Yoshida’s strategy was canny. Rather than confront the Americans on everything, he conducted a delaying action, slowing them down if at all possible, hoping to roll back some of their reforms once they had departed. Among the few reforms he did not oppose was the land reform, although he told Hiroo Wada, who was in charge of carrying it out, “As a conservative I am opposed to this on principle.” Typically, when the Americans wanted to change the names of some of the zaibatsu, which might have cost businessmen millions and millions of yen, Yoshida fought the reform and won. What the Americans saw as legitimate grievances on the part of large segments of the Japanese population, whether workers or farmers, he never accepted. He thought the people with grievances were those leaders of the business and financial community whom the Americans were busy purging. To him purging was guilt by association, a practice, he said, in which civilized nations no longer indulged. In early 1947, when his own minister of finance, Tanzan Ishibashi, was purged, Yoshida consoled him by saying, “Just imagine that you have been bitten by a mad dog.”
Of all SCAP’s reforms he most hated the liberalization of laws permitting the formation of labor unions. The Communists had always been a part of his nightmare, and he had feared the power they might gain once the war effort collapsed. Now here were his old enemies, the leftists, coming back, gathering strength within the union movement, tolerated by the Americans, trying to undermine his efforts to re-create the right Japan. Even worse, they were attacking him personally. His opposition was not just to the radical unions; in his heart he hated moderate ones as well. His view of what labor should do was relatively simple: Its job was to work hard, to raise productivity, and not to challenge management on rights and wages.
Yoshida regarded Douglas MacArthur with considerable suspicion. In that first phase of the Occupation, MacArthur’s command was trying to do something fairly delicate: Under the most difficult conditions of hunger and poverty, it was trying to nurture a non-Communist, democratic union movement against the opposition of a conservative Japanese government while tolerating what it considered abuses of democratic freedoms on the part of a particularly skillful Communist leadership. It was doing this, rather than arbitrarily cracking down on the Communists, because it was eager to teach the Japanese lessons in democracy, and it would not be fitting, no matter how suspicious MacArthur and his aides were of the Communists, to begin its lessons in democracy by squashing a newly legalized opposition party, particularly an opposition party whose rhetoric sounded much like that of SCAP. Besides, SCAP was confident of its own power and its ability to crush the Communists if need be.
The conservative Yoshida government was furious with the early American tolerance of the far left, in no small part because Yoshida himself was a choice target of the Communists. He complained constantly to MacArthur’s headquarters about its encouragement of what he believed were subversive elements in the unions, and he repeatedly criticized MacArthur’s own staff, claiming that it was riddled with Communists. Yoshida even told MacArthur that Theodore Cohen, his liberal labor staff man, was a Communist. (Cohen retaliated by asking Yoshida at one gathering whether the prime minister had ever had a single friend who was a working man. Yoshida said nothing, but quickly walked off.) Not only was MacArthur convinced that labor unions had to be part of the new Japan, a balancing force to the powerful ingrained business interests, but he also had serious political ambitions in America and had no desire to return as a candidate who had just crushed Japanese labor. Yoshida kept pushing MacArthur to move against the Communists, but in 1945 and 1946 the general held back. (Yoshida also disliked the Socialists, whom he compared to mermaids: “Their faces suggest they are beautiful maidens, but their bodies are like fish. Yes, they smell of fish.”) He and others, principally the country’s industrialists, were insisting to the American authorities that the Communists in the unions could not be controlled.
Though the Communist party in Japan was rather small (it had been made legal in the fall of 1945), its hold on certain unions was almost complete; the Communist labor leaders liked to boast that a handful of party members controlled the teamsters, the printers, and the newspaper unions. There was little reason to doubt this. The most influential labor leaders in many of the unions were Communists, and the most powerful figure on the left in the country was Kyuichi Tokuda, the head of the Communist party, who had just been released after some eighteen years in jail as a political prisoner. He was a fiery speaker, a talented organizer, and a true revolutionary. He believed that Japan, because of disillusion over the war and because of hunger and poverty, was ripe for revolution. He saw the labor unions as the means to that revolution. Tokuda was somewhat surprised by the legitimacy the Americans permitted him and surprised even more by their tolerance of his mounting protest movement. Few though they were, the Communists were extremely well organized, and they had considerable prestige, since no other group had suffered nearly as much at the hands of the militarists. That MacArthur’s headquarters had not acted against them added to their popularity among many Japanese; if the Americans did not crush them, it was reasoned, then they must be supporting them.
The radicalism of the unions seemed to grow in 1946, as the economic situation worsened. Inflation was out of control, government expenditures exceeded receipts by some 67 percent that year, and the only thing the government could do was keep printing money. The harvest was bad, and at one point there was only four days’ supply of rice in government hands. Some of the growing rebelliousness was the product of genuine grievance, some of it the result of manipulation on the part of the Communists. In the fall of 1946, Tokuda decided that this was the perfect moment to press the Communist case. He organized a series of mass meetings at which the left demanded food and listed other complaints. The great moment for the radicals came in early 1947. Mass meetings held outside the Imperial Palace drew huge crowds. It was as if a tide were carrying the left forward.
