Joseph E. Persico (52 page)

Dewey knew that he faced a cunning opponent in FDR and feared a trap. He found it hard to dismiss a suspicion that Marshall was doing the President's dirty work in order to rob him of a powerful campaign issue. A Dewey aide pointed out to Clarke that tens of thousands of people knew that the United States had broken the Japanese codes. Hadn't the
Chicago Tribune
carried that story after Midway? To which Dewey added, “Well, I'll be damned if I believe the Japs are still using those two codes.” As unlikely as it seemed, Colonel Clarke insisted, they were. For all his toughness and his own cunning, Tom Dewey was, at bottom, a patriot. After another meeting with Colonel Clarke at the governor's office in Albany, he accepted Marshall's plea. He did not raise Magic as a campaign issue, and the Japanese continued to use their compromised codes.

General Marshall, despite Dewey's suspicions, had been honest in claiming that the President knew nothing of his approach to the Republican candidate. Not until days before the election did Harry Hopkins go to FDR with the story, after Marshall had confided it to Roosevelt's closest aide. “The President was surprised at the action Marshall had taken but expressed no criticism of that action,” Hopkins later recalled. “He merely stated that he felt confident that Governor Dewey would not, for political purposes, give secret and vital information to the enemy.” FDR also revealed a surer grasp of popular sentiment than Dewey. He told Hopkins, “My opponent must be pretty desperate if he is even thinking of using material like this which would be bound to react against him.”

If he had lost a campaign issue, Dewey had won an unwanted fan. The Nazi RSHA, which included the Gestapo and the SD intelligence operations, received a dispatch from “an entirely trustworthy informant in Spain,” claiming, “Dewey hereby showed an instinctive antipathy to the Jews. . . . Many Jewish elements were to be found among the gangsters he had fought [as a district attorney]. This attitude is, according to the informant's view, traceable to Dewey's Irish ancestry as well as to his defeat in the 1938 campaign against the Jewish-Democratic candidate [for governor, Herbert] Lehman. . . . And the informant mentioned the possibility of an understanding between Germany and the U.S.A. under Dewey's presidency.” It was rubbish passing for intelligence and demonstrated the uselessness of information tailored to fit prejudices, in this case, the anti-Semitism of Adolf Hitler.

That fall, FDR found occasion to lecture Churchill about security.
The New York Times
had carried a story headlined
INVENTION GIVES U-BOATS NEW LIFE, BRITON ASSERTS.
A Royal Air Force senior officer was quoted saying that “the Germans were fitting an extendible air intake to their U-boats so that they could recharge batteries and ventilate the submarines without surfacing.” FDR cabled the text of the
Times
story to Churchill, adding, “. . . [O]ur own submarine campaign in the Pacific is playing such an important role that the Barbarian will seize desperately upon any information that will help him in anti-submarine measures. I do hope, therefore, that we may continue to keep anyone from talking too much. I have no doubt that indiscretions are committed in our press but the enclosed has recently appeared under a London dateline. I will do what I can to keep the lid on here and I know I may count on you for similar measures.”

*

The war eventually was going to be won. Normandy had settled the outcome on the western front; Stalingrad had settled it in the East. The questions remaining were how much longer the victory would require and how to deal with the enemy afterward. Germany's postwar treatment had been the subject of heated debate at Tehran in the fall of 1943. Roosevelt and Stalin favored a peace as simple as it was harsh; they wanted Germany broken up. Churchill was opposed. Keeping secret the dissension among the Allies became critical, for how hard the Germans continued to fight depended in part on how they expected to be treated in defeat.

On August 19, 1944, Henry Morgenthau, who had long concerned himself with the fate of European Jewry at the hands of the Nazis, went to the White House to discuss with FDR his ideas for dealing with postwar Germany. The President's thinking happily coincided with his own. “We have got to be tough with Germany,” FDR told his Treasury secretary, “and I mean the German people not just the Nazis. We either have to castrate the German people or you have got to treat them in such manner so they can't just go on reproducing people who want to continue the way they have in the past.” Morgenthau liked the punitive ring of the President's comments. “Nobody is considering the question along those lines,” he responded to FDR. “In England they want to build up Germany so she can pay reparations!” After leaving the White House, he wrote in his diary that the President “left no doubt whatsoever in my mind that he personally wants to be tough with the Germans.”

