The Pivot

I spied,
You spied,
America despised,
That we all spied.

The interment of Japanese in America during World War II by the United States was often described as the second greatest affront to civil liberties in America, second only to perhaps slavery. Executive Order 9066 incarcerated over 110,000 people without charges being levied and without due process of law. Most were American citizens and law abiding, hard working people whose only dreams were to make a better life for them. The Order allowed the federal government to “round up” nearly all Japanese living in the continental United States for fear of a few people who were perceived to be threats to the country – namely people working with the Japanese government to subvert America. In the end, it was believed no Japanese was ever convicted on spying, terrorism, or other such acts against the United States.

Over time, we viewed this treatment of Japanese in America as a shameful incident and a gross injustice. In the years that followed the release of Japanese from their prisons in 1945, there was much silence. Japanese wanted to get on with their lives, ignore the injustices, and America in general would rather forget this incident. In the decades that ensued, Japanese in America became to speak out on this dark moment. In 1988, President Reagan signed the Civil Liberties Act of 1988 into law. A Presidential apology was made and restitution of $20,000 was made to all internees. Perhaps it was genuine or perhaps it was just “lip service” to a growing protest from Japanese Americans, the positioning was that “ a wrong was righted.”

As time has passed, we seemed to have filtered out the real threats of espionage and its “cousin” terrorism by the Japanese in America prior to World War II. America’s action to imprison Japanese without cause was generally considered wrong, shameful, and illegal despite follow on Supreme Court rulings.

That said, Japanese spies and terrorists were real threats.

The rise of spies and terrorism by modern Japan, like much of our story in general begins with the fall of the samurai and Perry’s Opening of Japan. Espionage emerged as a tactic in response to the threat from America. The fallen samurai class, searching for a way to restore its dignity and replace their newly restless life, formed the early corpus of spies for Japan. Working to Make Japan Great was a calling and a mission the samurai could embrace.

Espionage and terrorism emerged from two perspectives. First, from the top down, Japan as a government sought to use these tactics in its goals to protect itself from America and advance Japan as world power. From the bottom up, Toyama embraced espionage and terrorism to advance its goals of nationalism and restored dignity of its people, especially the samurai class. The relationships between the Black Ocean Society and Black Dragon Society with the Japanese government were complicated. Often times they were at odds, sometimes they collaborated, and sometimes they ignored each other – and this was certainly true of the spy and terrorism efforts that each engaged. The conflict was most notable, of course, in Toyama’s assassination of Prime Ministers and other government officials. The cooperation was most notable in the tight relationship the Black Dragon had with the Japanese Imperial Navy. We speculate that Toyama’s personal relationship with Admiral Togo was the driver of this alliance. Hence there were often agents of the Japanese Navy who were also members (or at least supporters) of the Black Dragon Society.

Maybe coincidentally, both the government’s efforts as well as Toyama’s efforts were rooted in an espionage framework developed by Wilhelm Stieber. Stieber was Otto von Bismarck’s master spy, serving both as a domestic agent and external spy. He was of modern information gathering techniques. Rudolf Hess attributes Stieber as the thinker behind Japanese espionage and terrorism.

Yes, Rudolph Hess. Hess was the Deputy Fuhrer of the Nazi Party in 1933 (the only person ever to hold this office), appointed by Adolph Hitler. Hess was basically Hitler’s right hand man. Hess was fascinated by Japan’s execution of Stieber’s model. He visited and Japan often to observe its rise to power and study how espionage and terrorism were implemented. He wrote a 132 page, 40,000-word manuscript on the subject.

Japan’s espionage and terrorism efforts were complicated, covert, and far-reaching. Japan’s distrust and need to keep tabs on it’s own people required an internal spying within Japan. The Kemptei Tai was an artifact of this. In order to push its nationalistic agenda to control the world, an international external spy and terrorist network was built. By the early 1930’s half the globe was covered by Japanese agents – with extensive coverage in Asia, Russia, South America and Africa, and “cells” throughout Europe and the Middle East. It now wanted to turn its attention to North America, Central America, and the Dutch East Indies. Of course, China and Korea were the immediate prizes at hand, and Japanese covert activity blanketed the region, wielding violence and influence of a terrifying nature.

