The Tango War

by Mary Jo McConahay

  In the 1930s, German lines often used airplanes that were simply better than the competition in Latin America, including U.S.-owned airlines. Panair do Brasil, a subsidiary of Pan American, vied for the Brazilian trade but often lost out because it used only traditional seaplanes until 1937, limiting its routes to seacoast, lake, and river cities. Meanwhile, the Condor line was flying the most up-to-date product of the German aviation industry, the Focke-Wulf Fw 200 Condor, a four-engine monoplane suited for hard-surface runways. (In a sign of pride in the model, German foreign minister Joachim von Ribbentrop flew a Condor to Moscow in 1939 to sign the Non-Aggression Pact with the Soviet Union.) Designed as a long-distance, high-altitude passenger carrier, which saved fuel by cruising at more than ten thousand feet while other planes flew at a maximum of five thousand, the Condor was later modified by the Luftwaffe for use as a warplane.

  When the Italian LATI (Linee Aeree Transcontinentali Italiane) began to fly out of Rio in 1939, U.S. and British diplomats raised a warning flag. LATI flew regularly between South America and Rome, with connections to Nazi Europe.

  Not every airline in South America was run by Germany and Italy. An airplane mechanic from the United States founded a line in Peru. The French Aeropostale, whose pilots included Antoine de Saint-Exupéry, the author of The Little Prince and Wind, Sand and Stars, ran mail. Argentines established a spin-off of the Aeropostale amid national enthusiasm for flying balloons, and then airplanes, over the River Plate. The heroics of native aviators like Jorge Newbery, who began his love of flying when he met Alberto Santos-Dumont, inspired hundreds of tangos with titles such as “Night Flight” and “Chile by Night.” A tango called “El Gato” was named for a flier renowned for surviving accidents the way a cat survives a fall.

  The German and Italian airlines, however, worried the Allies the most. Reporting on Axis espionage in 1941, U.S. journalist Curt Reiss wrote, “In the case of South America, no intelligence apparatus had to be organized. It was already there in the many airlines which spanned the entire continent.”

  On the surface, the struggle for the southern skies looked like a fight between big international companies, but in reality it was a high-stakes duel among governments: the United States and Great Britain on one side, with Germany and Italy on the other. The grandfather of Latin airlines, SCADTA, flew routes within two hundred miles of the Panama Canal, constituting “an immediate and extremely serious threat to U.S. security” according to the Joint Planning Committee of the U.S. State, Navy, and War Departments. SCADTA and LATI had to be neutralized.

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  The effort began in Colombia, where a deep historical grudge existed against the United States. In 1903, Washington orchestrated the secession of Colombia’s northernmost province, arming “rebels” and recognizing the region as a new country named Panama, making a deal with its government to build the canal. In the 1930s, feelings in Colombia still ran strong against the United States for the loss of national territory. President Eduardo Santos pledged that no attack on the Panama Canal would be launched from Colombian soil, but he could not be persuaded to eject the Germans. SCADTA had become vital to Colombia’s economic growth, and it kept families and friends connected who lived far apart. Many of the company’s Germans had taken Colombian citizenship; they participated in civic affairs and otherwise contributed to the life of the country. Why should Santos kick them out?

  What the Colombian president wanted was beside the point to Spruille Braden, a blustering newcomer to the U.S. Embassy. A Montana businessman with stakes in companies active in Latin America—United Fruit, Standard Oil, and his own Braden Copper—the ambassador was not a diplomat at heart, but comfortable with political intervention. After the war, as assistant secretary of state for Western Hemisphere affairs, he made the cover of Time magazine with a story about him inside under the headline “DEMOCRACY’S BULL.” Corpulent, with dark eyes that stared out from under thick brows, Braden led the charge against SCADTA. He liked the nickname “Buffalo.”

