Part 4: Wedge, Secret War Between the CIA & FBI ...A Poisoned Chalice

WEDGE 
FROM PEARL HARBOR TO 9/11 
HOW THE SECRET WAR 
BETWEEN THE FBI AND CIA 
HAS ENDANGERED 
NATIONAL SECURITY 
MARK RIEBLING
CHAPTER SIX 

A POISONED CHALICE 

IAN FLEMING KNEW from his attempts to mediate the Hoover-Donovan feud that Central Intelligence could not survive, let alone earn the respect of the British services, unless it was headed by someone willing to step hard on the FBI director’s toes. Those toes were “covered with corns,” as Bond’s boss warned him in Live and Let Die, but in October 1950 CIA finally got a director who did not care. He was the incarnation of everything Fleming and the British loved about America. New World culture might be corrupt—in Fleming’s words, “bad but plentiful food, shiny toys such as the automobile and the television, and the ‘quick buck’ ”—and its style might be dreadful —“chilly white nylon shirts with white points to the collars, garishly patterned foulard ties, overcoats with over-buttressed shoulders”—but James Bond envied the American spirit. In Americans there still lived the rugged energy and individualist drive which had characterized England’s Victorian age. “We don’t show any teeth any more—just gums,” a disillusioned old boy would tell Bond, but American intelligence had men who could still bite. CIA now had the man whom Churchill himself had nicknamed “Bulldog,” and it was due to this man, more than any other, that the British were eventually forced to acknowledge the superiority of America’s Central Intelligence, and J. Edgar Hoover its permanence. 

Yet his tenure would also climax in what Agency and Bureau men would later call one of the “lowest” times in the history of inter-agency relations, for Hoover came down hard on suspected communists in the Agency, and investigated one outgoing CIA director as a possible Soviet spy.

WALTER BEDELL SMITH, FBI files noted, was “a man of great personal force.” As CIA analyst Ray Cline recalled, “It was often said he was the most even-tempered man in the world—he was always angry.” That irascibility had made the career military officer a valuable chief of staff for Eisenhower, in whose service Smith had gained an ulcerous stomach and more decorations than he could wear. He had never gone to college but had an encyclopedic mind, and his conversation was interlaced with lengthy verbatim quotations from military authorities. He was antisocial and yet could be, as an associate put it, “one of the most loyal friends you could have; if you were his man, he would really back you.” Unbending when he believed himself right, which was all the time, he was frank to the point of indiscretion, and had a proclivity for popping off. The only other bad thing you might say about Smith was that he drove himself too hard and always seemed to be tired. Said one of his colleagues, interviewed by the FBI during a background check: “If Smith is not the ablest, he is one of the three ablest men in my generation anywhere in the world.” Kim Philby, who worried after the defection of Maclean that Smith might suspect him of treason, put it somewhat differently: “He had a cold, fishy eye and a precision-tool brain…. Smith, I had an uneasy feeling, would be apt to think that two and two made four rather than five.”

In 1946, Truman had tried to project a tough military image in foreign affairs by appointing Smith U.S. ambassador to the Soviet Union. That was truly style over substance, for America’s military was shrinking by a million men a month, and her policy in Eastern Europe was no tougher than appeasement could ever be, but Smith did what was later regarded as a good job under strained circumstances. He had, for instance, personally undertaken the impossible task of negotiating with Stalin over the Soviets’ Berlin blockade. By March 1949, Truman had wanted a softer image to complement the tougher actions of his covert containment policy, and Smith came home to be commanding general of the First Army at Governor’s Island, New York, while his name began surfacing in press discussions about replacement of the indecisive Hillenkoetter.

On August 18, 1950, after Smith’s appointment was announced, the FBI’s New York SAC, Edward Scheidt, went to see Smith in his office at Governors’ Island. The D.C.I-designate was “extremely cordial and friendly in his manner, ” and “spoke in terms of the highest praise of the Director and the FBI,” Scheidt recorded. Smith said he knew he faced a difficult task at CIA, since it was easy for outsiders to criticize the secret work of an intelligence agency even when it had been well done. He was aware that CIA had many bureaucratic rivals, and ended the interview by telling the FBI man, “I’m afraid I’m accepting a poisoned chalice.”

But at least Smith acknowledged the difficulty of the situation, and would meet his problems square-on. Consulting Houston, Lyman Kirkpatrick, Dulles, and others, he decided to concentrate immediately on three areas: the Agency’s poor analytical capacity, which had failed to foresee the Korean War; its personnel, who were undisciplined and not always competent; and its relations with the FBI, which were extremely strained. Historians of CIA would credit Smith with “saving the Agency” by taking quick action in response to all three problems: setting up a new research-and-analysis division under Yale Professor Sherman Kent; starting a career officer training program under Colonel Matthew Baird; and dealing firmly but fairly with the director of the FBI.

When Smith arrived in Washington in early October, he moved with characteristic directness to arrange an introductory luncheon with Hoover in which inter-agency problems could be discussed. He found, however, that, despite Hoover’s offer “to call on me at any time we of the FBI may be of service, ” extended in a letter of congratulation on Smith’s appointment as DCI, the director was not available to see him. When passed the message that Smith would “await your pleasure regarding the available date, time and any other arrangements at your convenience,” Hoover only scrawled: “I am leaving the city at noon tomorrow & my return is indefinite.” For the moment, Smith would have to content himself with meeting DeLoach.

