“A new attitude of suspicion surrounded and embarrassed Standard Oil,” the BSC Papers recorded. “The U.S. Economic Defense Board was now compelled to put a stop to another deal under which Standard would have sold Germany its Hungarian oil interests.” This economic warfare against the enemy in the Western Hemisphere was waged against many commercial enterprises. Stephenson became expert in unexpected areas like the smuggling of diamonds, through which Germany could beat the economic blockade. Strategic goods were purchased by Nazi collaborators in black markets where the currency might be gold, precious stones, or other “light-weight, high-value” commodities whose origin could be disguised. The case of Standard Oil underlined the relentless nature of the pursuit of Nazi dupes by Stephenson, and his disregard for special interests. When BSC’s detective work exposed offenders like Standard Oil, whose ultimate ownership rested with the Rockefellers, no favors were asked and no quarter was given. In files labeled “The Campaign Against German Business,” a BSC historian comments: “We helped create an atmosphere in which the President could act and issue orders to seize companies or suspend their activities. The American people, persuaded by disclosures in the Press that German commercial machinations were a menace to their own security, accepted these orders as essential. American Big Business, conscious of public sentiment, did not dare oppose them.”
A curious alliance between business, labor, and pro-Nazi groups was uncovered. John L. Lewis, president of both the United Mine Workers of America and the Congress of Industrial Organizations, was involved with the “oilies,” the big oil companies trading with the Axis powers. His activities drew attention first of all because, in the words of the BSC Papers, he “nursed a personal hatred of President Roosevelt, was violently isolationist so long as Russia was allied with Germany, and had a virulent loathing for Britain.”
BSC created societies to discredit enemies in the U.S., “spontaneous” and seemingly home-grown agencies such as the American Labor Committee to Aid British Labor, the Fight-for-Freedom Committee, and subcommittees within the American Federation of Labor. In the course of plotting the downfall of Lewis as dictator of the American labor movement, BSC prepared a report on “the American working class” that reached Hoover. He read with some interest that “the American working class is uninformed and politically disorganised. Many of the workers came from the uneducated foreign-born population, which having no political tradition (and often a good deal of language difficulty) is confused and easily swayed by mass emotional appeals of the crudest character. . . . As the majority of unions in the vital defense industries are affiliated with the CIO, Lewis’s prejudices are a menace to Britain.”
Hoover had to swallow this judgment, and the FBI checked out the reported dealings between the labor leader and an American oilman, registered with German intelligence as a subagent. The name of this oddly placed oilman was William Rhodes Davis. He worked from the 34th floor of 630 Fifth Avenue, sandwiched between Stephenson’s Economic Intelligence Division and his coding machines.
Davis was a railroad engineer from Alabama who got into oil in his mid-twenties. He had been an independent operator in the Oklahoma oil fields for fifteen years when he was dazzled by the possibilities of Nazi commercial cartels by the son of a German immigrant to the United States, Dr. Horace Greeley Hjalmar Schacht, regarded as the Third Reich’s financial genius. The man who was named after Horace Greeley proved a popular salesman for Hitler because he made Nazism sound like American-style enterprise. Schacht talked of a great economic union with the Anglophile world, and his expansionist philosophy appealed to the rock-fisted oilman. Davis also saw that in the coming war Germany would need huge reserves of oil to fuel its U-boats and commerce raiders. By 1936, when Davis was forty-seven years old, he was on intimate terms with the Nazi Ministry of Economic Affairs and German industrial cartels involved in Hitler’s fortunes. He built a refinery at Hamburg, using blocked assets that the First National Bank of New York had in Germany, and then arranged to ship crude oil there from the Americas by a route that would circumvent British blockades. His company and its subsidiaries began shipping to the oil terminal at Malmö, in Sweden, which had attracted Stephenson’s interest in early 1939. Five days after war in Europe broke out, word leaked to London that William Rhodes Davis was on a “peace mission” in Berlin, and claimed to represent President Roosevelt.
