Wild Bill Donovan

by Douglas Waller

  Then there was Archduke Otto of Habsburg, one of the most voracious eaters on Washington’s dinner party circuit, who roamed the State Department with grand visions of assuming the Habsburg throne of the old Austro-Hungarian Empire. Otto’s offer: Set up a spy network for Donovan in Hungary and work his Budapest contacts to convince the government to desert the Axis. Though his aides believed Otto might be the silver bullet, Donovan was unsure. “Let me know what you wish done,” he wrote FDR. Climbing into bed with Otto, the horrified State Department warned, would paint Roosevelt as favoring restoration of the washed-up Habsburgs, not a popular idea with the Russians or other Balkan countries Washington wanted as allies. The president ordered the Otto contact severed. Later Donovan had to tamp down false rumors spreading through Washington that his brother Vincent would be “court chaplain” when Otto became emperor of Austria.

  Donovan thought he had a fighting chance with Gottfried Treviranus, a former communications minister to Heinrich Brüning, who had been German chancellor from 1930 to 1932. Treviranus, who had fled Germany to escape Hitler’s purges, knew Göring and other top Nazis. But of more interest to Donovan: Treviranus claimed to have ties to anti-Nazi terrorists among the Freikorps, the paramilitary bands of disgruntled German soldiers that sprouted after World War I. The operation became known as the “T Project” and Donovan ordered little put on paper for the highly secret plan. Treviranus, his wife, and daughter were moved from Canada to a New York apartment, which Dulles’s partner, Donald Downes, had rented. The German would be paid $10,000 a year to organize an insurrectionist movement inside Germany from his Freikorps and dissident contacts. But backbiting became fierce among the exiles. Hagan claimed Treviranus had no real following inside Germany and had been unusually chummy with the Nazis before he fled. What finally sank Treviranus, however, was his big mouth. Before leaving Canada he blabbed openly to friends that he was organizing a coup in Germany for the Americans. Donovan cut a $3,750 severance check for the German, hoping it would keep him quiet, and shut down the project.

  Donovan’s research analysts warned him that the exiles he consorted with were, for the most part, an unreliable lot with no followings in their countries. But espionage meant operating in this “strange netherworld of refugees, radicals and traitors,” Downes argued in one memo. “There is neither room for gentility nor protocol in this work. Utter ruthlessness can only be fought with utter ruthlessness; honor, honesty, carefulness and sincerity must be left to the fighting forces and the diplomats.” Donovan agreed.

  Chapter 12

  Enemies

  THE ACCIDENT HAPPENED, of all days, on April Fool’s 1942. Freeman raced the limousine to Union Station so Donovan could make the 1:05 p.m. train that Wednesday to New York. But as the car neared the station a cab slammed into it, throwing Donovan from the back seat to the front and painfully wrenching his right leg, the one injured in World War I. The leg was likely broken, but Donovan insisted that Freeman and a porter carry him into the drawing room car of his train. New York has the best doctors, he told Freeman. He would have one there check him if the leg still hurt.

  The pain was excruciating by the time the train reached New York’s Penn Station. But Donovan had a porter and Wayne Nelson, a Dulles aide who had clerked in his New York law firm, lift him into a cab, which took him to his suite at the St. Regis Hotel.

  Back in Washington the next night, Evalyn Walsh McLean hosted her weekly dinner party at her Georgetown mansion for Washington’s political and diplomatic elite. It was always a glittering black-tie affair with fine silver candelabras and McLean presiding with the forty-five-and-a-half-carat Hope Diamond dangling from her neck. The spoiled daughter and widow of publishing magnates, McLean was a rabid Roosevelt hater. FDR ranked her among Washington’s most prominent “parasites,” but key people in his administration went to her dinners to hear whom she was trashing. Tonight Vice President Henry Wallace sat next to McLean as she ranted about one of her pet hates: “Wild Bill.” The dowager was convinced Donovan was plotting to become the vice president with Frank Knox as the president. McLean assured Wallace she had the goods on the colonel: “He is a very bad egg.” Wallace thought Evalyn talked too much, as always. But he kept it to himself.

