PEACE Part Three UNANTICIPATED EVENTS

I am continually amazed that it wasn't until June 22nd, 1945, that the Emperor finally called a meeting of his ‘Big Six’ advisors. He told them openly for the first time , "I desire that concrete plans to end the war, unhampered by existing policy, be speedily studied and that efforts made to implement them." There was no talk of terms, and no effort to "push" the process.
The Japanese were now waiting for the invasion of their most southern island, Kyushu, the next logical target of the U.S. forces. There they would win the "Big Victory" that Okinawa was supposed to have been - to bleed the Americans enough to force them to offer better terms. The leaders of Japan, meeting amongst the wreakage of Tokyo, were certain that a great enough slaughter, mostly of their own people, would drive the Americans to negotiate. And they were certain they could out-negotiate the Americans. Why such a clever people were losing the war was a question never asked by the Big Six.
The Japanese plan was to use the Russians as a conduit to negotiate with the Americans, rather than talking to their chief foe directly. July was spent trying to open that conduit, but the Russians seemed exceedingly dim and obstructionist, and the niceties of diplomacy slowed everything down even more. But there was no worry. In Japan's view, Russia and America were destined to be enemies, and it seems never to have occured to the Japanese leadership that Russia would see a weakened Japan, the nation which had humiliated them in 1905, as an oportunity too good to pass up. But, by the beginning of August, it seemed to Japan that some progress was being made with the Russians.

The plans of Japan's rulers did not begin to unravel until the morning of August 6th. Reports began coming in that something unusual had happened in Hiroshima. First reports were of a “blinding flash and violent blast”. Since no communications were coming out of the city, a staff officer was ordered to fly over and report. One hundred miles from Hiroshima he could see a huge cloud still rising from the blazing port (hours after the attack).
Surrounding villages were being swamped with huge mobs of wounded, burned and simply stunned victims stumbling their way out of Hiroshima.

Relief workers began to press through to the city. Power to some parts of the town was restored the next day, and rail service the day after that. But to all intents and purposes, the core of the city of Hiroshima had been wiped off the map, the port facilities destroyed, and one of Japan's few remaining intact military bases was simply gone. There were at least 80,000 dead. Over the next five years radiation would raise that toll to nearly 200,000.

The Big Six argued about what had happened, with many denying the U.S. could have such a weapon. The debate was settled sixteen hours later when Japanese monitoring posts picked up the broadcast of President Harry Truman announcing to the American people that, "The power of the sun" had been unleashed on Japan, and adding “We are now prepared to obliterate rapidly and completely every productive enterprise the Japanese have…” It was not a threat. It seemed rather, to be a promise.

It was a powerful threat to the empire of the sun. But Admiral Soemu Toyoda now argued that if the Americans really had such a bomb they could not have many more. What he based that opinion on was unclear. But some of the leaders of Japan took solace from the Admiral and continued to perfect their plans for their Oriental Gotterdamurung. It was pure delusion.
The Americans had already crippled their nation. Hundreds of thousands had been killed. No train was safe in daylight, no city or factory safe at night. The Japanese army in Korea and Manchuria were starving. Troops in Japan were spending as much time tending to rice fields as training. And the harvest that year had been very bad. Come winter, invasion or no, there would be starvation in Japan.

Japan could do nothing to oppose the massive flights of B-29’s, now joined by B-17’s and B-24’s of the mighty 8th Air Force,  freed from the conquest of Germany, which were together pounding Japanese cities and military formations, day and night.

And nothing hindered the mass waves of P-51's, based on Iwo and Okinawa, which were now doing to Japan what they had done to Germany; sweeping across the country at will, striking at "targets of oportunity", destroying and sinking everything that moved, be it a supply or passenger train, a single horse and cart or a poor fishing boat. There was almost nothing left to oppose them. What remained of Japan's air force was being held back to oppose the landings. Japan's navy was scattered across the floor of the Pacific Ocean. Their cities were being reduced, one by one, to wastelands occupied by scarecrows.