It was outside his domain, but Morgenthau sensed a vacuum in postwar policy waiting to be filled. He went to a necessary ally, Henry Stimson, to test some fresh approaches. “I . . . gave him my idea of the possibility of removing all industry from Germany and simply reducing them to an agricultural population of small land-owners,” he later wrote of this conversation. Morgenthau had then described a plan for reshaping the German character. He told Stimson, “. . . [I]f you let the young children of today be brought up by SS Troopers who are indoctrinated with Hitlerism, aren't you simply going to raise another generation of Germans who will want to wage war? . . . Don't you think the thing to do is to take a leaf from Hitler's book and completely remove these children from their parents and make them wards of the state . . .?” Ex-Army officers from the United States, Britain, and Russia could run schools, he suggested, “and have these children learn the true spirit of democracy.” Stimson expressed horror at Morgenthau's draconian ideas. The Treasury secretary responded, “[T]hat is not nearly as bad as sending them to gas chambers.”

To Stimson, Morgenthau was not seeking a viable policy, but wanted Jewish vengeance. He immediately sent to the White House a “Handbook” prepared in his department describing a more moderate approach to a defeated Germany. Roosevelt's response, the most stinging that Stimson ever received, left no doubt that FDR preferred Morgenthau's divide, disarm, and denazify approach. “This so-called ‘Handbook,'” Roosevelt began, “is pretty bad. . . . [A]ll copies should be withdrawn. . . . It gives me the impression that Germany is to be restored just as much as the Netherlands or Belgium. . . . [E]very person in Germany should realize that this time Germany is a defeated nation. . . . [I]f they need food to keep body and soul together beyond what they have, they should be fed three times a day with soup from Army soup kitchens. . . . [T]hey will remember that experience all their lives. . . . There exists a school of thought both in London and here which would, in effect, do for Germany what this Government did for its own citizens in 1933 when they were flat on their backs.” FDR told Stimson, “I see no reason for starting a WPA, PWA or a CCC for Germany when we go in with our Army of Occupation.” The Third Reich was not to be replaced by the New Deal.

Thus was born, out of the Treasury secretary's drive and FDR's concurrence, the Morgenthau plan to subdivide Germany into small states to be peopled by farmers. “All Junker estates,” the draft read, “should be broken up and divided among the peasants and the system of primogeniture and entail should be abolished.” All German aircraft were to be confiscated; a nation of farmers did not need planes. The plan incorporated the President's own ideas for taming the Teutonic martial streak: “No German shall be permitted to wear . . . any military uniform or any uniform of any quasi-military organization.” Further, there were to be no military parades, no military bands. The word went out from the White House that the plan “must not be shown to anyone.” Stimson remained adamantly opposed and predicted that Morgenthau's proposal “will tend through bitterness and suffering to breed another war. . . .”

On September 10, Roosevelt and Churchill met again at Quebec. At first it appeared that the President had sold a reluctant Prime Minister on the Morgenthau plan through a quid pro quo, a substantial expansion of lend-lease to Britain. He and Churchill then signed a memorandum describing their intention to convert Germany “into a country primarily agricultural and pastoral in its character.”

The veil of secrecy surrounding the Morgenthau plan, however, was soon pierced.
The Washington Post
reaching the President's desk on September 21 carried columnist Drew Pearson's uncomfortably accurate account of the disagreements inside the administration over Germany's postwar fate. The next day,
The New York Times
had a story by Arthur Krock on the Morgenthau proposal, and the following day
The Wall Street Journal
printed details of both the closely guarded plan and the secret Quebec codicil. News stories began flooding the country raising the spectacle of a divided administration. Once the bare-knuckled approach to Germany leaked out, the enemy's ingenious propaganda minister, Josef Goebbels, leaped upon the Morgenthau plan to instill a fight-to-the-death mentality in Germany. Defiance, he preached, was preferable to serfdom.