They saw each other on October 9, in Hillenkoetter’s office at CIA, where the outgoing DCI was boxing up his personal property. After going through the formalities —“General Smith advised of his admiration for the Director and the FBI several times during the conversation” and “indicated his desire to carry on the same close personal liaison relationship with the Bureau as his predecessor, Admiral Hillenkoetter, had enjoyed”— Smith followed DeLoach into the hall outside Hillenkoetter’s office and apologized, in a hushed tone, for the poor state of liaison during his predecessor’s tenure. Smith had heard from high officials in Washington that “various units of CIA” had attempted to “usurp the FBI’s jurisdiction from time to time” under Hillenkoetter, but he wished Mr. Hoover to know he would not tolerate such actions. He hoped Hoover would accept his invitation to discuss these matters during a confidential luncheon hour whenever it might be convenient. DeLoach said he would relay the CIA director’s thoughts to Mr. Hoover, and did so when he got back to his office at the Bureau.


“General Smith is quite brusque in personality,” DeLoach reported, “but he seems to be anxious to start off on the right foot at CIA. He has undoubtedly been briefed thoroughly by Admiral Hillenkoetter regarding the numerous occasions in which CIA has ‘blundered’ to the embarrassment of the U.S. Government and other intelligence agencies. He, of course, fully realizes that one of CIA’s principal claims to existence will be through the medium of cooperating with the FBI and receiving domestic intelligence material upon which CIA can base work of their own. General Smith, therefore, desires to set the initial stage in exhibiting cooperation…. The Liaison Section will be guided by your wishes in accepting General Smith’s invitation.”

Hoover did soon agree to a luncheon date with Smith, although exactly how it came about remains a matter of some dispute. William Sullivan would recall seeing a letter from Smith to Hoover during the first days of Smith’s tenure, which said, in effect, “Whether you, Mr. Hoover, like me or not has nothing to do with the cooperation between two government agencies and it is mandatory for you to give the CIA full cooperation within your limits. If it is not done, if you want to fight this, I’ll fight you all over Washington.” Sullivan alleged that “Hoover put his tail between his legs and backed off at that time, even requesting our CIA liaison man to set up a luncheon with him and Smith.” DeLoach, however, would maintain that the lunch, was scheduled only after he went to CIA to complain about intimidation of FBI legal attaches in foreign embassies. “Several former FBI agents, then serving with CIA, attempted to close down FBI operations as well as to wrest the title of ‘Legal Attachಡ’ from the FBI," 

DeLoach said. “It was necessary for me to call upon Gen. Smith at Mr. Hoover’s instructions and indicate that if such tactics persisted, the FBI would withdraw its personnel from all foreign offices, leaving the CIA to furnish the intelligence that was needed at the time.” As DeLoach told it, “Smith became very angry because the lowly FBI was telling him to go fuck himself. He was so mad that when he tried to lift his coffee cup it was shaking so badly that he put it down. He said, ‘I’ve got a mind to throw you out of my office.’ I said, ‘General, neither you nor any man in your agency is man enough to throw me out.’ Twenty minutes after I got back to the Bureau a handwritten message arrived from Smith inviting Hoover to lunch. Hoover told me to accept.”

That Sullivan and DeLoach should recall the mere setting up of a luncheon to be a matter of such melodrama is indicative of just how bad relations seemed. But the FBI and CIA directors did meet for lunch at twelve-thirty on October 17. 

“What seems to be the problem between the two organizations?” Smith asked as soon as they had sat down. “Why can’t we get along?”

The director of the FBI was equally direct. “One of the problems is the former FBI men working for CIA, who are continually proselytizing FBI men to join them, and criticizing the FBI, and in particular Bill Harvey.”

After the luncheon, Smith ordered his executive assistant, Lyman Kirkpatrick, to talk to the ex-FBI men in the Agency. “The law was laid down in unmistakable terms, ” Kirkpatrick later wrote. “There would be no attempt to recruit from the FBI. There would be no criticism of the FBI. Any problems were to be forwarded to the assistant director for solution. Any deviation from the instructions was to be the grounds for instant dismissal.” Harvey, especially, was ordered not to do anything that might unduly upset Hoover.

Yet despite the luncheon pledge “to establish a system for the quick solution of mutual problems, ” contacts remained spotty and tense. The FBI director apparently felt that CIA harbored its share of “pink pansies,” and it was probably in that context that Hoover told Smith, at their luncheon, that he would have DeLoach furnish a digested summary of a new book by Indiana zoology professor Alfred S. Kinsey, Sexual Behavior in the Human Male. (DeLoach brought it over the following day.) But in February 1951, when Smith asked for Hoover’s help in vetting employees, he was turned down because the FBI was “pretty busy.” He also became frustrated with Hoover’s inaccessibility. Smith always declined to speak to anyone else when Hoover was unavailable, according to FBI files, and simply “hung up.” A Bureau memo tersely stated in July 1951 that “Files reflect limited contacts with General Smith.”

Smith meanwhile enjoyed little success in trying to win from Hoover a seat on the Interdepartmental Intelligence Committee (I.I.C), the board of the “Big Three” (O.N.I, G-2, FBI) which Hoover had chaired since the days of the “twilight zone” problem. The I.I.C still met on matters of domestic and hemispheric security, but it refused to “perform estimates,” i.e., to analyze intelligence. Smith wanted to change that by obtaining an I.I.C seat for CIA. When these requests were rebuffed, the task of persuading Hoover was assigned to Allen Dulles, deputy director of plans. Smith laid down the line that Dulles should take: The matter was too important for those involved to quibble about the media of exchange or details of protocol. CIA was willing to give to the FBI whatever information it obtained overseas, but it would make no special collection effort for the FBI unless it got something in return. Dulles accomplished nothing, however, and in November Smith took up the task himself, at another luncheon with Hoover. The FBI director was genial, but adamantly refused the Agency a permanent I.I.C seat. The best Smith could get out of him was a pledge that CIA would be specially invited to attend the I.I.C whenever, in Hoover’s judgment, Smith’s people had a legitimate interest in the subject under discussion. A Top Secret CIA history noted ruefully, “In this case, Smith’s usually irresistible force came up against an immovable object.”