  Colorful stories about “Wild Bill” became chitchat fare at Washington parties. To show off what his unit could do, he had agents steal secret documents from the office of an admiral he was having drinks with at one social event, then bring the papers to him to give them to the astounded officer before the party broke up. But the trail of bruised egos Donovan left behind was growing longer. Admiral Harold Train, the Navy’s intelligence chief, was irked when he denied Donovan the loan of an officer and within minutes received a phone call from Knox asking him to deliver the man. Train stood his ground and refused to transfer the officer.

  Washington also was a fairly libertine city filled with many extramarital affairs. Even so, Donovan’s dallying raised eyebrows. He was often seen driving around the capital with a beautiful woman in the back seat of his limo who seemed to have no official function. His aides routinely talked behind his back about the affairs. Army intelligence picked up the rumors. Some of the wives of Washington’s powerful took notice and did not appreciate how he treated Ruth. He cannot be trusted, some whispered into their husbands’ ears.

  Laid up with his broken right leg encased in a plaster cast, Donovan within days set up his two-room suite at the St. Regis as his office. “I am still in the ring,” he cheerily told friends. A stream of visitors trooped in at all hours of the day and night: advisers to receive his orders and relay them to Washington, secretaries to take dictation for letters and memos, agents returned from overseas to brief him on their operations, visitors from British intelligence to check his condition and report back to London.

  Donovan had hoped to return to Washington within a week after his accident but the injury turned out to be more serious than he realized. A blood clot had formed in his leg and had traveled to his left lung causing a dangerous embolism which was life-threatening. Doctors ordered him to bed, where he remained for six weeks. He was lucky to escape death once more. But Donovan was not sure his agency would survive. “I have greater enemies in Washington than Hitler in Europe,” he told Fisher Howe, whom he had sent to his England station. And they were circling now.

  FRANK KNOX DROPPED by the St. Regis on April 26 to see how the patient was doing and to pass along two bits of news from Roosevelt. The president had told him Donovan’s accident had probably left him physically unfit to lead a force in combat. Donovan, who still hungered for action at the front, insisted there was “nothing permanently wrong” with him and he was in fine shape for a field command. But Knox’s second piece of news almost gave him another embolism. Undersecretary of State Sumner Welles had told FDR that Donovan had ninety agents prowling Mexico in clear violation of the president’s ban on him putting spies in Latin America. Donovan thought he had buried that rumor when Welles brought it to him the month before. “It was a well worn lie,” he angrily wrote Roosevelt the next day—which it was.

  After almost a half year of Donovan pestering to get his men into Latin America, Roosevelt finally signed an order on January 16 siding with Hoover and ruling that the FBI would control spying in the region. Donovan abided and ordered Wallace Phillips to transfer agents he had watching ship movements along Mexico’s coast back to the Navy. But a good rumor can always find a way to survive. Hoover suspected Donovan still had spies there and Donovan’s men suspected he kept alive the tale, which they began to call “the famous ninety humpty-dumpties.” “I only hope that the German Army will melt away as rapidly as my alleged force of ninety agents in Mexico melts under investigation,” Donovan wrote FDR in a long memo rebutting the charge, adding, “You should know me well enough to know that I do adhere strictly to my orders and make no attempt to encroach upon the jurisdiction of anyone else.”

  FDR did know Donovan well enough and suspected he was conducting intelligen
ce operations in Latin America. Donovan never openly violated the ban—he did not put spy stations or intelligence-collecting officers in Latin America—but he cheated on the edges. Latin America—“our South rear,” as he told his aides—was important in the espionage war with the Axis. Hoover refused to share what his men collected there. Donovan’s agency might be banned from operating in the region but “we cannot be prohibited from thinking about Latin America,” he argued.

