By bribing someone in the 8th Army, Zappetti obtained a permit that allowed him to sell goods legally to authorized military personnel. He established a company and, in late 1950, set up shop in a two-story ferro-concrete building located on a broad West Ginza avenue that was perpetually jammed with military personnel, street vendors and smoke-belching oil drum fires.
The new company’s name, Lansco, was a play on the first names of Zappetti and his new partners, a Russian Communist with a taste for booze and expensive cars, named Leo Yuskoff, whom Nick had met during his CPC days, and an entrepreneurial US Army lieutenant named Al, who was transferred back to the States shortly after the company began operations. Yuskoff was a stateless White Russian in his early forties who had been born in Kobe, Japan, where his parents had settled after fleeing the Russian Revolution. One of an estimated 500 White Russians living in Japan after the war, Yuskoff could read and write Japanese better than most natives. He was simultaneously a devout Marxist and a shrewd, dedicated businessman, capable of calculating complex profit margins at the drop of a hat.
Displayed on the ground floor of the Lansco building was a wide variety of merchandise: canned and dry goods, including silk, wool and imported London tweeds. There was assorted hardware and appliances, like Gibson refrigerators and Servo stoves, along with luxury items such as Capehart phonographs – all procured from the PX by legitimate or other means. Although the store would turn a huge profit, it had originally been intended for show – to deceive the MPs and disguise the important part of the operation, which was conducted upstairs and which was the business of illegal checks.
Among Lansco’s first clients was a major American shipping company with an office in Tokyo that was looking for bigger earnings on its cash reserves than the banks were paying – at the time, 5 percent. The company deposited $2 million in Lansco’s account at the Tokyo branch of the Bank of America, and Lansco sold dollar checks on that account to black market buyers for yen. The official bank rate had been fixed at 360 yen to the dollar in 1949 as part of a tight new SCAP policy following a period of wild inflation that had seen the currency balloon all the way from 15 yen. (The dollar would stay at the 360 level until 1973, when US President Richard Nixon took it off the gold standard and allowed it to float on the international market.) On the street, however, with demand high due to stiff currency exchange laws and restrictions, a dollar would fetch anywhere from 480 to 520 yen, which meant considerable profits for those with greenbacks to sell. Other Lansco clients included American and Canadian construction companies under US military contract who wanted a better exchange rate on their government-issued dollar checks than the banks were paying when they converted them to Japanese currency. Lansco would buy their checks at the rate of 420 yen to the dollar, then sell them on the street at 480–520 yen. Since the checks in question were seldom under $100,000 a piece, the company realized a substantial return on each transaction.
Lansco’s most notable accomplishment was creating a bank out of thin air. The Bank of Texas, as it was called, was an entirely fictitious bank with no assets, no liabilities, and no legal standing whatsoever. It was brought into being solely by printing up some official-looking but fake documents, a letterhead that displayed an imaginary address in a nonexistent Texas town, and a set of checkbooks. For sheer audacity, nothing else in the city could quite match it. Whenever Lansco needed a quick fix of capital, Zappetti would prepare a bearer’s check for a certain amount – $30,000 was usually the minimum required to ensure a respectable profit – sign it at the bottom with Harry S. Truman or Franklin Delano Roosevelt, and sell it to someone in the underworld for 10 percent of its face value. The underworld buyer would in turn sell the check to someone else at a ‘discount’, explaining that it was stolen. The buyer usually didn’t care because he was planning to turn around and sell it to someone else – perhaps a Japanese entrepreneur, desperate for hard-to-get dollars. Whoever tried to cash the check at the end of the chain would realize it was worthless, but given all the go-betweens, it was almost impossible to trace the draft back to its original source.
The primary traffickers of the Lansco checks were members of the two gangs vying for control of the Ginza, the Sumiyoshi-Ikka (Sumiyoshi Family), a prewar gambling group that had traditionally run the area, and the Tosei-kai (Eastern Voice Society), a vicious gang of young Korean street toughs that had sprung up on the ashes of Japan’s defeat. The Sumiyoshi and the Tosei-kai were at constant odds with each other over turf, which included the right to buy checks from the Americans, to ‘escort’ GIs on leave from Korea, where war had erupted in June 1950, and to run protection and franchise rackets among the myriad of nightclubs, cabarets, dance halls, amusement parlors and gambling dens springing up all over the Ginza.