Everyone Can Spy; Everyone Must Spy

Hess’ documentation of Japanese espionage was quite extensive. He documented three areas – the history of Japanese espionage, how espionage was conducted at mass scale, and the targets of Japanese espionage.
Hess argued that spying was second nature to the Japanese people. Wherever they go, what ever they do, whatever they see, their eyes and ears were instruments to gather information. Whenever there was a chance to spy, one should be spying. It was the amateur, and ordinary citizenry, that were the best spies. Japan instilled in its people that it was a patriotic duty to spy. The most efficient amateurs were expatriates, students, and businessmen. In response to the Opening of Japan, the Japanese sent countless diplomatic, trade, and naval missions to gather precious information in Europe and America. Information that was openly gathered was perhaps as valuable at that covertly uncovered. The sheer number of citizen spies made it extremely valuable, relative to the professionally trained ranks. They could cover more distances and more places and go undetected with less suspicion. As a tactic, they would subtly or overtly criticize Japan to win the confidence of citizens in the targeted country. Such false friendships would ensue and be the source of valuable information. Finally, the ubiquity of the Japanese tourist with a camera was not just a personal fascination and stereotype of the Japanese people, as Americans had pejoratively believe, even as late as the 1990’s. It was a part of a directed effort by the government to get cameras into the hands of ordinary people for the purpose of intelligence gathering. To aggregate all of the citizens gathered information, the Japanese consulates throughout the world served as transfer points of information. Japanese loyalists casually but methodically brought information to the consulates and deposited the information. Carrier pigeons were used to transmit information hundreds of miles between consulates and from the field. One might wonder about the security of information being transferred. At least for the low fidelity consumer information, this was not much of a concern, at least in America and other English speaking countries. The strangeness of the Japanese language in both written and spoken forms (along with arrogance of Caucasians dismissing the communications of Japanese as primitive and unimportant) created little concern that the information captured would be decipherable.

For more sophisticated spy operations beyond that of the amateurs, commensurate sophisticated techniques and devices were created. Fake toothpaste containers, false teeth, and eyeglasses cases were compartments to hold information undetectable to unwanted eyes. Pigeons were strapped with cameras so that pictures could be taken of key locations such as military bases and industrial facilities such as power plants and dams. Pigeons need not be trained to take pictures; rather, by sending pigeons on specific flight routes, cameras would fire at regular intervals. Using the “law of averaging” and sampling techniques, detailed photographs of important facilities could be taken and stitched together to create complete pictures.

What was the extent of Japanese spying? It’s a bit hard to know, especially considering that everyone, according to Hess, was a spy. However, from a financial perspective, Japan appropriated 13,814,000 yen to its Secret Service in 111934-35. That was about $4,000,000 then and about $80 million in 2017. In contrast, the United States appropriated $240,000 or about $4.8 million for espionage and counterespionage services; about 6% of the spend of Japan.

From Crime to Espionage

Philosophically, I’ve often wondered – what was the purpose and goals of a mob organization and, specifically, the leader of such crime empire? Perhaps money and power are rewards in their own right, whether it be from legal or illegal means. Hence, mobsters might not be that much different that other enterprising businessmen (or women).

In particular, I’ve often wondered, and been asked when writing this book, what motivated my grandfather? What were the underlying motivations for his actions? Certainly, his upbringing, as a second son in Japan in the backdrop of the Japan’s transformation in the early 20th Century and his familial connections to Toyama Mitsuru, Admiral Togo, and the Japanese Imperial Navy played a significant role. In particular, as a second son, I’m guessing the need to prove oneself outside of the shadow of an older brother weighed heavily. And, metaphorically speaking, America’s relationship with Japan was perhaps not quite paternalistic but that of an oldest son towering over a second.