Roosevelt had indeed talked with Davis, at John L. Lewis’s request. He listened to Davis and agreed “it would be tragic if the war should spread.” By the time Davis reached Berlin, this brief conversation had been enlarged in his own imagination. He met several times with Göring. Reports duly filtered back to Washington that Davis had described the President as being under the control of John L. Lewis, who “in turn controls a block of fourteen million votes.” Lewis was said to have dropped his opposition to the Nazis since the Nazi-Soviet Pact of 1939 and to be willing to pressure Roosevelt into stopping the war. If the British persisted in their “aggressive war” with the President’s support, Lewis intended, provided he had sufficient funds, to bring about Roosevelt’s downfall.
Behind all this was Davis’s anger that the British had stopped shipments of oil to Germany after he sold the first 400,000 tons from his Mexican refineries. Another 33,000 tons of crude oil had been confiscated on its way to the Swedish terminal for redistribution to Germany.
When Davis left Berlin, he was given a German military intelligence number—Agent C 80—and he traveled in the company of the well-known Nazi economic expert Dr. Joachim Hertslet. They were intercepted by SIS in Lisbon. Hertslet was using a Swedish passport in the name of Carl Bluecher, and the British exposed the fraud, preventing Hertslet from continuing his journey to South America, where his job was to have been the penetration of commercial interests. Later, he assumed another false identity and flew first to New York, unaware that he had been allowed deliberately to slip through so that the FBI could tail him.
This was the period when the German Air Force chief was active in putting out “peace feelers.” Göring, by promising to get rid of the fanatic elements in the Nazi leadership, hoped to confuse and divide British and Americans. He readily believed that the American presidency was at the mercy of John L. Lewis, who was in effect boss of the Confederation of Mexico Workers, and that Lewis had pressured the Mexican government into guaranteeing oil supplies for the German Luftwaffe. Thus Lewis was entered in German military files as a sub-agent. In due course, he appeared in the BSC Papers as “a menace to be liquidated”—although direct action against the labor leader had to be postponed until after the crucial third-term election. The covert war against John L. Lewis began early in 1940 and was waged by the British on U.S. soil. The danger was that it might seem to be a campaign against the workers of America.
“The miners, who carried Lewis to power, were an incredibly neglected and oppressed group in 1940,” Stephenson later commented. “In that year alone, nearly 1,300 American miners were killed on the job and thousands more suffered permanent injury without compensation.
“Their greater enemy in the long run was the enemy we were fighting and which many American labor organizations were, in some cases unknowingly, helping. Lewis was their symbol.”
The somersaults performed by international Communism after the Nazi-Soviet Pact of 1939 were repeated by Lewis. A political and subversive campaign to stop supplies to Britain continued from the time Soviet leaders accused Britain of provoking and prolonging the war with Hitler until the Führer invaded Russia. Labor strikes hit U.S. ports where ships waited to run the gantlet of Nazi submarines with vital cargoes. The details of sailing schedules were passed by Communist informers to German agents. It was this devotion to alien dogma that so shook Eleanor Roosevelt. She had tried to work with “liberal” youth movements, which served as Communist fronts, but by the third-term election she was saying that John L. Lewis seemed to be indistinguishable from either Communist or Nazi propagandists. “This fearsome labor leader says that he and
millions of workers who obey him will vote against Franklin,” she wrote in October 1940 to Stephenson. “The so-called Lewis Hymn of Hate turns the election into a personal battle between the labor leader and the President.”
President Roosevelt said a few days later in a Brooklyn speech: “We must remember what the collaborative understanding between Communism and Nazism has done to the process of democracy abroad. Something evil is happening in this country. . . .”
The German Embassy reported to Berlin a confident assertion that Lewis could swing the workers’ vote. The chargé d’affaires, Hans Thomsen, wrote those dispatches, which were read by Roosevelt as quickly as by Berlin. Thomsen’s resident spy master worked with Hertslet; that enterprising gentleman was now directing Nazi subversion in the Western Hemisphere. Meetings between Hertslet and his agent C 80, William Rhodes Davis, took place in the oilman’s Rockefeller Center office, as well as in his Scarsdale home, with John L. Lewis, in April 1940. Then Hertslet moved to Mexico City and instructed Lewis to begin inciting the strikes that would hit those industries that represented life lines to Britain. His instructions were synchronized with the German campaign to convince American industrialists that Britain was already defeated.
