It was difficult to know exactly what to make of the vice president, and the British were not alone in thinking so. It was safe to say that a good portion of the American public regarded his mystical worldview with suspicion bordering on contempt. Wallace was a singularly divisive figure: his vehement detractors believed his extraordinary personal quests for enlightenment over the years qualified him as a crackpot, while others defended him as a “gentleman and a scholar” and the champion of all that was decent and progressive. Even Lippmann, who was a close personal friend, thought Wallace was unsuited to be president, believing there was too great a risk that under pressure he could go “crazy.”
Despite his mystical bent, Wallace had earned a reputation as an energetic idea man as head of the Department of Agriculture and then as vice president, and his early and unwavering support for Roosevelt’s policy of international collective security and national defense won him the president’s loyalty. When the country mobilized for war, Roosevelt rewarded Wallace by appointing him to a number of powerful positions: as a member of his Top Policy Group; as chairman of the Supply Priorities and Allocations Board; and as chairman of the Board of Economic Warfare. As the only scientist in FDR’s cabinet, he also led the top-secret committee that oversaw the military research project on atomic weapons, and made the recommendation to proceed with the development of the atom bomb. James Reston of the New York Times, who went so far as to dub him the “Assistant President,” opined: “Henry Wallace is now the administration’s head man on Capitol Hill, its defense chief, economic boss and No. 1 postwar planner.” And beyond that, he was someone the British wanted watched.
At the time, Dahl had no idea to what extent he was toying with a stick of wartime dynamite. He was involved in such an elaborate and enjoyable game of cat and mouse with Marsh, who was proffering all manner of politicians and diplomats and policy makers for his entertainment, that it must have all seemed like great sport. Moreover Marsh was so ardently pro-Churchill, he appeared wholly unconcerned about the information that might pass through his hands to the British. To Ralph Ingersoll, who watched their relationship progress (though he was not aware of Dahl’s BSC connections until after the war), Marsh’s preoccupation with Dahl was matched only by the latter’s with the former, so that at times it was difficult to tell who was cultivating whom. “With no source as frank and direct, Roald was both fascinated and amused,” observed Ingersoll. “He [Dahl] and his bosses both knew the authenticity of Charles’s sources and respected his sincerity and intelligence—though were no doubt often confused by the erratic intensity—and originality always close to whimsicality.”
ENTHUSIASTIC AMATEURS
He did not make the psychological mistake of swearing me to secrecy. He never mentioned secrecy at all. That impressed me, because at that time I was perfectly aware that whatever his exact occupation was, it was very secret indeed.
—NOËL COWARD, Future Indefinite
AFTER HE BEGAN freelancing for British security coordination, Dahl became thoroughly entranced with William Stephenson, who he had come to think of as “this mythical, magical name in New York.” Reportedly known to only a handful of the thousands of agents in his employ, Stephenson was the kind of cloaked figure who gave rise to wildly disparate rumors and, far from discouraging them, planted many of the most misleading stories himself, partly to enhance his mystery and power and partly because the miasma of conflicting reports helped to protect his anonymity. He was the brains behind the British Security Coordination, the complex secret intelligence, counterintelligence, and black propaganda operation that Churchill had charged him with developing in the United States more or less from scratch in the first year of the war, when American intervention had been anything but certain. Dahl imagined him to be a silent, unknown creature “hiding in the back of a dark room somewhere” and found himself irresistibly drawn to the remarkable mind and charismatic personality that allowed him to spin such an elaborate web of intrigue.
Dahl was always attracted to larger-than-life personalities and grand characters, and since coming to Washington he had met more than his share. He was enormously impressed by the worldly Marsh and his intimate grasp of the inner workings of American political power and influence. And yet something about the danger and excitement surrounding Stephenson, a tension that was almost palpable, was more directly connected to the charged atmosphere of the period. There was no denying the mystique of this secret warrior. Even before he took charge of the BSC, the forty-six-year-old Canadian had managed to achieve almost legendary status—amateur boxing champion, decorated World War I flying ace, self-made millionaire by the age of thirty.
