Joseph E. Persico

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

  Then, in 1942, Magic cryptanalysts learned that the Finns had made minor inroads into the Soviet codes, proving they were not invulnerable. Colonel Carter Clarke of SIS was inspired to create a special team to attack the Soviet ciphers. The operation, initially called Bride, eventually became known as Venona, the origins of the name as elusive as the secrets it sought to reveal. However, apart from whatever small success the Finns may have had, Arlington Hall seemed stymied. And then Soviet cryptologists blundered. For a few months in 1942, probably because of the demand placed on Russian intelligence by the German invasion, some duplicated pads were printed and spotted by the Americans. Here was an opening, since the heart of cryptanalysis lies in finding repeated patterns. In October 1943, given this wedge, Lieutenant Richard Hallock, a former archaeologist at the University of Chicago, now at Arlington Hall, made a small break into coded traffic between Moscow and Amtorg, the Soviet trade mission and espionage front in New York. Still, the traffic of the NKVD and GRU remained essentially inviolate as an eventual 200,000 unbroken messages accumulated at Arlington Hall. The next major breakthrough, beyond Hallock’s work, would not come for almost three more years. By then, the war would be over.

  If the Americans had been as successful in breaking Soviet codes as they had been in cracking Japanese ciphers, the President would have known that the Manhattan Project had been penetrated by Russia. Had the Soviet codes been decrypted, Whittaker Chambers’s 1938 allegations that key government officials—among them Alger Hiss, Donald Hiss, Laurence Duggan, and Harry Dexter White—were aiding the Soviet Union could have been verified. Had the codes been broken contemporaneously, their contents would have proved particularly startling to the security-obsessed General Leslie Groves at Los Alamos. A December 1944 message from the NKVD station in New York to Moscow, entitled “List of Scientists Engaged on the Problem of Atomic Energy,” identified most of the major figures associated with the Manhattan Project, Hans Bethe, Arthur Compton, Enrico Fermi, George Kistiakowsky, Ernest Lawrence, Edward Teller, and Harold Urey among them. Robert Oppenheimer’s name was doubtless included but part of the message was garbled. A September 1944 message from New York to Viktor, a code name for Lieutenant General Pavel Fitin, the youthfully handsome and bemedaled director of the NKVD’s foreign intelligence branch, reported that “Kokh” knew about four OSS personnel “who are supplying information to the Russians.” Years later, the Venona codebreakers tentatively identified Kokh as Bill Donovan’s executive assistant, Duncan Lee. Another message that September advised Moscow “of the new cover names,” among them Liberal, Prince, and Richard, referring, respectively, to Julius Rosenberg, Laurence Duggan, and Harry Dexter White. In a cable, the contents of which, if known at the time, would have staggered Henry Morgenthau, an agent identified as Koltsov described problems in meeting with Jurist, another code name for White, the Treasury secretary’s indispensable aide: “… [H]e himself did not think about his personal security, but a compromise would lead to a scandal,” Koltsov informed Moscow. “Therefore he would have to be very cautious… . Jurist has no suitable apartment for a permanent meeting place, all his friends are family people. Meetings could be held at their houses… .” On another occasion, the New York station cabled that White, this time referred to as Richard, “would have refused a regular payment but might accept gifts as a mark of our gratitude… .”

  Roosevelt and Churchill popped up frequently in NKVD traffic, the President code-named Kapitan and the Prime Minister, Kaban, or Boar. Vice President Henry Wallace was Lotsman, and the French leader Charles de Gaulle, Ras. A cable from New York to Viktor reveals how close the Russians came to losing their prize informant on the Enormoz project, Klaus Fuchs, referred to as R. On June 15, 1944, while Fuchs was still working in New York, an NKVD agent reported, “R expressed doubt about the possibility of remaining in the COUNTRY… . R assumes that he will have to leave in a month or six weeks.” Fuchs not only managed to stay on, but went to work inside Los Alamos two months later.

