The power elite playbook, Japan, land of Western industrialization (Part 16)

By Deanna Spingola

In Japan — "For a thousand years, it was the policy of emperors and shoguns to keep the people ignorant, and to keep taxes high enough so families had to struggle to survive, because this kept them fully occupied and harmless." [1]

J. P. Morgan was involved in Japan during the Meiji Restoration (1867-1912) which replaced the ruling Tokugawa Shogunate with the restored imperial family. This trade-off of power was merely a cosmetic change. Assets were confiscated from the Tokugawa shoguns and used to build factories and railroads. These assets were then privatized into four major zaibatsu (conglomerates): Mitsubishi, Sumitomo, Yasuda and Iwasaki. A zaibatsu could be comprised of mines, factories, banks, ocean fleets, insurance companies and export agencies. These four zaibatsus retained their exclusivity through kinship, marriage, school associations, bribes or any other secret or social arrangement. [2] This is very similar to America's elite class.

J. P. Morgan, always alert to profit potential, arranged financing for selected American entrepreneurs. Morgan financed Thomas Edison's incandescent light and invested in Edison's power generation and distribution plants. In 1891, he took over the Thomson-Houston Company and the Edison Company to form General Electric. [3] Tesla resisted financial support from Morgan as he had seen how the robber baron had "coveted and threatened the autonomy of Westinghouse." [4] Morgan wanted to acquire Nikola Tesla's patents, probably to conceal the possibility of profitless, wireless electricity through Tesla's AC (alternating current) induction motor. [5]

Thomas Lamont, a J.P. Morgan partner by 1911, had arranged the financing and purchasing of American supplies for France and Britain during World War I as the major purchasing agent for the British Army and Navy and for the French government. By the end of WWI, J. P. Morgan Bank had handled $3 billion in commercial transactions, netting $3 million in fees. It had arranged over $1.5 billion in credits and had become the world's most influential bank, moving it into the political arena of foreign policy, thereby serving as a virtual extension of the federal government. [6] Ironically, J.P. Morgan, war profiteer, had paid three hundred dollars to evade military service in the Union Army during the Civil War.

Post-WWI, Lamont negotiated Germany's deliberately crippling reparations payments. In 1920, with the approval of commerce secretary Herbert Hoover, Jack Morgan (J. P.'s son) sent Lamont to Asia in search of additional clients and investment opportunities. Lamont met with Japan's elite. Japan had prospered during World War I and had acquired huge gold reserves. This early collaboration would set a precedent for the corporate collusion that followed the Second World War. [7]

Between 1899 and 1930 banks and western manufacturers made large foreign direct investments (FDIs) in what is referred to as multinational enterprises (MNEs). This occurred in technologically advanced industries, like machine equipment and electric machinery, areas that were weak or nonexistent in Japan. [8] The Vanderbilts and J.P. Morgan bought a one-third interest in Gray (the real inventor of the telephone) and Barton in 1872 and then changed its name to the Western Electric Manufacturing Company. [9]

One of the first U.S./Japan joint ventures was Nippon Electric Company (NEC), established in 1899 with Western Electric, as a 54 percent shareholder. During the 1920s, other joint ventures included U.S. automobile companies. Toyota's sales organization began with American marketing methods acquired while working with Ford and General Motors which had established assembly operations. The U.S. companies purchased local parts which helped to create a network of suppliers. Nissan began as a Ford parts supplier. Many of the joint ventures ultimately became prominent Japanese corporations. [10]

Westinghouse transferred technology and management techniques to Mitsubishi Electric, founded in 1921. Dunlop Rubber Co. Ltd, a British firm, created Dunlop Japan, founded in 1909, which ultimately became Sumitomo Rubber Industries, Ltd., the first Japanese-owned rubber company to make automobile tires. Initially, Sumitomo depended on Dunlop engineers and skilled workers for its production technology. [11]

The Japanese government would eventually place restrictions on Ford and General Motors in the 1930s. Consequently, these companies would divest from Japan prior to World War II. Nissan and Toyota took over former Ford and General Motors suppliers, dealers and strategic personnel. After World War II, Japan used licensing agreements rather than FDIs. From 1950 to 1970, the Japanese government approved 7,800 licensing contracts in the area of chemicals, food, machinery, steel and other industries which escalated Japan's postwar economic growth. [12]