SMITH’S FAILURE TO WIN a seat on the I.I.C made it all too clear that FBI-CIA relations were in need of a serious overhaul, and by late 1951 there was agitation at both agencies for the removal of liaison officer DeLoach. “As time went on and as Hoover, Tolson and Ladd came to realize CIA was there to stay, things improved, but as long as DeLoach was CIA liaison there was constant friction, ” Lamphere recalled. “He reflected the Director’s negative attitude toward the CIA by working to exacerbate the problems between the two agencies, rather than to tamp them down.”

FBI Security Division man William Sullivan backed Lamphere’s assessment. “I heard about him from some former FBI agents who were working at CIA. The word around was that DeLoach was consciously driving a wedge between the two agencies. DeLoach played on the FBI Director’s jealousy by hinting to Hoover that the CIA was planning to extend its field of operations to the United States. To Hoover, that was like waving a red flag in front of a bull, and he was furious when he heard it. My CIA contacts saw through DeLoach’s game and came to me in alarm to discuss the ever-widening gap between the two agencies. They asked if I could do anything to remove DeLoach from his liaison job, but I didn’t have the authority.”

It seems likely that the DeLoach problem was raised at the second Smith-Hoover luncheon, in November 1951, from which DeLoach was conspicuously absent, and at which Smith set out the “personalities problem.” DeLoach was gone within a month, but in earning the ire of CIA he had not, it seems, provoked any disapproval from his own director; he was promoted to the FBI’s Inspection Staff. Reflecting on his tenure afterward, DeLoach denied that he had consciously tried to undermine the Agency, but admitted that his attitude toward it had been shaped by Hoover’s own, and by the overall delicacy and novelty of the situation. CIA liaison was a tricky job—“at times similar to walking a tightrope, attempting to maintain good relations between the two agencies while adequately representing the FBI. Special Agents who later handled the liaison assignment worked under vastly different conditions inasmuch as CIA had become a reality.”

“I’M SORT OF A LIAISON between the Central Intelligence Agency and our friends at the FBI, ” Felix Leiter told James Bond in Live and Let Die. They were drinking martinis in Bond’s room at the St. Regis Hotel. Bond had come to New York to help shut down an international bullion-smuggling ring, but first Leiter had to brief him on the jurisdictional subtleties. 

“It’s the FBI’s case,” Leiter said, “at least the American end of it is—but as you know there are some big overseas angles which are CIA’s territory, so we’re running it jointly.” Leiter’s job, as Bond understood it, was to “marry up the two halves” of the operation. 

The liaison officer seemed to know and enjoy his business, and he caused Bond to reflect that Americans could be good people. Leiter’s movements and speech were slow, but his eyes were sharp and his words were always well chosen. He had a uniquely intimidating charm, the kind that would make anyone think twice about crossing him. He was a tall man with flappy ears, huge rough hands, and a deep, rumbling belly laugh that made people want to be his friend. Yet Bond had the feeling that there was plenty of speed and strength in him, and that he would be a tough and cruel fighter, whether in a dark alley or in the mazes of bureaucratic Washington. 

As it happened, this was an uncannily apt description of the man who became FBI-CIA liaison officer in March 1952, the very month Fleming created Bond. 

• • • 

SAM PAPICH, THE SON of a Montana copper miner, had played football at Northwestern University. At 190 pounds he had been the lightest tackle in the Big Ten, but was scrappy and strong enough to lead a lot of plays— getting a full running start, targeting a defensive back, and just cracking up through him as the wingback motored past and fifty-five thousand people roared. After graduating with an engineering degree in 1936, Papich worked at a Chicago insurance firm during the day, went to law school nights, and on weekends was a tackle for the Chicago Gunners, a pro team financed by a lumber company. During his second pro season he messed up his knees and was finished with the football. He had meanwhile met some FBI agents through his insurance work, however, and soon his G-friends were recommending him to the FBI. It sounded like the kind of work he could do, and the agents he knew seemed truly worthy of their status as veritable American Knights. He joined in March 1941, and was quickly assigned to SIS.

Working under Bud Foxworth in New York, one of Papich’s early assignments was to follow Dusko Popov around the city, checking and double-checking on him, and helping unload the butterfly trays when Popov returned from Brazil. Papich himself was then posted undercover to Latin America, where he became known as an especially adept agent-handler. After the German surrender, he returned briefly to the States to marry, then was made legal attache in Rio de Janeiro. It was a nice place to start a marriage, but by 1947 CIA was taking over the FBI’s Latin American operations, and Sam and his young bride were feeling a little homesick. After turning down an offer from CIA, Papich made his way back to Washington, sat down with J. Edgar, asked specifically for San Francisco, and was sent to work there against the Mafia. After five years, he was recalled to Washington for headquarters assignment. He didn’t want to go; he didn’t like headquarters, though he was told he was going to be doing bank-robbery cases. But when he got there, they wanted him to be the new CIA liaison.

Papich didn’t particularly want the position. In the three months since DeLoach had moved on, another liaison officer, Charles Bates, had already tried the job, found it too frustrating, and requested reassignment. Given Hoover’s open dislike of CIA, the liaison post was bound to be one of the Bureau’s real “battle stations.” Still, Papich rather liked the idea of a challenge, an impossible mission, and he liked spy work. He was also willing to help out Hoover, a man for whom he had little personal affection but immense professional respect. Hoover needed someone to “buffer” him from daily headaches with the Agency, and his deputies had recommended that he appoint someone with good CI experience. The director would even throw in a nice raise and promotion. So Papich took the job.