  The gift that had dropped into the Soviets’ lap, the boy physicist Theodore Hall, code-named Mlad, Russian for “youth,” was proudly announced to Moscow on November 12, 1944. A Soviet agent, Sergei Kurnakov, described Hall as having “an exceptionally keen mind and a broad outlook, and is politically developed. At the present time H. is in charge of a group at CAMP-2 [Los Alamos]. H. handed over to Beck [Kurnakov], a report about the CAMP and named the key personnel employed on ENORMOZ.”

  In a cable from the Washington station to Moscow, the sender referred to “ALES,” subsequently identified by the Venona codebreakers as Alger Hiss. “ALES has been working with the neighbors [GRU] continuously since 1935,” the NKVD reported, “the group and ALES himself work on obtaining military information only.”

  Doubtless, FDR would have been amused by the Communist assessment of his chances in the 1944 election. Again, it was the New York NKVD post reporting to Moscow “transmitting information written down by RULEVOI.” Rulevoi, the Russian word for “helmsman,” referred to Earl Browder, the American Communist leader whom FDR had pardoned from prison as a sop to the Soviet Union. Six months before Election Day, Browder advised, “If the election were to take place at the present time, ROOSEVELT would probably receive an insignificant majority of the popular vote, but he would lose the election since the votes in his favor are strongly concentrated in the South… .” FDR not only took the popular vote handily but also the electoral college vote by 432 to 99. Oddly, Roosevelt’s pardon proved politically disastrous to Browder. The fact that he had secured an early release from prison through the intercession of the President of the United States made his loyalty to their cause suspect to Red leaders. In 1944, Moscow engineered his expulsion from the American Communist Party.

  The deepest Soviet penetration was into the White House itself. Lauchlin Currie, sharp of nose, chin, and mind, a slight man in his early forties with thinning gray hair and a pencil line mustache, had come out of Nova Scotia, Canada, taken a doctorate in economics at Harvard, fallen in love with the New Deal, and become an American citizen. In the summer of 1939, he was working for the Federal Reserve Board chairman, Marriner Eccles, when Eccles got a call from the White House.

  “Marriner,” FDR began, “I guess you are going to give me hell.”

  “Mr. President,” Eccles replied, “I do not know what good it would do me to give you hell, even if I wanted to.”

  “Well,” Roosevelt went on, “I am going to steal ‘Lauch’ Currie from you.” FDR put the Roosevelt gloss on the raid. “You, of course, see the advantage at once of having a friend in court who can represent and speak for your point of view,” he told Eccles. The President had been watching Currie over the previous two years and liked what he saw. Ordinarily, FDR regarded economists with less than awe, especially those preaching academic theories in incomprehensible jargon. Currie spoke economics in plain English. FDR also admired the man’s ability to disagree without putting his ego on the line in every policy contest. Currie came to the White House as one of six all-purpose administrative assistants who displayed that passion for anonymity which became the staff ethic in the Roosevelt administration.

  Currie’s willingness to labor anonymously was, however, broken in January 1941. Working the Washington power circuit at the time was T. V. Soong, brother-in-law of the Chinese leader, Generalissimo Chiang Kai-shek. Soong’s mission was to convince the Roosevelt administration that Chiang’s regime could stand up against the Japanese if only the United States would provide enough military aid, especially airpower. Soong arranged for Currie to be invited by Chiang to China to advise the government on raging inflation and tumbling foreign exchange rates. Currie consulted with FDR, who readily endorsed the trip. Roosevelt knew that Chiang’s armies were rife with corruption and were putting up a feckless fight against the Japanese. A fresh assessment by a smart, no-nonsense observer could prove invaluable in guiding U.S.-China policy. Thus, in January 1941, well before Pearl Harbor, an uneasy Currie had boarded a
plane for the first time in his life and headed for the Orient. Once in Chungking, he quickly grasped that his advice on inflation and foreign exchange rates was a pretext for what Chiang really wanted from him, American arms. Currie also deduced that the generalissimo would turn U.S. military aid against his Communist rivals as happily as against the Japanese. He met often with the taciturn, stubborn Chiang and his forty-three-year-old wife, the American-educated Mei-ling, the sister of T. V. Soong, and a steel lotus blossom of manipulative charm. A British general who dealt with Madame Chiang described her as “a queer character in which sex and politics seemed to predominate, both being used to achieve her ends.” If he really wanted to undercut the Communists, Currie advised Chiang and his wife to borrow a page from Roosevelt’s New Deal by making liberal economic reforms that would help the Chinese masses and by cleaning up China’s squalid government.

