Joseph E. Persico

by Roosevelt's Secret War: FDR;World War II Espionage

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  The eclectic talents that Donovan attracted hatched another operation far removed from the popular conception of spying. Cornelius V. Starr was a California-born insurance magnate who headed what would eventually become one of the world’s insurance giants, American International Group. Searching for a way his industry could contribute to the war effort, Starr helped the OSS put together a small Insurance Intelligence Unit, rarely numbering more than half a dozen members. The unit based its work on one of the fundamentals of the insurance business, that insurers require a detailed description of the properties they insure—their size, location, a complete physical profile. This condition included policies written on the plants of German and Japanese arms makers, the details of which would provide priceless intelligence for Allied bombers. However, the enemy could ferret out the same facts about U.S. plants—including plane makers, tank factories, and shipyards—through information traded in the international insurance market. Thus the Insurance Intelligence Unit carried out a two-pronged mission, to acquire by covert means target information disclosed in the insurance policies of enemy enterprises and to plug similar leaks from the Allied side. The unit’s harvest was far ranging, from the layout of rail lines and marshaling yards run by the Japanese in Asia to the location of a German chemical plant producing the poison to gas Jews. FDR, whose early law practice and business ventures had acquainted him with insurance customs, appreciated the sophistication of this mundane but productive Donovan initiative.

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  In early April 1943, Eleanor Roosevelt returned hopping mad from a speaking engagement in Seattle. On the way west, on the night of March 27, she had stopped over in Chicago at the Hotel Blackstone with her secretary, Malvina “Tommy” Thompson. On checking out, a hotel employee astonished Mrs. Roosevelt by telling her that her room had been bugged. The eavesdropping had been carried out by the CIC, the Army’s Counter-Intelligence Corps, motivated by interest in a guest whom Mrs. Roosevelt had entertained at the Blackstone. Joseph Lash, age thirty-three at the time, had first come to Eleanor’s notice in 1939 when he was serving as national secretary of the American Student Union. Lash, by his own admission, “practically became a member yet was not a member of the [Communist] party.” His youthful ultra-liberalism appealed to Mrs. Roosevelt from their first encounter. The young man was soon a frequent visitor to the White House and Hyde Park, where FDR mixed the drinks and Lash served them to the President’s guests. In April 1942, Lash had been drafted and was stationed at the Army’s school for weather observers at Chanute Field, Illinois. It was from this post that the First Lady had invited him, on a weekend pass, to come up to the Blackstone in Chicago and occupy an adjoining room, for which Mrs. Roosevelt paid.

  Because of the soldier’s radical politics Lash’s every move was being tracked by the CIC. The man could be a dangerous subversive, a Communist fifth columnist, the Army feared. Thus investigators opened his mail, tailed him, and bugged Mrs. Roosevelt’s room during Lash’s visit to the hotel. Eleanor vented her outrage to Harry Hopkins, who took the matter up with General Marshall. The general reviewed the CIC record, a thick dossier on the First Lady consisting of surveillance reports, photocopies of letters she had sent to Lash, and the transcripts of other bugged hotel conversations, a file totaling over a hundred pages. A recording of what had gone on at the Blackstone, the CIC agents wrote, “indicated quite clearly that Mrs. Roosevelt and Lash engaged in sexual intercourse during their stay in the hotel room.” The affection that Eleanor bore young Lash was undeniable. After an earlier visit she had written him, “I’m so happy to have been with you… . You forget how much you love certain movements of the hands or the glance in the person’s eyes or how nice it is to sit in the same room & look at their back!”

  The bugging of the Blackstone had been the second CIC surveillance of the First Lady and Lash. Earlier, on March 5, Army investigators had followed them to the Hotel Lincoln in Urbana, Illinois, near Chanute Field, where Lash also occupied a room adjoining Mrs. Roosevelt’s. The following week, Lash was again at the same hotel in a room bugged by the CIC, but this time with Trude Pratt, a married but separated woman with whom he was having an affair and whom he later married. On this occasion, the CIC agents reported, “Subject and Mrs. Pratt appeared to be greatly endeared to each other and engaged in sexual intercourse a number of times.” In the CIC report submitted to General Marshall, the Lash-Pratt sexual involvement had inexplicably become a Lash-Roosevelt tryst. There had been no sex in the Blackstone between the fifty-nine-year-old Eleanor and Joe Lash, twenty-six years her junior. Actually, they had played gin rummy with Tommy Thompson until Lash grew tired and fell asleep on a twin bed.