Japan's prosperity in the 1920s was enjoyed only by the elite who controlled the nation's wealth as well as a stable of corrupt government officials. Increased population and unemployment, especially in rural Japan led to horrific exploitation of laborers who often lived and worked in squalor. Outcasts, indentured workers, prisoners, evicted farmers from Korea and Manchuria worked and frequently died in Mitsubishi coals mines. Thousands of pre-teen girls slaved in wretched conditions. Labor and social movements were forcefully suppressed. [13]

In 1925, the Peace Preservation Law was passed. Criticism of the emperor or his government in any way, even by implication was a crime punishable by death. Opposing candidates could face arrest which restricted membership in Japan's parliament, the Diet, to the far right. By 1928, the Peace Preservation Law became even more restrictive — anyone speaking against, or even thinking about changing government policy could incur life in prison or the death penalty. Dissent was absolutely stifled. People were denied a trial by jury. Education Minister Hatoyama targeted primary and secondary school teachers who entertained dangerous thoughts. In November 1928, Hirohito was formally enthroned during a mythological Shinto ceremony. Four days later he was deified as a descendant of the sun goddess Amaterasu. [14]

J. P. Morgan Bank, known in Japan as the Morgan zaibatsu, flush with war profits, loaned $150 million to Japan for the rebuilding of Tokyo after the destructive Kantô earthquake of September 1, 1923. [15] Japan, thereafter would be Morgan Bank's special customer. With the earthquake came a 36-foot tall tsunami followed by a thick yellow cloud of dust rising from the thousands of collapsed buildings. Tens of thousands of homes, flexible and generally earthquake proof burst into flames. Tokyo burned and refugees fled. Thousands perished. On the Kantô Plain, Japan's biggest agricultural region, farms and warehouses were damaged or destroyed. Even Tokyo Bay burst into flame due to 100,000 tons of spilt fuel from the Yokosuka naval base. Two million people were rendered homeless. Hirohito's palace, behind a wide moat, survived the earthquake and the flaming inferno. Mob violence erupted and lasted for two weeks. Food, water and shelter were scarce. The U.S. donated canned beans. [16]

To avoid shame for their inadequacies in providing solutions, government officials accused Korean and Chinese immigrants of looting, murder, arson and rape. Fears were fueled by the media and martial law was proclaimed. The extreme right provoked violence against leftists and immigrants. Vigilantes murdered thousands. When the government finally halted the terror, they insisted that the Koreans provoked it. [17] Tyrannical governments always cast the blame on others: illegal aliens, bungling borrowers, incompetent managers, Arab hijackers, Jews — anyone but themselves.

Prince Asaka's (1887-1981) opulent Takanawa palace was destroyed in the Kantô earthquake. He had it rebuilt. The Art Deco style palace, ultimately finished in 1933, was even more luxurious. [18] He continued to live there until he died of old age in 1981, despite claims of imperial poverty and alleged post-WWII loss of property. [19] To conceal their wealth and avoid confiscation, some imperial family members transferred ownership of palaces and other properties and personal belongings to the well-connected Tsutsumi family. However, they never actually vacated their properties or relinquished their belongings. (More on that later in this series.) [20] Prince Asaka ordered and directed the brutal atrocities committed during the 6-week assault against Nanking, then the capital of China, the incident that destroyed any hope of peace.

With the Japanese banking crisis of 1927 (similar to the one in the late 1990s), a financial panic gripped Tokyo. Many of Japan's biggest banks had made massive unsecured loans to businesses that were, in fact, owned by the same bankers or their friends or family. This predictably created a sense of prosperity and reckless expansion. There were no audits, no oversight — just easy money. Years without interest collection led to a major crisis and a government bailout loan of 2 billion yen which only assisted the privileged individuals who had triggered the dilemma. Eight hundred out of 1,422 pre-crisis smaller banks inevitably collapsed, reducing competition. [21] Compare this to the $700 billion Wall Street open-ended bailout of September 2008. [22]