In those heady weeks, the Communists seemed to be surging toward power without opposition. Indeed, one high Communist leader used American naval craft to meet with dock workers; to the Japanese that represented not merely American tolerance but American support. The government seemed immobilized. The radicals suddenly looked like winners, and in Japan that was a powerful asset. Tokuda intended to bring the business of the nation to a halt; if he did, he believed, he could seize power in the chaos. He skillfully brought the more moderate unions under his control, at least momentarily. In this he was aided by Yoshida’s stubbornness. Yoshida and his government were unable to make any accommodation with the moderate unions and thus isolate the more radical ones. A general strike was called for February 1, 1947. Slowly and steadily, support for the strike appeared to grow. Much of the Japanese press seemed to favor it. Early reports at MacArthur’s headquarters estimated that two million Japanese workers would take part. But Tokuda continued to gain strength. SCAP changed its estimate: Four million Japanese would take part. Then a Communist leader was found stabbed to death in his home, a victim of right-wing zealots in an assassination that was painfully reminiscent of the prewar assassinations. That too fed the radical movement. After the stabbing the Socialists joined with Tokuda. That meant six million workers might go out on strike.
Until the very eve of the strike, MacArthur held back. His view of himself mandated that he stay above the fray, that the Japanese deal only with his underlings and that they divine his intentions, which were that this strike should not take place. But he was loath to give them orders, preferring instead that they find that his way was their way. Through his subordinates he had already sent out very clear messages to Tokuda and his allies that he would not permit a strike like this to cripple an already fragile society with so ravaged an economy. The Communists had not seemed to take the warnings seriously. They mistook MacArthur’s Olympian distance as a sign of weakness. It was a mistake. Finally, only nine and a half hours before the strike deadline, MacArthur moved. There was only a three-day supply of food and gas in the
country, and he would not accept a strike that was virtually life-threatening. “I will not permit,” his statement declared, “the use of so deadly a social weapon in the present impoverished and emaciated condition of Japan.” He also censored the Communist paper, and his headquarters began to crack down in other ways on Communist activity, for example by limiting contact between labor officials and representatives of Communist nations.
For a moment Tokuda and his people considered defying MacArthur. But their strength was only at the top of the unions; they had little organization and standing among the rank-and-file, and ordinary Japanese workers were not about to challenge Douglas MacArthur at that moment. The Communists had mistaken influence for power. They had overplayed their hand, and when they backed down in front of MacArthur, they immediately lost face. They had hoped to gain some fifteen seats in the Diet in the April elections; instead they lost one. Tokuda himself was purged by MacArthur in 1950, right after the Korean War began. He slipped out of Japan and made his way to China, where he died in the mid-fifties.
After that incident, MacArthur continued to move against the far left. Within his headquarters the conservatives gained power over the New Dealers. (Part of the reason, it was always believed by those who knew the general well, was that back home in America, the conservatives had done exceptionally well in the 1946 elections, which in turn affected MacArthur’s attitude toward Japanese unions.) Soon, with American help, the Japanese began to strip their unions of Communists. In 1949, with MacArthur’s support, there was an all-out assault upon Communist leadership in the unions which became known as “the Red Purge.” In union after union the Communists and some of their colleagues were simply arrested and removed from their jobs. As many as ten thousand workers were fired during these purges, and hundreds of thousands were pulled back from union membership. The American army sent its counterintelligence people, many of them Nisei, to go through the country looking for Communist leaders.
These events in Japan reflected the larger changes taking place in international politics. American policy in Japan was about to shift because American foreign policy throughout the world was very quickly changing. The Cold War was intensifying. The wartime alliances were over. Old allies were the new adversaries, and old adversaries were about to be the new allies. Not only was American involvement in the Cold War deepening but also, as it deepened, it affected domestic American politics, and thus Washington’s attitudes, as well. By 1948 it was obvious that Chiang Kai-shek’s power was diminishing and that America could not count on a stable anti-Communist China. Instead, China was likely to go Communist. That brought a profound change in Washington’s attitude toward Japan. In the past MacArthur had had to fight for every scrap of aid, be it food or financial. A weak Japan did not bother many high-level Americans in those days. But when the Cold War extended to the Pacific, Washington’s attitude changed. Suddenly there was a need for a Pacific bastion. Washington, which had been slightly amused by (and only marginally supportive of) MacArthur’s on-the-job attempt to teach the Japanese democracy by permitting them to stumble ahead themselves and make their own mistakes, suddenly became nervous about a nation so economically vulnerable. It was no longer the quality of Japanese domestic life which was at stake but, instead, American geopolitics.