And now an atomic bomb had vaporized one of Japan's cities, and there was a threat of more to follow. And yet the supreme council's only plan remained to wait for the American invasion of Kyushu and kill as many Americans as possible in order to force them to negotiate. About 40% of Japan's remaining strength had been transfered to Kyushu to fight that battle. But that was was, to borrow the words of an historian describing the Confederate insistance on defending Fort Donaldson against Union General Grant, "Too little to defend the place, and too much to lose when it fell."

Again, Japan failed to inform the Americans what their intentions now were, e.g. to fight to the death to preserve the Emperor. And without the final clause of that statement, it seemed to the Americans that the Japanese were insane and without logic, an entire nation of kamikazes, in love with death. And since the Japanese were not offering the Americans any alternatives, (nor the refuse) there was no way for the Americans to be certain the preservation of the Emperor alone was what the Japanese were still killing and dieing for, a full year after the Americans had won effectivly won the war.

And then, at about four AM on August ninth the Soviet Union, which the Japanese leadership had counted on to help negotiate a peace, announced they were voiding their non-aggression pact with Japan and joining the Americans in carving up the Imperial Empire. At the same time Soviet air and ground forces had invaded Manchuria in great numbers and strength. And in that moment, all Japanese and American complacency began to finally collapse.

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PEVERSION FOR PROFIT

“If pro is the opposite of con, what is the opposite of Congress?”

Will Rogers

I find it curious that Charlie Humphrey Keating Jr (above) spent his adult life crusading against pornography, which he called a “Perversion for Profit”. At the same time he saw no perversion in profiting from duping naive investors, even telling his sales agents, “...the weak, meek and ignorant are always good targets.” Charlie did not invent hypocrisy, nor the investment scam, nor even political graft. But when asked if he had bought five U.S. Senators, Charlie responded forcefully, “I certainly hope so.” It was Charlie's sociopathic self-serving arrogance which made him famously wealthy and infamously despised. And then Charlie got his hands on a bank.

“A holding company is a thing where you hand an accomplice the goods while the policeman searches you.”
Will Rogers

Once upon a time in America there were two kinds of banks, commercial banks, with few restrictions on their investments, and “Savings and Loans”. Federal regulations kept S&L's the dull, cautious bedrock of private home ownership. But even real estate suffers the boom and bust of capitalism, better known as the “business cycle”. So politicians, following an ideology of greed, created the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980, which amongst other things, lifted the limit S&L's were allowed to invest in things other than homes. In the decade after, S&L's went from 53% of their money being in home loans, to less than 30%. Seeking profit bankers then invented the Certificate of Deposit, or CD's, which allowed them to pay higher interest rates and compete with commercial banks for investors. But paying higher interest rates meant each new customer also cost more. In the world of academic economics this is known as an “asset-liability mismatch”. In Charlie Keating's world this was known as a business opportunity.

“Don't gamble. Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.”
Will Rogers

Charlie had arrived in Phoenix, Arizona  (above) in 1976, having been chased out of Cincinnati, Ohio by the Federal Securities and Exchange Commission. Once in town he proceeded to duplicate the behavior which had gotten him into trouble in Ohio, metamorphosing a faltering home construction company into American Continental Corporation, a holding company with maze of 54 divisions (and a few secret overseas operations), $6 billion in assets, 2,500 employees and a couple of corporate jets. When federal regulators started sniffing around Charlie even got economics guru Alan Greenspan to write him a letter of recommendation. Forbes Magazine, although impressed with Charlie's explosive growth, noted, “It seems almost impossible to find anyone who actually likes Charlie Keating.” His own brother admitted that Charlie was impatient and aggressive - but he left out, greedy. And then in 1980, Ronald Reagan won the White House, and geed became “good”, and deregulation, such as DIDMCA, became the mantra of the day. In 1984, Charlie used American Continental to buy Lincoln Savings Bank of California, for $51 million. He fired the management wholesale, and converted it into his personal bank.