The election was less than six weeks off when Dewey, deprived of the Magic issue, saw another opening. By mid-September, Allied troops stood on German soil for the first time since the war began. But the Wehrmacht gave ground grudgingly. Dewey charged that German resistance had stiffened because of the leaked Morgenthau scheme. American GIs, he predicted, were going to die unnecessarily because the Roosevelt administration intended to impose a brutal peace on the enemy. FDR, politically sensitized to his fingertips, began to back off. On September 29, Morgenthau, clutching a batch of newspaper clippings dealing with his now endangered proposal, planted himself in the entryway to Roosevelt's private study. He told FDR's daughter, Anna, “I will stay here outside the President's door in case he should want to see me.” Anna went into the office and emerged a few minutes later. “She said that the President didn't want to see me,” a crestfallen Morgenthau confided to his diary, “and she kept moving me toward the elevator.”

That same day, FDR quietly assigned the task of deciding Germany's postwar fate to a Morgenthau adversary, the State Department. The Treasury secretary was to stick to finance. Barely three weeks after he and Churchill had signed the Quebec memorandum to dismember Germany, FDR had made a 180-degree turn. “No one,” he told Cordell Hull, “wants complete eradication of German industrial production capacity. . . .” Four days after Morgenthau had been rebuffed, the secretary of war talked to Roosevelt and later recorded their conversation. FDR, Stimson wrote, “grinned and looked naughty and said, ‘Henry Morgenthau pulled a boner. . . .' He had no intention of turning Germany into an agrarian state. . . .” Though Stimson had seen his own position vindicated, he wanted to make sure that FDR did not trip over his own contradictions. He read to the President from the Quebec memorandum language unmistakably proposing to convert Germany into a nation of farmers. Roosevelt managed to appear stunned. He could not believe, he said, that he could have agreed to such a statement.

The Morgenthau plan was dead, though Tom Dewey kept flogging it. In his last speech of the 1944 campaign, he charged that disclosure of the plan had indeed cost the needless deaths of American GIs. Its advantage to the enemy had been, he said, the equivalent of “ten fresh German divisions.”

*

A lack of grounding in the political culture of the enemy could produce intelligence of astonishing naïveté. After Lieutenant Colonel Otto Skorzeny had succeeded in his daring rescue of the deposed Mussolini, Magic intercepted a message from the Japanese ambassador in Turkey to Tokyo that read: “According to what American officials here say, President Roosevelt had a little scheme for sending Mussolini to the United States and using him there for propaganda purposes in his move for re-election. Consequently Mussolini's escape, it is thought, was a . . . severe blow to Roosevelt.”

FDR hardly needed a fallen fascist dictator to win the presidency for the fourth time. On November 7 he carried out his election day ritual at Hyde Park. Eleanor, other family members, and the immediate staff sat around a small dining room table, tally sheets and sharpened pencils at hand, while the President nibbled on his wife's one culinary accomplishment, scrambled eggs. A clattering Teletype machine in the corner brought in early returns. Seventeen days before, Roosevelt had told Daisy Suckley that he thought Dewey had waged an effective campaign. FDR “. . . feels there is an excellent chance of his being defeated in the election,” she wrote in her diary. “The President is planning his life after he leaves the White House. . . . He will write and can make a lot of money that way.” If he genuinely feared Dewey, no sign appeared in Roosevelt's cool and unconcerned demeanor. By 1:30
A.M
., surrounded by crumpled papers, spilling ashtrays, and cold, half-finished cups of coffee, he was still scribbling on his tally sheets, out of habit, although it was already clear that he had won. Not until 3:16
A.M
., however, did Dewey read a concession statement to a near-empty ballroom at his campaign headquarters. He did not congratulate the victor. As the President was wheeled to his bedroom, he remarked to his aide William Rigdon, “I still think he is a son of a bitch.”

