YEN AT WORK
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP99-00418R000100150022-2
Release Decision:
RIPPUB
Original Classification:
K
Document Page Count:
2
Document Creation Date:
December 22, 2016
Document Release Date:
May 15, 2012
Sequence Number:
22
Case Number:
Publication Date:
June 1, 1989
Content Type:
OPEN SOURCE
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STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/05/15: CIA-RDP99-00418R000100150022-2
STAT
PILE ONLY
FROM THE EXPLOSIVE NEW BOOK'SELUNG OUT:HOW JAPAN IS BUYING FRIENDS
AND INFLUENCING AMERICA' ? BY DOUGLAS FRANTZ AND CATHERINE COLLINS
AT 9:30 A.M. ON MONDAY, OCTOBER 19, 1987 THE BELL ON THE FLOOR
of the-New York Stock Exchange signaled the start of the most tumultuous day in the
history of U.S. financial markets. A wave of sell orders that had built
up over the weekend cascaded into the stock market, pushing
its computerized trading system beyond the limits and
driving the Dow Jones Industrial Average down at an
unstoppable pace. 11 In Chicago the chaos was re-
peated at the futures exchanges, where harried traders
couldn't keep track of orders, let alone keep up with
them. In New York the Federal Reserve Board was forced to
demand that the nation's biggest banks provide billions of
dollars in credit to keep the brokerage houses open. In Washington
the nation's financial regulators conducted frantic telephone conferences in a fruit-
less attempt to stanch the hemorrhage. 11 As news of the crash spread, investors
across the nation telephoned Merrill Lynch, Prudential-Bache, and other brokerage
houses to dump their shares at any price before they were wiped out. The sell orders
came in such volume that phone lines jammed, and thousands of people were unable
even to get through. 11 By the end of what quickly became known as Black Monday,
John Phelan, the chairman of the New York Stock Exchange, said that the nation's
markets had nearly suffered "a meltdown." Indeed, the exchange had dropped 508
points, losing 22 percent of its total value and wiping out $1 trillion worth of wealth.
Newsweek
Time
U.S. News & World Report
RC(i4(D-C'S ? 87
Date J (MgL BS
Page
Declassified in Part - Sanitized Copy Approved for Release 2012/05/15: CIA-RDP99-00418R000100150022-2
Declassified in Part - Sanitized Copy Approved for Release 2012/05/15: CIA-RDP99-00418R000100150022-2
Bryanr'r roposed legislation demanded reci-
F. ocity; it would have prohibited foreigners
from investing in the United States unless
Americans were permitted to invest in the
investor's home country on the same terms.
The Reagan administration, which had
built its deficit on foreign investment, stead-
fastly opposed the legislation from the start.
Officials from various government agencies
argued that Bryant's proposal was at best re-
dundant and that current government efforts
to monitor foreign investment were ade-
quate. They objected to the reciprocity sec-
tion on the grounds that enforcing it would
create a bureaucratic morass and place Amer-
ican businesses abroad at risk of reprisals.
So in January 1987 Bryant dropped the
reciprocity section, lined up 31 cosponsors,
and submitted the Foreign Ownership Dis-
closure Act-a stripped-down version of his
earlier legislation-to the House. Two months
later it was attached as an amendment to the
omnibus trade legislation that was then under
consideration by the Energy and Commerce
Committee. The bill was adopted by the nar-
row margin of 21 to 20, after fierce opposi-
tion from every Republican on the committee.
Once the trade bill had passed the commit-
tee and was sent to the full House, however,
Bryant's amendment ran into vigorous oppo-
sition from a variety of sources linked to or
dependent upon foreign investment. Among
those fighting the measure were First Boston,
the investment bank owned in part by Credit
Suisse; Shell Oil, a wholly owned subsidiary
of Royal Dutch Shell; and the White House.
J. D. Williams, a high-powered Washing-
ton lobbyist who represented First Boston,
called on Bryant to express his client's con-
cerns. He cautioned Bryant in good-old-
boy fashion. "I've been around a lot longer
than you, son," Williams told Bryant. "If we
have to, we can stop you. Too bad, son."
In Washington there's no better measure
of a proposal's importance than the amount
of money that its opponents are willing to
spend to defeat it. Critics of Bryant's pro-
posal spent plenty, though there's no way to
determine precisely how much. The list of
domestic and foreign corporate interests that
lined up in opposition to it read like a who's
who of business in the United States: the
American subsidiaries of Honda, Toyota, and
Nissan, the Big Three Japanese automakers;
British-owned Standard Oil; Nestle, the Swiss
multinational; American Express, the big-
gest U.S. financial services company; Fujitsu,
the giant Japanese electronics manufacturer;
and even the U.S. Chamber of Commerce.
nations aemand of Americans when they In one six-week period George Slover,
invest abroad. A more significant section of Bryant's legislative counsel, fielded more
than 100 telephone calls from representa-
tives of foreign investors and governments.