He began by reading the FBI’s liaison files, which covered disputes concerning CIA’s creation, and subsequent misunderstandings about jurisdictions. “Reading those files gave me a picture of two warring agencies, ” Papich remembered. “It was that bad.” He felt that some of the FBI’s animus against CIA was justified, especially on the matter of OSS-CIA security problems, but thought much of the rest was misgiven. The FBI hadn’t grasped the whole intelligence picture, the scene. It hadn’t seen the importance of working with CIA on Venona, of sharing certain serials, of matching up the foreign with the domestic. Hoover had been biased against Harvey, and some agents had likewise confused the personal with the professional. The Bureau should have let certain things slide with Wisner’s OPC; there was no reason to ring J. Edgar’s bells every time Ukrainian nationalists met in the recreation center of some Eastern Orthodox church. Papich would have to undo much damage done.

But as he got out there and tried to undo it, Papich began to understand the difficulties that had confronted DeLoach. On one of his very first visits to CIA, he was offended by an officer who failed to show him common courtesy and respect, and they nearly came to blows. Soon afterward, Papich was in Bedell Smith’s office, and there was a disagreement, and Smith said to him, “You go back down to Ninth Street and tell J. Edgar to stick it up his ass!” Papich wasn’t about to tell Hoover any such thing, but he scribbled in his notebook, as if taking down the CIA director’s exact words, until Smith suddenly sucked in his cheeks and said, “Let’s calm down.” They put the work aside for a few minutes, and Smith took him into his side office, a little snack room, to have a cup of coffee, and the dispute began to clear.

The Smith episode taught Papich a valuable lesson: when CIA and FBI met outside the context of headquarters work, it was possible to relate as decent human beings getting on with the secret war against the Soviets. Thereafter, when he could, he met socially with Wisner, or Harvey, or whoever it was, playing tennis or going to football games. Such contacts had produced only limited benefits under DeLoach, but by summer 1952 it was clear that Sam Papich was helping to smooth relations.

“Most people at CIA liked Sam very much, ” Lawrence Houston said. “Difference in background was not a problem with Sam—I didn’t even know what Sam’s background was—but he was able to talk to anyone on a nice, easy basis. Sometimes we’d just sit around and talk. I liked him. He led a rough life, but he had the confidence of both sides, which was remarkable, in that job. He was one of the major influences keeping relations as good as they were.”

FBI agents agreed that there was a kind of sea-change under Papich. “Things improved when Sam took over liaison, ” Lamphere would say. “My view, shared I think by Sam, was that we should think first on what was good for the United States and that problems between the two agencies, which were inevitable, should be worked out without having them grow like a cancer. In many instances I thought the FBI was being unreasonable in making big problems out of fairly small ones.”

Perhaps the main reason relations began to improve was that Papich had the “mind-set” of a foreignintelligence officer, having been one himself. He was by nature “action-oriented, ” and empathized with those at CIA, such as Wisner, whose domestic adventurism raised Hoover’s hackles. Wisner made mistakes, and caused problems, but Papich always had more respect for the guy who was gung-ho than the one writing memoranda and coming up with do’s and don’t’s, but mostly don’t’s. Moreover, Papich understood the code of extralegal virtue that undergirded CIA’s entire operational existence. He knew there wasn’t a day when some foreign-intelligence officer, somewhere in the world, wasn’t violating the laws of some country, simply by being there. He also knew that, whatever foreign-domestic distinction might be mandated by the National Security Act, CIA had to operate in the United States. And on a more personal level, having lived undercover three years in Latin America, separated from a fiancee and family who knew nothing of his real activities, he sympathized with CIA officers who had to live two lives, undercover with the State Department in Greece or France, lying to their children, enduring marital breakups from the strains of a secret foreign life.

Of course, no matter how well Papich might have understood the clandestine mentality, he could not prevent it from clashing with Hoover’s own. Several imbroglios were caused when CIA’s Domestic Operations Division tried to recruit foreign officials in the U.S. without cutting Hoover in. CIA’s constant requests for bugs or taps or “bag jobs” (burglaries) on foreign targets in the U.S. were another “red flag” before Hoover’s eyes. Wisner would press Papich: “Why the hell can’t you fellas give us coverage on this case?” And Papich would have to say, “That’s illegal.” Not that the FBI didn’t “put out” for CIA under certain protections, such as an understanding with the Justice Department or the White House, but, overall, CIA’s extralegal activities in the United States caused problems for an agency that was supposed to enforce laws, not be a party to their breach. Though it was not yet clear to Papich in 1952, a whole chain of such disputes would mar liaison over the next two decades.

Still, it was inevitable that the Bureau should move closer to CIA under Papich—especially in Philby’s wake. After Philby was kicked out of the country by Bedell Smith in late 1951, just as DeLoach was kicked upstairs, FBI reliance on the British decreased markedly. If Hoover wanted any help at all in the foreign-intelligence sphere, he simply had to rely more on CIA. 

But Papich soon learned that this reliance would be tempered by the very factor that forged it. For if Philby’s treason had the effect of pulling FBI closer to CIA, it also served to feed a general climate of suspicion, in which the Bureau would probe Central Intelligence for Soviet moles.

IAN FLEMING HAD URGED William Donovan back in July 1941 to “Make an example of someone at an early date for indiscretion, and continue to act ruthlessly where lack of security is concerned, ” and much of CIA’s trouble during the McCarthyist period might have been avoided if Donovan had followed Fleming’s advice. Although William Quinn had thought the problem solved by Hoover’s vettings of the Bentley suspects in late 1945, it seemed probable that others, uncaught, had burrowed into the Agency. As CIA counterintelligence specialist James Angleton later acknowledged, there was “a very grave problem of the security standards of the Agency coming from World War Two … [when] O.S.S had many people who were loyal to General Donovan, but also had loyalties to the opposition.” Papich recalled that “CIA’s Office of Security ran a long campaign to ferret out those who potentially might be problems. I guess you could call it an ongoing housecleaning.”