Gangsters from both sides would from time to time take sudden potshots at the large clock tower atop the seven-storied Hat-tori Building at the Ginza 4–chome crossing, just to show who was in charge. Both gangs, in fact, earned the sobriquet ‘Ginza Keisatsu’ (Ginza Police), because they were better armed than the men of the Metropolitan Police Department, who, after having been relieved of their weapons by the GHQ, often had to make do with wooden staves.
For the most part, the foreigners and indigent mobsters on the Ginza lived in parallel worlds that did not intersect socially; the gaijin (‘outside people’, as Japanese referred to the Westerners in their midst) kept to the cozy, if gaudy military clubs, like the Rocker 4, on one corner of the Ginza 4–chome intersection, a new multifloored pleasure palace with 2,000 hostesses ferried to work from all around the rubble-strewn city by Army shuttle buses. The gangsters hung out in their own rickety bars – typically dark establishments with bare unpainted wooden floors, vinyl-covered bar stools and booths, and smelly ‘outdoor’ unisex toilets. The two sides only came together when business demands dictated – fake check sales, money laundering, or, as in one other memorable venture, gumball sales.
Lansco had somehow come into the possession of a thousand pounds of stolen gumballs, which the company was unable to sell. Lansco representatives went to stores, kiosks and open-air stalls all over the Ginza, explaining that gumballs were the latest rage back in the States, but found there was absolutely no interest. The Japanese merchants they spoke with had never seen gumballs before and after one viewing said, quite candidly, that they did not care to see them again. There were all sorts of objections: The gumballs didn’t suit Japanese tastes, a refrain foreign businessmen would hear quite often over the next half-century in association with any number of products; they weren’t sweet enough, the artificial coloring didn’t look right, they stained the hands, and so on and so forth. That Lansco had no gumball machines with which to dispense the gumballs did not help matters.
Faced with such obstinacy, Lansco turned to the Tosei-kai, employing a band of young Korean thugs from the gang to revisit all the shop owners and describe what would happen to them if they did not revise their inventory plans. This new sales strategy proved remarkably more effective than the previous one. Soon, the downtown area was inundated with gumballs. Lansco phones were ringing left and right with calls from shop owners begging for more. When Lansco raised gumball prices, the phones rang even harder.
Usually, however, such forceful tactics were not necessary. The demand for their first-floor goods among the local populace, though they were forbidden by law to buy them, proved to be far higher than anyone had expected, especially as the Occupation neared its end and a mini-boom from Korean War procurement orders began injecting the first signs of life into the economy. Lansco moved Zippo lighters by the box, nylon stockings by the carton, and the heavily rationed commodity of sugar by the sackful. They brought in their wares by the truckload and, when the coast was clear of watchful MPs and Japanese police, set them down on the sidewalk in front of the store for sale to passersby, who hauled them off in three-wheeled carts. In one insane afternoon, the company sold 4,000 pounds of stolen spaghetti. It was a time when people did not need to be
strong-armed into accepting American products – with the exception perhaps of gumballs.
Another foray was into the field of slot machines. The opportunity arose to rent several slot machines and install them in the 52-room Hotel New York across the Sumida River in Eastern Tokyo, among other spots. The hotel was a popular place for GIs on leave from the Korean War because of its bountiful supply of ‘onlies’ – girls who would contract to spend an entire week of R&R exclusively with one soldier. Upon acquiring the slot machines, Zappetti, who was preternaturally skilled in such matters, rearranged their inner workings so that hitting the jackpot became virtually impossible. The GIs played the machines, almost never won, and never seemed to catch on. But then again, they weren’t around long enough to grow suspicious. Zappetti increased slot machine revenue by purchasing bags of as yet unstamped 10-yen coins pilfered from a government printing office in Sugamo, which were usable as slot machine tokens, and he sold them to the R&R GIs.
