Occupation Without Troops. Glenn Davis
markets there, after U.S. forces occupied their territories and assumed temporary control over their governments.
In the State Department, which was trying to hammer out unified Occupation policies, the most conservative wing was led by Joseph C. Grew, who had been U.S. ambassador to Tokyo for ten years (1932-4l) and was on close personal terms with the main zaibatsu families, the peerage, diplomats, and political chieftains in Japan.15 While the Franklin D. Roosevelt government had strongly opposed Japanese aggression against China in 1937 and thereafter, Grew had felt it necessary to avoid antagonizing Japan's militarist elements in order to prevent an all-out war against the Western powers. In that sense, he was the Asian counterpart of British Prime Minister Neville Chamberlain, who, in the same years and for the same reasons, was trying to appease Hitler in Europe.
Grew, a cousin of John Pierpont Morgan and a wealthy man in his own right, was deeply concerned with American investments in Japan and China, the largest of which were controlled by Morgan affiliated companies and banks. Another appeaser was Senator John Foster Dulles, chairman of the Rockefeller Foundation, whose law firm, Sullivan & Cromwell, had long served Rockefeller interests abroad. At a time when most knowledgeable commentators thought the Second World War was inevitable, Dulles had declared in 1939: "Only hysteria can entertain the idea that Germany, Italy, or Japan contemplates war on us."16 Not surprisingly, Kern later became deeply involved with like-minded Grew and Dulles in publicizing their conservative policies toward defeated Japan.
Grew was undersecretary of state at the end of the war. But in truth he was running the department because his boss, Edward Stettinius, a business executive (Du Pont, Morgan) was inexperienced in diplomacy and was usually away attending international conferences. Grew had surrounded himself with several diplomats with long experience in Asia, the so-called "Japan Crowd." Among them were Eugene H. Dooman, who had been his counselor in the American Embassy in Tokyo; Joseph Ballantine, an old Japan hand; Walton Butterworth, a China expert who became director of the Office of Far Eastern Affairs; William R. Castle, a former ambassador to Japan who had been undersecretary of state under President Herbert Hoover; and Max Bishop, a former language officer in the American Embassy in Tokyo and a personal friend of General MacArthur. This tight-knit group of individuals became the inner circle of Kern's ACJ.17
Enter the Postwar Period
President Roosevelt did not live long enough to see the "infamous" Japanese Empire defeated; he died just before the end of the Pacific War. Harry S. Truman, his then little known vice-president, became chief executive and commander in chief of the armed forces. A month later Germany surrendered, causing the internecine struggle among American leaders concerning policies toward defeated Germany and Japan to intensify. Grew was particularly anxious because the Soviet Union's Joseph Stalin, at the Yalta Conference, had promised to enter the war against Japan by August 8,194518 and if the war lasted that long the United States would have to share the occupation of Japan with the Soviets. No definite policy had yet supplanted Roosevelt's insistence on the unconditional surrender of Japan, so Grew and Dooman drafted one, offering terms short of unconditional surrender, including preservation of the emperor system. The draft was bypassed, to Grew's chagrin, and the U.S. planners found it necessary to atom-bomb Japanese cities in order to stop the fighting and thus forestall the Soviet advance.19 Even so, by entering the war against Japan for a few days, in violation of a neutrality pact the country had signed with Japan, the Russians had won the technical right to participate in the Occupation, and were known to favor a hard line toward the Japanese.