There were several ways to get at John L. Lewis. An overt attack might play into the hands of those who could block Roosevelt’s measures; and so it seemed best to have BSC agents destroy the credibility of smaller men who buttressed Lewis or who were supported by Lewis in opposition to Roosevelt. Such an opponent of the President was Senator Burton K. Wheeler.
Wheeler, regarded with favor by the Nazi leaders, was an America Firster and proclaimed his belief that aid to Britain meant “plowing under every fourth American boy in foreign battlefields for the benefit of a decayed British Empire.”
At that time the America First group was only one result of a massive German propaganda effort. BSC recorded: “When Britain was on the ropes and needed every kind of assistance, the enemy redoubled his efforts to swing American public opinion against Britain. Isolationist anti-British propaganda was splashed over the newspapers, shouted at mass meetings, disseminated through special societies and proclaimed in the Senate and in the House of Representatives. . . . Paralleling the tactics used by the NSDAP [National Socialist German Workers’ Party] in Germany, the pro-Nazi forces within the United States formed ‘patriotic societies’ devoted ostensibly to serving the interests of ‘Americanism.’ There were a great many such organizations, from the ridiculous little imitations of Fascism like William Dudley Pelley’s Silver Shirts to the wealthy and powerful, like the America First Committee. The dozens of interlocking isolationist organizations held mass meetings, issued pamphlets, trained street-corner rabble-rousers and organized ‘educational’ meetings. Their effectiveness grew so that by 1941 the temper of the people became difficult to assess. It gave the impression of being unstable and dangerous.”
The German propaganda machine was working with economy and skill even after Roosevelt was re-elected. Americans who feared for their nation’s security thought it was imperiled by surrender to the totalitarian propaganda of Lewis and Wheeler. A stream of messages from the German Embassy in Washington referred to both men in connection with reports on American production capacity and readiness for war. The messages were intercepted by the British, who concluded that Wheeler had access to secret U.S. military contingency plans, including the politically explosive ABC-1 “Germany First” blueprint.
While the FBI tried to prove that military secrets were getting into wrong hands, Stephenson looked for other ways to limit Wheeler’s influence. He found one in what BSC called “The Congressional Franking Case.”
“It is a long-standing privilege of Senators and Representatives to send letters without paying postage, using envelopes which are ‘franked’ with the signature of the sender,” Stephenson noted. “Certain Congressmen were using the ‘frank’ for distributing free through the mails not only their own isolationist speeches but the work of Nazi hacks. Moreover, this went to people throughout the United States and not just to the Congressman’s own constituents. Congress was converted into a distributing house for enemy propaganda.”
His agents drew up a list of the recipients of this curious mail. They ran into thousands of names. The same names were on the distribution list of the German Library of Information in New York. BSC inserted extra names and addresses into the German Library list. Within days, these names began to appear on franked pro-Nazi mail from Congressmen. British agents examined envelopes franked by Senator Wheeler. They were found to have addresses stenciled by a distinctive addressing machine, an out-of-date Elliott. The German Steuben Society, a “cultural” organization that sent out confidential bulletins, still used an Elliott. The Society’s confidential bulletins were intercepted. The envelopes were found to have been stenciled in a particular ink matching that used on the franked envelopes. The address plate carried the same coded number as the one used on Wheeler’s outgoing mail.
Senator Wheeler was accused of abusing his Congressional privilege. He replied in the Senate in such an evasive way that he received hostile press comment and lost a good deal of prestige. He was forced to admit America First had purchased a million of his franked envelopes. A month later, in June 1941, all German consulates and agencies were closed by executive order. BSC ended a period during which 1,173,000 copies of Axis propaganda had been mailed at the expense of the American taxpayer through twenty-four members of Congress. It was not, however, the end of Senator Wheeler just yet; the BSC would have further use for him.