Much of the suspicion came from Venona. The decrypted Soviet cables suggested that there had been at least fourteen Soviet penetrations in or close to OSS— meaning that Bentley had identified perhaps only half of the agents—and it did not take a professor of logic to grasp the implications for an agency dominated, at its highest levels, by OSS veterans. When Donovan was pushing the idea of a strong centralized intelligence organization in October 1946, Hoover’s deputy Michael. Ladd objected that such an entity would inevitably be a platform for leftist “coloration and biases, ” given “the number of the type of people Donovan proposes to employ, especially ‘foreign-born experts.’ ” Hoover agreed heartily, scrawling flatly on one memo: “O.S.S was a breeding ground for Commies.” Lamphere, Papich, and others who often secretly sided with CIA against Hoover did not think their director was wrong on this point. “The FBI knew that a number of O.SS. men ended up in CIA, and we knew of a number of instances where O.S.S had Communists in their ranks knowingly, ” Lamphere recalled. “This tainted our view of CIA in the early days.”

Great attention was paid to persons considered security risks on the basis of sexual preference. This was not motivated by homophobia per se, but by a fear that the Soviets could play on homosexuals’ own fears of stigmatization by threatening to “out” them if they did not cooperate. For instance, the prominent journalist Joseph Alsop had reportedly gone to both FBI and CIA and said that the KGB threatened to expose his homosexuality unless he did their bidding. The “homo factor” thus became important in FBI investigation of prospective CIA employees, including Donald Downes. The ubiquitous C.O.I-O.S.S operative, a burr in the FBI’s side in Washington, Mexico City, and Morocco, was denied the necessary security clearance when some O.S.S colleagues conceded that he was probably “a pervert.”

The homo factor hit closer to CIA’s operational heart in 1950, when it forced Frank Wisner’s best deputy, Carmel Offie, out into the cold. Offie was a popular “walker” in Washington society; no Georgetown dinner party was really complete without him. His many contacts on the Continent proved invaluable to Wisner in developing an underground railway for the quiet movement of anticommunist exiles to and from Eastern Europe, but his private proclivities came to the attention of the FBI when he was arrested for soliciting a male prostitute in Lafayette Park, just across Pennsylvania Avenue from the White House. By February 1950, the Bureau was surveiling him. A number of “unknown subjects” were spotted leaving and entering his home, and one of them carried a mysterious envelope which appeared to contain “three cylindrical objects about the size of Ediphone records.” When its file on “Carmel Offie, a well-known homosexual, ” was forwarded to CIA, the Bureau was certain that Offie was not only a security risk but a Soviet agent. It is not clear on what grounds the Bureau so concluded, but after reading the FBI material, William Harvey, then still running Staff C, agreed that Offie was quite probably a Soviet mole.

Still, the Agency did not fire Offie. Wisner defended his man against Harvey and the FBI, and Hoover grew impatient. When CIA Security Director Sheffield Edwards, caught in the middle, failed to arrange some kind of compromise, the case against Offie was leaked to Senator Joseph McCarthy, probably by someone at the FBI. Wisner had no choice but to sack his man, but the Bureau did not find the Agency helpful when it tried to get the government to prosecute Offie. The director of CIA had a statutory right to protect “sources and methods, ” including the identities of current and former personnel which might be exposed at an Offie trial, and CIA’s refusal to cooperate meant that Offie could not be tried. “The usual ‘brush off’ all around, ” a disgusted Hoover complained to one underling.

The FBI next fixed on OPC’s John Paton Davies. A former assistant to Bedell Smith in Moscow, Davies had worked with Wisner on Bloodstone and had proposed a project code-named Tawney Pippet, which was to finance covertly a procommunist think-tank in the U.S., in order to control it and gain intelligence—much as Lenin’s secret police had once created the Trust, or Britain’s XX Committee had created the Tricycle ring. But one OPC agent, alarmed at the prospect of funding America’s enemies, passed word of the project to Hoover. The FBI dug into Davies’ past, and learned that he had once recommended that the U.S. back communist rebels in China. The Bureau also believed that Davies had recommended that CIA employ certain communists, then lied to Senate investigators about it. Davies was fired.

But each FBI victory, rather than sating suspicions, only fueled demands for another sacrifice. In a way, the Agency brought this on itself, or its director did. When called to testify before HUAC, General Smith told the truth; in so doing, he crippled his own career, and endangered the very existence of CIA.

“I believe there are Communists in my own organization, ” he testified on October 13, 1952. “I believe that they are so adroit that they have infiltrated practically every security organization of Government.” General Smith so assumed, he said, because CIA had discovered “one or two” communist penetrations, and he believed that in the future they would discover more. CIA was doing its best to screen out security risks, Smith said, but the security of government employees was mainly the business of the FBI. “I have … no internal security responsibility in the United States, and am prohibited by law from exercising any of these functions, ” Smith reminded the committee, adding: “I should say the FBI is almost entirely penetration proof. They employ only Americans and they operate only in the United States.”

Smith’s remarks were noted by the FBI, and despite the DCI’s apparently flattering reference to the security of the Bureau’s personnel, Papich’s supervisor in the liaison section, V. P. Keay, concluded Smith “was not at all impressive as a witness, ” having shown “ignorance of important subjects, ” a “lack of clear thought, ” and “a general ineptness in handling questions.” Public reaction to the CIA director’s words proved the Bureau correct on at least the last point. Rather than earning the country’s trust, Smith’s candor caused a groundswell of grass-roots agitation against the “commie-dominated” CIA. As a chastened Smith told Papich, “That’s what happens when you talk too much.” The CIA director realized only too late that press reaction to his testimony was “natural” in the political climate of a presidential-election season—his old boss, Eisenhower, was running against Adlai Stevenson—and he knew that he had placed himself in a “jam.” If Eisenhower had not cooperated by ordering “no use” of Smith’s testimony in Republican speeches, CIA undoubtedly would have been subjected to even more embarrassing press coverage.