  For months after presenting his credentials in Bogotá in February 1939, Braden treated unsuccessfully with President Santos about removing Germans from SCADTA. Meanwhile, Juan Trippe, the shrewd, legendary founder of Pan American Airways, held information close to his chest that neither Santos, important Pan Am executives, nor key U.S. officials knew about who really owned the “German” airline in Colombia: he did. In 1931, Trippe had surreptitiously bought 85 percent interest in the company by way of a secret compact with its Austrian owner, who eventually also obtained Colombian citizenship. Making the transaction known would have stoked the anti-gringo ire of Colombians, reckoned Trippe, who had also failed to inform U.S. authorities at the time.

  In March 1939 Trippe was summoned to Washington by military officials who knew he controlled SCADTA. The War Department generals told him to eliminate its “Germans,” Colombian citizens or not, in the interest of U.S. national security. Pan Am, with its extensive air routes and responsibility for carrying U.S. mail, was considered by the State Department and the military as an arm of national defense.

  Ambassador Braden had discovered the truth about SCADTA’s ownership only on the eve of his departure for Colombia. In February 1940, he called a secret meeting with Pan Am representatives at the U.S. Embassy in Bogotá. It was the middle of the day, but the men arrived to find Braden’s office dark, all the drapes drawn. The only light came from candles sputtering in their holders on a grand piano. Solemnly, as if he were delivering a death sentence, Braden announced that SCADTA must be “deloused.” The Germans, like insects, were to be picked off and the airline purified.

  Even with war coming, however, Trippe dragged his feet about “delousing” the airline, concerned that the state might take it over and he would lose money. Finally in June 1940, more than nine months after war had begun in Europe, and only after being assured his expenses would be covered, Juan Trippe bent to pressure from Washington and the “Buffalo’s” diplomatic charge.

  In an operation worthy of a spy film, Pan Am smuggled 150 U.S. pilots and dozens of maintenance technicians into Colombia, keeping them hidden and communicating with them in code. Early one morning, Trippe’s local operations manager surprised all of SCADTA’s German personnel with simultaneous dismissal notices and replaced them with the Americans. SCADTA did not miss a day of flying. President Santos could do nothing. The U.S. Treasury cushioned the costs of firing the Germans for the resourceful Juan Trippe “in the interest of the national defense of the United States.” After Pearl Harbor, German pilots and other SCADTA employees were interned in camps in Colombia or in the United States.

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  While SCADTA’s Germans were being eliminated, LATI’s Italians were smuggling spies, intelligence, and contraband between South America and the Reich. LATI’s fast, three-engine Savoia-Marchetti SM.79 airplanes, nicknamed “Sparrowhawks,” carried fascist secret agents, diplomatic pouches, and propaganda books and films. At a time when even small amounts of rare materials were in demand for war industries, LATI secretly carried them out of South America: industrial-use diamonds, tungsten for aircraft manufacture, mica for insulation and heat transfer in electronics.

  LATI secretly delivered to the Nazis one of the earth’s rarest elements: platinum, a metal so strategic that the United States banned its use during the war for any purpose other than military. Essential for catalytic converters and for electronic and oil-refining processes, platinum is found in few places in the world, among them Colombia. Thanks to LATI and roundabout airline routing, Colombia became for Germany and Japan the only wartime source for platinum. In 1940, a mine operator named Theodor Barth smuggled out small amounts at a time to the chief Vertrauensmann—V-man, or confidential agent—of the German secret service, the Abwehr, in Chile. The agent contacted a collaborator, the German manager of the Condor-LATI office in Santiago. Together the V-man and the airline office manager repackaged the platinum into one-pound packets, sending them clandestinely on a series of separate C
ondor flights to Brazil, where they were transferred to LATI planes. In this way a significant lode—twenty-five pounds altogether—of the metal reached the Reich between August 1940 and February 1941. In like manner, other precious commodities mined from South American earth evaded the British naval watch of European coasts, literally flying over His Majesty’s ships to supply the German war machine.

  If the Allies were going to take LATI down, they must do it in Rio, its Latin American headquarters and continental hub. But the Italians were ahead in the game. From its first days in Brazil, LATI had hired President Getúlio Vargas’s son-in-law Pedro Cavalieri, a lawyer, as one of its top directors in South America. Members of Brazil’s social elite held key administrative positions, and wealthy Brazilian investors stood to lose if the airline were closed down. President Vargas was unsympathetic to pleas from Washington and London that, for their benefit, he should upset an arrangement that was serving his country well. He saw little value in uprooting a key player in Brazil’s growing economic sector, not to mention cutting a lifeline to the European continent, especially with no substitute in sight to provide a direct bridge across the Atlantic.