Where the tilt in MacArthur’s headquarters had been somewhat to the left and against the old industrialists, Washington now wanted to favor the Japanese business community. There was increasing pressure on MacArthur from American conservatives to bring some coherence and stability to the Japanese economy and to stop what some people in Washington regarded as his persecution of the zaibatsu. As far as Washington was concerned, MacArthur was permissive toward the left and too tolerant of incompetent governmental machinery; his headquarters was sponsoring an inflated, undisciplined economy. The problem could not be MacArthur himself; everyone in Washington knew how conservative he was. Therefore, it had to be the New Dealers around him. George Kennan, then the national security establishment’s leading authority on Communism, had repeatedly warned against occupation policies that weakened the power of business and against a general drift toward socialism, which might eventually turn the country Communist. Others, like James Forrestal, warned against the power of leftist New Dealers in MacArthur’s headquarters. It was time to shape up the Japanese economy and, by so doing, stiffen the country against the Communists.
The first move against MacArthur’s control of the economy was a visit in the fall of 1947 by William Draper, a former general and Dillon Read banker who was then undersecretary of the army. Draper’s visit was an important one. He had already played a pivotal role in West Germany, where, as an aide to General Lucius Clay, MacArthur’s counterpart in Europe, he had in effect ended one program, that of denazification of West German politics and the breaking up of the old German cartels, and started a new one, that of strengthening German industry. When Draper left Germany, America was no longer looking for Nazis; it was, under the pressure of a growing confrontation with the Soviet Union, looking for allies. Now, in Japan, his role was to be strikingly similar. In Tokyo Draper announced that he wanted to reduce the expense of American support for Japan. “Tremendous costs have accrued to the victor,” Draper noted. But what he really wanted to do was change the direction of the policy. Draper lobbied forcefully with MacArthur against SCAP’s reforms. America needed to strengthen the Japanese business community, not hobble it with trust-busting and decentralization, he argued. The purges of businessmen must stop, he insisted. In 1948 Draper returned to Tokyo to press his case again with MacArthur. It was clearer now than ever before that Washington wanted to change its policies in Tokyo. Still frustrated by what he considered the lack of urgency at MacArthur’s headquarters, Draper asked MacArthur if he would accept a man named Joseph Dodge on temporary assignment to his staff. Dodge’s job would be to tighten up the Japanese economy by enforcing earlier Washington directives. MacArthur said he had no objection as long as Dodge was under his command.
Joseph Dodge arrived in Tokyo on February, 1, 1949. His stay was to last only three months. He was a small, somewhat self-important, pugnacious man who even in Japan, where men were generally short, wore lifts in his shoes. He had graduated from high school in Detroit and instead of going to college had immediately set to work as a clerk in a bank. In Japan he was sent on the most complicated of modern international missions, but he remained the ultimate conservative small-town banker (although later in his career he headed a large bank in Detroit). No relation to the automobile family, Dodge was the product of grinding, suspicious, and unsentimental times in America. As far as he was concerned, the banker’s job was to say no—with few exceptions. Banks succeeded not by being visionary and anticipating the changes in society but by lending only small amounts to the surest candidates under the strictest conditions. He was, said one friend, a nickel-and-dime man.
He liked to boast that when he served as a bank examiner for the state of Michigan, he enjoyed his work immensely. The other examiners, he said, would take the word of the local banker about how much cash was in the vault. Not Joseph Dodge. He liked to gather the bank’s staff and, with them, go into the vault, whereupon the evening would be spent counting every dollar.
He had taken over what was to become the Detroit Bank in 1933, one of the worst moments of the Depression, when that city’s banks were probably hit harder than any in the country. By dint of the toughness of his approach—the relentless manner with which he scrutinized every loan and rejected all he possibly could—he held that bank together during the bad times, so that afterward, during the war, it became very successful. No one, he liked to point out, had ever given anything away to him, and he had no intention of giving anything away to anyone else. He liked to boast that he had dealt with the possibility of his bank’s giving out bad loans during the Depression by the simplest of all methods—depriving all bank officers, including himself, of the authority to lend money. He hated an economy that was loose, where
money moved around too easily, where the standards of lending were too flexible.
He knew of nothing but work. Other bankers, the Grosse Pointe men who were connected to GM and Ford, might have had a certain panache that allowed them to mix in the upper-class social milieu of the city, but Joe Dodge was always edgy there. He thought a lot of those fancier bankers were soft, men who depended on social connections instead of hard work. His lack of education hung heavily on him, and there was nothing he could talk about but the bank. He was comfortable when he was working and uncomfortable when he was not. To the day he retired he was at his desk both Saturdays and Sundays. He was a man for mean times, not good times; parsimonious during the Depression, he had difficulty adjusting to the lusher postwar American economy. The boom—easy money, too many people buying too many things—made him nervous. In those years he deliberately took his bank out of one of the most profitable of all areas, lending construction money both to individuals and to institutions. The building boom was something he neither liked nor understood. He believed there were simply too many people buying and building houses for the first time in their lives, people to whom in the past he never would have lent money. When he was young, people of this class did not own their own houses, and he could not conceive of them doing so now. To him life was simple—no one should ever spend more than he made—and the bank was the enforcer of that Puritan credo. A simple, conservative man of the American Midwest, he believed in the verities—a balanced budget, the free market, and as little government interference in business as possible. “The imperial accountant,” Ted Cohen, one of the SCAP liberals, called him.
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