I first came to Japan in 1962, in the US military, assigned to Fuchu Air Station in the Tokyo suburbs.
I was 19, a trained electronic intelligence analyst working in the Elint Center, a windowless bunker protected by armed guards – under the joint supervision of the Central Intelligence Agency (CIA), which was making top-secret U-2 spy flights over the Soviet Union and Red China three times a week, and the National Security Agency, which operated low-altitude flights and coastal surveillance missions in those areas.
The Elint Center was an important cog in the overall US defense scheme of things at the time. It was a primary target of the Russians during the Cuban Missile Crisis. At one point during that 13-day stand-off, our superior told us to write our farewell letters home.
It was while working at the center that I began to learn about the extensive history of American intelligence operations in Tokyo during the postwar era and came to learn about the Canon Agency, thanks to a veteran warrant officer who knew Jack Canon.
Decades later, after I had written my 1999 book Tokyo Underworld, I interviewed the last two surviving Canon agents: Victor Matsui, a nisei – second-generation Japanese American – from Los Angeles and one-time amateur sumo champion of the United States; and Alonzo Shattuck, an ex-US Army sergeant from St Louis.
The Canon Agency was a black operations group that dated back to the early days of the occupation. Originally known as the Z Unit, it was created in 1946, along with other groups, by the G-2 Intelligence wing of the General Headquarters under Major General Charles A Willoughby.
Willoughby was alarmed by the advances of Mao Zedong’s armies in China, the existence of a pro-Soviet North Korea and an increase in demonstrations by leftist groups in Japan that threatened the country’s political stability.
Canon had served in Borneo and Manila during World War II as an explosives expert and became one of the first Americans to enter Tokyo after the war, arriving in September 1945 as a member of the 411 Counter Intelligence Corps (CIC).
Canon’s mother was from Germany and he spoke fluent German. One of his first acts upon landing in the bombed-out capital was to blow open the safe at the German Embassy, where he discovered documents that showed the notorious Sorge spy ring was still in operation.
Canon took the papers to Willoughby at G-2. Willoughby, also of German descent, then gave Canon his own group to smoke out communist spies in Tokyo.
Canon recruited 26 nisei, Euro-American and Korean-American agents, and trained them to conduct secret operations against the Soviet Union and communist sympathizers in Japan. The Canon group carried arms, made arrests and carried out interrogations.
It was one of a number of such groups in the G-2 whose targets expanded with the creation of the communist Democratic People’s Republic of Korea and the communist takeover in China, events which helped transform the occupation’s initial goal from turning Japan into a peace-loving Switzerland of Asia to building it up as an Asian bulwark against communism.
Among many Canon Agency exploits was the 1948 infiltration of the newly established government of the DPRK – which, Canon learned through underworld informants, was manufacturing heroin refined from opium fields in Manchuria, with the intention of flooding the Tokyo-Yokohama area with it.
“The DPRK regime had two goals,” Victor Matsui, who had spent most of the war in an internment camp in Arkansas, told me. “One was to sell as much of their drugs as possible in Japan and channel the profits to the Japan Communist Party.
“The other was to turn as many American soldiers as possible into heroin addicts so they’d be unfit to fight in the war that was coming on the Korean Peninsula, which broke out two years later in 1950.”
Until then, there had not been a lot of heroin in Japan, except that brought in from China by the ultranationalist Yoshio Kodama, whose Kodama Kikan comprised of yakuza had plundered China to fund the war effort back home.
It was Kodama’s wartime treasure chest that had founded the Liberal Democratic party in 1955. The DPRK project was much more ambitious.
The Canon people came up with a daring counterplan. Posing as a yakuza gang based in Yokohama, under the leadership of a Korean-American from San Diego named Young Hou, Canon’s agents traveled to Pyongyang and struck a deal with the generals to distribute as much heroin as they could supply.
They returned to Tokyo and, shortly thereafter, a North Korean fishing vessel dropped off a dozen aluminum cans in a flotation device at the mouth of Tokyo Bay. Each aluminum can weighed one kilogram and bore the printed label, in English, Red Lion.
Inside were packages of 99.9% pure heroin. The agents picked up the cans and took them to an office in Yokohama where they unpackaged the heroin and weighed and measured it.
Alonzo Shattuck piloted the boat that picked up the heroin canisters. As he told me: “The stuff was so powerful that just the few puffs of powder that escaped into the air during this measuring process were enough to get everybody stoned.”
The agents, of course, did not want to deal the heroin, nor did they want to reveal their operations, so they stored it and sent word to the North Koreans that they had lost the shipment at sea and requested another to be sent. That was a lot of heroin to go missing.
The North Koreans sent another shipment, and another one after that, but grew suspicious when no GI junkies immediately manifested themselves. So they cut ties with Young Hou’s impostors and struck deals with a succession of real yakuza gangs based in the Yokohama area.
Soon heroin was being peddled on the streets of that city, but cut as much as 20 times, with some of the profits siphoned off to the JCP.
“By the end of 1948,” said Shattuck, “there were drugs all over the place. There was a certain bridge in Yokohama where you could buy heroin in any quantity you wanted.
