The Chairman

by Kai Bird

  The morning after the explosion, The New York Times reported that ninety-nine chemical and ammunition plants had been damaged or destroyed since the outbreak of the European war. And six months later, on January 11, 1917, a munitions factory in Kingsland, New Jersey, caught fire; within four hours, eight carloads of dynamite and some five hundred thousand artillery shells exploded. The next day, two hundred tons of gunpowder exploded at a Du Pont factory in Haskell, New Jersey. Such a string of accidents, all destroying ammunition bound for the European Allies fighting Germany, caused investigators to suspect sabotage.

  After Germany surrendered in 1918, an international arbitration body, the German-American Mixed Claims Commission, was established to settle the war-damage claims of both German and American companies. A panel of two commissioners, one each from Germany and the United States, plus an “umpire,” proceeded to compensate hundreds of companies. For years, however, the Commission left unresolved the sabotage claims arising from the Black Tom and Kingsland explosions. These were difficult to prove and politically controversial.

  By the time McCloy was brought into the case in 1930, any leads had long gone cold. To make matters worse, the lawyer initially hired to represent the sabotage claims, Amos Peaslee, was unorganized and, as the date for the Hague hearing approached, he found himself overwhelmed. Barely six weeks before the scheduled arguments, the Germans had filed 966 pages of fresh exhibits, leaving him no time to research credible rebuttals.2 In panic, he requested assistance from Cravath, which represented one of the sabotage claimants, Bethlehem Steel Company. As one Cravath lawyer later explained, rather uncharitably, “He was getting kind of desperate, and Peaslee, when he was losing, always wanted to get someone else to help.” So McCloy found himself taking a train from Paris to The Hague. He was told that all he had to do was show up and “wave the flag.”3

  The hearings took place in the chambers of The Hague’s gloriously ornate Peace Palace, built by Andrew Carnegie. By 1930, the Peace Palace had hosted dozens of such tribunals. With its delicate spirals and elaborately carved arches, it seemed as fragile as the whole idea of an international court of justice. As he entered the Palace and heard the sharp echo of his heels clicking on the gaudy marble floor, McCloy was intrigued by the atmosphere of the place. At thirty-five, he considered himself to be a hardheaded man, and certainly not naïve about nation-state conflicts. He believed in military preparedness in the tradition of Grenville Clark and Teddy Roosevelt, but he was also a lawyer’s lawyer, and, like Clark, he harbored hopes that someday international law would adjudicate more sovereign disputes than force of arms. Influenced by Clark, he believed the only thing wrong with the League of Nations was that it did not have stronger judicial powers. For the moment, however, The Hague was the closest the world had to an international court. Taking his seat in the Peace Palace’s great hall, he felt a little as if he had been invited to argue a case before an international version of the Supreme Court.

  After only a few days of listening to the commissioners question Peaslee’s evidence, McCloy cabled Cravath in New York and predicted that the suit would be defeated.4 Peaslee, he thought, was a pleasant enough fellow, but rather incompetent. He didn’t have the Cravath discipline, and in this case he simply hadn’t gotten his “ducks all lined up in a row.” This was all the more unfortunate since Peaslee had been handed some rather startling evidence by the chief of British naval intelligence during World War I, Admiral W. Reginald Hall.

  Affectionately known as “Blinker” Hall because of his habit of rapidly blinking his eyelids when addressing his men, the admiral was a living legend in the intelligence profession. Hall had created “Room 40” in London’s Old Admiralty Building, where throughout the war German wireless cables were intercepted and painstakingly decoded.

  Peaslee had charmed the admiral in their first meeting in London, and subsequently persuaded him to hand over a treasure trove of 264 decoded German intelligence intercepts which described German sabotage activities in the United States during the period of American neutrality, 191417. The most incriminating document came in the form of a cable from German Foreign Undersecretary Arthur Zimmermann to the German Embassy in Washington, D.C. Dated January 26, 1915, the cable informed the German military attaché in Washington, Captain Franz Joseph von Papen, “In the U.S. sabotage can be carried out in every kind of factory for supplying munitions of war.”