  In light of what subsequently befell Currie, it is worth noting his recommendations to FDR when he returned to Washington in March 1941. The President asked him if Chiang was a reliable ally, and whether the United States should provide aircraft to China, the sale of which would, incidentally, make T. V. Soong a rich man. Currie had no illusions about Chiang. “I alerted FDR to the inefficiency, corruption and completely authoritarian character of the Chiang regime,” he later wrote, “but Chiang was the head of the government just as Stalin was.” With a pragmatism that FDR shared, Currie reported, “It appears to me to be profoundly in our national interests to give full support to the Generalissimo, both military and diplomatic.”

  Back in 1940, FDR had favored the incendiary bombing of Japan by Chinese pilots covertly flying American aircraft. That scheme had not come to pass, but Claire Chennault’s American Volunteer Group, the Flying Tigers, had grown out of it. And even though Currie was not enamored of the jagged-edged Chennault character, the Flying Tigers would never have gotten off the ground without Currie’s backing at the White House. More significantly, it was Currie who pressed for tacking Chinese military aid onto the lend-lease bill under debate at the time in Congress. With the bill’s approval, Currie became the administrator of Chinese lend-lease along with his other ragbag of duties. At the time of his China mission, he exhibited no detectable affinity for Chinese or any other Communists.

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  As America entered its fourth year of the war, with Hitler’s Ardennes offensive blunted, with Allied troops now on German soil, with the border between France and Switzerland cleared of enemy forces, the President moved to end a condition that still rankled him, the continuing trade between Switzerland and Germany. On January 19, 1945, he wrote a confidential letter to the Swiss president of the Confederation, Eduard von Steiger, tactful in style but unmistakable in intent. “We have respected the traditional neutrality of your country and have sympathized with the past difficulties of your position,” FDR wrote. “We forbore pressing our demands when you were isolated by our enemy and were in no position to do other than carry on a large trade with him. Now, however, the fortunes of war have changed… . I know in these circumstances that you will be eager to deprive the Nazis of any further assistance. It would indeed be a trial for any freedom-loving Swiss to feel that he had in any way impeded the efforts of other freedom-loving countries to rid the world of a ruthless tyrant. I speak strongly as every day the war is prolonged costs the lives of my countrymen.” Should there be the slightest doubt as to his meaning, FDR further informed the Swiss leader that he was sending a delegation, to be headed by Lauchlin Currie, to renegotiate any prior American deals with Switzerland now that the country was no longer landlocked by Nazis.

  A month later, Currie was in Bern. Through a skillful application of strength and tact, he managed to cut the flow of strategic exports that the Swiss had been selling to Germany. With the border between France and Switzerland now open, he made clear that the Swiss no longer needed to trade electricity for German coal. The Allies could supply them with this fuel. Currie pressed the Swiss to abide by Safehaven, the American strategy to stop Nazis from using Swiss banks to funnel gold and other assets to hiding places where they might seek refuge after Germany was defeated. Currie thought he had a deal. When he got back to Washington, Treasury secretary Morgenthau told him, “You have not only thwarted the Nazis’ plan for using Switzerland as a financial hideout, but have also laid the basis for the Allied Military Government in Germany to take control of German assets in Switzerland.” But the head of the Swiss banking system, Herr Doktor Weber, was a longtime collaborator with the Reichsbank vice president, Emil Puhl. And only weeks after the Currie agreement, Allen Dulles learned from his agent in Berlin, Fritz Kolbe, that Puhl had gone to Switzerland to meet with Weber and other friends in Swiss banking. Puhl, according to Kolbe, “has made careful plans to go underground and that every essential figure had been given a specific assignment.” “Nazism,” Puhl boasted, “would not end with Germany’s political defeat because it is like a religion rather than a mere political regime.” Unknown to Currie, Swiss bankers reneged on their promises to stop gold transfers or to freeze German assets, a betrayal that would reverberate down through the decades.

