The Strength of the Wolf (6 page)

Blessed with a knack for hype, Anslinger in the mid-1930s christened his organization the Federal Bureau of Narcotics (FBN), to liken it in the public's mind with the fabled FBI. In similar fashion he created a pseudo-crisis that helped justify the FBN's existence during the Depression, when the federal budget was being drastically trimmed, and bureaucrats who were not showing success were being sent to the gallows. At the time, Anslinger's job was in jeopardy too, so borrowing from Madison Avenue and creating a need that could never be fulfilled, he launched his infamous “Reefer Madness” crusade to rid America of marijuana.

Relying on his contacts in the press, the drug industry, and the evangelical movement, Anslinger conjured up a rogue's gallery of undesirable minorities that appealed to traditional race and class prejudices. According to Anslinger's Army, those pushing the Killer Weed were lazy Mexicans on the southwest border, sex-crazed Negroes and Puerto Rican seamen, inscrutable Chinese pagans who turned weak-willed white women into prostitutes, and lewd Lost Generation atheists preaching free love and Bolshevism in Greenwich Village cafes. Anslinger cynically linked crimes of passion and wanton violence, sexually transmitted diseases, insanity, and even eternal damnation to that fatal first puff of pot.

In 1937, with the support of some of America's most prominent citizens, federal legislation was enacted making the sale and possession of marijuana illegal. A new class of criminal was created, as was the “stepping-stone” myth that smoking marijuana led to heroin addiction. Making cases on pot smokers became a rite of passage for FBN agents, and, as the war in Europe and Asia increasingly hampered international smuggling routes and thus reduced the number of heroin cases that could be made, it became a surefire way for mediocre agents to meet their case initiation and arrest quotas.

As a Roosevelt Republican, Anslinger shared an uneasy alliance with Treasury Secretary Henry Morgenthau, Jr. A keen advocate of his Department's law enforcement branches, Morgenthau in 1934 created an
Enforcement Board consisting of the heads of the Secret Service, the Bureau of Alcohol Tobacco & Tax, the Internal Revenue Service's Intelligence Unit, the Coast Guard, the customs service, and the Bureau of Narcotics. The goal was to improve efficiency through closer coordination, and the Board's chief coordinator became Anslinger's boss.

Harold Graves was the first chief coordinator, and after his promotion to assistant secretary of Treasury in 1936, Graves was succeeded by IRS Inspector Elmer Irey. Having arrested several Narcotics Division agents in Chicago on corruption charges in 1925, Irey fully understood the challenges facing Anslinger. Moreover, he and Anslinger had formed a close personal relationship in 1931, when they quietly quashed an extortion scheme aimed at implicating President Herbert Hoover and Andrew Mellon in a bootlegging conspiracy worth millions of dollars. A pioneer in crafting conspiracy cases, Irey established the Treasury Department's Law Enforcement Training School in 1937. Greatly admired by Morgenthau, he was the last chief coordinator to wield more power than Anslinger.
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Starting in 1932, Stuart J. Fuller was Anslinger's counterpart at the State Department. Fuller's appointment as chief of the East Asian Division underscored the importance of protecting Nationalist China, and represented a shift away from the isolationist policies of Congress toward the expansionist policy advocated by the Foreign Policy Association and other Establishment front organizations. As the government's representative to the Opium Advisory Committee, Fuller, until his death in 1941, assumed the lead role in formulating foreign narcotics policy, while working hand in glove with Anslinger.

Anslinger's most trusted staff assistant was attorney Malachi L. Harney. In the early 1920s Harney served as a supervisor in Irey's IRS Intelligence Unit, and in the late 1920s he established a reputation as a “gang buster” while overseeing Eliot Ness and the legendary Untouchables in their successful pursuit of Al Capone in Chicago. Tall, dignified, and tough as nails, Harney served in Anslinger's Flying Squad, and then joined the FBN. As Anslinger's enforcement assistant, Harney shaped the FBN's operating procedures and methods of managing informants, and built conspiracy cases against the most notorious drug traffickers of the 1930s and 1940s. His career culminated with his appointment as Treasury's assistant secretary for law enforcement in the mid-1950s.

