Wild Bill Donovan

by Douglas Waller

  By April the problems had begun to leak into the press. The New York Post speculated that FDR was unhappy “with our intelligence work in the Italian theater” and “Bill Donovan’s OSS may soon be on their way out.” Roosevelt was not actually paying attention to the OSS in Italy, but a senior U.S. Army officer was: General Jacob Devers, whose G-2 Donovan had threatened to throw out of a window the year before. Now the deputy supreme allied commander for the Mediterranean, Devers was convinced the OSS had wasted millions of tax dollars in Italy. He demanded “a thorough accounting” of everything Donovan had spent there. What’s more, Devers intended to send his inspector general to the OSS to examine its ledgers and in the future he wanted Donovan to get his approval for every nickel the OSS spent in Italy.

  Mark Clark thought Devers was “a dope” and Donovan was now inclined to agree. Donovan was accountable to the president of the United States, to the Joint Chiefs of Staff, and to the U.S. Congress; opening his books to any other military outsider with a beef would mean baring complex financial arrangements for covert activities, exposing sensitive operations, revealing the names of undercover agents. No spy organization could operate under those conditions. Donovan politely but firmly refused to let Devers have a peek at his accounts. The general soon backed off.

  Donovan instead did his own housecleaning in Italy. In addition to making Glavin the head of all Italian operations he brought in two other Army officers: Lieutenant Colonel William Suhling, to be Glavin’s deputy for special operations, and Colonel Thomas Early as his executive officer. Glavin, whom Donovan knew from the officer’s connections in New York Republican circles, eventually turned out to be a weak administrator as well, but at the outset he sent half of the intelligence officers in Italy home. He banned political activity among the ones who remained and tightened security and the vetting of agents. Donovan also had an audit team come in to police the Italian finances. Tompkins, who wanted to stay in the field as a spy, fought to defend his record in Rome, pointing to the valuable intelligence he provided Clark during the Anzio offensive. But Donovan decided he had become a liability and ordered him home. Tompkins was a courageous and brilliant young man, but the Germans had a full dossier on him, which made it impossible for him to maintain a cover in the field, Donovan knew. Moreover, Donovan wrote his deputy Ned Buxton, lives were lost “as a result of his inexperience and poor handling of people.” Angry Italians might kill him if he remained.

  Donovan’s reforms improved his agency’s performance in Italy. As Clark’s army ground slowly forward the OSS dropped seventy-five commando teams and two thousand tons of arms, food, and equipment into northern Italy, whose partisan force grew to 85,000. By February 1945, Kesselring warned his generals that guerrilla attacks in the north had “spread like lightning.” He ordered brutal reprisals. But the partisans eventually succeeded in taking forty thousand enemy prisoners, killing or wounding thousands more, and liberating over a hundred cities and towns, including Genoa, Milan, Venice, and Turin. In another operation launched shortly after Donovan left Rome, OSS agents recruited disaffected German soldiers from POW camps and slipped them behind enemy lines in their Wehrmacht uniforms to plant subversive propaganda, gather intelligence, and mingle with their old comrades to gauge morale. “Sauerkraut,” the code name for the operation, was legally questionable—the Geneva Convention prohibited using war prisoners as spies—but the higher command looked the other way. Striking up conversations with German soldiers, the infiltrators detected subtle signs of deteriorating morale: complaints growing about no mail coming from home and cigarette rations being cut. Soon the infiltrations got under Kesselring’s skin. At one point he was forced to deny authorship of a phony proclamation Sauerkraut agents spread among his troops with his forged signature, which denounced “Hitler’s policy of destroying the German Wehrmacht for the sake of the party.”

  AS HE SHOOK up his operation in Rome, Donovan was also cleaning house in another country: Turkey. There had been such high hopes that Packy Macfarland would tunnel critical intelligence pipelines into Bulgaria, Hungary, Austria, and even Germany. But problems with his Istanbul station had begun to pile up. The Pentagon complained about the quality of the intelligence coming out of Turkey. The reports from Alfred Schwarz’s Dogwood chain, which Archie Coleman oversaw, were “regarded as erratic—sometimes extraordinarily good, often extraordinarily poor,” a memo warned Putzell, who had Donovan’s ear. Nearly two thirds of the intelligence reports sent by the Rose chain, which was led by Donovan’s New York friend A. V. Walker, were not even delivered to the military because OSS headquarters considered them worthless. By early 1944, Donovan and his senior advisers also became increasingly suspicious that covert projects such as Sparrow to separate Hungary from the Axis and the Hermann Plan to topple Hitler had been the victims of more than just bad luck.