  Was the confusion in the CIC recordings an honest mistake? General Marshall did not find this explanation credible. At the prompting of a furious FDR, Marshall ordered the CIC’s domestic spying operations disbanded and its surveillance files destroyed. The CIC was supposed to hunt foreign agents, not harass American citizens. But not every file copy was destroyed.

  Long before the Hotel Blackstone incident, Eleanor Roosevelt had made a lifelong enemy of J. Edgar Hoover, not only by daring to stand up to him, but also by exposing him to ridicule. Edith B. Helm, after a dozen years as Eleanor’s social secretary, had been appointed by FDR to an advisory committee of the Council of National Defense. The appointment required a routine FBI background check. Eleanor went to her husband and to the attorney general complaining of what she regarded as a slight against a loyal White House staff member whose husband and father were both Navy admirals. Hoover, learning of the First Lady’s displeasure, sent her an apology. Subsequently, Eleanor discovered that the FBI was investigating her personal secretary, Tommy Thompson. She wrote Hoover: “This type of investigation seems to me to smack too much of the Gestapo methods… . [I]f you have done this type of investigation of other people, I do not wonder that we are beginning to get an extremely jittery population.” Word went round the Washington gossip circuit that Eleanor had walked where others feared to tread. At a meeting at Treasury, Secretary Morgenthau gleefully told his staff, “[O]h gosh, Hoover has apologized to Mrs. Roosevelt and to General Watson and to Mrs. Helm and everybody else… . They will never live it down. Have you ever heard of anything more stupid?”

  J. Edgar Hoover was proud, sensitive to every slight, and hardly pleased to be thought a fool. His liaison officer with Army intelligence, George Burton, was slipped a copy of the Lash-Roosevelt file before the CIC destroyed its surveillance records. At the FBI, the hundred-page report went into the Do Not File category. The designation was misleading. It meant that material so classified was not to be placed in the regular FBI archives but kept in the director’s office and handled exclusively by his personal secretary, Helen Gandy. The Do Not File file was filled with so-called intelligence of the flimsiest substance. One example was a report claiming that after learning of his wife’s supposed misconduct, FDR, late one night, ordered the Army intelligence chief, General George Veazey Strong, and Colonel Leslie Forney, head of G-2, to report immediately to the White House. There, allegedly, a recording of Mrs. Roosevelt’s sexual encounter with Lash was played before FDR, Harry Hopkins, and General Watson. Roosevelt was then said to have summoned his wife, confronted her with the evidence of her infidelity, and a frightful row ensued between them in front of the others. Finally, the President is supposed to have called the Army Air Corps chief, General Hap Arnold, and ordered him to have Lash shipped out to a combat zone within ten hours with a warning by FDR that “anybody who knew anything about this case should be immediately releaved [sic] of his duties and sent to the South Pacific for action against the Japanese until they were killed.” It was all undiluted trash, as Hoover well knew. But he did not relegate the file to the trash bin. He was to keep the scurrilous and false account of Mrs. Roosevelt’s behavior in his Do Not File cabinet long after FDR’s death.

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  The President’s yachtsman pal Vincent Astor had faded from the Whit
e House espionage constellation. John Franklin Carter, however, still served as odd job man. On February 23, 1943, Carter sat quietly at the back of the Oval Office as the President held a press conference. After the senior correspondent dismissed the reporters with, “Thank you Mr. President,” Carter caught FDR’s eye signaling him to stay behind. As Carter took a seat across from him, Roosevelt began one of his uncharted monologues, joking that all the “bosses want me to speak about is motherhood and God,” and so he was going to preach from Corinthians and the Sermon on the Mount at his Washington Day speech. He shifted randomly to his working with the Navy Bureau of Medicine on an anti-submarine ray while he had been assistant secretary twenty-five years before. “Doctors know more about these rays,” he said, “than engineers.” The latter point briefly enabled Carter to bring up a confidential project he was pursuing, an anti-shark device to save seamen who had to abandon ship. Oh yes, FDR interrupted, he knew that asafoetida had a smell that would keep sharks away. He began spouting, almost verbatim, information on dead shark decomposition that Carter had briefed him on five months before.

