Spying in America: Espionage from the Revolutionary War to the Dawn of the Cold War

27. The Spy in the Treasury: Harry Dexter White

201 27 The Spy in the Treasury Harry Dexter White Under Stalinist leadership the lineaments of the archetypal communist had entirely changed. The resolute and romantic organizer of street war had been put away into a museum. Into his place had stepped the iron bureaucrat—the well-dressed, soft-spoken, capable executive who sat in the boardroom or on the government committee. This man with a briefcase led a secret life of his own. Nathaniel Weyl, an underground member of the Communist Party of the United States of America. Quoted by Rees, Harry Dexter White The strains of recovering from the Depression and fighting a world war had already begun to affect Roosevelt’s health in his third term. His vice president during that term, the progressive Democrat Henry Wallace, was already contemplating his own cabinet choices if Roosevelt died in office. Wallace, however, clashed with conservative Democrats, and Roosevelt replaced him with Harry Truman on the ticket for his fourth term. This choice was a stroke of luck for American national security, because Wallace later said that he would have named Laurence Duggan secretary of state and Harry Dexter White secretary of the Treasury.1 202 The Golden Age of Soviet Espionage—the 1930s and 1940s Duggan and White were both Soviet spies. After Duggan was recruited in 1936, he passed classified documents to the Soviets for the next eight years as he rose to chief of the State Department’s Latin American Division and became a foreign affairs adviser to Wallace. His Soviet case officer described Duggan as a Communist sympathizer and “100 percent American patriot,” a seeming contradiction that plagued him through his espionagecareer .2 Dugganremainedastarry-eyedMarxistidealistbutareluctant spy, because he was troubled by Stalin’s purges, by constant fear of exposure , and the increasing concerns of State Department security officers about his loyalty. These security concerns led to his resignation from State in 1944. In 1948 he was questioned by the FBI regarding Chambers’s allegations against Hiss. Nine days later, he fell to his death from the sixteenth floor of his office building.3 Wallace’s other choice for a cabinet post, however, proved far more valuable to the Soviet Union than Duggan. Harry Dexter White was the most highly placed Soviet spy in FDR’s administration. White—one of Treasury Secretary Henry Morgenthau’s closest advisers—rose to the position of assistant secretary of the Treasury and was instrumental in establishing the World Bank and International Monetary Fund. His meteoric rise at Treasury mirrored Alger Hiss’s ascension at State. White was born in Boston in 1892 to Lithuanian émigré parents who had anglicized their name, and his early years portended a successful future. After serving in the army in France during World War I, he studied at Stanford University and received a PhD in economics at Harvard University. After a brief stint as an economics professor at Lawrence College in Wisconsin, he was among the liberal intellectuals drawn by Roosevelt’s New Deal to work in the administration. White entered the Treasury Department in 1934 as an analyst on banking and monetary policy. Parallel to his government work, sometime in 1935, he was introduced into the Ware Group (see chapter 26) and started to pass Treasury Department documents to the Soviets through Whittaker Chambers. White’s motivation was ideological and stemmed from his specific concerns about US economic policies. He gradually came to believe that New Deal economic reforms were insufficient and that the type of centralized control over trade and foreign exchange practiced in the USSR was essential to heal the world economy. And he had also been fascinated with 203 The Spy in the Treasury • Harry Dexter White Russia since college and at one point had considered pursuing a fellowship to study in Moscow.4 White never joined the CPUSA and was thus less subject to control by his handlers than the spies who pledged allegiance to the party. In attempts to exert more control, the Soviets contrived to find ways to remunerate White and other ideologically motivated agents without insulting them. In White’s case, however, the evidence suggests that the Soviets’ lack of full control had little impact on his prolific intelligence production and exercise of covert influence within the Roosevelt administration. In 1938 White was appointed director of monetary research for the Treasury Department. His career was progressing rapidly when his underground activity suddenly hit a roadblock...