“Big business don’t go broke any more. The minute it looks bad for them, they combine with something else and issue more stock.”

Will Rogers

Three years later an audit by three investigators for the San Francisco office of the Federal Home Loan Banks Board found that Lincoln had unreported losses of $135 million, and had exceeded the new looser limit on risky investments by $600 million. But what Charlie had learned from his first run-in with financial regulators back in Ohio was that it paid to have friends in high places. He had made over $1 million in political contributions to five U.S. Senators – Alan Cranston (D-Ca), Dennis DeConcini (D-Az), John McCain (R-Az), John Glenn (D-Ohio) and Donald Riegle (D-Michigan). Charlie now insisted that his “Keating Five” have a joint sit down with the three investigators from the FHLBB.

“Ancient Rome declined because it had a Senate. Now, what's going to happen to us, with both a House and a Senate?”

Will Rogers

On Thursday, April 9, 1987, the investigators were flown to Washington to be intimidated by the five senators in person. DeConcini explained that “Our friend at Lincoln...is a big employer and important to the local economy.” Former Astronaut and former Marine Senator John Glenn had little patience for such niceties. “To be blunt”, he told the bureaucrats,. “You should charge them (Lincoln Savings) or get off their backs.” The regulators worked up the courage to explain that it appeared money was being siphoned out of Lincoln to fuel false profits at American Continental. That converted their audit into a criminal investigation. The Senators backed off and rushed to tell Charlie.

“There ought to be one day - just one - when there is open season on senators.”

Will Rogers

Charlie was not happy "his" senators had not shut down the investigation. . He even called Senator John McCain a “whimp” to his face, and went looking for politicians more willing to do his bidding. When the San Francisco regulators persisted in recommending that Lincoln Savings be seized, the Reagan administration appointed a new head of the FHLBB, who forgave Lincoln for any past violations and started a brand new audit, this time run from Washington, D.C., where it could be controlled.  Charlie always said if they just relaxed the rules, the Savings and Loan industry could be “the biggest moneymaker in the world.”

“A lobbyist is a person that is supposed to help a politician make up his mind—not only help him but pay him.”

Will Rogers

It was at this point that the tellers at Lincoln Savings were ordered to begin pushing their customers to switch their savings from insured CD's to the uninsured American Continental bonds. Twenty -three thousand eventually fell for this sales pitch. Thanks to the delay in moving against him, Charlie had now bypassed the bank entirely. He was siphoning cash directly out of the customers' pockets into his. Federal Deposit Insurance Corporation chairman Seidman would later call this “one of the most heartless and cruel frauds in modern memory.”

“The short memories of the American voters is what keeps our politicians in office.”

Will Rogers

By December of 1988, even the bought politicians had become convinced Charlie was a fraudster. In January they finally ordered him to stop transferring money out of Lincoln savings. Three months later, both American Continental and Lincoln Savings and Loan went bankrupt, and those 23,000 dupes, who had trusted the tellers and managers at their neighborhood bank, lost their life savings by buying $288 million in uninsured bonds. Among the many suicides this crime produced, was that of Anthony Elliott, who slit his wrists after losing his life savings - $200,000 – to feed Charlie's ego. Anthony's Thanksgiving Day 1990 note asked, “My government is supposed to serve and protect, but who?" He then answered himself, writing, "Those who can gather the most savings from retired people. . . . It takes billions to fill the pockets of spendocrats”.

“I tell you folks, all politics is applesauce.”

Will Rogers

The FDIC had to shell out $3.4 billion to cover the insured part of Charlie's looting of Lincoln Savings. Finally, in December of 1991, the state of California convicted Charlie of 17 counts of fraud, racketeering, and conspiracy. In January 1993, the feds convicted him of 73 counts of fraud, racketeering and conspiracy. In 1994 the Resolution Trust Corporation, which had been created to clean up the Reagan deregulation mess, won the largest judgement against a private person in American history - $4.3 billion, against Charlie Keating. Still, somehow, after serving just 4 ½ years in jail, Charlie Keating was released, free and clear. He now lives with his daughter in Phoenix, Arizona, maintaining to this day that he was a political prisoner, and if the government had just left him alone, today all those investors, even Anthony Elliot, would be rich.