Chapter XXIV

“Take a Look at the OSS”

BY THE fall of 1944, the OSS payroll numbered over eleven thousand. Professors, scientists, philosophers, writers, journalists, lawyers, doctors, engineers, public relations experts, and actors crowded the cubicles on E Street. Secret agents had been spirited into every Nazi-occupied country. Supporting the Normandy invasion, the OSS infiltrated 523 agents into France to arm the resistance, radio back intelligence, and wreak havoc behind the lines. The London OSS staff forged papers and concocted cover stories for its spies and saboteurs that held up even against the Gestapo. Donovan had followed Overlord with his premier coup to date, espionage easing the way for Operation Anvil, the invasion of southern France. On August 15, 1944, General Alexander Patch's Seventh Army swarmed ashore at the chic Riviera beaches between Toulon and Cannes, suffering light casualties in no small measure because of OSS's advance work. Donovan's agents, teamed with the French resistance, provided Patch's forces with a virtual X ray of German defenses, coastal gun emplacements, minefields, roadblocks, airfields, even distinguishing real fortifications from false redoubts. One OSS dispatch reported the sand content of a concrete wall that the Seventh Army needed to blow. The Army's evaluation was glowing: “. . . [T]he results achieved by OSS in respect of Southern France before [Anvil] were so outstanding that they should be brought to the attention of interested authorities.” Donovan's outfit had achieved the “best briefed invasion in history.”

By September, the OSS embarked on its boldest enterprise, infiltrating agents directly into Germany. British intelligence had dismissed the possibility. Successful penetration of Nazi-controlled countries, MI6 warned, had depended on resistance fighters to provide safe houses, clandestine communications, food, clothing, and knowledge of the local landscape. No such support would be available in the enemy homeland with its populace in the grip of the Gestapo, with informers planted on every block and in every apartment building. Still, Donovan's increasingly sophisticated organization was eager to declare its independence, and how better than by succeeding in a mission that British intelligence considered foolhardy. On September 2 the OSS parachuted its first agent into the industrial Ruhr, Jupp Kappius, a German anti-Nazi socialist whose mission was to foment sabotage. Kappius became the forerunner of an eventual two hundred OSS agents who penetrated nearly every major German city before the war ended.

Donovan, though a rock-ribbed Republican of conservative social bent, had shown himself to be flexibly pragmatic in recruiting agents. German Communists were among the most ardent anti-Nazis who had fled the Gestapo dragnet, many finding refuge in Britain. In seeking to recruit Germans who could pass unnoticed inside the Reich, the OSS's Joseph Gould, a former movie publicist, hung around a left-wing London bookshop where he correctly guessed he would encounter Communist refugees. Through his bookshop contacts, Gould recruited German Reds, some under Gestapo death warrants, who were willing to parachute back into their homeland and spy against the Nazi regime. Aaron Bank, a forty-two-year-old OSS Army captain, trained a company of phony German infantry to be parachuted into the National Redoubt, the rumored stronghold where die-hard Nazis were expected to prolong the war indefinitely. Bank's mission, Iron Cross, was to attempt to seize Hitler and other top Nazis seeking sanctuary in the Redoubt. His recruits were Communists almost to a man.

Donovan, however willing to enlist Communists and Germans during wartime, knew he would face a contentious situation once the fighting ended. He took his quandary to FDR. On December 1, 1944, he sent the President a memorandum asking guidance on “a question which will rise with increasing frequency in connection with those of German nationality who work for us behind German lines.” Donovan wanted to know “what we are prepared to do in their behalf in regard to offering firm guarantees of protection and post-armistice privileges to Germans whom we recruit and who work loyally for our organization.” He asked the President to grant “permission for entry into the United States after the war, the placing of their earnings on deposit in an American bank and the like for these German nationals working for us within Germany at great risk.” The President appreciated the courage displayed by these agents and their value. He had personally approved the employment of known Communists as radio operators on merchant ships. But bringing Germans, particularly Communists, to the United States after the war presented risks for a Democratic president long under attack by the American right wing for being soft on communism. FDR bucked Donovan's request to Edward Stettinius Jr., who by now had replaced the ailing Cordell Hull as secretary of state. “What do you think?” Roosevelt asked Stettinius. The secretary drafted a suggested reply for the President to send to Donovan. “I do not believe that we should offer any guarantees of protection in the post-hostilities period to Germans who are working for your organization,” it read. “Such guarantees would be difficult and probably widely misunderstood both in this country and abroad. We may expect that the number of Germans who are anxious to save their skins and property by coming over to the side of the United Nations at the last moment will rapidly increase. Among them may be some who should properly be tried for war crimes.” State's objections carried the day. No American safe harbor was to be provided after the war to anti-Nazi Germans, however usefully they had served the Allied cause or at what personal risk. The President's decision, however, did not deter OSS operatives from continuing to recruit German Communists or entering POW cages looking for soldiers willing to spy against the Nazi regime. And fulfillable or not, the OSS continued to dangle inducements before these prospects—U.S. citizenship, jobs, an automobile dealership in some American city—if they would spy against their country.