By all accounts, Stephenson had survived a Dickensian childhood in the frozen heart of western Canada and at nineteen, eager for action, had enlisted in the light infantry.* He was fighting in the trenches of France when he was felled by a serious gas attack that put him in the hospital in England for months. Instead of opting for an honorable discharge, he applied to flight school, and after nine months of training at a Royal Flying Corps facility near Denham, he quickly made a name for himself with the RAF’s 73 Squadron. He was said to be a brilliant fighter pilot, reportedly shooting down anywhere from twelve to twenty-six German planes. According to one anecdote, when his Sop-with Camel was damaged by enemy fire during a battle, he managed to land the out-of-control plane and, “mad as hops,” jumped into another machine and took out two more Germans. Dahl could not have helped but be impressed by his record: he was awarded Britain’s Military Cross and the Distinguished Flying Cross, as well as France’s Legion of Honor and Croix de Guerre with palm. There were stories that when he finally crashed and was captured by the Germans, he organized a daring escape, carrying with him a can opener poached from the POW camp—which he promptly patented and turned into a commercial success.
Although he had left school after the sixth grade to earn a living, Stephenson had a natural technical aptitude, and while in the service he learned everything he could about airplane design, internal combustion engines, navigation, and wireless communication. When the armistice came, he returned to Canada with the twin-handled German can opener he dubbed the Kleen Kut and launched a career in manufacturing and sales. After some initial success, the new company floundered, and Stephenson hightailed it out of Winnipeg after filing for bankruptcy, leaving a string of debts in his wake. Convinced that some of the emerging technologies held out great promise for the future, the budding entrepreneur headed for England and invested what little capital he had left in two nascent British electronics firms, General Radio Company and Cox Cavendish Electrical Company. His instincts proved correct, and in a matter of months the self-taught tinkerer had teamed up with a leading research scientist named T. Thorne Baker to perfect an apparatus that could transmit images by wireless. Their pioneering new device transmitted photographs suitable for newspaper reproduction, and Stephenson was in on the ground floor of an immensely profitable new business.
Coupling his technical capabilities with a zeal for marketing, Stephenson capitalized on the boom in commercial electronics and made his first fortune selling cheap radio sets to a public enthralled by the sound of the BBC. He arrived on the scene at the moment when new technologies, which had been in development since World War I, would revolutionize communications, and he had the foresight to recognize many of the new forms it would take. He realized that the same technology used to reproduce a still picture could be used to broadcast a moving picture—by increasing the rate of transmission to the time necessary for persistence of vision—and worked at experiments that demonstrated that broadcasting moving images would soon be feasible. Eager to expand into new areas and attract overseas investors, he traveled to America, where he investigated the possibilities of recorded sound and “talking pictures” and immediately spotted the enormous potential in mass entertainment.
Throughout the 1930s, Stephenson expanded his wealth and holdings, becoming partners and friends with some of Europe’s most
influential figures in finance, industry, publishing, and government. His main business office, in St. James’s Street, off Piccadilly, was known as a meeting place for some of the best brains on either side of the Atlantic. He had a gift for commerce: a small holding company he formed with one associate ended up attracting so many wealthy partners that by 1930 it had swelled to become British Pacific Trust, a worldwide investment company, with Stephenson installed as chairman. He poured money into the burgeoning movie business and started Sound City, one of England’s first major film production companies, home to Shepparton Studios, where in 1934 Alexander Korda, who became a close friend, was shooting Saunders of the River. He followed up on his early interest in aviation by buying General Aircraft Limited, and that same year a plane designed and built by his firm won the King’s Cup air race. Among the dozen or more companies he had accumulated was Earls Court Grounds Ltd., which built what was then the world’s largest stadium and exhibition hall in London; Alpha Cement, one of Britain’s largest cement companies; and the Pressed Steel Company, which manufactured 90 percent of the car bodies for British firms such as Austin, Hillman, Humber, and Morris.