  Donovan did more than just think. He had friends from United Fruit Company and National City Bank feed him intelligence their executives touring the region picked up. He huddled privately with a Mexican labor leader to arrange for him to supply information he ran across traveling through the continent. A year later, Donovan began one of his most secret Latin American projects, code-named “Kangaroo.” Its records were kept in London instead of Washington to reduce their chance of leaking to the FBI. With $50,000 from his unaccounted for funds, Donovan had about a half dozen Chilean diplomats feed him intelligence on the Axis from Santiago and from European and Asian capitals where the envoys were posted.

  Hoover, nevertheless, picked up whiffs of the Kangaroo Project. State Department officials, who noticed Donovan’s men spending an unusual amount of time snooping in their Latin America files, also did not believe his claims that he was following Roosevelt’s January 16 order. In one heated confrontation, Nelson Rockefeller accused him of being a “liar” when he denied he had agents in South America. Donovan lost his usual self-control and threatened to throw Rockefeller out the department window they were standing next to. The two men cooled down and tried to remain cordial to each other after that. But Rockefeller still thought Donovan was lying.

  LIMPING FROM HIS sore leg, Donovan took up another important piece of business with FDR when he returned to Washington in May—moving his agency to the Joint Chiefs of Staff. Roosevelt thought he was committing bureaucratic hari-kari. “They’ll absorb you,” he warned.

  “You leave that to me, Mr. President,” Donovan answered confidently. He knew the Joint Chiefs wanted nothing better than to kill his unit, but if he didn’t move under their wing he would likely be scuttled anyway. His outfit was too vulnerable sitting out as a lonely White House agency with the military, State Department, and Justice now at his throat. Moreover, the military controlled the war and Donovan believed his spies and guerrillas had little chance of operating in the combat theaters unless they did so under the control of the Joint Chiefs. Smith at the Budget Bureau was eager for the military to take over what he considered a rogue agency and clamp down on its freewheeling spending. The Joint Chiefs, however, wanted nothing to do with what they considered a disorganized bunch of civilian spies and disreputable saboteurs run by a political appointee who had amply demonstrated he was no team player willing to follow the chain of command. But Roosevelt insisted that the move be made. Marshall finally agreed to take Donovan’s organization, realizing it did have talent within its ranks and he did need covert operatives for subversive activities in this war. Better to have Donovan under his control than not.

  The transfer came at a painful price for Donovan. Smith convinced Roosevelt to consolidate most propaganda operations under a new Office of War Information directed by Elmer Davis, a conscientious former New York Times reporter who spoke through his nose with an Indiana twang. Donovan could not convince Roosevelt that ripping out Sherwood’s Foreign Information Service “would tear the tissue of our whole organization,” as he declared in one pointed memo. Sherwood backed the move, which made sense to other Donovan aides. What business did an espionage organization have broadcasting slanted news and Roosevelt’s speeches to foreign countries? On June 13, Roosevelt signed another executive order, this one moving Donovan and his agency to the Joint Chiefs of Staff, minus the Foreign Information Service. But with the Joint Chiefs’ approval, Donovan continued to wage his own “black” psychological warfare abroad, broadcasting lies to disrupt the enemy. It ensured two years of warfare with Davis when the two agencies’ propaganda operations bumped into each other overseas.

  Roosevelt also gave Donovan’s agency a new name: the Office of Strategic Services. Donovan liked the title. But London still put its odds of survival at low. “It was not clear what Col. D would now be looking after,” a secret Foreign Office memo concluded two days after Roosevelt’s order.

  WHAT DONOVAN WOULD now be looking after if Marshall had his way was a guerrilla training camp in the sticks with a general’s star to keep him quiet and the Office of Strategic Services’ functions scattered among the Army and Navy. Roosevelt, however, would not allow the OSS to be dismembered. Donovan kept his organization intact, but it quickly became bogged down in the military’s vast bureaucracy with a gauntlet of procedural hurdles he had to clear before launching any intelligence or sabotage operation overseas. The OSS nearly ground to a halt.