During the 1927 panic, the ruling elite again contacted Thomas W. Lamont, J. P. Morgan's principle financier. He immediately responded and offered direction to his banking buddies and visited Hirohito, who had assumed the emperor's throne on December 25, 1926. Lamont was awarded the Order of the Rising Sun. Hirohito would wage his first war of aggression against China's Shandong Province in May 1927, [23] and sanctioned Japan's second and third military Shandong expeditions. Hirohito's rule, from 1927 to Japan's surrender in August 1945, was distinguished by Japan's plundering wars of aggression. [24]

Back in New York, Lamont arranged the following: $263 million in new bond issues for Japanese borrowers; additional Kantô earthquake reconstruction loans for Tokyo; a guaranteed loan to Japan's electric utility in Taiwan; and a $25 million bank credit to the Yokohama Specie Bank to stabilize their currency to help Japan get back on the gold standard. [25] The emperor owned 22 percent of that bank's stock. Gold and platinum had been hoarded by Asians for generations as they distrusted banks and governments. The deprivations of the imminent worldwide depression reinforced the people's distrust of paper currency, making gold and other tangible assets even more desirable. [26]

Approximately one half of Japan's small businesses failed because of the orchestrated Wall Street crash of 1929. Japan's ultra nationalists believed that the depression was a Western racist scheme. Between 1929 and 1931, the value of Japanese exports fell by 43 percent. Rural families were devastated by a 50 percent reduction in farm produce. Other economic conditions such as taxes and rent forced many small farmers off their lands. Whole villages starved, tens of thousands of children were sold into prostitution by their desperate families. During the 1930s, 200,000 girls would be sold into prostitution annually. [27]

War takes the focus off of a failing economy! In a false flag attempt to provoke Chang's Manchu troops into attacking Japanese units, Japanese officers murdered Manchurian warlord Chang Tso-lin in 1928 with the objective of allowing Japan to counter attack and seize Manchuria. Emperor Hirohito, upon learning of the incident, concealed it, thereby sanctioning future terrorist acts. It took three years and several more terrorist actions to get the desired response. The devised Manchurian Incident of 1931 was blamed on ill-equipped Chinese soldiers but it enabled Japan to seize Manchuria, 440,000 square miles — an ideal source of food and raw materials — a solution to Japan's financial and social crisis. Morgan banker, Thomas W. Lamont, supported Japan's seizure and probably financed it, while President Hoover publicly denounced but privately endorsed the action. [28]

Chinese citizens stopped purchasing Japanese exports which fell about 90 percent in 1932. Japanese provocateurs posing as monks started a fight with a Shanghai mob and the two "monks" were slain. Westerners in China's International Settlement were appalled at the Japanese machinations. Lamont conceded that Japan's aggressiveness might make Japanese loans troublesome. [29]

Harvard-educated Lamont had been Herbert Hoover's biggest political and financial supporter. President Hoover (1928-1932) installed Douglas MacArthur as the Army Chief of Staff. [30] During the Great Depression, Japan was still an important market for American products. Trade privileges were tendered to insure cooperation, peace and prosperity, especially in view of the growing enemy, Communism. In June 1932, Hoover appointed, with Lamont's support, Harvard-educated Joseph Grew as Ambassador to Japan. His job included promoting American business in Japan. Grew had worked on Hoover's campaign and came from a family of Boston bankers who had underwritten Russell & Company and their opium clipper ships. The Grew family associated with the Forbes, Delano and Roosevelt merchant clans. [31]

Joseph Grew had been a diplomat in Berlin when WWI started and oversaw Hoover's phony profit-producing food relief scheme to keep the Germans from starving and to keep the war going until America could join in the slaughter. Grew claimed that he "loved Germany and was an unrestrained champion of the German cause." But when the U.S. entered the war in April 1917, he returned home. He went on a "Liberty Bond whistle-stop sales tour speaking to 24,000 people in eleven days" where he described Germans as "licentious barbarians and international criminals." [32]

Hoover, Lamont and other elites promoted the idea that national economies linked together by private enterprise would stabilize the world. Private enterprise through multinational and transnational business, orchestrated financial assaults against the middle class, enslavement of the surviving poor and war — all funded or activated by the banks — is facilitating a one world, one currency tyrannical government.

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© Deanna Spingola