  Packy Macfarland was loved by everyone in Istanbul, but respected by no one. Visitors such as John Toulmin, the top OSS Middle East officer in Cairo, found him appallingly lackadaisical in running his operations, “and very slow to realize that the intelligence received from his two chains is practically valueless,” Toulmin wrote Donovan. The American ambassador in Turkey considered Macfarland incompetent. The embassy’s naval attaché refused to work with him. British special operations officers in Istanbul cabled London in February 1944 that the security problems they saw with Macfarland’s station had become “alarming.” London relayed that warning to Donovan through back channels. A month later, Donovan asked his X-2 counterintelligence branch for a report on anything they had on the Abwehr tracking OSS agents in Turkey. Their answer hardly calmed his nerves. The X-2 men thought the Germans knew little about the OSS operations, but they had to admit this was only a guess; Donovan’s counterintelligence team hadn’t even set up an office in Istanbul until January and had not vetted any of Macfarland’s foreign agents.

  Macfarland could be glaringly cavalier about security. Turkish intelligence officers finally informed him that two of his chauffeurs worked for the Russian secret service. When Hildegarde Reilly, the Germans’ most successful female agent in Istanbul, struck up a friendship with one of Macfarland’s men, Macfarland ordered the OSS officer to continue seeing her, naively believing he could glean information on the Germans. Macfarland’s man proved no match for Hildegarde, who weaseled far more intelligence out of him about OSS employees in the station and their activities. By May 1944 the British services in Istanbul decided to cut back their dealings with the OSS station until Macfarland’s men could demonstrate they were “actually serious and organized to do the job.” Donovan and his top intelligence officers were stunned when they learned of the demarche.

  Donovan sent Toulmin and counterintelligence investigators to Istanbul to assess the damage. The biggest problem, they reported back, was Alfred Schwarz’s Dogwood chain and its more than two dozen flower-named agents. “It was completely infiltrated by the Germans,” Toulmin concluded. The Abwehr, Gestapo, and SD had complete dossiers on the Czech engineer and closely watched the Western Electrik office, his front company. Double agents in the chain not only spied for the enemy, they also fed Nazi propaganda and disinformation to Schwarz.

  Macfarland supervised this most important chain in his operation like an absentee landlord. He rarely talked to Dogwood. Instead, Macfarland delegated that job largely to Archie Coleman and his assistant, Lansing Williams, who both found Schwarz nearly impossible to manage. Strong-willed, egocentric, and domineering, the Czech “fancied himself to be a practicing psychologist and had the utmost confidence in his ability to make friends and influence people,” one investigator reported to Donovan. “He was interested in grandiose political schemes involving individuals only in high echelon.” Coleman complained that Schwarz was “an egomaniac,” with a “big-shot-dreams-of-glory complex.” He also brooked no interference in his intelligence operation, flying into a rage and threatening to quit every time Coleman or Williams tried to supervise him or question his authority.

/>   Schwarz got his way. Because his chain produced the largest volume of reports for the Istanbul station, “it was impossible to call the Dogwood bluff and he knew it,” one secret postmortem report concluded. His operation became “almost entirely independent.” All intelligence from Central Europe came through the Dogwood network. Schwarz insisted that he was the only one who could talk to his agents. He dictated and edited each of their reports, which came to Coleman and Macfarland identified only as from a “sub-source.” Donovan’s investigators found “evidence that Dogwood colored intelligence he received to conform to his own ideas,” as one report stated. “There is evidence that he withheld material from us for personal and, perhaps, less obvious reasons” and concocted phony reports that he attributed to his agents, which were “subsequently found inaccurate.”