During this hectic period between the wars, Stephenson acquired the habit of passing along information he had gathered in the course of his travels to various friends in positions of influence, many of whom had ties to government and the intelligence service. He would consult with his friend Charles Hambro, the wealthy London financier, who, in addition to being a director of Hambro’s and the Bank of England, was chairman of the Great Western Railway Company and did part-time service at the Ministry of Shipping and the Ministry of Economic Warfare. What began as a way of comparing notes with concerned colleagues gradually evolved into more of a watchdog role by 1933, as Hitler became chancellor of the new Germany, fascism swept over Italy, and tensions escalated throughout Europe.
On one of his frequent buying trips for Pressed Steel, Stephenson discovered that Germany had greatly increased rate of steel production and that virtually all of it was earmarked for the manufacture of armaments. When he returned to London, he reported the flagrant violation of the Treaty of Versailles to friends in government, and word of his findings filtered back to Churchill. Stephenson soon found himself drawn into the former First Lord of the Admiralty’s circle of secret advisers, a league of like-minded activists who toiled in every sector of government from the Foreign Office to the Ministry of Defense and who depended on Churchill to be their voice in Parliament and sound the alarm about Germany’s renewed belligerence. Out of favor and out of power, Churchill had no access to official documents and had to rely on networks and inside intelligence to provide fodder for his newspaper columns, which railed against a government “lost in a pacifist dream.”
Stephenson began working for Churchill’s so-called Z organization, along with his friends Korda and Hambro. He monitored German rearmament and regularly funneled information about steel production in the Ruhr, surreptitiously copying balance sheets that he was able to obtain through his myriad business contacts. He documented other examples of the German military buildup and met with German aviation officials who were interested in his prize-winning airplane; he gleaned information about the Nazi war machine and blitzkrieg strategy of attack. In 1936 he turned up the chilling statistic that Germany was spending in excess of 800 million pounds on military expenditures, including preparedness measures such as fortifying strategic roads. Using his companies as a front, Stephenson collected evidence of how Germany was disguising its rearmament, revealing how companies manufacturing hairpins were also turning out howitzers, and how tank designs were hidden among seemingly innocent blueprints for tractors. He was bold enough to attempt to implement some of Churchill’s more ambitious early countermeasures against the Germans, including a scheme to sabotage Swedish iron-ore transports to Germany that was compromised when details of the plan were leaked, as well as a plan to hire a sniper to assassinate Hitler that was vetoed by Lord Halifax, then Britain’s foreign secretary. With little or no guidance, Stephenson acquired his only training in espionage on the run, compensating for his lack of experience with hubris and sheer ingenuity—never hesitating to make up his own rules as circumstances required.
From Dahl’s perspective, Churchill could not have picked a more determined, wily operator than Bill Stephenson to head up his vast covert spy network in North America. His résumé was a virtual study in self-invention, courage, and inspired opportunism. The boyhood desire for heroes dies hard, and there is nothing like war to rekindle youthful visions of daring leaders and the romantic admiration for men of action. Dahl had always been something of an outsider all his life, an aloof and sharp-eyed observer of human foibles, but Stephenson was very much on the inside, thoroughly committed and coldly compelling. He awakened in Dahl a sense of loyalty and commitment—that higher plane of feeling that he craved since being grounded. “He [Stephenson] had such immense capabilities,” recalled Dahl. “Before the war, he worked hard, he played around with his businesses and his scientific things, he coupled them up and made a fortune with apparently no trouble at all. But when the war came, he was really put to it by Churchill, and then he went to full stretch.”