  To be sure, Marshall and the other chiefs had far more pressing things on their minds than Donovan’s dirty tricksters. America’s military-industrial complex had to be organized for war. Priorities had to be set. Marshall was juggling a lot of balls. Guerrilla and espionage units were flyspecks on his to-do list. At the same time he and the other military chiefs did not want Donovan going off half-cocked with clandestine operations that might spark a battle they weren’t yet prepared to fight. The days of covert games run out of the White House had passed. Roosevelt had turned the war over to his generals and admirals. Donovan’s organization now had to fit into the military’s machine.

  Yet the cultural chasm between Donovan’s novel organization and the brass was gaping. When he tossed out ideas for subversive plots and psychological warfare and exotic espionage, “the Joint Chiefs of Staff didn’t really know what Bill was talking about,” Roper recalled. FDR had finally ordered that Donovan be paid $10,000 a year, more than $132,000 by today’s standards although it hardly matched his law firm earnings. Donovan, however, began to find the backbiting not worth any salary.

  He soon discovered an adversary in the Pentagon as cunning and ruthless as Hoover in the FBI. Major General George V. Strong, who replaced Sherman Miles as Marshall’s G-2, had earned the nickname “George the Fifth” for his gruff and imperious manner. Strong was a professional soldier from head to toe with a cerebral side—he once wrote a Japanese-English military dictionary—and he was intent on improving Army intelligence. Like Donovan, Strong had visited London’s MI6 and returned brimming with ideas for putting G-2 on a wartime footing. He also had the ear of Roosevelt, who considered him an authority on battlefield intelligence. Strong had decided that the OSS was a band of civilian amateurs that had to be broken up or it would take over his agency. He began referring to the OSS director as “Wildman Donovan.”

  Donovan thought Strong was an idiot. But the general chaired powerful committees in the military and he began a one-man guerrilla operation to shut down Donovan’s agency. He tried to block the OSS from setting up intelligence-sharing agreements with the British and the Free French forces led by Charles de Gaulle. He prevented enemy cables the Army intercepted overseas from going to Donovan. He even took control of businesses Donovan had enlisted for spying overseas, such as the Philips Lamp Company.

  Donovan persevered and soon even the service chiefs recognized the value in having his civilian organization control subversive warfare, considered unsuitable duty for men in uniform. They eventually ordered Strong to scale back his attacks. But George the Fifth remained determined to supplant Donovan. Convinced the OSS was infiltrated by the British, French, and Russians, Strong set up with $350,000 his own small espionage unit, whose existence he kept secret from Donovan and all but a few top officials in the government. The unit eventually became known as “the Pond” and like Donovan’s OSS began infiltrating spies overseas under State Department and commercial cover. It was run by the man who had not forgotten that Donovan had fired him from the FBQ front company—Major John Grombach.

  STRONG DID SUCCEED in blocking Donovan’s access to Magic. D
onovan protested his agency being walled off from radio intercepts. Marshall and Admiral King had also shut down the small decoding unit Donovan set up to decipher Axis transmissions that FBQ’s radio receivers picked up. How could his spies operate in the field and his researchers analyze Axis moves if they were deaf to what the enemy was saying over the airwaves? But Strong prevailed. All the OSS would receive were paraphrased copies of selected Magic intercepts that the Army and Navy deemed pertinent to the agency’s mission. Marshall feared security in Donovan’s organization was still not tight enough to be granted direct access to Magic, one of the U.S. military’s most closely held secrets.

  Donovan had done a lot to improve security in his outfit. Information was compartmentalized so no one person knew everything about an operation. Even secretaries typing secret research reports were assigned every third page so no one person in the pool read the entire document. But the organization was still infected with security breaches. Over a two-week period in June security officers roaming the headquarters building at night found seventeen safes open—an “epidemic,” one internal memo complained. Screening of employees still needed improvement and Donovan had just begun to organize counterintelligence agents to vet foreign sources.