  Washington’s efforts to eliminate LATI looked feeble. The Brazilian branch of the Rockefeller family’s Standard Oil of New Jersey provided fuel to the Sparrowhawks, despite State Department protests. The U.S. ambassador in Rio, Jefferson Caffery, a career diplomat from Louisiana, complained to Washington for months about the airline without results.

  At last, in August 1941, a cable from Secretary of State Cordell Hull informed Caffery that the federal Reconstruction Finance Corporation would create a branch specifically to eliminate Axis control of airlines in South America. In its first action, the new office negotiated with Pan American, promising loans, and Pan Am agreed to establish a route from New York to Lisbon by way of cities on the Brazilian hump, an alternative passage to compete with the Italians. In huffy-sounding language, Secretary Hull cabled Ambassador Caffery that the idea had better work, given that “the sole reason for the establishment of this new service is, of course, the elimination of LATI.” Even with the prospect of a Pan Am route to Europe, however, President Vargas hesitated to act against the airline.

  As war ravaged England in the summer of 1941, British leaders decided they could not wait for the Americans to manage developments. They suspected LATI’s pilots of spotting for German submarines that sank British ships. “L.A.T.I. constituted the biggest gap in the British economic blockade,” wrote British Security Co-ordination (BSC) agent H. Montgomery Hyde. Something drastic needed to be done.

  An order came to the BSC office in New York, the British secret intelligence outpost that covered the Americas: eliminate LATI operations in South America. Details of the order were left to the agent in charge. The scheme that unfolded, led by a Canadian code-named “Intrepid,” would erase the Sparrowhawks from the southern skies and go down as one of the most successful single blows to the Axis in the history of wartime spycraft in Latin America.

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  High above New York City, in “his highly mechanized eyrie in Rockefeller Center” as author Ian Fleming described it, William Stephenson presided over the BSC offices. On Churchill’s orders, Stephenson had installed the office in May 1940 with the support of President Roosevelt and knowledge of FBI director J. Edgar Hoover. The task of confronting the Nazis in Latin America in July 1941 was on the desk of an extraordinary man.

  As a young boy in his native western Canada, William Stephenson had become fascinated with radio technology and taught himself Morse code. During World War I, he flew fighter planes and fought in the trenches, escaped German captivity, and earned medals for valor from Canada, Great Britain, and France. Slender, with clear blue eyes, young Bill’s nickname was “Captain Machine Gun,” not for combat proclivities but for his boxing style. Stephenson won the interservice lightweight world boxing championship at the same time the heavyweight title was won for the U.S. Marines by the legendary Gene Tunney, who would become Stephenson’s good friend and business partner. Stephenson invented a kind of early wireless technology, traveled around Europe to grow his business, and was a millionaire by age thirty.

  Stephenson became Winston Churchill’s intelligence point man. Churchill charged him with establishing a global network of information gathering and sabotage to help besieged England survive the onslaught from Germany. No armchair administrator, the man called “Intrepid”—Churchill gave him the code name—took on certain dangerous missions himself.

  “He is the man who became one of the great secret agents of the last war,” Ian Fleming wrote of Stephenson. Fleming, creator of James Bond, one of the best-known fictional spies of all time, was an intelligence agent for the British Navy on a plainclothes mission when he first met “Intrepid,” describing him as “a man of few words” who possessed “a magnetic personality and the quality of making anyone ready to follow him.” Added Fleming, “He also used to make the most powerful martinis in America and serve them in quart glasses.”