John L. Lewis was in difficulty that same June of 1941 as the result of Hitler’s invasion of Russia. Suddenly, American Communists were in favor of war. Lewis himself was never a Communist. He pandered to Communist sympathizers for reasons of political expediency.
Stephenson mounted a campaign to discredit Lewis with the Kremlin. His agents in Moscow openly discussed the need to separate Lewis from the labor unions, arguing that it was now in Russia’s interest to stop further labor troubles in the war industries. The Soviet press declared that the U.S. labor movement as represented by John L. Lewis was “a racket run by racketeers.” Within weeks, BSC reported: “The isolationist faction within the American Communist Party has been bludgeoned into line by the Party Executive . . . a belated flip-flop among union leaders, made all the more painful for those who denied they were members of the Party. But all are now opposed to Lewis.”
Other influential figures inside the CIO did not subscribe to Communist policies or to Lewis’s isolationism. Now, for the first time, they felt stronger. BSC gave them extra courage through the Fight-for-Freedom Committee, taking care to conceal the British connection. Agents were sent to the CIO National Convention in Detroit the following November. The results were summarized in the BSC Papers:
“Fight-for-Freedom conducted a public opinion poll of the delegates. Great care was taken beforehand to make certain the poll results would turn out as desired. The questions were . . . to steer the delegates’ opinion toward support of Britain and the war. . . . 96 per cent thought defeating Hitler was more important than keeping the USA out of the war; 95 per cent said they would advocate keeping the Japanese out of British possessions in Asia; 90 per cent said they would fight at once if it seemed certain Hitler would defeat Britain. Lindbergh was voted U.S. Fascist Number One and Senator Wheeler was U.S. Fascist Number Two. . . . BSC agents met union leaders and explained the purpose of Fight-for-Freedom and the poll. . . . The campaign was particularly appreciated by some representatives of the Roosevelt Administration who attended the convention as observers.”
Public opinion had been manipulated through what seemed an objective poll. This was a resounding defeat for Lewis. Before Senator Wheeler could mobilize his remaining resources, another member of the trio met an untimely end. William Rhodes Davis had placed his business at the disposal of German friends. Nazi spy networks meshed with Davis’s trading agencies in neutral countries like Spain. His
vice-president in charge of foreign operations, Henry Warren Wilson, carried information from London to German military-intelligence intermediaries in neutral centers like Madrid and Mexico. Davis himself had excellent contacts inside England, including Lord Inverforth, whose knowledge of the munitions industry was voluminous. Inverforth fed Davis information that was distinctively misleading. When this “tagged information” turned up in intercepted German radio traffic, the source was unmistakable. In May 1940, for instance, Wilson had been informed at Inverforth’s home in Hampstead that the Royal Navy had developed a device to detect submarines between the surface and a depth of fifty feet. This was a flight of imagination, confided to nobody else. Soon afterward, ULTRA recovered German Navy instructions that U-boats should keep below fifty feet while submerged to avoid British sub killers equipped with new detection gear. The inference was obvious.
Even inferences were no longer necessary by the summer of 1941. The Davis organization had been under prolonged scrutiny wherever in the world its employees showed their faces. It had become deeply involved in German plans for air and naval bases within striking distance of American shores. Davis himself had received large sums of money for political campaigns to keep America out of the war.
In the prime of life, at the age of fifty-two, William Rhodes Davis died unexpectedly. The cause of death was given as “a sudden seizure of the heart,” and further police inquiries were discouraged by the FBI, at BSC’s request. There were even reports of foul play. The BSC Papers merely record that among Davis’s many business deals with Nazi Germany was “a project to ship oil through Mexican charter vessels to hidden fuel depots in the Atlantic and Caribbean among lesser-known islands where the German U-boats could prey upon merchant vessels along the American Eastern seaboard without the need to return to Europe to refuel. The swiftest way to put a stop to this scheme was to remove Davis from the scene.”
A Man Called Intrepid Page 36