I will refrain from accusations of trolling for now, tbone, and instead venture to inform you. (…but Billy Jack? Seriously? 
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In this case your grasp of the matter is not as one might hope, but that’s going to be true of most people. First of all, there was no confiscation drive by the Japanese government. In a nutshell, the disbanding of the samurai as a class was a process of steps beginning in 1873 and which was only truly wrapped up once and for all by 1947; indeed, prior to 1873 the nation had already been at peace with itself for so long that the samurai had become largely idle militarily, with fewer and fewer being retained. They drifted into nonmartial occupations because their stipends, if any, became increasingly reduced and they had to find other ways to put food on the table, mostly by entering into administration, but also medicine, academics, and the arts. Some even took up farming. I doubt that any ventured full-out into commerce without some major soul-searching, because no matter how wealthy and influential, merchants were at the bottom of the social hierarchy. Be that as it may, this became the norm, but whatever they did for income they still retained samurai status. In other words, they were redundant. Of course a few descended to banditry and the like, but the lot weren’t all going around cutting each other up willy-nilly; there were already very stiff laws against that long beforehand. In the course of the disbanding process, the samurai’s right to wear swords and use them at will among the general public was abolished. That’s a completely different thing from confiscation. Yes, there were “sword hunts” in the past, but those were either between warlords, the winner in war harrying the loser, or in the most famous and sweeping case, to outlaw and remove weapons from the hands of commoners and monks, not samurai. Big picture is the samurai still kept their arms by privilege and displayed them at home, and continued to use them in contexts such as teaching, practice, and demonstration (pursuits that continue to this day); there was no overarching “need” for stealth weapons to substitute for their traditional ones. Splashy video game gore-fest narratives might be another matter, but questionable amusements ain’t history.
Less in question was how the mendicant komusō monk wasn’t always entirely what he seemed; the whole getup was perfect for anonymous spying and surveillance, if a bit obvious, so the shogunate granted them complete travel privileges free of challenge and used them for espionage. It’s also known that lay people dressed up that way as well for covert reasons. Makes sense. Naturally in all things cloak-and-dagger, self defense is a consideration, so the shakuhachi is logical for the purpose (so long as it’s of one-piece construction).
Here’s a komusō in full kit so we can stay marginally on-topic:
But it’s highly doubtful that samurai would have readily engaged in such deceptions except in great extremity; it would go against their sense of honor. Working in espionage was a ninja’s gig, skulking being unworthy of the samurai’s hereditary profession. If members of samurai families ever took up the shakuhachi as a pastime, there is no doubt that they would also consider its martial potential, but being primarily a defensive weapon it never replaced the sword, the bow, or any other traditional weapon associated with that class. It would have at most been simply a nonstandard weapon of circumstance. If one felt the need for a dedicated defensive weapon just in case, the socially acceptable tessen (a solid iron bar in the general shape of a folded fan, also a working fan with iron ribs that serves as a baton when closed) was more likely because of its unobtrusive appearance and because it was easily tucked through the belt and out of the way, neither of which can be said about the considerably less durable shakuhachi.
And now that I’ve bored you all to death…
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