His previous relationship with Ike had seemed to assure that he could stay in the job if he wanted it after Eisenhower’s November triumph, but Papich could read the signs, even if Smith could not. Eisenhower and his former chief of staff did not have the relationship they once had, and there was no way the incoming president was going to keep a DCI who had undercut his own Agency by “popping off” about communist infiltration. By Christmas 1952, FBI memos recorded “rumors that General Smith might be leaving CIA, ” and on January 12 Eisenhower told Smith that he wanted to “make a change.” Smith would become undersecretary of state for administration, and Allen Dulles would be the next Director of Central Intelligence.

General Smith closed up his desk on January 23, but before leaving his office he telephoned Hoover. For the first time in a long while, the director of the FBI was available to take his call. The outgoing DCI duly expressed appreciation for the “courtesies and cooperation” which had been extended to him during his days at CIA. Hoover noted in a memo that Smith was “most verbose in his praise” for the “fine work” Sam Papich had done as liaison. The outgoing DCI expressed a desire for continued contacts when he assumed his new duties, which would include the weeding out of security risks at State, and he hoped Hoover would come over for lunch once he was settled in. The FBI director said he would be glad to, but he never did.

ALLEN WELSH DULLES was essentially the same man he had been when Donald Downes met him just after Pearl Harbor, in the New York office of Donovan’s COI. The milk-white mustache was a little fuller, perhaps, and the dome of his forehead higher and more wrinkled with the worries of the past decade, during which he had become a seasoned veteran of secret intelligence. In World War II, Dulles had been Donovan’s star operative in Europe, operating mostly out of Switzerland, and after a stint at the prestigious New York law firm of Sullivan and Cromwell, he had been made CIA’s deputy director for plans (DDP) in 1950. Soon he had been moved up to the number-two slot, deputy director of central intelligence (DDCI), and in that capacity had overseen daily operations. For all his familiarity with the intimate workings of the institution, Dulles was not an ideal administrator, and was in fact something of a bumbler. One intelligence officer who worked with him noted that Dulles “had a habit of talking around a problem, not coming to grips with it. Sometimes, he seemed to be ruminating aloud—and pretty diffusedly at that.” But the same officer found Dulles to be “good, comfortable, predictable, pipe-sucking, whiskey-sipping company.” In this sense, Dulles was much like Donovan: professionally bold, but personally mild. He was popular with his men in a way that no one since Donovan had managed to be, and was much admired and respected by Sam Papich, too. “Allen Dulles was a great man, ” Papich would say. “A real gentleman, regardless of what you read and what you hear. In many ways he was a gentle man. But action oriented, and very dedicated to CIA.”

Hoover did not share the feelings of his liaison officer, at least not at first. The distrust went back to Dulles’ 1949 report to the National Security Council, in which a larger domestic role had been urged for CIA. Later it was also said that Hoover had suspected Dulles of “secret communist leanings.” For the first few years of Dulles’ tenure, he and J. Edgar “didn’t have much of a personal relationship, ” as Papich put it, but Dulles himself attributed that less to personal chemistry than to the dynamics of bureaucracy. In any case, Hoover’s hostility persisted throughout the 1950s, and agents in the FBI’s Security Division would recall several symptomatic episodes. In 1954, according to William Sullivan, Hoover decided to share the Bureau’s Venona material with the director of the Royal Canadian Mounted Police after withholding it for a decade. “When he asks why we kept it from them for ten years, ” Sullivan asked Hoover, “what will I tell him?” “Blame it on the CIA, ” Hoover reportedly instructed. Sullivan understood that he cooperated with CIA at his own peril, and when he worked with Richard Helms and others at the Agency, he had to do it “behind Hoover’s back.” On one occasion, when Hoover cut back funds needed to pay an agent on what Sullivan considered a vital national-security case, Helms supplied $9,000 from CIA so that the FBI could obtain the information.

Hoover’s resentment of CIA was so fierce that it could even be used as a lever to advance one’s Bureau career. By mid-1953 Robert Lamphere was due for a raise, but a recent letter of censure for a minor infraction of Hoover’s code would have precluded that. Lamphere went to Assistant Director Allan H. Belmont and threatened to “pull a Harvey”: He was going to work for the Agency if he didn’t get his raise. Over the next few weeks, Lamphere got not one raise but three. “I was very lucky to get what I wanted after spouting off, ” Lamphere remembered, “but I knew better than to ever try that ploy again.”

So much for irritants on the Bureau’s side. As far as the CIA was concerned, the situation was not helped by the fact that, during Dulles’ first days as director, his agency came under sustained attack by Senator Joseph McCarthy, who fired away with material fed to him, it seems, by the FBI.

FIRST THERE WAS THE CASE of CIA officer Cord Meyer, Jr. He came from an old family, and had a distinguished Marine career in World War II. A Japanese hand grenade had blown out one of his eyes, and since then he had worn a glass one. After gaining some recognition as a literary talent when the Atlantic published “Waves of Darkness, ” a short story about his wartime experience, Meyer became active during the late 1940s in the World Federalist movement, a leftist group which proposed putting all mankind under one government. The FBI had looked into the World Federalists, and had apparently given Meyer’s name to McCarthy, who in turn pressed the Bureau to investigate him further. By September 1951, Meyer was working for Frank Wisner and Tom Braden in CIA; some said he had “run” there for the “protection” of Dulles, who knew Meyer’s father. But the Bureau was not put off Meyer’s track by his alleged special relation to the DCI, any more than by the fact that he had spearheaded the expulsion of communists from the Federalists. On August 31, 1953, Meyer was in his office discussing with a branch chief certain lines of action they planned to follow in Europe when the phone rang and he was requested to go see Richard Helms, then second-in-command of the Agency’s clandestine operations under Wisner. Helms seemed uncomfortable as Meyer sat down opposite his desk.

