Re: [OPE-L] (OPE-L) recent references on 'problem' of money commodity?

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Fri Dec 03 2004 - 04:50:15 EST

At 10:41 AM +0900 12/3/04, Akira MATSUMOTO wrote:
>At 4:54 PM -0800 04.12.2, Rakesh Bhandari wrote:
>>Analysis should focus on the conditions under which the dollar, as
>>inconvertible fiat money, can serve (or continue to serve) as measure
>>and store of value and means of international payment. Insisting that
>>nothing has changed, that underneath all the monetary turbulence
>>money is still the gold commodity militates against analysis of the
>>ways in which capitalism has changed under the weight of two world
>>wars and hegemonic displacement via catastrophic violence.
>I wonder about  dollar as measure and store of value. Indeed, dollar
>is a kind of credit money, but in even this case dollar have to be
>backed by any valuable substance as currency. This is also paper
>money.  Any substitutes can serve any functions of money, as long as
>they represent any valuables as measure of value. we don't have to
>forget that a thing which serve measure of value substantially, must
>move backward to substitute under the modern credit system.

I know this is not directly related to the theoretical discussion,
but I thought I would send it anyway.

The Looting of Asia

Chalmers Johnson

Gold Warriors: America's Secret Recovery of Yamashita's Gold by
Sterling Seagrave and Peggy Seagrave
Verso, 332 pp, £17.00

It may be pointless to try to establish which World War Two Axis
aggressor, Germany or Japan, was the more brutal to the peoples it
victimised. The Germans killed six million Jews and 20 million
Russians; the Japanese slaughtered as many as 30 million Filipinos,
Malays, Vietnamese, Cambodians, Indonesians and Burmese, at least 23
million of them ethnic Chinese. Both nations looted the countries
they conquered on a monumental scale, though Japan plundered more,
over a longer period, than the Nazis. Both conquerors enslaved
millions and exploited them as forced labourers - and, in the case of
the Japanese, as prostitutes for front-line troops. If you were a
Nazi prisoner of war from Britain, America, Australia, New Zealand or
Canada (but not Russia) you faced a 4 per cent chance of not
surviving the war; the death rate for Allied POWs held by the
Japanese was nearly 30 per cent.

The real differences between the two nations, however, developed in
the years and decades after 1945. Survivors and relatives of victims
of the Holocaust have worked for almost six decades to win
compensation from German corporations for slave labour and to regain
possession of works of art stolen from their homes and offices.
Litigation continues against Swiss banks that hid much of the Nazi
loot. As recently as July 2001, the Austrian Government began to
disburse some $300 million out of an endowment of almost $500 million
to more than 100,000 former slave labourers. The German Government
has long recognised that, in order to re-establish relations of
mutual respect with the countries it pillaged, serious gestures
towards restitution are necessary. It has so far paid more than $45
billion in compensation and reparations. Japan, on the other hand,
has given its victims a mere $3 billion, while giving its own
nationals around $400 billion in compensation for war losses.

One reason for these differences is that victims of the Nazis have
been politically influential in the US and Britain, forcing their
Governments to put pressure on Germany, whereas Japan's victims live
in countries that for most of the postwar period were torn by
revolution, anticolonial movements and civil wars. This has begun to
change with the rise of Sino-American activists. The success of Iris
Chang's The Rape of Nanking (1997), a book the Japanese establishment
did everything in its power to impugn, heralded the emergence of this

More significant, however, are differences in US Government policies
towards the two countries. From the moment of Germany's defeat, the
United States was active in apprehending war criminals, denazifying
German society, and collecting and protecting archives of the Nazi
regime, all of which have by now been declassified. By contrast, from
the moment of Japan's defeat, the US Government sought to exonerate
the Emperor and his relatives from any responsibility for the war. By
1948, it was seeking to restore the wartime ruling class to positions
of power (Japan's wartime minister of munitions, Nobusuke Kishi, for
example, was prime minister from 1957 to 1960). The US keeps many of
its archives concerned with postwar Japan highly classified, in
violation of its own laws.

Most important, John Foster Dulles, President Truman's special envoy
to Japan charged with ending the occupation, wrote the peace treaty
of 1951 in such a way that most former POWs and civilian victims of
Japan are prevented from obtaining any form of compensation from
either the Japanese Government or private Japanese corporations who
profited from their slave labour. He did so in perfect secrecy and
forced the other Allies to accept his draft (except for China and
Russia, which did not sign). Article 14(b) of the treaty, signed at
San Francisco on 8 September 1951, specifies: '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.'
As recently as 25 September 2001, three former American Ambassadors
to Japan - Thomas Foley, a former Speaker of the House of
Representatives, Michael Armacost, the president of the Brookings
Institution, and Walter Mondale, Carter's Vice-President - wrote a
joint letter to the Washington Post denouncing Congress for its
willingness even to think about helping former American slave
labourers get around the treaty.