Anslinger's top overseas agent in the 1930s was case-maker Charles B. Dyar. Fluent in French, German, Dutch, and Italian, Dyar joined the State Department in 1906 and served with the American Embassy in Berlin through the First World War, reporting on political, economic, and military
matters. After Dyar was reassigned to The Hague in 1918, he met and formed a fast friendship with Anslinger, who also spoke German and Dutch, had recently joined the State Department, and was performing security- and intelligence-related tasks for the Embassy. Anslinger looked up to Charlie “the Sphinx” Dyar (famous for his grace under pressure), and after he became chief of the Division of Foreign Control, Anslinger hired Dyar as a Prohibition Investigator. Dyar worked with the Flying Squad in Canada until 1927, when assistant secretary of State Seymour Lowman personally assigned him to Berlin, where he served until 1930, at which point Anslinger brought him into the FBN.
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Like many of Anslinger's top agents, Dyar was hired as a special employee on the basis of his linguistic abilities, his experience as an intelligence operator, and the overarching fact that although he was suave and sophisticated, he was tough enough to handle the dangerous informants who made their living entrapping violent drug smugglers. Anslinger in 1931 put Dyar in charge of all FBN narcotics investigations in Europe, and in this capacity he was responsible for uncovering the ties between Eliopoulos and his array of American customers.

Dyar and Anslinger became intimately linked in 1934, when there was a sharp drop in the number of narcotics seizures in America, and Morgenthau put the blame squarely on their shoulders. The problem began in late 1933, when the last of the world's licit heroin-manufacturing facilities in Bulgaria was shut down, and international drug traffickers switched to clandestine factories and smaller shipments to evade detection. Morgenthau unintentionally made it harder for the FBN to adjust to this change in the underworld's modus operandi when, in 1934, he gave the customs service jurisdiction for drug investigations in Asia, Latin America, and Mexico. The FBN had jurisdiction everywhere else, but conflicts arose, and the flashpoint in the FBN's feud with Customs was in February 1937, when Morgenthau put Customs agent Alvin F. Scharff in control of anti-narcotics operations in Europe. Ambitious and domineering, Scharff tried to convince Morgenthau that Customs, not the FBN, should manage any investigation that had to do with drug smuggling, anywhere.

If an adversary can be included in Anslinger's inner circle, then Al Scharff, along with FBI director J. Edgar Hoover, deserves the honor. Based in Texas, Scharff's area of expertise was Mexico, where in the First World War, while operating as a special employee of the War and Justice Departments, he assassinated two German spies. After that the customs service hired him, and over the ensuing years he made many alcohol- and drug-smuggling cases. But it was not until 1936, when he smashed a drug-smuggling
ring that stretched from Shanghai through Havana to Mexico City, that Scharff's competition with Anslinger, Dyar, and the FBN began. The drug ring, which was depicted in the 1948 movie
To The Ends of the Earth
, included a Eurasian femme fatale, a Prussian count-cum-Nazi spy, the Paris-based playboy brother of the mistress of Rumania's King, and the Istanbul-based son-in-law of Mexico City's police chief. All were associates of Elie Eliopoulos.
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The problem for Anslinger was that, although the case had been made in Mexico, Scharff had generated leads and developed informants in Europe, which he was not about to share with the FBN. As noted, Morgenthau had lost faith in Anslinger and had instructed Scharff (as we are told in his biography,
The Coin of Contraband
) to assist the American Embassy in Paris “in organizing a system to combat the flow of narcotic drugs from the Far East through Europe to the United States.” In addition, the chief of Naval Intelligence wanted Scharff to obtain “certain information from Europe on matters not being investigated by its other agents.” Obviously, in this latter respect, Scharff's narcotics investigation was merely a cover for espionage activities.
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In Europe, Scharff used an “unlimited expense account” to hire forty-six men in key European cities and, based on this vast informant network, found that narcotics from the Far East were smuggled through the Suez Canal into Italy and Turkey, then to Corsica and Marseilles, and that French Corsicans, financed by Greek racketeers, controlled the traffic. Scharff also discovered that the overland narcotics route included the Trans-Siberian Railroad and the Vienna Express from Istanbul to Paris. He located poppy fields in Yugoslavia, and learned how narcotics were moved to Trieste, Rome, and Naples, where he “saw American tankers pumping gasoline into German submarines and barges, and into tank cars bound for Berlin.”
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In Paris, as part of his espionage mission, Scharff worked with Ambassador William C. Bullitt in an effort to penetrate a faction of the Sûreté that protected Louis Lyon. Through the family connections of his wife, Ida Nussbaum, whose cousin was related to French Premier Léon Blum, Scharff was eventually able to initiate action against Lyon. It is a case worth examining.

