also negotiated compensation to their citizens that would today be worth about $50,000 each. While Burma was occupied by Japan, Switzerland was not even a belligerent during the war.

China, which lost by far the greatest amount of treasure to Japan, was not a signatory to the 1951 Treaty. Therefore its government and citizens are not restrained by the Treaty terms.

The real question is whether Japan alone is guilty of preventing China, the Chinese people, and other Asian victims of Japan’s aggression and industrial-scale looting, from recovering their treasure. Or is Washington as culpable, for having deviously shielded Tokyo -- or, more important, for having stolen a second time (and made vanish) what was stolen the first time by Japan.

As many Chinese people are asking in November 2008: “Why should China rescue the US economy today when America

secretly recovered what Japan stole during WW2, and blocked victims from getting it back?”

Edited by Sterling Seagrave
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On the other hand one could argue that because the US defeated Japan in WWII that China “owes” the US. The US was attacked because of its restrictions on imperialist Japan. The US did this largely out of self interest but that would precisely be the reason for China to bail out the US. Basically the Chinese have to figure out:

• what kind of return if any they would get on such an investment and the chances of taking a hit

• their vested interest in helping keep the world’s largest economy afloat vs. the political advantage of seeing it collapse.

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On the other hand one could argue that because the US defeated Japan in WWII that China “owes” the US. The US was attacked because of its restrictions on imperialist Japan. The US did this largely out of self interest but that would precisely be the reason for China to bail out the US. Basically the Chinese have to figure out:

• what kind of return if any they would get on such an investment and the chances of taking a hit

• their vested interest in helping keep the world’s largest economy afloat vs. the political advantage of seeing it collapse.

Len ~

I take your point, but I have to disagree about your perspective.

Briefly, you’re saying that China owes it to the US to rescue it, because the US rescued China from Japan in WW2. That assumption requires taking a US triumphalist view of the war, which concludes that the US defeated Japan and rescued China in the process. This is not true nor valid, especially when said in the same breath. There were several wars going on concurrently, and over different time spans. Japan began invading the Asian mainland in 1895, starting what came to be called the Greater East Asian War; after Korea, Japan invaded Manchuria, then North China, then (in 1937) invaded South China and seized Vietnam; then (after Pearl Harbor) invaded the rest of Southeast Asia and the archipelago. For America, WW2 in Asia only began with Pearl Harbor, and involved the US in different ways: (i) With US Navy forces in the Pacific War, (ii) US ground forces and naval support in the Island-Hopping campaign of MacArthur, and (iii) limited US ground forces and air forces under Stilwell in parts of the mainland, being almost exclusively Burma and Assam. Of these, the Pacific War certainly was won by the US admirals, no question. MacArthur’s Island-Hopping was a series of bloodbaths that were individual tactical victories, but proceeded contrary to the strategic objectives of the US admirals who, for example, wanted MacArthur to by-pass the Philippines and instead attack Taiwan. -- MacArthur did the reverse, which resulted in the total destruction of Manila, then failed to defeat the Japanese in Luzon, and did not proceed to or result in the invasion of Japan’s Home Islands, leaving the whole question of strategic victory for MacArthur undecided/ambiguous at the very least. On the mainland, which was a separate war, the Japanese were prevented by the British from invading India by Slim’s success at Imphal and Kohima; Stilwell was the victor defeating the Japanese in Burma. But Stilwell’s efforts to defeat the Japanese in China by putting both the Nationalist and Communist forces under his command (authorized by FDR and Marshall) failed when Stilwell was undermined by a GOP conspiracy organized by Herbert Hoover and the China Lobby working through Chennault and Joe Alsop, leading to Stilwell’s recall by FDR. For the most part, the Nationalists in China did not fight the Japanese except for certain notable battles such as their defense of Hengyang, which prevented the Japanese Operation Ichigo from succeeding in 1944, which would have given Japan for the first time a land route connecting their occupied territories in China and those in Southeast Asia. Chennault’s air strategy failed when Operation Ichigo destroyed his forward bases. Mostly, Generalissimo Chiang’s efforts were focused on the civil war against the Communists, but included selling US Lend-Lease supplies to the Japanese, and other collusion. The only long-term victories against the Japanese in China were achieved by the Communist forces in North and Central China. In 1945, the Japanese in China had not been defeated by the US or anyone else, but were told to surrender by Hirohito. The US, since the recall of Stilwell, had done everything possible to stymie the Communist effort to defeat the Japanese in North China. (The new US ambassador, Hurley, was a Hoover groupie.) After 1945, the US effort continued to be in favor of the Nationalists and against the Communists, who were victorious at the end of 1948. In the absence of any clear “victory” by anyone over the Japanese in China, and in light of the GOP undercutting all Stilwell’s efforts, and the CIA’s efforts to block the Communists between 1947-1949, it cannot be said that the US did anything magnanimous for China (Lend-Lease aside), beyond nuking Japan and saving everyone the trouble of invading the Home Islands, where they would have had to actually defeat the Japanese on the ground. To the contrary, the US (Hoover, et al) then did everything possible to rescue Japan and put its wartime fascist leaders back in power in Tokyo. This greatly delayed any normalization of life in China after the Maoist victory in 1948-1949 (politics aside). This interference and obfuscation of China continued for many years thereafter.

We all know that the decision to nuke Japan was made for a number of other reasons having nothing whatever to do with “rescuing” China. Aside from obfuscating China, the US during the Korean War dropped a horrific range of chemical and biological weapons on China, including plague germs, mostly on civilian regions far down the coast. It could be argued that drenching the coast of China with CBW weapons after WW2 voided whatever positive things the US did for China during WW2.

Therefore, both militarily and theoretically, the US might have intended originally to rescue China from the Japanese, but ended up neither defeating the Japanese in China nor fulfilling the original intention to “rescue” China in any other way. A great many Americans might have wanted to rescue China and shaft Japan, but a lot of other Americans wanted to rescue Japan and shaft China. The pro-Japan group won. Things have now changed.

Or so it seems to me...


Edited by Sterling Seagrave
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