Why do these attitudes protecting and excusing Japan persist? Why has
the US pursued such divergent policies towards postwar Germany and
Japan? Why was the peace treaty written in the way it was? Many
reasons have been offered over the years, including that Japan was
too poor to pay, that these policies were necessary to keep postwar
Japan from 'going Communist', and that the Emperor and Japanese
people had been misled into war by a cabal of insane militarists, all
of whom the occupation had eliminated from positions of
responsibility. The explanation offered in the Seagraves' book is
considerably more sinister. It concerns what the United States did
with Japan's loot once it discovered how much of it there was, the
form it took, and how little influence its original owners had.

Almost as soon as the war was over, American forces began to discover
stupendous caches of Japanese war treasure. General MacArthur, in
charge of the occupation, reported finding 'great hoards of gold,
silver, precious stones, foreign postage stamps, engraving plates and
. . . currency not legal in Japan'. His officials arrested the
underworld boss Yoshio Kodama, who had worked in China during the
war, selling opium and supervising the collection and shipment to
Japan of industrial metals such as tungsten, titanium and platinum.
Japan was by far the largest opium producer in Asia throughout the
first half of the 20th century, initially in its colony of Korea and
then in Manchuria, which it seized in 1931. Kodama supplied heroin
and liquor to occupied China in return for gold coins, jewellery and
objets d'art, which the Japanese melted down into ingots.

Kodama returned to Japan after the surrender immensely rich. Before
going to prison he transferred part of his booty to the conservative
politicians Ichiro Hatoyama and Ichiro Kono, who used the proceeds to
finance the newly created Liberal Party, precursor of the party that
has ruled Japan almost uninterruptedly since 1949. When Kodama was
released from prison, also in 1949, he went to work for the CIA and
later became the chief agent in Japan for the Lockheed Aircraft
Company, bribing and blackmailing politicians to buy the Lockheed
F-104 fighter and the L-1011 airbus. With his stolen wealth,
underworld ties and history as a supporter of militarism, Kodama
became one of the godfathers of pro-American single-party rule in

He was not alone in his war-profiteering. One of the Seagraves' more
controversial contentions is that the looting of Asia took place
under the supervision of the Imperial household. This contradicts the
American fiction that the Emperor was a pacifist and a mere
figurehead observer of the war. The Seagraves convincingly argue that
after Japan's full-scale invasion of China on 7 July 1937, Emperor
Hirohito appointed one of his brothers, Prince Chichibu, to head a
secret organisation called kin no yuri ('Golden Lily') whose function
was to ensure that contraband was properly accounted for and not
diverted by military officers or other insiders, such as Kodama, for
their own enrichment. Putting an Imperial prince in charge was a
guarantee that everyone, even the most senior commanders, would
follow orders and that the Emperor personally would become immensely

The Emperor also posted Prince Tsuneyoshi Takeda, a first cousin, to
the staff of the Kwantung Army in Manchuria and later as his personal
liaison officer to the Saigon headquarters of General Count Hisaichi
Terauchi, to supervise looting and ensure that the proceeds were
shipped to Japan in areas under Terauchi's control. Although assigned
to Saigon, Takeda worked almost exclusively in the Philippines as
second in command to Chichibu. Hirohito named Prince Yasuhiko Asaka,
his uncle, to be deputy commander of the Central China Area Army, in
which capacity he commanded the final assault on Nanking, the Chinese
capital, between 2 December and 6 December 1937, and allegedly gave
the order to 'kill all captives'. The Japanese removed some 6000
tonnes of gold from Chiang Kai-shek's treasury and the homes and
offices of the leaders of Nationalist China. All three princes were
graduates of the military academy and all three survived the war;
Chichibu died in 1953 of tuberculosis but the other two lived to a
very ripe old age.