*

As the war progressed, Donovan began an offensive to ensure that his hard-won gains did not evaporate with the arrival of peace. A lifelong student of power, he began by reconnoitering the surest allies in the White House. Judge Samuel Rosenman, FDR's longtime confidant and potent phrasemaker of so many Roosevelt speeches, became a target. Donovan sent a rough outline for a permanent postwar intelligence service to Rosenman, hoping he would endorse it and forward it to FDR. Nothing came of this approach. A more unlikely but eventually more productive channel turned out to be a small, bald, bespectacled labor economist and statistician, Isadore Lubin, whom the President had put in the Map Room to work on wartime statistics. On October 12, Donovan dispatched Major J. H. Rosenbaum to the White House to enlist Lubin in support of his postwar dream. Rosenbaum happily reported back to Donovan, “Dr. Lubin was definitely impressed by the idea.” Lubin advised only that Donovan amend his proposal to assure the Army and Navy that their intelligence branches would not be eclipsed by his scheme. “If we will get this changed plan back to [Lubin] right away,” Rosenbaum reported, “he will present it to the President at once. This reaction is very satisfactory, as Dr. Lubin is usually successful in getting adopted what he has recommended.” Donovan sent a response to Dr. Lubin expressing gratitude for his support of a permanent “central intelligence agency.” It was the first time, outside of the OSS, that he had employed this phrase. Lubin took the revised proposal to the President on October 25, telling him, “Bill Donovan's Office of Strategic Services has been doing some swell work. It occurred to me that there will be room after the war for a service in the United States Government which would carry on some of the work now being done under Donovan's auspices.”

Donovan's plan was bound to leak, and his rivals remained implacable. The first to strike back without having read the proposal was John Franklin Carter. Days after Lubin had taken Donovan's idea to the President, Carter warned FDR, “In my opinion, consideration should be given to the probability that British Intelligence has already penetrated the Donovan organization and is thoroughly familiar with its methods, plans and personnel.” As for the future, Carter suggested an insulting role for the OSS: “. . . [I]ts greatest usefulness might be as a means of letting the British think they know what information is reaching us.” He had a much more sensible idea, Carter advised the President, and cheaper too. It “involves a small and informal central office, adequately camouflaged, utilizing chiefly foreign contacts of American business, with the dispatch of occasional ‘look-see' agents in special circumstances. If you should wish,” he added, “I would like to organize and direct it.” Carter was, in effect, proposing to make his own tight little ring permanent. His proposal was obviously not intended for Donovan to see, though that is exactly to whom FDR gave it with a cover note reading, “I am sending the enclosed to you for your eyes only. Will you be thinking about this in connection with the post-war period?” Donovan read Carter's dismissive critique, and four days later FDR had Wild Bill's counterblast. “I am afraid that the author is in the ‘horse and buggy' stage of intelligence thinking,” Donovan observed. “Under your authority and with your support, there has been established for the first time in our history an independent American Intelligence Service which has already won the respect of similar services in other countries.” Donovan rejected Carter's charge that the British had penetrated his OSS. “In point of fact,” he told the President, “you would be interested to know that both our Allies and our enemies know less about our inner workings than we do about theirs.”

Beating off Carter's attack was only a secondary skirmish. What mattered more to Donovan was that the President had actually asked him to start thinking about postwar intelligence. While FDR waged the final week of his presidential campaign, Donovan's top staff was huddled at his E Street headquarters into the small hours designing a permanent espionage apparatus. One week after the election, the general delivered to Grace Tully a suggested executive order with his customary plea that she place it before FDR immediately. Under his proposal, the new service would be freed from control of the military and placed directly under the President. The plan made a polite bow to the continuing necessity of military intelligence, MID and the ONI; but their connection to the new entity would be strictly advisory. Finally, Donovan's brainchild was not to be barred from practicing any reasonable form of espionage. It would have the authority to spy on foreign governments and carry out “subversive operations abroad.”