During the U.S. led Occupation, Kern was foreign editor of Newsweek, but a glance at his activities indicates that he was spending more time in Washington than at his desk in New York. Working in close collaboration with Kern as Newsweek's bureau chief in Tokyo was Compton Pakenham,20 an Englishman who had served as a language officer at the British Embassy. Since his father had served as military attache in the same embassy before him, Pakenham had close contacts with the Japanese military establishment and was once enrolled as an officer in the Japanese Imperial Army.21
President Harry S. "Give 'em Hell" Truman, a Democrat, continued for a while along the Roosevelt policy line. On September 22, 1945, Truman ordered General MacArthur to democratize the Japanese economy by activating a "program for the dissolution of the large industrial and banking combines:" MacArthur, though far from liberal, was a good soldier, and followed the chief executive's policy to the letter. By the end of 1945, the largest holding companies had been dissolved, Japanese political prisoners had been released, political parties and labor unions legalized, press restrictions eased, and preparations made for the trial of war crimes suspects by an international tribunal.
Of course, all these moves were deeply shocking to the Japanese zaibatsu-military establishment and their political allies, many of whom were now being held as war criminals. Hardly less shocked by all this were American conservatives who had hoped for a stable, disciplined Japan in which big business—foreign as well as domestic—could operate securely and profitably. Thus, from the beginning of the Occupation, the struggle between the New Deal reformers and the defenders of the status quo continued and was aggravated by each step taken by MacArthur in following Washington's directives.22
Just a Friendly Dinner
In postwar Japan, people were not so easily driven back to the "thought control" of wartime days, but unrest was occurring because of rampant inflation. As the Japanese economy began recovering gradually under the Dodge Plan, an austere economic program introduced by a Detroit banker of that name, the trend was toward conservatism. Truman's zaibatsu dissolution program breathed its last. Everything was moving according to the plans of the ACJ, but Kern was not complacent. Neither was his mentor John Foster Dulles, now an appointed Republican senator and special advisor to the State Department. In June 1950, he was working with General MacArthur and Brigadier General Courtney Whitney of SCAP's Government Section (GS) on the terms of a peace treaty with Japan.23
Kern, who had gained the confidence of Dulles, had managed to fly to Japan aboard his special plane, and used the occasion to promote the ACJ's schemes. Or was it the other way around? Dulles was arguing for Japanese rearmament, but it was MacArthur who vetoed the idea.24 From June 18 to 21, Dulles visited South Korea, where he inspected defenses at the line that divided north and south—the 38th Parallel. Arriving back in Tokyo he immediately consulted MacArthur, and afterwards told the Associated Press that he predicted "positive action by the United States to preserve peace in the Far East." Only three months after the Korean War had started, Dulles stated that "the problem of keeping Japan within the orbit of the free world was possible of solution only because of Korea... '25
On June 22 Dulles, having accepted Kern's invitation, was a dinner guest at Pakenham's home in Tokyo. Apparently, the venue was chosen in order to avoid public attention. Even Pakenham's associates in the Tokyo Bureau knew nothing about the affair, which in retrospect seems to have been a significant episode in U.S.-Japan private diplomacy. Accompanying Dulles was Undersecretary of State John M. Allison, a keen supporter of Grew's right-wing clique and future ambassador to Japan. Kern had arranged the friendly get-together and had persuaded Dulles to attend. The other guests, all "well-informed" Japanese,26 had been carefully chosen: all but one were fluent in English, none had been purged, and each represented one or more of the major aims of the ACJ.
Most distinguished was Yasumasa Matsudaira, a former marquis and brother-in-law of the Mitsui family head, who had been secretary to Count Koichi Kido, lord privy seal, and later Grand Master of Ceremonies in the Imperial Court. As such, he had participated in major decisions of the war, and was still a very useful pipeline to the imperial court. Also present was ultra-nationalist diplomat Renzo Sawada, a Christian convert who had married a daughter of the Mitsubishi zaibatsu.
Also among the select group invited to dinner to meet Dulles was ex-viscount Takeshi Watanabe,27 a Finance Ministry official handling liaison with SCAP, who was the grandson of a former finance minister, and son of a member of the Privy Council. He was also a close associate of Kauffman's, and was later named minister to die United States, where he became a protege of Eugene Black, former president of Chase Manhattan Bank, who subsequently became president of the World Bank. Watanabe was director of the International Monetary Fund (IMF)