With the Japanese capture in the winter and spring of 1941-42 of all
of South-East Asia, including the Philippines and Indonesia, the work
of Golden Lily increased many times over. In addition to the monetary
assets of the Dutch, British, French and Americans in their
respective colonies, Golden Lily operatives absconded with as much of
the wealth of the overseas Chinese populations as they could find,
tore gilt from Buddhist temples, stole solid gold Buddhas from Burma,
sold opium to the local populations and collected gemstones from
anyone who had any. The gold was melted down into ingots at a big
Japanese-run smelter in Ipoh, Malaya and marked with its degree of
purity and weight. Chichibu and his staff inventoried all this
plunder and put it aboard boats, usually disguised as hospital ships,
bound for Japan. There was no overland route to Korea, the closest
point on the mainland to Japan, until very briefly in late 1944.

A lot of gold and gems were lost as a result of American submarine
warfare; and by early 1943, it was no longer possible for the
Japanese to break through the Allied blockade of the main islands
except by submarine. Chichibu therefore shifted his headquarters from
Singapore to Manila and ordered all the shipments to head for
Philippine ports. He and his staff reasoned that the war would end
with a negotiated settlement, and they believed (or imagined) that
the Americans could be persuaded to transfer the Philippines to Japan
in return for an end to the war. From 1942, Chichibu supervised the
building of 175 'Imperial' storage sites to hide the treasure until
after the war was over. Slave labourers and POWs dug tunnels and
caves and then were invariably buried alive, often along with
Japanese officers and soldiers, when the sites were sealed to keep
their locations secret. Each cache was booby-trapped, and the few
extant Golden Lily maps are elaborately encoded to hide exact
location, depth, air vents (if any) and types of booby trap (e.g.
large aerial bombs, sand traps, poison gases). In Manila itself,
Golden Lily constructed treasure caverns in the dungeon of the old
Spanish Fort Santiago, within the former American military
headquarters (Fort McKinley, now Fort Bonifacio), and under the
cathedral, all places the Japanese rightly assumed the Americans
would not bomb. As the war came to an end, Chichibu and Takeda
escaped back to Japan by submarine.

Soon after the liberation of the Philippines, American special agents
began to discover a few of the hidden gold repositories. The key
figure was a Filipino American born in Luzon in either 1901 or 1907
named Severino Garcia Diaz Santa Romana (and several other aliases),
who in the mid-1940s worked for MacArthur's chief intelligence
officer, General Willoughby. As a commando behind the lines in the
Philippines he had once witnessed the unloading of heavy boxes from a
Japanese ship, their being placed in a tunnel, and the entrance being
dynamited shut. He had already suspected what was going on. After the
war, Santa Romana was joined in Manila by Captain Edward Lansdale of
the OSS, the CIA's predecessor. Lansdale later became one of
America's most notorious Cold Warriors, manipulating governments and
armies in the Philippines and French Indo-China. He retired as a
major-general in the Air Force.

Together, Santa Romana and Lansdale tortured the driver of General
Tomoyuki Yamashita, Japan's last commander in the Philippines,
forcing him to divulge the places where he had driven Yamashita in
the last months of the war. Using hand-picked troops from the US
Army's Corps of Engineers, these two opened about a dozen Golden Lily
sites in the high valleys north of Manila. They were astonished to
find stacks of gold ingots higher than their heads and reported this
to their superiors. Lansdale was sent to Tokyo to brief MacArthur and
Willoughby, and they, in turn, ordered Lansdale to Washington to
report to Truman's national security aide, Clark Clifford. As a
result, Robert Anderson, on the staff of the Secretary of War, Henry
Stimson, returned to Tokyo with Lansdale and, according to the
Seagraves, then flew secretly with MacArthur to the Philippines,
where they personally inspected several caverns. They concluded that
what had been found in Luzon, combined with the caches the Occupation
had uncovered in Japan, amounted to several billion dollars' worth of
war booty.

Back in Washington, it was decided at the highest levels, presumably
by Truman, to keep these discoveries secret and to funnel the money
into various off-the-books slush funds to finance the clandestine
activities of the CIA. One reason, it has been alleged, was to
maintain the price of gold and the system of fixed currency exchange
rates based on gold, which had been decided at Bretton Woods in 1944.
Just like the South African diamond cartel, Washington's plotters
feared what would happen if this much 'new' gold was suddenly
injected into world markets. They also realised that exposure of the
Imperial household's role in the looting of Asia would destroy their
by now carefully constructed cover story of the Emperor as a peaceful
marine biologist. Washington concluded that even though Japan, or at
least the Emperor, had ample funds to pay compensation to Allied
POWs, because of the other deceptions, the peace treaty would have to
be written in such a way that Japan's wealth would remain secret. The
treaty therefore gave up all claims for compensation on behalf of
American POWs. To keep the Santa Romana-Lansdale recoveries secret,
MacArthur also decided to get rid of Yamashita, who had accompanied
Chichibu on many site closings. After a hastily put-together court
martial for war crimes, Yamashita was hanged on 23 February 1946.