If the President concurred, he had only to sign the executive order, and Donovan would have planted in the United States government its first permanent central intelligence agency. The general added a cryptic rationale as to why the President should make a quick decision. “Though in the midst of war, we are also in a period of transition,” he noted. “There are commonsense reasons why you may desire to lay the keel of the ship at once.” Donovan's appeal for quick action had been influenced by Robert B. Joyce, a sharp-minded political advisor on his staff who had studied the Soviet Union at first hand. By now, the Red Army had driven the Germans out of large tracts of Eastern Europe, and Joyce advised Donovan, “The Russians do not desire OSS activities in areas controlled by them or under their influence.” What Donovan was saying to FDR, however obliquely, was that after the war, Europe would be weak, and Russia's behavior in it could not be presumed to be benign. A continuing American espionage capability would be vital to decode Stalin's intentions.

The postwar proposal Donovan set before the President was framed in the bloodless prose of the bureaucracy. But within the OSS, a document circulated that made the true intent clear. This secret internal paper was entitled “Interpretive Notes of Memorandum for the President.” It envisioned a recasting of American intelligence on a breathtaking scale. Intelligence collected by other government offices, the document read, “must be furnished promptly and unreservedly to the central agency.” Furthermore, no longer would Donovan's people be excluded from the Magics and the Ultras of the future. Other federal agencies were to act, in effect, as parts manufacturers while Donovan's apparatus would become the “assembly line,” delivering the finished product to the Oval Office. The spy service was to have the pick of the litter: “In the armed services those officers who have demonstrated their superior aptitude for intelligence should be chosen for key positions in the intelligence agency.” Further, this central service would be allowed to hire any talents it required, and “civil service regulations should be made inapplicable to such specialists.” The document brashly styled the proposed agency “a national intelligence cartel.”

Four days after receiving Donovan's suggested executive order creating a central intelligence agency, FDR told Admiral Leahy to take it to the Joint Chiefs of Staff for a recommendation. By now, Wild Bill's arch enemy, General George Veazey Strong, had been replaced as head of Army G-2 by General Clayton Bissell, who proved equally belligerent. Bissell argued, before the Joint Chiefs, that Donovan's super spy agency would have the authority to decide what intelligence the President did or did not see. “Such power in one man is not in the best interests of a democratic government,” Bissell charged. “I think it is in the best interests of a dictatorship. I think it would be excellent for Germany. . . .”

While the military struck from one flank, J. Edgar Hoover attacked Donovan from another. The FBI director had made himself nearly indispensable to the White House. At the President's behest, his FBI had placed Vice President Wallace under surveillance ever since his loose-tongued indiscretions to his brother-in-law had been exposed. While Allen Dulles spied for the OSS in Switzerland, FBI agents spied on his sister, Eleanor, at home, reporting that her affair with a Russian translator had been consummated every Tuesday, Saturday, and Sunday for the previous five years. Even the private life of the President's trusted Harry Hopkins was not out of bounds. The President was furious over leaks of near-verbatim White House conversations that appeared in the antagonistic Washington
Times-Herald.
The shadow of suspicion fell upon Hopkins's third wife, Louise, a former Paris editor of
Harper's Bazaar,
a great beauty, and a woman with a past. She reportedly numbered among several wealthy lovers Bernard Baruch and Jock Whitney. After she married Hopkins, Louise moved into her husband's quarters in the White House. In the beginning, the President was smitten by her. Eleanor, however, was less enthralled at having another permanent houseguest, and a charmer to boot. Still, FDR wanted the couple to stay, particularly to keep Hopkins at hand day or night. In December 1944, with his frustration over the newspaper leaks mounting, Roosevelt had the FBI start watching Louise Hopkins. Hoover placed her under “physical and technical surveillance,” which meant that she was followed and her phone tapped. Revealing his closeness to FDR, or his distrust of his wife, Hopkins himself made the arrangements for the FBI to spy on her. The investigation came up dry. Louise was neither spilling White House secrets nor betraying her husband.