  The son of an old Catholic noble family, von Papen had been posted to America in 1914 as military attaché. With an extraordinary budget of several million dollars, he directed an extensive network of sabotage agents operating in Canada, where a number of munitions factories and railroad bridges were blown up. Von Papen’s brazen activities eventually came to the attention of U.S. authorities, and in December 1915 he was expelled. All of this was part of the public record when Peaslee took on the sabotage cases at The Hague. Von Papen himself did not deny the sabotage operations in Canada, but he insisted that he had never engaged in such activities on U.S. soil.

  McCloy could see that the Zimmermann cable alone was not sufficient to prove the case. But as Peaslee explained to him at The Hague, the intelligence intercepts obtained from Admiral Hall had provided him with another lead. Although none of the intercepted cables specifically mentioned Black Tom, they did name a number of von Papen’s agents, including Friedrich Hinsch, Fred Herrmann, and Paul Hilken. After considerable detective work, Peaslee had tracked the last of these agents, Hilken, to his home in Baltimore.

  Hilken had been born into a wealthy German American family; his father was the honorary German consul in Baltimore. The family had for years been the shipping agent for the large German shipping company North German Lloyd, and now Paul Hilken was a cultivated gentleman of leisure.5 When initially confronted by Peaslee, he was evasive, changing his story several times. Not until May 16, 1930, did Hilken finally agree to bare his soul; on that date, he formally refuted his previous sworn statements and related a most remarkable story.6

  Hilken claimed that, at the outbreak of the war, von Papen had taken over a network of German American security guards employed by Paul Koenig, chief of security for the Hamburg-Amerika passenger-ship line. Hilken said he was recruited into the von Papen network, and early in 1916 spent two months visiting Germany. Sometime in February 1916, he had a meeting with the German General Staff in Berlin. There he met Frederick Laurent Herrmann, a Brooklyn-born German American who had been recruited in 1914 into the German Admiralty Secret Service at the age of nineteen.7

  For the next two years, Herrmann, a tall, blond-haired youth, lived in England, ostensibly studying forestry but actually spying on the British fleet. In February 1916, he was expelled by the British, who had suspicions, but no proof, of espionage. Herrmann was then recalled to Berlin, transferred to the German Army’s Secret Service, and, along with Hilken, given instructions to organize the destruction of munitions plants in the United States and the distribution of anthrax germs among cavalry horses and cattle bound for Europe.

  To accomplish this task, he was given several hundred newly designed “incendiary pencils.” Though one could actually write with them, these lead pencils contained a glass tube of sulfuric acid, chlorate of potash, and sugar. When the tip of the pencil was cut with a penknife, the sulfuric acid would slowly seep into the mixture of sugar and chlorate of potash, eventually producing combustion.8 Simple in design, these “pencils” were perfect instruments for the surreptitious setting of fires in munitions plants.

  In addition, Hilken told Peaslee that he was willing to testify about the activities of Friedrich Hinsch, the captain of a German ship that docked in Baltimore in September 1914. Hinsch had contacted Hilken, who gave him cash, a supply of incendiary pencils, and some deadly anthrax serum. Hilken claimed that Captain Hinsch quickly organized a team of Negro dockworkers and day laborers to inject thousands of mules, cattle, and horses with the anthrax serum as they were boarded on ships bound for the European battlefields. Sometimes as many as half
the animals would die crossing the Atlantic. Shortly after the Black Tom explosion, Hilken said he had paid Hinsch $2,000 for pulling off the job.

  While Hilken’s new affidavit had the German High Command linked to the alleged sabotage at Black Tom, Hilken was unable, at least in 1930, to produce any supporting documentary evidence. In order to corroborate his testimony, Peaslee tracked Fred Herrmann down in Santiago, Chile, where he had found a job after the war with the National City Bank of New York. Herrmann’s subsequent testimony substantiated Hilken’s story, but, unfortunately for the American claimants, before leaving Chile, Herrmann, in need of money, had gone to the German Embassy and signed a statement denying the sabotage charges. Obviously, this fact would be used by the Germans to discredit Herrmann’s testimony before the Commission.