As much as Yamamoto had succeeded within the Toyo Club and assented to head the club, he pondered, in 1931, “what now?” Would a continued life of crime running a large illicit network of interconnected businesses and stockpiling hoards of cash be his legacy? Certainly, personal gain and wealth did not seem to be much of importance. He lived a simple life without much extravagance, even though the Toyo Club accumulated tens of millions of dollars. More of the same would be a reasonable fate. However, it was fraught with danger, as one might expect as the head of a mob organization. And, within a few years, death or forced retirement (as covertly orchestrated by powerful entities in Japan) was almost a certainty.

Instead, Yamamoto decided to pivot the Toyo Club.

A Pivot, in 21st Century Silicon Valley parlance, is the transformation of a company, typically a startup, from one business to another. A pivot is typically a dramatic change necessitated because an existential threat will put the company out of business. Slack’s transformation from gaming to enterprise communications, Microsoft’s change from PCs to the cloud, and Apple’s move from Macintosh desktops to iPhones are all pivots. While a pivot is popular-today terminology from the 21st Century Silicon Valley, it is a well suited description of Yamamoto’s plans for the Toyo Club.

The Toyo Club would exit the wholesale opium business and transform itself to support Japan’s nationalistic and Imperialistic agendas. Financial gain was not his primary objective. Rather, allegiance and dedication to the Rising Sun was. Influence and control in America would be an artifact of success.

Yamamoto realized that the underlying businesses of the Toyo Club, outside of drugs, were well suited to supporting the greater cause. Yamamoto would leverage gambling, prostitution, fishing/canneries activities to support the new cause.

Make Japan Great.

He would transform the Toyo Club to focus on three vectors; money, espionage, and terrorism.

Money: Lifeblood of Toyama

Money was the lifeblood of the Black Dragon Society. Some of it came from extortion and other criminal behavior. However, much of it came from private support from those that believed the cause. Indirectly, the Toyo Club supported the Toyama and the Black Dragon Society through its drug business. The more drugs processed from Asia to the United States, the more money flowed to Toyama as an intermediary in the supply chain. As the Toyo Club’s drug business stopped, this flow of money was now only a trickle (but still substantial) of the recent past.

Yamamoto decided the Toyo Club would financially support the Black Dragon Society directly, through its operations of other businesses to compensate. Further, the Toyo Club had stockpiled significant cash that it would make available to the Toyama.

Gambling would be the primary source of money. Yamamoto ramped up gambling operations up and down the west coast. Increasing operational efficiency as well as growing the business would be key. Shoring up clubs in California would be potentially a large source of new business. Of course, these clubs were largely under control of the Tokyo Club. His meeting with Sera after taking control of the Toyo Club was key – it established a strong “toe hold” into the Tokyo Club’s satellite operations. Further, Yamamoto was able to reinforce with Sera the nationalist agenda to Make Japan Great. Sera was, in theory, on board. It was yet to be seen if in practice money would flow. If not, Yamamoto confidently believed taking operation control of these clubs would enable him to siphon money to Toyama regardless.

Of course, closer to home, Seattle, Tacoma, Vancouver, and other clubs in the Pacific Northwest extending down to San Francisco continued to thrive and grow as well. While the gambling business did not generate the revenues to match the previous drug business, it generated tens of millions of dollars.

Bailing out the Bank

The stock market crash in 1929 left America in turmoil. It sparked the Great Recession. The Japanese-American community was not immune to these economic troubles. On October 23, 1931, the Pacific Commercial Bank went bankrupt. The bank was cornerstone of an economic empire of Masajiro Furuya. Furuya owned and operated a network of businesses known as the “Furuya Kingdom.” It was magnificently successful – until it wasn’t. Perhaps its downfall was inevitable, but the Great Recession accelerated its decline.