  Roosevelt suddenly switched his verbal wandering to the fortune to be made by the first person who learned how to desalinate seawater. Then, for no apparent reason, he began a critique of student societies at Harvard. This subject gave Carter a chance to bring into the conversation Putzi Hanfstaengl, FDR’s fellow Harvard alumnus. He explained that Putzi’s son, Egon, now in the U.S. Army, was writing a book exposing the corrupting influences on boys of the Hitler Youth movement, to which young Hanfstaengl had belonged. The President broke in, telling Carter to take out his reporter’s notebook. Chin lifted, he began dictating a suggested preface to Egon’s book, punctuating his thoughts with his cigarette.

  At this time, Egon’s father was being held in a filthy, mosquito-ridden house at Fort Belvoir. The two guards assigned to Putzi Hanfstaengl, Sergeant Ledunn, a white, and Sergeant Lee, a black, did not consider housekeeping among their duties. Nor did Putzi, a man of breeding, expect to serve as his own housemaid. Consequently, dirty dishes piled up in the sink, floors went unswept, and the insects multiplied. Twice a day, Sergeant Lee ventured out and returned with plates of cold, greasy beans and slices of beet root. Hanfstaengl found it particularly offensive that Lee drew these rations from the Negro mess hall. During the night he listened to shortwave German broadcasts, slapping mosquitoes and taking notes on which he based reports for Carter. He believed himself utterly unappreciated. He complained bitterly that he should not be treated as some sort of convict stool pigeon when he had chosen to help America of his own will. His son, Egon, he liked to point out, had dropped out of Harvard to enlist in the Army ten months before Pearl Harbor.

  FDR did occasionally seek out Hanfstaengl’s inside knowledge of the enemy psyche. At one point, he asked Carter what Putzi would suggest to assure the German people that the Allies did not intend to massacre them en masse and that the fight was against the Nazi regime. Putzi, recognizing that the marriage between Hitler and the German army had never been ardent, proposed a dividing wedge. A top-ranking American military leader, Marshall or Eisenhower, who could speak to the Junkers on an equal footing, should broadcast to Germany a message pitched to its armed forces. “When the Hitler regime begins to crumble,” Hanfstaengl claimed, “the Army will be the only remaining group in Germany with the will, and above all, the weapons with which to remove the Nazis.” Carter relayed Hanfstaengl’s advice to the President, adding, “The Army could really be turned against the Party, instead of nursing a ‘stabbed-in-the-back’ alibi as after Versailles.” Putzi’s idea had a surface appeal. Possibly the German generals could be awakened to their latent power. But FDR was already secretly mulling over his own formula for Germany’s defeat, and it had no place for Junker militarists.

  Putzi continued to dredge his memory of Hitler’s inner circle for tidbits that might earn him better treatment and keep him from being shipped back to the POW camp in Canada. The President enjoyed Hanfstaengl’s tittle-tattle as much as the man’s strategic concepts. One of Putzi’s more prurient reports described the extracurricular services that Heinrich Hoffmann, the Führer’s personal photographer, provided for Hitler. After coming to power, Hitler had gone to great cost to have Hoffmann recover pornographic drawings he had made as a starving artist in Vienna, Hanfstaengl said. Hoffmann also served as Hitler’s maître de plaisirs, his chief procurer. Among his deliveries was the daughter of a Munich professor, a slender, shapely, blue-eyed blonde who worked in Hoffmann’s photography shop. Her name was Eva Braun, known as Effi, and, according to Hanfstaengl, Hitler had bought Effi a house on the Chiemsee, halfway between Munich and Berchtesgaden, where he trysted with her in assured secrecy.

