One Man's Greed

INVESTIGATIONS One Man's Greed

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He was a peddler's son, a puny boy born in the shadow of the el in a Boston slum. At school his grades were not notable and hardly anyone noticed him--except the bullies. They picked on him. Even when he grew up and became a Doctor of Philosophy he had to take a job he didn't like. And then, suddenly, Harry Dexter White got his chance to show everyone how important he could be.

His chance came in Washington, in the U.S. Treasury Department. He got a job there, and he pushed and shoved and schemed his way upward until he was one of the most important men in the world. Before long, he was sneering publicly at Robert A. Taft, telling him haughtily in a session of the Senate Banking Committee that a certain monetary matter was beyond Taft's "knowledge and competence." He was telling big people what to do: he bullied Lord Keynes, the famed British economist. As a result of White's maneuvering, Winston Churchill unhappily put his "W.S.C." on a plan for postwar Europe which, if it had been carried out, might have resulted in the domination of Europe by Russia. He built a sort of substitute State Department in the U.S. Treasury. His influence on U.S. policy was massive, and while he used it, he also passed U.S. secrets to a Communist spy ring. Then, as his very importance began to build a trap around him, he died.

Who was Harry Dexter White? How did he get his power?

Life Beneath the El. White's parents were Jacob and Sarah Weit, who came to the U.S. from Lithuania (then a province of Russia). A peddler, Jacob moved into the hardware and crockery business, and at one time the family had four stores. Harry White was born Oct. 29, 1892, at 57 Lowell Street, Boston, in a crowded, busy, tenement district beneath the dust and roar of the el. A nervous boy, he belonged to a grade-school group that met one night a week at the Webster Literary Club, where each boy would write and read a composition and all would discuss them. When the family began to prosper, they moved to Everett, a Boston suburb, where Harry attended high school. His grades (79 in French, 85 in chemistry) gave no clear sign of his later brilliance.

Out of school, he first tried the hardware and crockery business, which had been left to him and two elder brothers by his father. Perhaps in revolt against Lowell Street, he thought for a time about being a farmer. He registered at the

Massachusetts Agriculture College (now the University of Massachusetts), where he was admitted conditionally in the fall of 1911; he had failed two entrance examinations: American history and civics. He stayed on only one semester, got an average of 80.8, then went back to selling hardware. Just six days after the U.S. declared war on Germany in April 1917, White (who had earned a 99 in military science in his one college semester) enlisted in the Army, was sent to officers' training school.

Just before he went overseas in 1918 (to serve with the 3O2nd Infantry, 27th Division), Harry White married Russian-born Anne Terry, a student at Pembroke College in Providence. A Phi Beta Kappa and later a successful author of children's books (e.g., Prehistoric America, Lost Worlds, Three Children and Shakespeare), Anne Terry White became an intense "liberal."

Just Like Adam Smith. Not long after ist Lieut. White came home from the war in 1919, he packed up and went to New York to become director of a settlement house. Once there, he decided to get a college education. He enrolled at Columbia University in February 1922, moved across the country to Leland Stanford as a junior three semesters later. The mature and married White was a different kind of student. He graduated (A.B.) from Stanford in 1924, "with great distinction" and also with a Phi Beta Kappa key. A year later, also at Stanford, he got his master's degree in economics. Despite his excellence as a student, he was never mentioned in any student publication.

After Stanford, White went to Harvard, where he worked toward his philosophy doctorate. Not until he got it, apparently, did Harry Dexter White become proud of his record. The listing he prepared for Who's Who starts with the Harvard degree, ignoring all of his life before that. He is remembered as a brilliant, bumptious student and instructor at Harvard, assertive and quick to argue. After he got his doctorate in 1930, he continued teaching economics at Harvard and also taught at Boston's Simmons College. But he felt he was not going any place at Harvard, and he could find no other teaching job in the East. In 1932 he took the best job available--associate professor of economics at Lawrence College, Appleton, Wis. (the home town of U.S. Senator Joseph McCarthy).