On that fateful October day, the doors were locked and windows drawn shut. Behind the scenes Furuya’s men, businessmen owed by the bank, other banks connected to the Pacific Commercial Bank frantically scurried about to salvage the situation. Strange dealings, which I cannot explain, such as a man requesting a withdrawal of $300 was given $3000 took place. Depositors were often those affiliated with the Toyo Club. For whatever reason, the bank was that favored by prostitutes. The bank’s failure would have great impact around the world – the bank had interconnected relationships with Sunitomo Bank and Yokohama Specie Bank. If Furuya’s bank failed, the others would suffer too. Characters of both upstanding and criminal pedigree collaborated and fought as to how to salvage their interest in the bank. A plan for personal harm to Yoshito Ono, manager of the Sunitomo Bank via dynamite at his home was concocted. Sunitomo Bank was a creditor to the Pacific Commercial Bank. (Though it is unclear to me why he was a target of violence.) Ultimately, through perhaps complex but correct reasoning, providing liquidity to the banks was necessary to save them. Bickering among leaders in Seattle and Japan ensued as to who would provide the money. Most of the meetings to decide happened at the Toyo Club – who had deep relationships with all the banks, especially Sunitomo.

It is unclear precisely who provided the capital or how much. Perhaps surprising or perhaps not, the Toyo Club, under the direction of Yamamoto, fronted much of the cash. It was at least a million dollars but likely five or ten. Further, I’m told by my father, that his father, Kanekichi Yamamoto, provided loans directly to desperate store owners whose money was locked up in the various banks.

Was this altruism on the part of the new boss of the Toyo Club? Perhaps. Maybe to curry favors. However, I suspect there was ulterior motive. Yamamoto provided more than the necessary capital to Sunitomo. Why? It was a mechanism to get large amounts of money out of the United States, detected but approved by the federal government. Where did the money flow? Into the hands of Toyama Mitsuru and the Black Dragon Society.

No time was the saying, “You can never repay a favor” more true. The smaller “loans” made to proprietors that lost money in the bank failure, were never expected to be repaid. Instead, there was the unspoken promise to pay (some of it) it forward to Japan, in the name of the Black Dragon Society. It was a brilliant move. Yamamoto would indebt the people he loaned money. Loyalty would flow to himself, his cause, and the Black Dragon Society. Indeed, these were loans that could never be repaid. Nationalism and allegiance to Japan was solidified with money.

Fishing and Canneries

The Alaskan fishing and cannery operations, after its expansion a few years earlier, were humming. Santos, as predicted, had done an excellent job in completing the expansion and operating it. Not only were the drug processing operations a runaway success, but the fishing and canneries were extremely profitable as well. With the withdrawal from the whole drug business, Yamamoto decided to scale up the fishing and canning business. Not surprising, he assigned Santos to the task. Santos was up to the challenge. In addition to managing the continued drug processing for the retail business that the Toyo Club retained, the Santos quickly ramped up the fishing and canning business. As a side benefit, the gambling and prostitution business grew commensurately.

Santos continued to impress. He was up for whatever challenge Yamamoto assigned his way. By 1933, the Alaska fishing business was now 5 times larger. Realizing that the success was the doing of Santos, Yamamoto decided to give Santos even more responsibility. He decided to bring Santos to Seattle to run much more of the diversified businesses of the Toyo Club. He would still be in charge of operations in Alaska, but he would give protection operations and gambling responsibilities to him as well.

Yamamoto increased his relationships with the Japanese government through the consulates on the west coast. Through this diplomatic channel, he opened communications and strengthened relationships with the Imperial Navy and Japan’s secret service. In parallel, he also had a separate conduit to Toyama and the Black Dragon Society. The legitimate fishing operations would evolve to be a conduit for communication, personnel, and arms (in addition to the continued drug business). Fishing boats traveling across the Pacific were difficult to trace. Information, spies, engineers, and other personnel slipped in and out the country undetected (or detected with suspicion but without prevented action) as ships entered port or rendezvous with other ships coming ashore.

Prostitution: Collecting Information

In the early 20th Century, operating under the guise of either the Black Ocean Society or perhaps the newly formed Black Dragon Society, Toyama established the “Hall of Pleasurable Delights” in Hankow (now part of modern day Wuhan). Here, every oriental version of all the vices could be experienced. It was used to entice Chinese notables. Distracted by the pleasures of the flesh, information was often easily extracted. And, if not, blackmail after engaging in the oriental delights, was a secondary technique for extracting intelligence information. It was also a rendezvous point for spies and information depot. When engaging in her services, information could be passed to a prostitute. The prostitute would mindfully collect all information given and pass it along to the appropriate conduit It was said there is no safer place to exchange secrets than in bed. Lastly, members and loyalists of the Black Dragon Society were allowed access to the pleasures of the hall in the guise of training. Namely, to understand the enemy who would be enticed by the hall, one had to know the pleasures and the seduction involved. Perhaps true, but maybe it was merely reward or enticement to indoctrinate.

