At long last an issue is solved! Did an engraver creating banknotes for a Japanese puppet bank in the 1940s slip in a picture of Confucius making an obscene gesture to the Japanese? I have asked this question before, and never gotten an answer.
I still don’t have an answer, but it turns out that I do have a locus classicus. Paul Linebarger (a.k.a. Cordwainer Smith) included this story and the picture of the note in his Psychological Warfare pg 141.
Given his history in the Office of War Information, I would assume that this at least a period myth.