“There are three kinds of men. The ones that learn by readin’. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.”

Will Rogers

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UNDER PRESSURE

I bet the hero of this story was not Frederick Wells. He is the man credited with finding a legendary jewel, but to me it seems unlikely that in the South Africa of 1905 a white man would have been at the dig’s face, where the danger was greatest, and where, in fact, the huge crystal was found. Still, the legend has it that Frederick spotted the rock embedded in the wall just above his head, reached up and pried what he first thought was glass out of the stone with his pen knife. And if that seems as unlikely to you as it does to me, we should both remember that everything about this particular artifact is unlikely.

The nursery where this carbon crystal grew was an odd place. First, the surface above it had to have been stable for 1 to 3 billion years – maybe three fourths of the age of our planet. And for all of that time 90 to 120 miles below this stable surface the temperature had to be a constant 1,000 degrees centigrade, and the pressure about 653,000 pounds per square inch. The longer a carbon crystal remains under that pressure and temperature, the larger the crystal might grow. And this one grew to one and a half pounds. There are only a few spots in the earth where the temperature and pressure has remained consistent for so long; beneath the Canadian Shield, beneath Siberia, beneath the center of the Indian subcontinent, beneath northwest Australia, and beneath South Africa.

The heat allows the molecular bonds of carbon atoms to become plastic, but does not break them down completely, while the immense pressure squeezes them into an eight side crystalline shape. Over eons such carbon crystals grow slowly and they must be fairly common in these regions of the mantle. But then something unlikely happens. The earth burps.

If one of these carbon crystals rises to the surface slowly, over decades or even years, the atoms binding its carbon molecules together return to their fail-safe state, which is graphite – pencil lead. For carbon to remain a crystal, it must reach the surface in a burst, over no more than a minutes. To travel from the nursery to the surface, then, the stone must reach speeds of several hundred miles an hour. Such a speed can only be reached if the capping pressure is suddenly punctured through by a narrow fissure, at which point the temperature and pressure produces a massive volcanic explosion at the surface. For that to happen is unlikely. But over a billion years unlikely becomes inevitable.

The first European who “owned” the surface above this jewel was a Dutch farmer named Cornelis Minnaar. But this was not Holland. It was the southern part of Africa, north of the River Valaal, 25 miles east of the city of Pretoria (Tshwane). The Boers, as these Dutch transplants called them selves, had made the trek to this region to avoid the British, who had stolen their colony. In 1861 Cornelis sold a section of his land to his brother, Roelof , who in 1896, sold an even smaller part to Willem Prinsloo (above) who was just starting a family. The sale price was 570 English pounds, and it was William who owned the land when another Dutchman named Fabricus arrived looking for buried treasure.

Being experienced in this sort of thing, Fabricus first inquired as to where the Minnarrs and Prinsloo households had dug their “sanitary pits”. This was a euphemism for the holes used to bury the products of your outhouse, politely known as “night soil”. Why did a hole when a hole had already been dug? But since to date nothing unusual had been found in the sanitary pits, Fabricus assumed he would have to look elsewhere. Once he had located some “virgin dirt”, he scrapped away the thin red top soil, and then hacked his way through ten feet of yellow limestone gravel, the bi-product of primordial coral reefs, before reaching a blue slate gravel peppered with tiny red garnets, a rock called Kimberlite. Fabricus had struck pay dirt

Fabricius was working for an Englishman named Henry Ward, who had paid for the option so search on Prisloo’s land. But Ward didn’t have the money to make the buy, and besides Prisloo was not interested in selling at the moment, since it looked like war was about to break out between the Boers and the English. Which it did. By the time the war was finally settled in 1904 – The British won – Ward had sold out his options to Thomas Major Cullinan (above), and Willem Prinsloo was dead. So Cullinan made an offer to Wlliam’s widow, Maria Prisloo. Broke and defeated, she sold the farm for 52,000 pounds. Not a bad profit.