  Of the twenty-eight original flower operatives in Dogwood’s chain, only five were now deemed credible enough to keep on the payroll, Donovan’s investigators decided. The network was riddled with double agents. Andor Gross, the smuggler code-named Trillium who was Schwarz’s courier for contacts with Hungarian Lieutenant Colonel Otto von Hatz, was a Nazi informer, the counterintelligence team concluded. So was Iris, the code name for Friedrich Laufer, another intermediary with the Hungarian General Staff. Iris reported to the Gestapo in Budapest. Hatz as well kept the Nazis posted on Donovan’s infiltration of Florimund Duke into Budapest and his plot to entice the Hungarian regime to part with the Axis.

  Incredibly, Dogwood knew that many of his spies were double agents. But he believed that he still commanded their loyalty and that they paid only lip service to their Nazi employers. It proved hardly the case. Donovan’s investigators concluded that Nazi informers in Dogwood’s chain betrayed the Sparrow mission, the Hermann Plan, and other operations. Virtually all the agents the Istanbul station developed in Central Europe ended up killed (like Moltke) or arrested (like Duke’s team).

  Some of Donovan’s counterintelligence officers suspected that even Schwarz was a double agent the Nazis planted to feed the OSS “worthless intelligence” and render “our Central European operations ineffective,” as one top secret report theorized. Others disagreed. Dogwood, they argued, was an arrogant and garrulous fool who meant well but ended up unwittingly being a tool of the Nazis. Either way, Donovan’s men realized the Czech agent was part of a larger failure. The Istanbul “organization we set up to handle Central European intelligence was unwisely conceived, badly staffed, and directed in the first instance by mediocrities,” admitted one confidential report that landed on Donovan’s desk. Moreover, “this organization was given a free hand with no direction” from anyone above. The report did not name the guilty at the top, but it had to include Donovan.

  By late June 1944, Donovan had moved to shut down Macfarland’s network, much of which had already collapsed. Packy was sent home. Schwarz was fired. To rescue what he could from the wreckage in Istanbul, Donovan brought in a four-man team, headed by Frank Wisner, a thirty-five-year-old Mississippian and former Wall Street lawyer who spoke with a Southern drawl and had a level head. But Wisner found little he could salvage. “All our Central European eggs had been placed in the Dogwood basket,” a confidential memo glumly told Donovan. In Turkey, the OSS now had to start all over from scratch.

  BEFORE HE LEFT ROME, Donovan paid a visit to the Vatican to huddle with Pope Pius XII. Donovan had devoted a lot of time to cultivating and encouraging spying by the Catholic Church. Vincent had vetted priests for him who might be useful as agents. The apostolic delegate Cardinal Spellman had introduced to Donovan three years earlier dropped by his office frequently with political reports papal envoys filed from foreign posts where Donovan had no agents, such as in Tokyo. Donovan also had another Catholic intelligence network he kept hidden from the apostolic delegate and all but a few of his trusted advisers. It was known as the “Pro Deo” project and it was run for him by Father Felix Morlion, whose code name became “Blackie.”

  Morlion was a Belgian Dominican priest Vincent had known who had run a press and propaganda service since the 1930s in Breda, Holland, and Brussels with Catholic correspondents scattered around Europe feeding him reports that he distributed in two dozen countries on the continent. The uncensored stories Morlion’s correspondents smuggled out of Germany particularly irritated Goebbels and the Gestapo. When the Germans overran Europe, Morlion relocated his service to Lisbon in July 1940 and continued to print his anti-Nazi and anticommunist news stories for what he now called the Pro Deo Movement. But fearing the Germans would also invade Portugal, Morlion moved once more, this time to New York City in September 1941 with the help of Donovan and Dulles. He set up the Center of Information Pro Deo and soon had his presses rolling with reports from Europe. But Morlion’s network of Pro Deo correspondents around Europe also became a private intelligence service for Donovan.

  By April 1944, he was secretly paying Blackie almost $2,000 a month to help maintain his New York office as well as bureaus overseas. In return, Morlion funneled to him cables his European correspondents filed, which became known as the Black Reports. Many of the files, which were written by reporters instead of trained spies, were too general or opinionated or had too many errors to be of use. But other Black Reports contained intelligence Donovan’s analysts deemed valuable on the mood and thinking of Catholics in Germany and other countries. One file analyzed the “fate of the Catholic Church in Russia.” Another, which Donovan relayed to Roosevelt, gauged “German Catholic resistance to the Nazis.” Pro Deo, one classified OSS memo concluded, “is one of the few sources from which an approximation may be made of what the common man and woman are thinking.”