“I’ve got a rough one, ” Helms said, offering him a cigarette. “They’ve apparently found something in your past that looks serious.” The allegations in an FBI report on him were so serious, in fact, that he would have to resign immediately, without pay. The “information” included FBI allegations that someone who met Meyer in 1948 “concluded, on the basis of that contact, that you must be in the Communist Party, ” as well as reports that Meyer associated with persons such as journalist Theodore White and poet Richard Wilbur, who were “associated with Communist front organizations.” Additionally, Meyer’s wife, Mary Pinchot, had “registered as a member of the American Labor Party of New York in 1944, at which time it was reportedly under extreme left-wing or Communist domination.”

As he read the allegations, Meyer’s first reaction was incredulity, followed by relief and then by indignation. No old friend turned out to have been a Soviet agent, which was one of the fears he had conjured up while waiting to see the charges. But he was warned that the situation was grave, and that his reply to the charges should be “extremely complete and detailed.” For the next few weeks, Meyer worked diligently on his response. He happened to know many communists, because he moved in intellectual circles and had been in with the World Federalists; he had worked to weaken communism in that organization and was now trying to do the same in the international labor movement. He listed dozens of people who could swear to his ultimate loyalty, handed his rebuttal to Houston, and waited. Finally, on Thanksgiving Day, Meyer received a call from Director Dulles; he was acquitted.

Meyer never did discover who at the FBI had been out to get him, or why. In later years, he worked closely with FBI officials on a number of occasions and came to respect and like most of them. They never raised with him the subject of his suspension, and he never asked them about it. But ultimately, he and other CIA officers thought Hoover’s Bureau was to blame for the McCarthyist disaster. It went back to their wartime incompetence in counterespionage. For all Hoover’s early anticommunism, the FBI had been remarkably uninterested in pursuing Chambers’ and Krivitsky’s early tips about a huge Soviet ring in government. Even when Elizabeth Bentley and William Harvey confirmed the truth of Chambers’ warnings, the FBI should have moved more aggressively. If proper pre-emptive action had been taken then, McCarthy would have been denied the ammunition that he used so effectively in charging that communist infiltration had been condoned, and communist agents befriended, by traitors at the highest levels of American life. As it was, McCarthy was able to make a big show of attacking men with impeccable credentials and character references from the Eastern liberal establishment, men like Offie, Davies—and Meyer. If the nation’s best sons were to be suspected of treason, Meyer reflected, “where did suspicion end?”

Not with Meyer. Others at CIA were closely watched; Robert Amory, deputy director for intelligence from 1953 to 1961, later said he saw evidence that the Bureau tapped his office phone. No one, not even such an archetype of American capitalism as Nelson Rockefeller, was above doubt. At the beginning of the Eisenhower administration, Bedell Smith had opposed Rockefeller’s appointment as special assistant to the president for Cold War operations because Rockefeller was, Smith said, “a communist.”

Allen Dulles, who was then taking over as CIA director, considered it unthinkable that Rockefeller was a traitor, and told the president that he had learned of other stupid statements by Smith, such as “World War III is to start tomorrow.” The Rockefeller episode soon evaporated, and was remembered as just one more mark against the irascible general, but two months later there was cause for even more serious concern about his character. It was suspected that Smith himself, while serving as CIA director, might have been a Soviet spy.

PERHAPS FITTINGLY, such an outrageously sensational allegation first found its way into the FBI’s Smith file in a January 1951 crank letter postmarked Palm City, California. According to the anonymous informant, “The Communist Party used the Main Event at the Ocean Park Calif Wrestling Arena to send a message over television to Party members (The match between Lord Byron & Count on Friday Jan. 12, 1951)—I do not know the signs & signals but I understand the fake right arm injury meant some trouble for the right arm of Communism in other words DOPE. The Count went to the rope for relief more in this match than ever before signifying something. Another tip. The U.S. Attorney General Office used a news broadcast over a San Diego Calif radio station tonight to warn & give legal assistance to some Communists who might be in hot water. Walter B. Smith of Central Intelligence Agency, Washington, D.C. will stand investigation for communistic activities.”

Exactly two years later, on the day after Eisenhower’s decision to send the general packing, the State Department asked the FBI to see whether Smith might be a security risk. On the surface, this was a routine request. In the wake of McCarthy’s charges, the Senate had resolved that State should not appoint any personnel without full FBI background checks. But Smith’s case was complicated by his connections to John Paton Davies. The idea took hold that Davies must have had powerful sponsors who advanced his career, and those who supported Davies against his FBI accusers soon became suspect, too. When Davies came under scrutiny in 1952, Smith got “seriously involved in the case” and was “bedeviled” by it, according to a Top Secret CIA account, after telling investigators that Davies was “a very loyal and very capable officer of sound judgement.” It was only days after his final refusal to condemn Davies, in January 1953, that Smith’s own career came under review. An “Urgent” FBI teletype went out from headquarters to various field offices, ordering a “thorough investigation as to character, loyalty, reputation, associates and qualifications of Smith. Account for his entire adult life.” Findings were to be reported surreptitiously to the director through one of his assistants.

At first pass, the suspicions against Smith seemed absurd, as they would against anyone who could list “Dwight D. Eisenhower” as a reference on a personnel security questionnaire. One of Smith’s former bosses in government believed that “the general had occupied such high positions, always cleared for secret matters, that inquiries into his loyalty were useless, , ” and even telephoned the FBI to complain about its “foolish” attempts to pacify Senator McCarthy. The FBI noted that Smith’s book My Three Years in Moscow had been “critical of Russia and the spread of communism, ” and that the general was given to saying, “The Communists embrace you only to destroy you.”