At Appleton, White felt, and said he felt, marooned, and that his job was beneath his talents. He is remembered there as an excellent instructor but a distant, arrogant man who "thought the White opinion was the only opinion." No Marxist, he taught economics "as conservatively as Adam Smith," said one of his superiors. 'While there, he published his Harvard thesis, The French International Accounts 1880-1913, in book form. Its most interesting lines are in the acknowledgments. There is one to Dr. L. (for Lauchlin) B. (for Bernard) Currie, who read the manuscript, and one to Dr. A. (for Abraham) G. (for George) Silverman, who clarified certain points. Both Currie and Silverman later were linked with White in testimony about espionage rings.

"The Waterbug." Harry Dexter White was plucked out of Appleton and taken to Washington in June 1934 by Professor Jacob Viner, the internationally known economist, then a Treasury official. White went to the capital only for a summer assignment: to study the gold standard and international trade. By fall he had settled down to a long career in the Treasury--and an interesting career it was. He was not a great economist. His specialty was international payments, which does not require much theoretical ability but does pose intricate problems, as chess does. In the 1930s, White wrote some rather original memoranda on the modified gold standard, but he published only one book in his life: his Harvard thesis. His consuming interest was not in economics for its own sake but as a path to political power. He once told a friend that he had originally planned to study government, "but pretty soon I realized that most governmental problems are economic, so I stayed with economics."

He could hold his own in technical arguments, but his greatest talent was his ability to put a technical point in broad, political perspective and reduce it to plain English. An associate recalls: "He could talk economics in kindergarten terms." This was important because his boss as Secretary of the Treasury was Henry Morgenthau Jr., who had every reason to appreciate a man who could talk in kindergarten terms.

White soon became a forbidding figure at Treasury. A stocky little man with a cropped brush mustache that twitched when he was nervous, he lunged around the corridors with a jerky gait. He was a ruthless martinet with subordinates, bluntly critical of those he considered his intellectual inferiors--and that included just about everyone. He was intolerant: a man who opposed Harry White was likely to fall under suspicion of being "pro-Nazi." He worked and schemed constantly, slept and played little. Said one of his associates: "He ranged everywhere, like a waterbug."

Harry White cared not at all for comforts or luxury. What he wanted was power, and he got more and more of it.

Within four years after he started at Treasury, a new division, Monetary Research, was created at his suggestion. The logical choice to head the department: Harry Dexter White. To push himself ahead, he flattered his superiors shamelessly. He used to tell his staff members that he learned the trick of flattery as a salesman. He could always sell a man after a compliment, he said. His advice: "You can't pile it on too thick."

This gave some staff members an idea. If the boss thought that technique worked so well, maybe it would work on him. They tried it, and work it did. When an employee would tell him that he was a greater economist than Britain's Lord Keynes, the man White envied most, White would preen himself. The Communists, too, learned that White could be flattered. Their technique was revealed when a baffled Washington carpenter named Harry White received a container of caviar, then a case of vodka, and then an engraved invitation to a social occasion at the Soviet embassy. Through a mistake in addresses, Carpenter White had received Harry Dexter White's flattering mail from the Soviet embassy.

Willing & Witting. As head of Monetary Research, Harry Dexter White had one of the most remarkable personnel gimmicks in Washington. His funds did not come from Congress, but from profits of the $2 billion revolving stabilization fund. This enabled him to hire his staff without the usual civil service red tape. As a result, he surrounded himself with many employees who might not have passed even the loose scrutiny of the day. Some of them took refuge in his agency after having security-clearance trouble in other jobs; at least five of them later ducked behind the Fifth Amendment, refusing to say whether they were 1) Communists, or 2) spies, on the ground that an answer might incriminate them. Among these were Frank Coe, A. George Silverman, Harold Glasser and William Ludwig Ullmann.

No economist, Ullmann rose rapidly in White's division, partly by using White's technique of flattery on White. At one time Ullmann used to pick White up in the morning and drive him home at night, going three or four miles out of his way to do so. Ullmann's hobby was photography. He once advised an associate to buy an Exakta camera because it had an attachment that was most useful in photographing documents. Ullmann shared a house with Nathan Gregory Silvermaster. named by Elizabeth Bentley as the head of a Communist spy ring. Silvermaster and Ullmann have both refused to affirm or deny that they were Communists, or that they were spies.

Whittaker Chambers, former Communist courier, outlined his dealings with White in great detail. The Treasury official, he said, was probably not a member of the Communist Party, but he was its willing and witting tool. He handed secret documents over to the spy ring for copying, and when he was dealing with Whittaker Chambers, he wrote a fortnightly summary of the secret documents that passed over his desk. One of these summaries, in White's own handwriting, was among Chambers' famed pumpkin papers.