  Of more substance was a report that Carter relayed to FDR from Hanfstaengl entitled “Probable Mode of Exit of Adolph Hitler from the Stage of History.” The statement began: “Hitler is familiar enough with ancient history to know that especially the Romans, affected by the Stoic doctrine, recognized many legitimate reasons for suicide … in the course of 1923 [the year of Hitler’s failed putsch] Hitler told [me] that he would not hesitate to commit suicide if, having lost his freedom of action, he felt that his opponents were exploiting that fact… . In such a case, he said, ‘I would not hesitate a moment to make an end of it.’”

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  In January 1943 another FDR chum was about to enter the President’s espionage orbit. George Howard Earle 3d was the scion of a rich, rock-ribbed Republican Philadelphia Main Line family that had made its bundle in the sugar trade. The adventure-loving Earle had dropped out of Harvard and in 1916 joined General Pershing’s army trying to hunt down Pancho Villa in Mexico, where the Philadelphian won a second lieutenant’s commission. When America entered World War I, Earle joined the Navy, skippered a submarine chaser, and was awarded the Navy Cross. After the war he amused himself playing polo, flying his own plane, and chasing women.

  He startled his family by supporting Roosevelt for president in 1932, and surprised FDR by being elected governor of Pennsylvania as a Democrat in 1934, launching his “Little New Deal.” Roosevelt was drawn to men of Earle’s stripe, adventurers of the kind that he himself could no longer be. In 1940, before the United States entered the war, FDR had sent this gruff charmer to Bulgaria as American minister because he knew Earle was a vocal anti-Nazi. Earle quickly confirmed the President’s appraisal. On one occasion, the burly envoy beat a confession out of a suspected Nazi spy caught in the embassy. Earle became a familiar figure on the Sofia nightclub circuit. At one dance hall, he listened impatiently as the band played a request for the “Horst Wessel Lied,” the Nazi anthem honoring a Berlin pimp. As soon as the last note ended, Earle jumped up and demanded that the orchestra play the British World War I favorite, “Tipperary.” An empty whiskey bottle flew through the crowded club from a table of Germans and crashed among Earle and three pals. A Pier Six brawl ensued, with the club’s furniture the chief loser. Earle’s escapade got back to the President, who delighted in regaling visitors with the story of what he called “The Battle of the Bottles in the Balkans.” State Department careerists were less amused by the unorthodox minister the White House had foisted on them. After Bulgaria joined the Axis powers and Earle returned to America, State blackballed him for any further diplomatic posting. Secretary Hull made clear he wanted this loose cannon spiked. Earle, however, pestered the President endlessly to send him abroad again. FDR, still fond of his rambunctious friend, found a solution to satisfy Earle without angering State. Neutral Turkey was a hive of espionage and a haven for anti-Nazi Germans. Roosevelt had Earle commissioned a lieutenant commander in the Naval Reserve and sent him off to Istanbul as assistant naval attaché. FDR told him to report to him personally, short-circuiting formal channels. Earle set off for his new post with his tarnished star replated. The old capital of the Ottoman Empire, where the exotic and the clandestine intertwined, would mesh perfectly with his character.

  When the President went t
o Casablanca in January 1943 to meet with Churchill after the success of Operation Torch, he included Earle, then en route to Istanbul, in his entourage. Earle was thus privy to most of the secrets exchanged between the two Allied leaders, including a decision to invade Sicily that summer. During this summit FDR also divulged the surprise he had been secretly mulling over. On January 24, the final day of the Casablanca meeting, Roosevelt and Churchill held a press conference. FDR spoke first. After saluting American and British unity, he began, in his storytelling fashion, “[W]e had a General called U. S. Grant. His name was Ulysses Simpson Grant, but in my, and the Prime Minister’s, early days he was called ‘Unconditional Surrender’ Grant. The elimination of German, Japanese, and Italian war power means the unconditional surrender by Germany, Italy, or Japan.” Churchill was aghast. He later complained to Robert E. Sherwood, “I heard the words ‘Unconditional Surrender’ for the first time from the President’s lips at the Conference… . I would not myself have used these words, but I immediately stood by the President.” Churchill’s statement was not literally true. Unconditional surrender had been tossed about between the two leaders before, along with other alternatives for ending the war, but never agreed upon. Nor had the State Department been informed of what FDR intended. Secretary of State Hull, on hearing FDR call for unconditional surrender, was dumbstruck.