“The dope was submerged underwater in waterproof packets attached to a string the dealer pulled up to fill your order.”
After the real yakuza gangs took over distribution, the Canon Agency mission became one of intercepting the clandestine drug shipments. Violent shoot-outs between Canon’s men and the gangs took place on beaches outside Yokohama, in public parks and sometimes even in deserted shrines and temples in the small hours.
In one battle at Yokohama’s Nogeyama Park, Canon was wounded in the leg with a .38 caliber slug.
From 1948 on, narcotics manufactured in North Korea became a fixture on the drug scene in the Tokyo-Yokohama area. Drug trafficking was said to be worth more than US$1 million a year, an enormous amount of money at the time.
Despite all the heroin flowing into the country, the drug never really caught on among the Japanese. As Matsui explained it, heroin was a lethargy drug and Tokyo was a city on the go where people worked dawn to dusk as much as seven days a week.
Speed was the perfect drug for a taxi driver, a night laborer, a student cramming for exams or a nightclub hostess.
Once the generals in Pyongyang figured this out, North Korea was perfectly willing to manufacture and supply it to them in the form of crystal meth, which became Tokyo’s designer drug.
There had been something called hiropon (Philopon), that was supplied to soldiers, factory workers, pilots and others during the war by the Japanese government, leaving many of them addicted and suffering adverse side effects such as migraines and blackouts because the drug was of such low quality.
But the meth coming out of North Korea, distributed by the Yamaguchi-gumi and other gangs, proved to be a better product and dominated the underworld market for the next several decades.
It is still available today, although China and Mexico are now the primary suppliers of crystal meth, synthetic cocaine and fentanyl.
The Hongo House
The headquarters of the Canon Agency for most of the occupation was the Hongo House in the former Iwasaki Estate, built on a palatial scale, like something out of The Great Gatsby.
On the sprawling 17,000-acre premises were three buildings: a two-story western-style mansion, a large 44-room Japanese-style house and a billiard house. There was also a garden with a lawn, stone monuments, stone lanterns, a hand washing basin and a tennis court.
Originally the home of Baron Hisaya Iwasaki, the eldest son of the founder of the Mitsubishi Group and its third president, the Iwasaki Estate was designed by the British architect Josiah Conder (1852-1920) and completed in 1896.
Canon’s headquarters in the Hongo House had the feel of an old European hotel. On the first floor were a big dining room with a fireplace, a big kitchen with a pantry, a library, nine bedrooms and four assorted smaller rooms.
Canon’s office was upstairs overlooking the garden. According to his interpreter, Vic Matsui, Canon had decorated the garden with empty coke bottles, tin cans, beer cans and light bulbs, and used them for daily target practice, often firing at them from his desk with the gold plated pistol he always carried with him.
Once he took aim at an intruding crow and broke a store window in Ueno’s Ameyoko-cho, a busy market area, causing a minor scandal.
Guns and midnight
Canon knew more about firearms than anyone else in Japan. According to Matsui, “he was a real gun nut. He had the Shooter’s Bible memorized. You could wake him up at 3 o’clock in the morning and ask him what the weight, length and velocity of a German Walther PK was and he could tell you, even half asleep.”
Canon, in fact, would later invent the Glaser Safety Slug and would die when a gun he was building went off and sent two bullets into his chest, thereby demonstrating that the slug was not all that safe after all.
“Canon was a night person,” Shattuck told me. “All the agents were. His routine started after dark when he went out to meet undercover operatives, collaborators and rival agents, and also perform recon on suspected communist activities.
“He’d assume a false name and go to bars and nightclubs and receptions where he thought he could get the information he was looking for.”
“The ladies liked Canon,” Shattuck added. “A big guy, burly, good looking, with a high forehead. He was the kind of guy who could easily strike up a conversation with a beautiful woman whenever he wanted.
“It was a talent he used a lot with the Russian ladies. He would get them to invite him to Soviet receptions and, once there, he’d secretly take photos of people he thought were spies.”
One of Canon’s assets was a Japanese clerk at the Russian Embassy who provided him with secret reports, including photos and details of communications equipment the Russians were using in Tokyo.
Canon also turned a Japanese field operative working for the Russians to his side and supplied him with misinformation in the form of documents and tape recordings to dispense to his contacts.
When he wanted to send real information, Canon encrypted his messages, recording and compressing them so that they could be sent over the radio in bursts lasting a matter of seconds.
The receiving operator would record the message, then play it back at a slower speed. Meetings with contacts usually took place in the middle of the night in public parks like the Hibiya in Tokyo and Nogeyama in Yokohama.
The agency also used ethnic Korean yakuza, like Hisayuki Machii, boss of the Tosei-Kai, one of the top Tokyo gangs, to suppress leftist demonstrations in and around the city.
In the basement of the Hongo House was a utilitarian office with a desk and a cot in the corner that looked like it had once been a bedroom or servant’s quarters. There Canon and his people would interrogate known or suspected communist sympathizers they had arrested.