Yamamoto was aware of such tactics and knew they would be effective in America. The prostitution business in place would be ideal suited for such implementation in the United States. The separation of clientele by Japanese and not into separate brothels provided the needed firewall of the two businesses. Japanese agents that had gathered important military, industrial, or political information would frequent a brothel of the Toyo Club. There, while engaging in sexual pleasures and delights of prostitutes trained to carefully listen and remember, agents could transmit the important information they had gathered. Once satisfied and depleted, the men would leave and the women would dutifully pass along the information gathered to waiting recorders of the Toyo Club. The information sometimes was aggregated and summarized but oftentimes not. All was passed on to the Japanese consulate where it was recorded and passed back to the Japanese Imperial Navy or possibly Toyama.

Americans, mostly military officers and government personnel, were segmented away from Japanese notables seeking pleasure or exchanging information. The White brothels were equipped with prostitutes, Toyo Club members, and equipment – notably cameras – to collect information from unsuspecting American military and politicians. While White prostitutes were occasionally the choice of such visitors, the exotic and erotic pleasures of the oriental flesh were usually the choice of Americans visiting Yamamoto’s brothels. The delights of the foreign, petite, and seemingly submissive Japanese woman were oftentimes too desirable to resist. Caught up in the acts of sexual pleasures, their guard was often down. Secrets, and sometimes just important public information, were cajoled from these men by trained prostitutes. The women were as much actors as they were information gatherers. Their seemingly uncontrolled expression of their own sexual excitement and pleasure brought their clients to new sexual heights where there inhibitions were greatly decreased. Perhaps the women derived pleasure or it was faked; nonetheless, bringing men to their sexual climax proved to the ideal time extract important information.

Even if information was not voluntarily offered, the women had other means. Namely blackmail. A prostitute would maneuver its target into a position that he would not want to be publicized. Then, as feigning surprise as though discovering a surprise in the heat of the moment, she would point off to a position on the wall and squeal, “Look!” Her man would turn to look into a camera hidden behind the wall.

Eventually the man would be confronted with the photographs of him in compromising positions. “I’m sure your family and friends would be interested in copies of these pictures,” the man would be told by one of Yamamoto’s men. Usually, rage, anger, and violence followed. Typically, they would attempt to snatch the photos away tear them up. Of course, the negatives were safely stored away elsewhere. Then, threats to report them to the authorities followed, which the retort was, “We’re happy send photos to your superiors and family.”

The American was in a pickle. In exchange to keep the compromising evidence a secret, the poor man would be compelled to reveal the important information that he had to Yamamoto’s men, rather than risk his family or position.

In addition to the valuable information gathered through prostitution, it continued to be a lucrative business that thrived in the 1930’s. Seattle in particularly thrived. However, its extended operations through the Tokyo Club provided intelligence and revenue through prostitution into California as well.

Leveraging the Old for the New

By 1934, the transformation of the Toyo Club was nearly complete. Yamamoto had secured his position as the undisputable leader. The drug business, while still financially lucrative, was no longer a key focus for the Club. He had successfully repurposed the fishing/cannery, and prostitution enterprises to support his new calling – Making Japan Great. Yamamoto, by virtual of his positions with the Sokoku Kai and the Black Dragon Society and relationship with the Imperial Navy and Japanese Consulate, now found himself in a key role for Japan’s expansionist goals into the Americas. Necessary money, intelligence, and personnel all flowed through Yamamoto and the Toyo Club. A network of spies, engineers, and terrorists flowed from Japan into America, all built on the foundation of the previous successes of a crime empire.

It was as surprising as it was profound.

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