As mentioned in
chapter 1
, Lyon had worked with Eliopoulos smuggling narcotics to various American gangsters. Lyon, however, played a double game and information he provided to French officials resulted in Eliopoulos being expelled from France. In exchange, Lyon was allowed to operate a heroin factory in Paris, directly across the street from the French Ministry of Foreign Affairs. From his factories in Turkey and China, tons of opium
was moved to his accomplice, Corsican Paul Carbone in Marseilles. The Sûreté even protected Lyon after an explosion in his Paris factory in 1935. Everyone knew Lyon was the factory's owner, but he was not tried until 1938, and then received only a light sentence. Why? Because high government officials, including Max Dormoy, the former Socialist minister of interior, employed Lyon as a spy against fascist French with ties to Nazi Germany.
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By 1940, the French were deeply divided along ideological lines, and while his former partners Elie Eliopoulos and Paul Carbone became Nazi collaborators, Lyon played a precarious triple game, posing as a Nazi sympathizer in order to expose Gestapo agents trying to infiltrate the Resistance. As Anslinger grudgingly observed, “Following the war, the French government awarded ex-gambler, ex-bookmaker, ex-dope dealer Lyon the Legion of Honor.”
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Throughout his tour in Europe, Scharff had a huge ego battle with Charlie Dyar, whom he started supervising in 1937. In a July 1940 letter to his supervisor in El Paso, Scharff disparagingly and unfairly said of Dyar, “so far as I knew he had not done anything up to the time I left Paris.”
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One can imagine refined, taciturn Charlie Dyar suffering sidewinder Al Scharff, with his cowboy boots and grating Texas drawl that so irritated the French officials he was trying to outwit. And of course Dyar was anything but unproductive. After the First World War, he had helped French counter-intelligence identify some 13,000 German spies, and thereafter Dyar relied on his friends in the Sûreté for the successes he achieved in his European narcotics investigations. So when Scharff tried to penetrate the Sûreté, the two men clashed immediately, and Scharff had Dyar summarily transferred to Customs in June 1937. But as soon as Scharff left Paris to return to Texas, the Treasury Attaché summoned Dyar back to resume control. Dyar remained in France until his investigations were interrupted by the Second World War, at which point he was reassigned, to his eternal dismay, to Scharff in El Paso, where the feud between Customs and the FBN simmered in the sweltering Texas heat.

At home, Anslinger's top gun was fearless Ralph Oyler, the premier narcotic agent of the 1920s. In 1916, having transferred to the Narcotics Division as a special employee, Oyler made the seminal Jim Fuey Moy case in Pittsburgh. Moy, an addict, was arrested because his doctor had prescribed
him narcotics, and the Narcotics Division wanted to challenge the legality and wisdom of the practice, because narcotics were being diverted from many of the treatment clinics that existed at the time. A milestone in drug law enforcement, the Moy case went to the Supreme Court, which ruled against Moy and found, in effect, latent police powers in the Harrison Act, which had been enacted as a revenue-gathering measure.
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In 1921 Oyler initiated another landmark case against several major American drug manufacturers and wholesalers. An estimated 300,000 ounces of heroin was being produced every month in New York, much more than was needed by area hospitals. Licenses were easy to obtain, and huge amounts of narcotics were being diverted onto the black market. At Oyler's direction, an agent was placed in each manufacturing and importing house, and for the first-time purchasers, as well as manufacturers and wholesalers, were investigated. The result was the Jones–Miller Act of 1922, which standardized licensing and registration practices, and made the mere possession of narcotics a crime. Jones–Miller also provided for a federal narcotics commission, later chaired by Anslinger, which controlled the importation and exportation of narcotics.
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Oyler was also the brawling undercover hero of the Battle of the King Alexander – the King Alexander being a Greek ship whose crew was smuggling a million dollars' worth of opium and cocaine to the Mafia. Oyler, leading seventeen fellow agents, raided the ship on 9 September 1921. As the
New York Times
reported, “Oyler and his companions used their revolvers freely and with effect.”
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Two crew members were killed, four hospitalized, twenty-eight arrested, and eleven convicted.