  The British secret operations executive office in London entrusted Stephenson with the mission of destroying LATI in South America “by any means necessary.” With full discretion, Stephenson considered his options. A coup changing the Brazilian government was a possibility, but the potential consequences of an attempt, successful or not, were considered too grave to risk: if traced to the British undercover office in New York, the operation could jeopardize the BSC’s still-covert cooperation with officially neutral Washington. President Roosevelt supported the British intelligence team only in secret because isolationists, such as those in the America First Committee, were a strong political force, constantly challenging the president, who was up for reelection. Stephenson would do nothing to threaten the position of the American president upon whom so much depended in England’s darkest days, from circuitously supplying warships and armaments to sharing intelligence.

  Another option was to blow up a LATI commercial flight as an unmistakable warning to the Nazi network in Latin America. There were occasions when civilian lives had to be sacrificed, went the thinking of the time. Stephenson decided the need to crush LATI, however, was not such an occasion; besides, as a pilot he could not condone the deaths of fellow pilots if an alternative could be found.

  Instead, the intelligence chief sought out the skills of operatives at Camp X, a clutch of fields and buildings forty miles from Toronto, a school for assassins and a factory of dirty tricks carved out of Canadian farmland. Describing the place in his memoirs, Stephenson used the language of his boxing life: Camp X was “the clenched fist,” he said, “preparing for the knockout.” Forty miles of Lake Ontario, rough and icy cold much of the year, lay along one side like a forbidding moat. A perimeter of dense scrub and woods around the rest discouraged accidental discovery. A corps of security agents trained in silent killing patrolled constantly against the possibility of deliberate intrusion.

  Stephenson knew Camp X well, because he had helped to create it earlier in 1941. By September the camp already housed classrooms, stage sets, and a massive radio transmission station where men and women from more than a dozen countries trained as spies, saboteurs, and recruiters of resistance forces. Before radio operators were flown out and dropped behind enemy lines, they learned Morse code at Camp X, practiced new identities, and underwent realistic training to prepare them for harsh interrogation should they be captured, which most of them were. Five future directors of the Central Intelligence Agency and its predecessor, the Office of Strategic Services (OSS), trained at Camp X.

  Alongside the professional spies labored forgers, chemists, tailors, Oxford tutors, and filmmakers such as the Korda brothers, Alexander and Zoltán, famous for Hollywood successes such as The Thief of Bagdad and The Private Life of Henry VIII. Artists created locales to mimic corners of Nazi-occupied territories in Europe where operatives would carry out their missions, such as the spectacular murder of SS general Reinhard Heydrich, an architect of the Final Solu
tion, outside a Czech village in 1942.

  A spy’s spy, “Intrepid” believed that the best method to complete a mission—the smartest way—used violence only as a last resort. From his New York office, Stephenson contacted a Camp X unit called Station M (for “magic”). Headed by a master illusionist famous among British schoolboys before the war, Station M invented ways to fool the enemy, even creating the semblance of air bases, troops, or seagoing fleets at various points of the world. Once, on a clandestine visit to Camp X, FBI director Hoover was amazed to look out from a hut to see what appeared to be several German warships on the Great Lake, an illusion produced by the Station M master with mirrors and toy boats. Station M also manufactured special inks and forged documents that could be sneaked into diplomatic pouches or caused to materialize on desks where they might do the most harm. Stephenson had an idea: could Station M produce a letter that would pass all tests to look like a missive sent from the president of LATI airlines in Rome?

  The creation of a believable letter entailed a series of steps that went far beyond finding an agent with language skills in colloquial Italian. Stephenson requested the BSC chief in Rome to pilfer a sheet of paper from LATI headquarters that carried the personal letterhead of company president General Aurelio Liotta.

  Before forgers in Canada could create a convincing forgery, however, authentic primary materials had to be made from scratch. This was not beyond the reach of the experts at Station M: in order to outfit spies who would infiltrate Nazi strongholds, operatives in Europe regularly collected items such as baggage decals, belt buckles, and a host of wardrobe elements for duplication at the Canadian site, lest a secret agent be betrayed in the field by some fault in appearance. Likewise, a letter putatively written in Rome must appear on what seemed like local paper. That meant finding straw pulp, because in much of Europe, where trees were scarcer than in the Americas, paper was manufactured by pulping annual plants—mostly wheat, but also rye and oat.