  Donovan ordered that the Black Reports be sent to him and only to a select few in his organization, not because the information in them was so secret, but because of the danger Morlion’s correspondents faced if it became known they were working for an American intelligence service. The reporters, who were given code names like “Hank Judah,” were never told their cables also ended up in the hands of the OSS.

  Donovan soon had bigger plans for Morlion. Within four months he would have Blackie planted in the Holy See and feeding him Vatican gossip on the man in whose private chamber he now sat: Pope Pius XII.

  Pius had been one of the war’s most cunning fence straddlers. The Allies seethed at his silence over German atrocities and his willingness to have a Japanese embassy in the Vatican. A racist, the pontiff asked the Allies not to have black soldiers posted in Rome. (The Allies ignored the request when they entered the city.) After Axis soldiers were expelled from North Africa in May of 1943, Hanfstaengl reported to Donovan that Pius felt the wind shift and became more critical of fascism and National Socialism in his speeches, which Putzi knew would irritate Hitler. Donovan also knew that Pius so far had refused to authorize priests to serve as chaplains with the northern Italian partisans; the pope thought the bands were infested with anticlerical communists and discounted their strength. He reversed himself later in 1944 when he realized the guerrillas had clout.

  But Donovan told friends he liked Pius “immensely as a person.” He did not mind Tokyo having a delegation in the Vatican as long as the pontiff’s emissaries continued to feed him tidbits on what they picked up from Japanese ambassador Ken Harada and his underlings. But after the two men settled into their chairs and the pope’s aides had left the room, Donovan told Pius that espionage agents hidden in Harada’s diplomatic mission soon planned to install a radio transmitter in their office to beam intelligence back to Japan. Pius promised to shut it down.

  The pope and the spymaster chatted about American politics. Pius let Donovan know that he was pulling for Roosevelt’s reelection. He told Donovan to send FDR “all my heart’s affection.” Donovan said he would. The Catholic Church had become a trusted and valuable ally in his secret war against the Nazis.

  Chapter 25

  The Plot

  DONOVAN WAS FINISHING dinner in his Georgetown home the night of July 20 with Lieutenan
t Colonel Hsiao Po and his wife when a servant whispered into his ear that he had a phone call from his office. Hsiao was Chiang Kai-shek’s military attaché as well as Tai Li’s Washington representative for the Sino-American Cooperative Organization. Though Donovan had traded threats with Tai during his Chungking visit, he remained on cordial terms with Hsiao and occasionally had him for dinner.

  Donovan excused himself from the table and took the call in another room. The message center was on the line to relay a report Dulles had just delivered by radio-telephone. The Bern station chief was intentionally vague and cryptic. He knew both the Swiss and the Germans listened in on all his calls. There had been “an attempt on Hitler’s life” that day, Dulles told Donovan. “I presume you all have the news we have on this. We haven’t very much except the names of the various generals and admirals who were wounded.” But Hitler survived the attack, Dulles said. “The man seems to have a charmed life.”

  The next morning Dulles began sending Donovan lengthier coded cables with all the details he had so far been able to piece together on Valkyrie, the name given for the plot to remove Hitler. Some of the German generals who were in on the conspiracy had been at Hitler’s Wolf’s Lair headquarters near Rastenburg in East Prussia “when the bomb went off because the only chance for planting the bomb was in conjunction with a conference attended by many of the chief military leaders,” Dulles cabled Donovan. Even though Hitler survived the blast, Dulles believed the conspirators could still have carried out the coup, but “one of the disheartening facts seems to be that the participants in the revolt did not have adequate radio facilities at their command” to mobilize the Home Army against the Nazi regime. Dulles had dossiers on most of the senior officers who were part of the conspiracy. “Various members of the Canaris organization were also giving their assistance,” he wrote Donovan. But he did not have much on the obscure colonel who actually planted the bomb, Claus Schenk von Stauffenberg. He checked his files and discovered Stauffenberg’s name on an earlier list of dissident officers, “but at that time we did not realize the part he would play,” Dulles wrote.