During the war, White could supply information far beyond his own field because he had pushed through a policy making the Treasury Department a nerve center for secret war information.

To show the Communists' "gratitude," Chambers once gave Oriental rugs to White and three other participants in his espionage ring. Some years later, a member of a different spy apparatus, with whom White was working, saw the rug and said: "Why that looks like one of those Soviet rugs." While White shifted nervously, there was an embarrassed silence. The next time the associate visited White, the rug had disappeared.

Analyzing White's motives, Chambers found that the Treasury man "enjoyed the feeling that he was in direct touch with 'big, important people.' " In his book, Witness, Chambers recalled White in this passage: "There is Harry Dexter White. I see him sauntering down Connecticut Avenue at night, a slight, furtive figure. I am loitering near the Ordway Theater, where he has insisted (probably out of laziness) that I meet him for the third time in a row. Yet he is nervous at the contact, and idles along, constantly peeping behind him, too conspicuously watchful . . ."

There is corroboration of Chambers' word on White. Ex-Communist Agent Elizabeth Bentley told congressional committees that White was a key man in the Red spy ring; that he not only delivered information to her associates, but also pushed Communists into strategic jobs. At a hearing of the Senate Internal Security Subcommittee on May 29, 1952, there was this exchange between Michigan's Republican Senator Homer Ferguson and Miss Bentley:

Ferguson: What were your avenues for placing people in strategic positions?

Miss Bentley: I would say that two of our best ones were Harry Dexter White and Lauchlin Currie [who was a presidential assistant]. They had an immense amount of influence, and knew people and their word would be accepted when they recommended someone.

In its files, the FBI has additional, independent information about White that confirms the Chambers-Bentley testimony. This evidence shows repeated contacts between White and Gregory Silvermaster. One of Attorney General Herbert Brownell's problems: much of this evidence was obtained by wire tapping, and it is inadmissible in court.

More Important: Influence. Far more important than White's espionage activity was his influence on policy. White became the No. 1 brain at the command of Secretary of the Treasury Morgenthau. Although he hated rich men, White used his old flattery plan on Morgenthau, would often tell him: "Let your instincts be your guide, Mr. Secretary; your instincts are usually pretty good." Morgenthau, who has 900 volumes of diaries about his Washington work, has steadfastly refused to talk about his late assistant.

With White constantly at Morgenthau's elbow and ear, the Treasury Department became an important voice in wartime diplomacy, and it was a leading planner for major postwar policies. Morgenthau sat as chairman of an interdepartmental committee on postwar economic planning. White drafted the basic plan for the International Monetary Fund and the World Bank, set up at Bretton Woods in July 1944. It was in this connection that White's general views prevailed over those of Britain's Lord Keynes. In a meeting once, White sneeringly called Keynes "Your Royal Highness." Keynes was offended at what he considered an insult to the Crown.

One of White's greatest triumphs, although a short-lived one, was the Morgenthau plan for postwar Germany. The plan called for destruction of nearly all German industry, and reduction of Germany to a "pastoral" state, plus early withdrawal of all U.S. troops. This, of course, would have left Germany--and Europe--an easy prey to Communist domination.

After White wrote the plan, Morgenthau, bypassing the State and War Departments, took it to the Quebec Conference in September 1944. There, Morgenthau and White pushed through approval of the plan by Roosevelt and Churchill. White had taken pains to inform Lord Cherwell. Churchill's personal assistant, that British requests for U.S. funds would be greeted with much greater favor if Britain approved the White-Morgenthau plan. When the agreements were being initialed, F.D.R. suggested that Churchill initial the German one first and then an economic agreement that would lead to an additional loan to Great Britain. Asked Churchill: "What do you want me to do? Get on my hind legs and beg like Fala?"

At that time, hardly anyone on the Allied side wanted an easy peace for Germany. But when the details of White's Morgenthau plan leaked out, the plan was widely condemned. The most important group in favor of the plan was the World Communist Party. F.D.R. soon abandoned it. Churchill, who had believed from the first that it would never become a reality, reported in the latest volume of his memoirs, with obvious satisfaction: "With my full accord, the idea of 'pastoralizing' Germany did not survive."