The amount of money Lansco made was extraordinary. At any given time there was several hundred thousand dollars in cash in the company’s coffers – US dollars, military payment certificates, Japanese yen, even some Korean won. Membership in the company also grew. The first addition was Ray Dunston, a big, raw-boned, ruddy-faced Australian, around fifty years old, who was welcomed into the company because he possessed a valid license to sell sugar (still among the most tightly rationed commodities) and because he was willing to contribute $250,000 of his own money in operating capital. Dunston had also started an English ‘academy’ in Tokyo, something his partners found curious since he had never graduated from high school and could barely string together two correct and complete sentences. Another addition was an American businessman formerly connected to the GHQ who was fluent in Japanese and who went on to work for the US Department of Commerce in Washington, D.C. Still another was a Canadian drifter who possessed uncommon skills in the recondite art of falsifying bank documents. Also joining up were two more White Russian Communist capitalists, who would end each business day with Yuskoff in a smoke-filled yakitori shop across the street, getting drunk and singing Russian Eskimo songs. When it came time to go to bed, Leo would stagger back to the office, open up a fresh jug of sake, and curl up with it on the vinyl-covered sofa on the second floor. In the morning, the bottle would be empty. He was the only person Zappetti ever met who drank while he was asleep.
Oddly enough, the Soviet Embassy, involved in a bitter cold war with the United States and its allies, quietly encouraged Lansco’s activities, offering tips and suggestions for possible business deals, in the belief that black marketeering would result in the overthrow of capitalism. As Leo put it to Zappetti somewhat absurdly late one drunken night, ‘Nick, I’m in this business because I want to get rich and destroy the capitalist economic system.’
For a time, Lansco joined forces with a West Coast gangster named Huff, a big, mean-tempered man who ran the Evergreen general store on the eastern end of the Ginza, which was itself a front for black market goods – as a shopper discovered one day when strolled in and asked for some flour and Huff replied, ‘How many carloads do you need?’
Huff became famous in the Ginza underground for the time he hijacked 3,000 baskets of imported bananas from the US military and sold them on the street. His connection to Lansco ended when he was shotgunned to death in a gangland killing, sometime later on a trip to Arizona. Rumor had it he was done in by California-based Asian mobsters, resentful of his success in the Far East.
Eventually, more than one of the Lansco partners would see the inside of a Japanese jail, but that would come later – much, much later, and only after the GHQ had packed up and gone home.
OCCUPATION LEGACY
The Occupation lasted six years, eight months and fourteen days, and the amount of theft, graft, illicit sales, fraudulent conversions and other funny business that took place during that time is impossible to calculate – although many have tried. A Japanese magazine once estimated that 10 percent of all supplies shipped from the United States during the Occupation wound up on the black markets. Another study guessed the amount of American currency brought in by streetwalkers alone from the occupiers to be a staggering total of $200 million yearly. Still other reports dealt with a secret billion-dollar slush fund created by the Japanese government from the black market sale of goods and materials donated by the United States. The fund, equivalent to nearly 10 percent of Japan’s 1950 GNP, was reportedly used to finance the production of basic industries. (In addition, the Japanese government also sold great stockpiles of gold, silver and copper bullion, pig and scrap iron, steel, aluminum and rubber, which they had concealed in early 1945 in anticipation of Japan’s defeat.) Yet, these figures are only educated guesses and no one knows for certain the exact extent of the ill-gotten lucre. Suffice it to say that as an exercise in the cross-cultural exchange of illegal goods and services, it was suitably impressive.