At this stage, Dahl still had only an inkling of the BSC chief’s ferocious dedication and singleness of purpose. It was many war months before he would meet Stephenson, become his friend, and begin to learn about the extraordinary lengths the Canadian had gone to in order to help Churchill manipulate America into the war. From the moment Churchill was restored to his old seat at the Admiralty in September 1939, after Germany’s attack on Poland pushed England to declare war, one of his first orders of business was to strengthen Britain’s intelligence capabilities. Shortly after returning to the government, he created the Special Operations Executive (SOE), a top-secret branch designed to stimulate and supply sabotage and subversion behind enemy lines in Nazi-occupied countries, stir up riots and disorder that would weaken Germany’s stranglehold on the Continent, and “set Europe ablaze.” At the same time, Churchill knew that the real key to victory lay to the west, that American participation in the war was Britain’s most important single objective. To that end, he asked Stephenson to undertake a secret mission to Washington aimed at improving Anglo-American cooperation, which would hopefully lay the foundation for the step-by-step process of securing U.S. assistance in the war effort.
Traveling under his usual cover as a Canadian businessman, Stephenson flew to Canada on a military plane and arrived in Washington on April 2, 1940. His orders were to gain the confidence of J. Edgar Hoover, the director of the Federal Bureau of Investigation, and “to establish relations on the highest possible level” between the two countries’ intelligence agencies. Before departing, Stephenson wrote to his old army buddy Gene Tunney, the burly American heavyweight boxer whom he had met in France during the First World War and who had since become a boxing legend. Aware that Tunney and Hoover knew each other, he asked his old friend to help arrange a meeting. Stephenson, who had included a sealed letter to be forwarded on his behalf, explained that this was a confidential undertaking and that not even the British ambassador would be involved. “Sir William did not want to make an official approach through well-placed English or American friends,” recalled Tunney. “He wanted to do so quietly with no fanfare.”
Hoover agreed to see Stephenson the following day, promising to make him his first appointment. A dour-faced former lawyer and criminologist, Hoover listened to the British proposal, then firmly declared his opposition to any cooperation between the SIS and the FBI on the grounds that it infringed on the Neutrality Acts. He made it clear he would not consider sanctioning any liaison with the British without a direct order from the White House. He had no reason to welcome a foreign intelligence agency onto his turf, and the political no-man’s-land between the SIS and the FBI promised to be nothing but trouble. Stephenson succeeded in making enough of an impression on Hoover that he allowed that if the president could be persuad
ed to sign off on such a collaboration, it would be conducted personally by himself and Stephenson, no one else, and no other government agency was to be informed.
During his brief sojourn in America, Stephenson made a point of seeking out another old associate, the New York millionaire Vincent Astor, Roosevelt’s childhood friend and now intelligence chief. Astor was a member of the old Anglo-American fraternity and a founding member of the Room and the Walrus Club, two bodies favored by well-connected Wall Street financiers who liked to be well informed on the movement of money and about its corrolary, covert intelligence. Astor had a long-standing relationship with the SIS. He agreed to take up Stephenson’s cause, insisted on putting him up at his “broken-down boarding house”—the St. Regis Hotel on Park Avenue—and briefed Roosevelt on his mission. According to Kim Philby,* who joined the SIS in 1940 and was nothing if not a keen observer of the various players, “A true top-level operator, Stephenson was not used to fooling around at the lower levels. His achievement was to stimulate the interest of Roosevelt himself, and to make quite sure the President knew that Stephenson and his backers, among whom were SOE and MI5 as well as SIS, had a lot to offer.”
On his return to London, Stephenson argued in favor of forming a much broader intelligence and security system than had hitherto existed to assist with the war. After hearing his report, Churchill appointed him the new head of British secret operations in the United States. He would replace Sir James Francis Paget, a debonair and socially well-connected officer. The time had passed for gentlemanly agents and their tried-and-true methods. The pressure of war now demanded that they do far more in the field than the collection of enemy intelligence, and this necessitated a changing of the guard. The SIS would have to rise to a new level to defeat the Nazis. Churchill agreed with Stephenson that the only truly effective form of intelligence was counterintelligence, and to carry out this work they needed new blood—dynamic and innovative men who could confront the challenges ahead with new ideas, organizations, and action.
The Irregulars Page 8