The Double Play. On one international policy question in 1945, White found himself playing one hand under the table and one above board. The Russians wanted to print, for use in Germany, occupation marks that would be identical to American occupation currency. Elizabeth Bentley testified that White turned a sample of the currency over to the Communist espionage ring. When that sample failed to serve their purpose, the Russians put pressure on to get the U.S. printing plates released to them officially. White did that too, and the Russians printed millions of occupation marks, some of which were redeemed in U.S. dollars.

From the day he went to the Treasury, Harry Dexter White stopped pushing and scheming for only about a year. That was after the Nazi-Soviet pact in 1939, when he seemed to lose interest in the big political picture. His normally intense, hard-driving division relaxed. Before, he had guarded his staff jealously; in that year he began to lend his economists to other agencies. He explained to one of his unoccupied staff that his group had nothing to do with defense work.

After some 15 months in the doldrums, Harry White swung back into action, and his years of greatest influence were the early 19405. He kept on drawing plans until the day he left public service. A search through his papers at Princeton University (they were donated by his widow) last week showed that he had proposed 1) that the U.S. give Russia a $10 billion postwar credit, and 2) that the U.S. conserve its raw-material resources for the next two generations and import from Russia to meet domestic needs. This combination of plans, of course, would have been of great help to Russia.

"I'm Leaving." From his post as Assistant Secretary of the Treasury, White moved on in 1946 to become U.S. director on the International Monetary Fund, at a tax-free $17,500 a year. The current controversy centers around White's appointment by President Truman to that post. He held the job for eleven months, and then, one April morning, he announced to his startled boss, Belgian Financial Expert Camille Gutt: "I'll be out of here in an hour. I'm leaving."

White cleared every scrap of paper out of his office, packed his goods in crates, and rode off in the truck that carried the crates. Eleven months later White was called to testify before the New York federal grand jury, which was investigating Communist infiltration. The jury did not indict him. That was 20 months before Chambers identified the pumpkin-paper memorandum in White's handwriting.

In August 1948, after he had been denounced publicly by Chambers and Elizabeth Bentley, White demanded and got an opportunity to testify before the House Un-American Activities Committee. He sparred magnificently and arrogantly with the committee, got applause from the spectators, all the while admitting that he had been a close friend of at least ten Government workers who had been named as spies. Three days later, at his farm in New Hampshire, White suddenly died of a heart attack. Liberals cried that he was a martyr and used his case as the supreme example of 'witch-hunting.'

There the case lay for five years, until Attorney General Brownell revived it with the charge that Harry Truman had known that White was a spy when he appointed him to the Monetary Fund. Truman blurted that he knew "nothing about" the FBI report that Brownell used as the basis of his charge. Then he said that "as soon as we found White was disloyal, we fired him." Three days later, a new witness entered the strange case of Harry Dexter White.

In a formal statement issued to the press, South Carolina's Governor James F. Byrnes, Secretary of State under President Truman, flatly contradicted his old boss. Byrnes said that while he was Secretary of State he had personally discussed the FBI report with Truman on Feb. 6, 1946, and that the President was familiar with it. A memorandum in State Department files confirmed Byrnes's memory. Having read the FBI report, Byrnes had urged Truman to withdraw his nomination of White for the Monetary Fund post. After a hurried check with the Senate, said Byrnes, Truman learned that White had been confirmed that afternoon. Byrnes had three solutions to offer:

1) have the Senate reconsider its action,

2) call in White, confront him with the FBI report and force him to withdraw,

3) refuse to commission him.

President Truman did none of these. At that time Harry Truman's popularity index in the Gallup poll was beginning to decline. The 1946 congressional elections were less than a year away. The Republicans were preparing to attack, and the left wing of Harry Truman's own party was doubtful about him. If Truman had withdrawn the White appointment, howls would have risen from the right and left. Whatever his motive, the President signed White's commission. When he quit. Truman and Treasury Secretary Snyder wrote him letters of praise that laid it on thick enough for Harry White's taste.

After Brownell's speech, Truman said that White was fired "as soon as we found out he was disloyal." When was that? The bulk of the information about White's spying was available to Truman in February 1946. Little new evidence against White was developed between that date and White's resignation 14 months later.