  Peaslee had other pieces of evidence to present at The Hague, but these too were either denied outright or discredited by the German lawyers. By this time, von Papen was a prominent member of the Prussian legislature and a leader of the monarchist Catholic Center Party. He had married the daughter of a wealthy Saar industrialist, and in just two years he would become the chancellor of Germany. He denied ever having heard of the Black Tom explosion. And he ridiculed the charges against him by arguing that the Zimmermann telegram was at most “only an authorization, and not an order” to engage in sabotage.

  McCloy saw that these categorical denials from high-ranking German officials had greatly weakened the American case. He watched helplessly as Peaslee introduced one affidavit after another, only to have the German lawyers cast doubt on their reliability. As fantastic as their tale of spying seemed, McCloy wanted to believe in the Hilken-Herrmann story. It was a pity, he thought, that Peaslee had not come prepared with sufficient documentary evidence to support the affidavits of witnesses who were, after all, fairly disreputable characters, self-confessed secret agents, murderers, and men who had proved themselves willing to lie under oath.

  The commissioners evidently came to the same conclusion about Peaslee’s case, for on November 15, 1930, they announced their unanimous decision in favor of Germany. They did not doubt that Hilken and Herrmann were in fact German agents operating under the orders of the German General Staff. But because they had changed their stories so often, both the German and the American commissioners discounted their claims to have been responsible for Black Tom. Herrmann and Hilken were “liars, not presumptive, but proven.”9

  The American claimants nevertheless decided to file an appeal. For the next four months, McCloy devoted all his time to Black Tom, reviewing the old evidence and seeking new evidence throughout Europe.10 Carrying pictures of Hinsch, Herrmann, and Hilken, he spent much of his time in Germany, trying to track down possible witnesses.11

  “Every sort of thing was involved,” he later recalled. “I was having to meet shady kinds of characters in dives, the worst kinds of bars, even houses of ill-repute.”12 He often took Ellen with him on these detective missions, and on one occasion had her tail a suspect.13

  Some of the leads proved illusory. In January 1931, he was given the name of a Russian count living in Berlin who might be helpful. Count Alexander Nelidoff was rumored to have in his possession documents that could prove Germany’s guilt in the sabotage cases. It took him weeks to locate the count in Berlin; even then, McCloy was worried that Nelidoff could not explain how he had acquired the documents. But from his description of them, McCloy thought they might easily be worth the asking price of a couple of thousand dollars. One day, as they sat negotiating in his hotel room, the telephone rang. It was a call from the Cravath office in Paris. While talking on the phone, McCloy decided he needed to take some notes and, not having a pencil handy, looked about the room. Seeing two mechanical clip pencils in Nelidoff’s vest pocket, he gingerly leaned across the table and plucked one.

  With a look of sudden panic crossing his face, Nelidoff jumped up, pulled a handkerchief to his face, and fled from the room. Startled by this strange behavior, Ellen, who as usual had accompanied McCloy to Berlin, went to the door and looked out. Nelidoff was standing in the corridor, shaken, and now embarrassed. He went back inside with Ellen and, when McCloy got off the phone, explained that the other mechanical clip pencil was actually a tear-gas pistol. He reached for the other pencil from his vest pocket, slowly took off its cap, and showed the McCloys four small pellets.

  “If you had snatched this from my vest,” Nelidoff said, “instead of the pencil, a poisonous gas would have been released, and we should have been unconscious in a few seconds.”

  His suspicions aroused by this odd little melodrama, McCloy told the count he would pay him his price but only after the documents had been authenticated by an expert. On April 18, 1931, Nelidoff turned over a batch of papers, any number of which could have led the Mixed Claims Commission to reverse its decision. After a cursory examination of the documents by a handwriting expert, McCloy paid Nelidoff several thousand dollars and then cabled news of his discoveries to his clients in New York.

  Only then did McCloy call Admiral Hall and inquire as to Count Nelidoff’s background. Was he known to British intelligence? The obliging Hall contacted his colleagues at the British Secret Intelligence Service, and one of their number gave McCloy a full briefing on Nelidoff. To his consternation, he was told that Nelidoff was the chief of a network of private forgery experts based in Berlin. A free-lancer in the intelligence business, he was known to have been used by the German Secret Service to plant forgeries with foreign governments. McCloy had become the victim of a double agent, an experience that underscored for him the value of the kind of intelligence bureaucracy run by the British.

