Back in December 1941 the Japanese diplomats posted in Washington were taken into custody and sent under armed guard to a posh resort in Virginia's Allegheny mountains. Three hundred eighty Japanese, including the ambassador, were interned in relative luxury the Homestead Hotel until April when they were exchanged for the U.S. diplomats who were in Japan at the time of Pearl Harbor.

As anyone who visits the Homestead knows, there is a certain timeless quality about the place. The creak of the wide screen doors opening onto the Long Veranda with its row of white rocking chairs, the smell of the oak logs burning in the fireplace; the tinkle of teacups as waiters serve afternoon refreshments in the lobby. Those things, as well as the bracing mountain air around hot springs, one imagines, probably are unchanged since the main hotel building went up in 1902.Times, of course, do change, and nothing reflects that better than the rather triumphant return of the Japanese to the Homestead this week. Roles weren't exactly reversed, but the Japanese seemed to be in the driver's seat. The subject was investment capital and scores of state government officials were hoping they could pry some cash out of Japanese wallets made fatter by a rapidly appreciating yen. One Virginia old timer said the Japanese returned as industrial conquerors.

Nearly 100 top Japanese leaders, including 40 CEOs and Ambassador Nabuo Matsunaga, five state governors and over 600 U.S. business leaders attended the Oct. 13-14 meeting of the Southeast United States/Japan Association. In between rounds of golf and some exuberant wining and dining, the main business was luring Japanese private investment - and with it jobs - to the seven Southeast states.

This was the 11th annual meeting of the association, and certainly the region's early start in cultivating the Japanese helps to explain why so much Japanese money has recently been flowing into Tennessee, Georgia, the Carolina's and now Virginia. The Southeast is second only to California in winning Japanese direct investment, and has attracted nearly 30 percent of the $19 billion the Japanese have put into the U.S. market.

Within the Southeast, Tennessee is the clear winner thus far. Governor Lamar Alexander has courted the Japanese during nine trips to Tokyo in the past seven years. He boasts that during his term as governor he has spent more time in Tokyo than he has in Washington. His major prize is the $600 million Nissan truck and car plant south of Nashville.

But Tennessee altogether has gained 7,500 jobs from investments worth over $1.2 billion from 42 Japanese companies. Tennessee international marketing director Louis Lockhart says theSoutheast is moving ahead in the investment sweepstakes because of several major pluses - a pro-business environment, a strong work ethic, a moderate tax burden, lower labor cost and proximity to markets. He notes that the shift of population to the sun belt puts 76 percent of the U.S. market within a day's surface journey of Tennessee. Mr. Lockhart says his state gains by linking its recruiting efforts to those of the southeast region.

Atlanta, true to its tradition, is ahead in the Southeast in winning Japanese banking and transportation firms. New one-stop air service from Atlanta to Tokyo is bound to boost the region as a whole.

Virginia, after a slow start, is coming up fast and has attracted 18 Japanese investments. The state organized a familiarization bus tour for 17 Japanese executives as a curtain raiser to the meeting at the Homestead. Among the participants was the CEO of Canon, which is building a stronger copier facility in Newport News. Newly elected Gov. Gerald Baliles, the host at the Homestead, will soon be making his first visit to Japan. Japanese officials of the Southeast U.S. Association say the stronger yen has made the United States much more attractive to Japanese investors.

The Japanese, by all accounts, enjoyed their 1986 stay at the Homestead. For Yoshio Katagiri, a top executive of C. Itoh, the visit closed a circle. Having been assigned to Washington as a junior official in the finance ministry in 1941, he was among the Japanese interned at the Homestead. He said except for the new addition, nothing much had changed, and that the service was of the same high standard he remembered from 44 years ago.

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