Action at Dawn. While Jimmy Byrnes's contradiction of Harry Truman was still echoing, Illinois' Republican Representative Harold H. Velde reeled into the controversy, firing subpoenas from the hip. At 5 o'clock one morning, after sitting up alone in his Pekin, Ill. home, Velde, with an eye on the headlines, issued subpoenas for Truman, Byrnes and Supreme Court Justice Tom C. Clark (who, said Brownell, also saw the FBI report at the time Truman saw it). Velde did not get approval of his Un-American Activities Committee for this action. Committee Counsel Robert Kunzig explained that the committee just "had to get into the act."

Velde's clumping entry "into the act" was the political boner of the week: it made a martyr out of Harry Truman, who, as ex-President of the U.S., should have been immune from such summary practices. For 48 tense hours, the high command of the Republican National Committee put pressure on Velde to withdraw the subpoenas. Finally, Truman, Clark and Byrnes all refused to honor the subpoenas,* on the ground that the committee had no right to demand that they testify. (Byrnes's specific reason was that the committee had no right to summon a governor from his duties, though he added that he would be ready to testify in South Carolina. Truman and Clark based their refusals on the argument that the subpoena constituted interference by the legislative with the executive and judicial branches of the Government.) Velde agreed that he would not try to force them to testify, and moved off the stage.

Before the week was out, the Senate Internal Security Subcommittee, headed by Indiana's Senator William Jenner. had the ball. That was where the G.O.P. wanted the ball to be. The committee called two witnesses: General Harry Vaughan. formerly Truman's military aide, and Theron Lamar Caudle, onetime Assistant Attorney General. But their appearance was anticlimactic. Neither one added anything to the stories they had told reporters earlier (TIME. Nov. 16). Even "Sweet Thing" Caudle didn't provide a good quote for the press.

At the White House, Dwight Eisenhower tried to stay above the brawl, but reporters did their best to get him into it. At his news conference, the President said Brownell had come to see him a few days before the White charge was made. He had never met White/- and knew nothing about him, the President said, but he told Brownell to do his duty as he saw it. In answer to a question, he said he thought it inconceivable that Harry Truman knowingly did anything to damage this country. He added that he did not think Brownell had charged that Truman actually saw the FBI report. President Eisenhower's answers showed that he was not so well-informed on the case as he might have been.

Remakers of the World. The spies-in-government story won't lie down, won't go away. Harry White was not a freak; what he did was more or less repeated by a dozen or more other important men in the Roosevelt and Truman Administrations. Probably not one of them ever said to himself: "Now I am a spy," or "Now I am a traitor." That is not the pattern of 20th century treason.

The road to the political calamities of this era has been paved solid by good intentions, and traveled by men who wanted to help the world. They wanted to remake it. That can be a generous thought; but it can also be a supremely greedy and arrogant thought. A man who thinks that he is moving the nations can get the idea that law, rules, morals and loyalty do not apply to him.

Harry Dexter White got that idea. It destroyed him, and it cost his country dear.

*No ex-President has ever been subpoenaed before. Two court subpoenas were issued to President Thomas Jefferson in 1807 by Chief Justice John Marshall in the treason proceedings against Aaron Burr. Jefferson refused on both the grounds that no court could force him to "abandon superior duties," and because of "the necessary right of the President to decide . . . what papers . . . the public interests permit to be communicated." At least 16 Presidents, among them Washington, Coolidge and Hoover, have declined to supply Congress with certain requested information.

/-Harry Truman, in rejecting the subpoena, extended this principle to ex-Presidents, saying: "The doctrine [of separation of powers] would be shattered ... if [the President] would feel during his term of office that his every act might be subject to official inquiry and possible distortion for political purposes." Some constitutional lawyers doubted that Truman, as a private citizen, had a right to reject the subpoena without hearing what questions the committee wanted to ask. They said that he 1) would not have to answer questions relating to state secrets, but 2) would have to answer questions bearing on any charge of malfeasance or crimes that might be made against him. They divided on the middle ground of questions about his routine presidential acts. Some said he would have the same protection as if he were still President; others said no. Obviously Mr. Eisenhower does not remember all the Americans who lunched at his table in Europe during Worl'd War II. Secretary Morgenthau and White lunched with him at his mess tent in southern England on Aug. 7, 1944-Mor-genthau and White, then considering the postwar treatment of Germany, were pleased that Eisenhower favored a stern peace. Later, however, Eisenhower firmly opposed the Morgenthau plan.

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