Of course, the Americans liked to view their occupation of Japan as more than just one giant backstreet Walmart. They preferred to focus on the concrete social and political reforms that they had seen instituted, which were designed to give the common man a break: the redistribution of land, the fostering of labor unions, the establishment of equal rights for women, and the elimination of the tyrannical ie (family) system – that aspect of the legal code which gave the male head of the household control over marriage, divorce and adoption. (Japan’s prewar Civil Code had stated, ‘Women are to be regarded as incompetent,’ denying them a voice in matters of law, property, and suffrage.) Indeed, it was commonly agreed that SCAP was infinitely more generous to the Japanese than the wartime Imperial Army had ever been to its Asian subjects. SCAP’s behavior, most notably its decision not to indict the still-revered Sun God Emperor Hirohito for war crimes but to leave him on the throne downgraded to a figurehead, offered quite a contrast to the tales of wholesale rape and murder related by tearful Japanese refugees from Soviet-occupied Manchuria. (As the months and years passed, the failure of the Soviet authorities to account for some half-a-million Japanese prisoners of war seemed to further justify people’s fears that such tales were true.) Given the reality that in the blink of an eye several hundred thousand young Caucasian soldiers had been plopped down into a country where there had never been more than a handful of Westerners at a time in any one spot (missionaries, traders and teachers), it was remarkable that things managed to go as smoothly as they did.
Yet, far too often, the contradictory and unpleasant side of the American character manifested itself and undid much of the good that was being accomplished. Take the sudden restrictions instituted by the second wave of Occupation authorities, who, alarmed at what they perceived to be a breakdown in discipline, sharply limited fraternization between Japanese and Americans for a period of two years, from 1947 to 1949. In one fell swoop, all Japanese movie houses, subways, banks, beaches, rivers, hotels, hospitals, nightclubs, bars and private houses were declared off-limits to Occupation troops, and Japanese citizens were banished from all military clubs and bachelor quarters, where they had hitherto been welcome. It was hardly a lesson in democracy, and, in fact, the specter of MPs bursting into Japanese-patronized establishments and even private homes to thunder ‘Any Americans here?!’ proved an uncomfortable reminder of the wartime Kempeitai, or secret police, who had intruded into every aspect of Japanese life. Moreover, there were several thousand Japanese workers in the GHQ busily censoring newspapers, periodicals and radio broadcasts critical of the GHQ, even opening personal letters and wiretapping telephone conversations, in a search for dissenters. This was all in direct contravention of the Potsdam Declaration, which had called for the establishment in Japan of freedom of speech, religion and thought.
Thomas Blakemore, a young SCAP legal expert who had studied at the prewar Imperial University and who would later pass the bar exam in Japanese, the only American in fifty years following the war to accomplish such a feat, was one who believed the Occupation was a
colossal waste of time and money. Blakemore, an official liaison to Japanese courts and constitutional scholars, whose knowledge of the language and culture was perhaps unsurpassed by any of his GHQ colleagues, was of the opinion that the Americans’ high-handed, hypocritical ways had only earned them the secret enmity of the majority of their hosts – as if their bitter feelings over defeat in war were not already enough reason. (Those postwar surveys which consistently showed America to be the ‘favorite foreign country’ of the Japanese, he liked to point out, also consistently indicated that roughly two-thirds of the population wanted nothing to do with the foreigners in their midst.)
To Blakemore, the leading offender was MacArthur, who professed to understand ‘the Asian mind’ but probably saw less of the country in his stay than anyone else in the Occupation, limiting his vista of Japan to a daily shuttle between his office and the US Embassy, where he lived. During a brief stint with the US State Department in Tokyo, the Oklahoma native, who had also been an OSS agent on the Subcontinent during the war, had filed a report on a bordello in Yokohama with 100 hostesses that was illegally servicing a neighboring US military base – a place where soldiers with disciplinary problems and criminal records were confined as they awaited transfer to the States. He described in his account how payoffs were routinely made to the MPs to buy their cooperation so the inmates could leave the base to visit the establishment across the street, as well as how the girls were recruited, what the VD rate was, and how it was treated. The experience reinforced Blakemore’s personal belief that the Occupation was intrinsically corrupt. When ordered by his supervisor to bury the report because it would reflect badly on MacArthur, who had been boasting grandly of a ‘spiritual revolution’ taking place in Japan (albeit one that evidently required censorship and segregation), he resigned in protest.
Tokyo Underworld Page 3