Cullinan and partners named their new venture "The Premier Mine". Production started at the end of April 1903, and in a year 2,000 people, mostly non-Europeans, were blasting, chopping, digging and hauling blue Kimberlite out of the open pit. They were looking for diamonds.

Most diamond mines start out as open pits. A Kimberlite Pipe is famously “carrot shaped”, wide at the top, narrow towards the bottom. And after less than a year of digging, on January 25th, 1905, this new mine is credited with producing the largest diamond ever found. Diamonds are not rare, but gem quality diamonds are. On average two hundred tons of ore must be culled for every 1 caret diamond, (there are 141.7 carets in every once) and only one out of every five million diamonds weighs two carets or above. The one and one half pound diamond Mr. Wells pulled out of the rock face that January afternoon, was rated at 3,106 carets. In the name of good publicity, it was named after Mr, Cullinan.

After a nondescript voyage to England via the royal mail in an unmarked plain brown box, The Cullinan, as it was now known, was presented to King Edward VII. He asked as many experts as he could find - geologists, gemologists and even the physicists Sir William Cookes (above) -  how to cut this hunk of rock.

Cookes noted that around a small black spot in the interior of the stone the colors were very vivid, changing and rotating round the spot as the analyser was turned. These observations indicated internal strain…there was a milky, opaque mass, of a brown color, with pieces of what looked like iron oxide. There were four cleavage planes of great smoothness and regularity.” At issue was how to turn this indescribably rare nondescript lump into something indescribably rare and beautiful.

Diamonds had been known since the tenth century, but it was not until the 17th century that they became popular amongst the aristocracy, not until the first “Brilliant Cut” by Italian jeweler Jules Mazarin, really showed the beauty that was hiding inside. His diamonds sparkled with 17 facets, each one reflecting light back out at the viewer. By 1900 the skill of the diamond cutter had increased the possible reflections to 57 facets.

The general consensuses was that the best cutter for this job was Joseph Asscher, ironically another Dutchman. He studied the Cullinan for six months in his shop in Amsterdam, surrounded by a small crowd of bankers, experts and royal representatives, laying out a plan of attack.

As the London Evening News reported in mid-January, of 1908, “…a special model of the diamond in clay was made…It was cut into pieces to give an idea of what would happen if the genuine stone were treated in the same way. After several experiments a definite plan was arrived at…”

Finally, on Monday, February 10th, 1908, at 2:45 pm, Joseph was ready. Surrounded by a small crowd of anxious interested third parties, Joseph poised his hammer over the chisel, the blade of which was lodged against the precise point which he had calculated the first strike had to be made. If he missed, or struck a glancing blow, the one-of-a-kind diamond worth a million pounds would be rendered damaged and worth a few thousand. Joseph drew a breath, and sharply struck the chisel….which cracked apart against the diamond.

Immediately Joseph ordered the room cleared, except for the notary republic for the bankers, who were financing this entire thing. Joseph checked the Cullinan and found it, thankfully, undamaged. He checked his tooks, re-examined his plans and announced a week's delay while he fashioned a new, larger, chisel.

So it was that on February 17, 1908, alone in the room with the diamond and the notary, Joseph lined his hammer up for a second time over The Cullinan, and struck the precise strong blow, directly above the dark inclusion...and the diamond fell apart into three perfectly clear pieces. Despite legends to the contrary, Joseph did not faint. He did, however, drink a glass of Champaign.

The Cullinen was cut into nine large stones and 96 smaller diamonds, so many that it took 8 months just to polish them all. And if you ever get to the Tower of London, you might make a note that the Crown Jewels of England on display there, might be literally billions of years old, but they have only in the royal families’ possession for about a hundred years. But they will always be a testament to the creation of timeless beauty under pressure.

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