  It was a shock for McCloy to learn that the case “was riddled with forged documents.”14 It was one thing for the Germans to withhold evidence or even offer testimony that told less than the full truth. Such aggressive tactics were to be expected. But to hire an agent to plant forged evidence before the Commission was beyond the pale.

  At just about the time McCloy was entangled with Nelidoff, new, ostensibly genuine evidence was found across the Atlantic. Hilken and Herrmann, angered by the Commission’s harsh pronouncement that they were “liars, not presumptive, but proven,” renewed their search for documentary evidence to support their stories. Hilken claimed to have found in his attic a bizarre secret message written in lemon juice on an old pulp magazine called Blue Book. The secret writing was legible only after the page had been warmed with a hot iron. The message was partly written in numbered code, the numbers referring to pages in the magazine where pinpricks had been made in certain letters. After substituting the pinpricked letters for the numbers from the page with lemon-juice writing, anyone could read the message. It had been sent in April 1917 by Herrmann in Mexico to Hilken in Baltimore, and was so indiscreet as to mention the names of the individual saboteurs responsible for the explosions at Black Tom and Kingsland: two Austrian anarchists, Michael Kristoff and Theodore Wozniak. (Kristoff was presumed dead, and Wozniak was a paid witness for the German case.) The secret message also named the saboteurs’ superiors, Hinsch, Frederick Maguerre, Rudolf Nadolny, Herrmann, and Hilken. The message even referred to the Black Tom explosion. If it could be accepted by the Commission as genuine, the “Herrmann Message” alone proved the American case. Peaslee was elated, thinking the secret message was all the documentation the Commission needed to reverse the Hague decision. But McCloy thought his colleague was once again underestimating their German adversaries.

  After nearly fourteen months in Cravath’s Paris office, McCloy boarded a French passenger liner in Le Havre. Six days later, on June 29, 1931, the ship docked in New York harbor. He had returned just in time to help file before the Commission the final petition to reopen the Black Tom case based on the “Herrmann Message.” And as he had feared, the Germans had come up with a means to question the authenticity of this curious new evidence. They now argued that Herrmann had indeed written the message with invisible ink onto a 1917 Blue Book magazine—but that he
did this in 1931, not 1917. Consequently, for a time the case became a battle between the two sides’ handwriting experts. Unless McCloy could somehow prove that the Germans had tampered with the evidence, it was beginning to look as though he would fail as Peaslee had failed.

  McCloy was beginning to acquire a philosophy about the intelligence business. Early in 1932, he eagerly read a best-selling book on intercept intelligence by Major Herbert Yardley, who, until he was dismissed by Secretary of State Stimson in 1929, had been in charge of the State Department’s secret “Black Chamber,” where transatlantic cables were intercepted and decoded throughout World War I and afterward.

  Henry Stimson thought Yardley’s American Black Chamber was a “very disturbing book,” and he had tried to prevent its publication. Historians have since argued whether Stimson actually ever made the famous comment “Gentlemen do not read each other’s mail,” but there can be no doubt of his disapproval of cable and wireless intercepts. “It disturbed me a great deal,” Stimson wrote in his diary on February 20, 1933, “but made me very thankful that I had stopped the whole nefarious practice in the beginning of my term. . . .” McCloy disagreed; his dealings with the British and German secret services convinced him that intercept intelligence was an integral part of any modern intelligence bureau. He was also delighted to see that Yardley’s book contained intercept material substantiating McCloy’s claim that German intelligence had been blowing up munition dumps in 1916. Some of the deciphered messages even mentioned the use of “lead pencil sticks” to cause explosions.

  The professional judgment of veterans of the intelligence game such as Admiral Hall and Sir William Wiseman gave him the confidence to persevere. Their belief that anything was possible in this wilderness of mirrors allowed him to hope that new facts could turn the case around. Still, he was disappointed when, on December 3, 1932, the Commission once again ruled in Germany’s favor. His only consolation was that this time the Commission’s vote had not been unanimous: the American commissioner dissented. McCloy took this as an indication that he should not give up.