On orders from Washington, Lansdale supervised the recovery of
several Golden Lily vaults, inventoried the bullion, and had it
trucked to warehouses at the US Naval base at Subic Bay or the Air
Force base at Clark Field. According to the Seagraves, two members of
Stimson's staff, together with financial experts from the newly
formed CIA, instructed Santa Romana in how to deposit the gold in 176
reliable banks in 42 different countries. These deposits were made in
his own name or in one of his numerous aliases in order to keep the
identity of the true owners secret. Once the gold was in their
vaults, the banks would issue certificates that are even more
negotiable than money, being backed by gold itself. With this
seemingly inexhaustible source of cash, the CIA set up slush funds to
influence politics in Japan, Greece, Italy, Britain and many other
places around the world. For example, money from what was called the
'M-Fund' (named after Major-General William Marquat of MacArthur's
staff) was secretly employed to pay for Japan's initial rearmament
after the outbreak of the Korean War, since the Japanese Diet itself
refused to appropriate money for the purpose. The various uses to
which these funds were put over the years, among them helping to
finance the Nicaraguan counter-revolutionaries in their attacks on
the elected government in Managua (the Iran-Contra scandal of the
Reagan Presidency), would require another volume. Suffice it to say
that virtually everyone known to have been involved with the secret
CIA slush funds derived from Yamashita's gold has had their career

Santa Romana died in 1974, leaving several wills, including a final
holographic testament, naming Tarciana Rodriguez, a Filipina who was
the official treasurer of his various companies, and Luz Rambano, his
common-law wife, as his main heirs. They set out to recover the gold
since, after all, it was in his name in various banks and they had
custody of all the account books, secret code names, amounts, records
of interest paid, and other official documents proving its existence.
Using the famous San Francisco attorney Melvin Belli as her
representative, Rambano actually filed a suit against John Reed, then
CEO of Citibank in New York and today president of the New York Stock
Exchange, charging him with 'wrongful conversion': that is, selling
$20 billion of Santa Romana's gold and converting the proceeds to his
own use. The Seagraves vividly describe the extraordinary meetings
that took place between Rambano and Reed, with phalanxes of lawyers
on both sides, in Citibank's boardroom in New York. Reed apparently
ordered the gold moved to Cititrust in the Bahamas.

Santa Romana and Lansdale by no means discovered all the Golden Lily
sites. Over the years, a cottage industry developed of treasure
hunters digging holes in obscure places in Luzon, often claiming they
were looking for the remains of family or lovers. A regular feature
of life in the village of Bambang, in the Cagayan Valley, Nueva
Viscaya province - one of the places where Takeda was most active -
is the appearance of elderly Japanese 'tourists' bearing not the
usual bag of golf clubs but sophisticated metal detectors. This area
of the Philippines is one where guerrillas of the New People's Army
are active, and it has no major tourist attractions. Many local
Filipinos have gone into business as professional 'pointers', telling
gullible visitors, for a fee, where to search, before skipping town.

Twenty years after Santa Romana stopped searching in 1947, a
secondary - and quite violent - hunt for gold began, carried out by
Ferdinand Marcos. Marcos recovered at least $14 billion in gold - $6
billion from the sunken Japanese cruiser Nachi in Manila Bay, and $8
billion from the tunnel known as 'Teresa 2', 38 miles south of Manila
in Rizal province. During 2001, Philippine politics were rocked when
the former solicitor-general Francisco Chavez alleged that Irene
Marcos-Araneta, Marcos's youngest daughter, maintained an account
worth $13.2 billion in Switzerland. Its existence apparently came to
light when she tried to move it from the Union Bank of Switzerland to
Deutsche Bank in Düsseldorf. Marcos, who personally supervised the
opening of at least six sites and routinely used his thugs to steal
any treasure that local peasants happened to find, died in exile in
Honolulu in 1989. In 1998, the Supreme Court of Hawaii affirmed a
judgment against his estate for the astonishing sum of $1.4 billion
in favour of a Filipino who retrieved a solid gold Buddha and then
had it stolen from him by Marcos, who also had him tortured for

The key to Marcos's discoveries was the services of one Robert
Curtis, a Nevada chemist, metallurgist and mining engineer, whom
Marcos hired to resmelt his gold, to bring it up to current
international requirements for purity so that it could be marketed
internationally. Curtis proved to be the only person who could
decipher the few Golden Lily maps that survived, in the possession of
Takeda's former valet, a Filipino youth from Bambang. The Seagraves
describe very thoroughly Curtis's activities, including his narrow
escape from death on the orders of Marcos's henchman General Ver,
after he struck gold at Teresa 2.