“They held one guy down there,” said Shattuck, “a leftist journalist named Wataru Kaji, who was also a spy for Red China, for five months. Canon kidnapped him off the street. He was lucky in a sense because he had tuberculosis and our doctors cured him of it, but only after he had given it to a couple of our agents.”
The Canon Agency held onto Kaji until December 1951 as the occupation neared its end and they had to leave. According to Shattuck, “they didn’t know what to do with him. So they turned him over to their Japanese counterparts in intelligence, who didn’t know what to do with him either. They held on to him for a while and then released him.
“He went straight to the police and the newspapers picked it up and it became a national scandal. That’s how the Japanese public first learned of the existence of the Canon Agency and that it was a black-ops group.
“The leftists went nuts. They blamed all sorts of unexplained events on us, like the train wreck at Matsukawa in 1949. But they didn’t know what they were talking about.”
Closing down
The beginning of the end for the Canon Agency came shortly before the occupation closed down. A CIA representative simply walked in one day – appropriately clad in a trenchcoat and fedora – and announced that all military intelligence operations in Japan would henceforth come under the CIA’s control.
Said Shattuck later: “It was a complete fiasco. The people they sent over from Washington couldn’t find their ass with both hands.”
There were many resignations as a result, starting with Jack Canon, who immediately asked for a transfer and was sent to Fort Hood, where he wound up working for the CIA anyway.
Glenn Davis notes in his book Oswald and Japan – I’m quoting from the as yet unpublished English manuscript – that eventually “Willoughby and Canon both ended up working for HL Hunt, an extreme right-wing Texas oil billionaire who later became a major suspect in the JFK assassination.”
Shattuck also resigned and stayed on in Tokyo to go into the nightclub business, opening up the Latin Quarter in Tokyo’s Akasaka district in 1952 with the Manila-based gambler Ted Lewin and another Canon Agency veteran, Saburo Odachi, a 10th dan judo black belt from Southern California.
Later Shattuck and Odachi opened Club 88, a popular Roppongi watering hole. Victor Matsui went on to work for the CIA in Southeast Asia.
The CIA, however, did prove to be effective in its own way, despite the deprecations of Canon, Shattuck and others. The agency had paid the Liberal Democratic Party $1 million a month through most of the 1950s and 1960s, using trusted American businessmen as go-betweens.
Among them were executives from Lockheed, the aircraft company then building the U-2 and negotiating to sell warplanes to the newly set-up Japanese self-defense forces.
The CIA also helped get Nobusuke Kishi, a former class-A war crimes suspect and descendant of a samurai family, elected to the presidency of the LDP and subsequently the post of prime minister.
Kishi – the maternal grandfather of Japan’s current prime minister, Shinzo Abe – was notorious for his brutal rule of the Japanese puppet state of Manchukuo in Northeast China in wartime, using yakuza thugs to keep Chinese workers in line, and his lavish spending amid much drinking, gambling and womanizing.
Kishi was released from Sugamo Prison in 1949 on the very day General Hideki Tojo and others were hanged, under an agreement with GHQ whereby Kishi would work with the Americans to pursue conservative interests in exchange for political and financial support.
As prime minister of Japan in 1960, the flop-eared Kishi oversaw the parliamentary ratification of the extension of the Mutual Security Treaty, originally signed in 1951 despite massive public opposition in Japan, allowing for the stationing of US troops on Japanese soil.
Kishi also allowed the Americans to secretly store nuclear weapons on military bases in Okinawa.
Following the end of the occupation, new US intelligence agencies came into operation. One was the National Security Agency, established by President Harry S Truman in 1952 and funded and overseen by the Department of Defense, which co-managed my duty station, the Elint Center.
Two others were the Defense Intelligence Agency, which Defense Secretary Robert McNamara created in 1962 after the Bay of Pigs fiasco, and the National Reconnaissance Office, set up in 1962 to build spy satellites.
But the CIA, with its monetary pipeline to the highest levels of government, was the most active US agency in Japan. At the time, no one was privy to everything that was going on.
Some people knew about the connection between the CIA and the yakuza but hardly anyone knew about the pipeline between the CIA and the ruling LDP.
And virtually no one knew about the operations of the Canon Agency. All records were destroyed and the activities of the group remained secret for a long, long time until Canon granted an interview to NHK decades later in 1977 and the aforementioned Young Hou wrote the memoir Kyanon Kikan Kara No Shougen, a work noted for its exaggerations.
Jack Canon shot himself on March 8, 1981, the first victim of his own invention, the Glaser Safety Slug, at his home in Maclean, Texas. Matsui passed away in 2016, but Alonzo Shattuck is still alive and residing in Fountain Hills, Arizona.
Robert Whiting’s Tokyo Underworld: The Fast Times and Hard Life of an American Gangster in Japan (Penguin Random House) is now under option to production company Legendary Global. The Canon Agency will be explored in greater depth in a forthcoming English edition of his Tokyo Outsiders. This article, which first appeared August 15 in Number 1 Shimbun magazine of the Foreign Correspondents’ Club of Japan, is republished with permisson.