Most of the callers were lawyers who refused
to say which foreign investors or corpora-
tions they represented.
"The word on the street was that more
money was spent on defeating the Bryant
amendment than on both sides combined
of any other provision to the trade bill,"
Stover said. "But it was all very quiet. The
foreign lobby didn't want to arouse any pub-
lic sentiment. It would be virtually impossi-
ble to stir up any grass-roots support for
keeping foreign investment secret."
Ultimately, the concerns of First Boston,
Shell Oil, and the other big foreign investors
were satisfied in another round of modifi-
cations. But the Reagan administration wasn't
satisfied. It kicked its lobbying efforts into
high gear and called up such heavy hitters
as Paul Volcker, the chairman of the Federal
Reserve, and James Baker, the secretary of
the treasury, to lead the charge.
"As soon as the amendment hit the full
committee, Baker started working the House
and Senate hard," Bryant said. "For some-
one who usually just calls on chairmen of
the various committees, Baker walked the
halls of Congress, calling on members like a
common lobbyist."
The threats by foreign companies to aban-
don the United States, coupled with fears
that investments would be withdrawn, car-
ried the day in the Senate. The opposition
won a clear victory, sending Bryant's pro-
posal down to defeat by a vote of 83 to 11.
But Bryant's provision on foreign disclosure
was resuscitated in conference committee,
and from February through April 1988, as
the House and Senate conferees hashed out
their disputes on the trade bill, it emerged
as one of the most hotly contested issues.
House Democratic leaders wanted Bryant's
provision included in the bill. "I think Amen.
cans should be allowed to know who is in-
vesting in this country," Speaker Jim Wright
told reporters. "I don't see any justification
for secrecy."
Yet President Reagan had vowed to veto
the trade bill if it contained any of several
amendments, including Bryant's. Democrat-
ic leaders in Congress, who wanted to turn
up the heat under the Republican admin-
istration in an election year, put "veto bait"
in the bill, but it had nothing to do with
foreign investment in the United States. In
deciding to narrow the focus to a single issue,
the leadership decided to make the big fight
hinge on an amendment that would require
companies to notify their workers at least
60 days in advance of a plant closing.
IT SHOULD COME AS NO SURPRISE THAT
Japan and other foreign nations try to safe-
guard their interests by shaping U.S. policy
and influencing debate on issues that are
critical to their well-being. Quite surpris-
ing, however, is the fact that so many former
high-ranking U.S. government officials are
willing to serve as their hired'guns.
Elliot Richardson, who's held three cabinet
posts and more than a dozen other high-level
positions, represents foreign interests, includ-
ing an umbrella organization known as the
Association of Foreign Investors in America.
James Lake, who was a key unpaid advis-
er in George Bush's presidential campaign,
has been one of the most effective lobbyists
for Japanese and European interests because
of his close ties to the U.S. Trade Represen-
tative's office. During a six-month period in
1987 he met or spoke with U.S. Trade Rep-
resentative Clayton Yeutter or his assistants
12 times on behalf of Mitsubishi Electric
Company, which is just one of his firm's
Japanese clients. Mitsubishi paid Lake's firm
$129,000 during that time.
Richard Allen, President Reagan's first na-
tional security adviser, was forced to recuse
himself from trade decisions involving the
Japanese automobile industry because of
his contacts with former clients and others
associated with Japanese automakers. Imme-
diately after he left the government, he opened
a firm that represented Japanese interests.
Retired admiral Daniel Murphy, George
Bush's former chief of staff, was hired to run
the international division of Hill & Knowlton,
which counts some of Japan's largest com-
panies and trade associations among its
clients, including Hitachi and the Electron-
ic Industries Association of japan.
Peter Peterson, a former secretary of com-
merce and the chairman of the Council on
Foreign Relations and the Institute for Inter-
national Economics, is the chairman of the
Blackstone Group, a Wall Street firm with
major Japanese clients. While Peterson isn't
a registered lobbyist for the Japanese, he
frequently defends Japanese interests.
William Eberle, a former U.S. trade repre-
sentative, and superlobbyist Robert Strauss,
a onetime special trade envoy with the title
of trade representative, represent or advise
Japanese and other foreign interests. So do
Roderick Hills, a former chairman of the
Securities and Exchange Commission Clark
Clifford, a former secretary of defense and
William Colby, a former director of the Cen
=LWLel-ligence A g e n c y .
Declassified in Part - Sanitized Copy Approved for Release 2012/05/15: CIA-RDP99-00418R000100150022-2