The Seagraves' narrative is comprehensive, but they are not fully
reliable as historians. They have a tendency to overreach,
exaggerating the roles of Japanese gangsters and ex-military American
bit-players when the bankers, politicians and CIA operatives are
scary enough. They know the Philippines well, but are unreliable on
Japan and do not read Japanese. The book is full of errors that could
easily be corrected by a second-year student of the language - the
ship they repeatedly call the Huzi is accurately romanised Fuji; the
important Japan Sea port is Maizuru, not Maisaru; tairiki is not a
Japanese word: they mean tairiku ronin (a 'Continental adventurer' or
a 'China carpetbagger'); and their mysterious Lord Ichivara is an
absurdity - no one was ever called 'Lord' in postwar Japan and
Ichivara is an impossible name (it is surely Ishihara).

The authors seem to sense that they might have a credibility problem,
and have therefore taken the unusual step of making available two CDs
containing more than 900 megabytes of documents, maps and photographs
assembled in the course of their research. The CDs can be ordered
from their website ( These are invaluable,
particularly in what they reveal of the US Government's vicious sting
operation against a former American deputy Attorney General, Norbert
Schlei. Schlei represented about sixty Japanese people on whom the
Japanese Government had unloaded huge promissory notes in an attempt
to hide the M-Fund after the former Prime Minister Kakuei Tanaka was
convicted of bribery. The Government persisted in calling these notes
forgeries (thus engaging in another form of illegal conversion) and
Schlei's career was ruined. Gold Warriors is easily the best guide
available to the scandal of 'Yamashita's gold', and the authors play
fair with their readers by supplying them with massive amounts of
their raw research materials.

The Seagraves end their 'authors' note' with these words: '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.' Unfortunately, the list of potential
killers from this book alone would include at least several thousand
generals, spies, bankers, politicians, lawyers, treasure hunters and
thieves from half a dozen countries. So I wish the Seagraves a long
life. Meanwhile, a substantial portion of the treasure stolen by the
Japanese from East Asian countries remains buried in the Philippines.

Chalmers Johnson is the author of Blowback and The Sorrows of Empire.

copyright © LRB Ltd, 1997-2004        HOME | SUBSCRIBE | LOGIN | CONTACTS |
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Gold Warriors: America's Secret Recovery of Yamashita's Gold by
Sterling and Peggy Seagrave.

        The Seagraves have uncovered one of the biggest secrets of
the twentieth century. - Iris Chang, author of The Rape of Nanking

In 1945, US Intelligence officers in Manila discovered that the
Japanese had hidden large quantities of gold bullion and other looted
treasure in the Philippines. President Truman decided to recover the
gold but to keep its riches secret. These would be combined with
treasure recovered inside Japan during the US occupation, and with
Nazi loot recovered in Europe, to create a worldwide American
political action fund to fight communism.

Overseen by General MacArthur, President Truman, and John Foster
Dulles, this "Black Gold" gave Washington virtually limitless,
unaccountable funds, providing an asset base to reinforce the
treasuries of America's allies, to bribe political and military
leaders, and to manipulate elections in foreign countries for more
than fifty years. Drawing on a vast range of original documents and
thousands of hours of interviews, Gold Warriors exposes one of the
great state secrets of the twentieth century.

"Fast-paced and jammed with racy details and incident Š engrossing to
anyone who has ever attempted to filter through the mass of detail
and conjecture, fact and rumor, and bare-faced lying that fill the
bewildering hodgepodge of source we must draw on the studies of
China." - Jonathan Spence, New York Times Book Review, on The Soong

Sterling Seagrave was a reporter for the Washington Post before
becoming a freelance investigative journalist contributing to Time,
Life, Atlantic Monthly, and the Far Eastern Economic Review. He is
the author of The Soong Dynasty, among other books. Peggy Seagrave
was the senior researcher and picture editor at Time-Life Books.
Together they are the authors of the bestselling Lords of the Rim and
The Yamato Dynasty.
Sept. 2003

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