  Alongside this invaluable aide to the President walked another Lauchlin Currie. In 1940 he had become involved with two men with names close enough to create confusion. One was Abraham George Silverman and the other Nathan Gregory Silvermaster. Currie had been a graduate student at Harvard when he met Silverman, who was then teaching economics at the Massachusetts Institute of Technology. When Silverman came to the capital to work for the Railroad Retirement Board, the two men renewed their acquaintance, and Currie now considered Silverman “one of the top ranking statisticians of Washington.” He met Gregory Silvermaster in 1940 when FDR asked Currie to look into an alleged shipboard mutiny, actually only a one-day in-port work stoppage. Silvermaster had become involved in the dispute as an employee of the Maritime Labor Board. Thereafter, Currie continued to see both Silverman and Silvermaster, whom he described as strictly social acquaintances.

  Silvermaster was born in Odessa, Ukraine, and raised in China, where he attended a school run by an English religious order. He came to the United States at age sixteen, eventually earning a doctorate in economics and philosophy from the University of California at Berkeley. When Currie met him, he was in his early forties, a trim man with steel gray hair, horn-rimmed glasses, a neatly trimmed mustache, and the manner of an English headmaster. In mid-1942 the Board of Economic Warfare, the mobilization planning organization, thought it could use Silvermaster more profitably than could the Farm Security Administration to which he had transferred. Silvermaster then went to work for the BEW on loan. His new employment provided access to sensitive intelligence—America’s production schedule for tanks, planes, other armaments, and the raw materials they required. His very presence at the BEW alarmed agencies involved in wartime security. The Civil Service Commission, MID, and ONI all sent warnings to the board claiming that Gregory Silvermaster was an out-and-out Communist with a long record of Communist associations, and certainly not a man to be trusted with military secrets. A Civil Service Commission investigation concluded: “Mr. Silvermaster is one of the really important operatives of the undercover Communist Party in the United States.” The military agreed and wanted BEW to fire him.

  Among the undecipherable cables piling up at Arlington Hall, one from New York to Moscow dated September 2, 1943, demonstrated the NKVD’s close interest in Silvermaster. “A few days ago,” it read, “two representatives of the Khata visited Pazh and began to [garbled] about Pel, in particular, is he a Fellow countryman.” Pel was Silvermaster and Khata the FBI. Pazh, meaning “page,” was “possibly Lauchlin Currie,” according to Venona’s later decryption. The FBI had indeed questioned Currie as to whether he considered his friend Silvermaster a Communist. Currie drew a fine distinction. He told Hoover’s men that for him the dividing line was June 22, 1941, the date Germany invaded the Soviet Union. Until then, the German-Soviet peace pact applied and a Communis
t would have opposed the United States going to war against Germany. But Silvermaster, during that time, had favored war. Therefore Currie did not regard him as a Communist, but simply a liberal New Dealer like himself.

  Elizabeth Bentley served as the courier between Silvermaster and the New York NKVD station. She later gave an account of what happened after the security agencies began going after Silvermaster. She had gone to his home to pick up purloined secret documents and found him slumped in an armchair. “What’s the matter?” she asked. Silvermaster handed her a letter to the BEW from then Army G-2 chief, George Strong, stating that the military intelligence agencies had proof that Silvermaster was a Communist disloyal to the United States and demanding that he be removed from his sensitive post. Bentley recalled Silvermaster saying, “It’s no use fighting this thing. They’ve probably got enough to hang me. I’d better resign now before they kick me out.” This potential loss to the spy ring alarmed Bentley. She had started out collecting three or four rolls of microfilm per trip to Washington gathered by Silvermaster from fellow spies inside the government to turn over to her controller/lover, Jacob Golos, in New York. Silvermaster’s productivity had grown so swiftly that the knitting bag Bentley carried on the New York train now bulged with some forty rolls every two weeks. She pleaded with him not to give up so easily and urged that he “pull every string you can to get this business quashed. Use Currie, White [Harry Dexter White], anybody else you know and trust.”