And yet … through the dark prism of suspicion, certain facts about Smith were not flattering. One of his favorite devices, when being questioned too closely by congressmen, was to divert attention from the subject by saying, “Now, as I recall, Marshal Stalin once told me …” That always made a big impression; there were not many men in Washington who could recall what Stalin, the archenemy, had once told them. But how close had Smith been to Stalin, exactly? Although Smith claimed in his HUAC testimony to have “realized fully” the “conspirational designs” of Russia “around 1943, ” he elsewhere admitted that in the days immediately following the Nazi surrender he went through a period of thinking that “the leopard might have changed its spots, ” and that there might be “a way of working out a modus vivendi with the Communist countries.” He had thought backing communist coalition governments in China and Italy “a wise thing to do, ” in the belief that “our communists are different.” He had attended a January 1946 Red Army Day Dinner at New York City’s Waldorf Astoria hotel, sponsored by the National Council of Soviet-American Friendship. He had said, “The Soviet Union is setting a higher cultural standing within its borders. At least according to my taste, the Soviet ballet, the puppet theaters, and things of that sort are based on a higher cultural level than that in this country.” At the Waldorf dinner, he had shared the dais with persons the FBI considered “leading Soviet sympathizers, ” such as Max Yergan, “Communist leader of the National Negro Congress, ” and Lillian Hellman, the “pro-Soviet playwright.” Also present were Edmund J. Barach, a close friend of Julius Rosenberg and Philip Jaffe; the FBI was sure that Jaffe, Barach, and Rosenberg were Soviet spies. Indeed, FBI investigators believed they had uncovered a pattern of contacts between Smith and suspected Soviet agents. He had met with Barach on at least one other occasion, at the Soviet consulate in New York City, and the general’s name had come up in the FBI’s investigation of China expert Owen Lattimore, a close friend of Davies….

Bureau files do not show whether investigators ever assembled anything more than such a McCarthyist melange of associational guilt. The special inquiry appeared to have concluded on May 6, 1953, when Hoover sent a summary of its results to the White House. Forty years later, that summary would be among 197 pages from Smith’s FBI file withheld from the public on national-security grounds. The State Department would similarly refuse to release any documents stating the FBI’s conclusions. A later FBI memo to the Army stated flatly that “This investigation [reported to the White House on May 6] developed no derogatory information concerning Walter Bedell Smith.” But on May 21 the case was apparently open again, and serious enough to be expanded internationally. Hoover’s legats interviewed Smith associates in Moscow, Karachi, Berlin, Cairo, Tokyo, and Rome.

What was going on? Although the first investigation may have been mustered merely to preclude McCarthyist attacks, or as some private vendetta by Foster Dulles against Smith, Bureau files show no apparent rationale for the second investigation, and no indication of its results. One possibility is that State Department security chief R. W. McCleod, a former FBI man, was put onto Smith by the Venona intercepts, which were still being worked by McCleod’s old colleagues at the Bureau. For instance, Venona held a suggestive reference to one “Agent 19, ” who had provided Stalin with high-level details of Top Secret British-U.S. agreements in 1945 and 1946. Smith would have had access to those details while managing Eisenhower’s paper flow, and then as ambassador to Moscow. Averell Harriman, who preceded Smith as ambassador, would have had the same access, and he, too, would later be investigated as a possible Soviet mole. Yet Lamphere, who was trying to track down Agent 19 for the FBI at the time, later insisted that he knew “nothing” of any suspicions against Smith.

In June 1953, despite Hoover’s orders that the inquiry be handled “surreptitiously, ” news of it somehow reached Smith himself, who reacted to it by denigrating the FBI. The only man the FBI interviewed, Smith said in a banquet speech, was one who didn’t get along with him, but who couldn’t think of anything bad to say. When Smith’s remarks reached Hoover, Papich went to Smith’s office at State to complain about such incorrect and “derogatory “statements. Smith insisted that his intention was only to tell a funny story at a banquet. Reading his liaison man’s account of the conversation, Hoover sniffed: “He has a most peculiar sense of humor. At least it isn’t appreciated by me.”

Nor did Hoover look kindly on allegations by Smith that the Bureau harbored homosexuals. During a discussion one Saturday morning with an FBI informant in August 1953, Smith noted that, though Senator McCarthy had found CIA “a juicy target, ” the FBI was “not so lily white.” Some time ago, Smith said, when the Bureau was giving its people polygraph tests, it was discovered that one sixteen-year veteran was a lifelong homosexual, and “old J. Edgar almost dropped dead when he heard about it.” Papich again went to see Smith, telling him that Hoover wondered who he was talking about and what the facts were. Smith denied ever saying any such thing, but the FBI did not believe him, and the whole business boiled up into a dramatic confrontation between Smith and Papich in the general’s office on August 13

After “considerable prodding” at the Agency, Papich had learned that “CIA had possession of information which should have been given to the Bureau long ago, but apparently CIA felt that the information should not have been disseminated to the Bureau.” There had been a homosexual in the FBI. He had been identified not by Bureau polygraphers, but by CIA, when he applied for Agency employment. The Agency had denied his application but had never informed the Bureau about this man, who was still working at FBI headquarters. Papich explained that apparently the case was “pinned down, ” but damage had already been done to the Bureau through malicious rumors circulating in Washington.

Smith asked Papich why he was calling all this to his attention. Papich took a deep breath. He had respect and admiration for everything that Smith had done for the country, but felt that he was obliged to be blunt. He had been following the matter very closely, and, as far as he was concerned, Smith had undoubtedly originated the rumor.

The general turned purple. “I don’t know why I deal with you!” he screamed. Then he paused for several seconds, and calmly added, “Sam, I do not know. It is possible that I did start the rumor. This is very possible.” Smith claimed that he hadn’t known of the case during his tenure as DCI, and that, if Allen Dulles had failed to disseminate the information, it was only because “Dulles has a great fear of Mr. Hoover.” So, too, did the general. The interview ended with a palliative Smith telling Papich, “I do not want to fight the FBI Director.”

“Well handled by Papich, ” Hoover wrote on an FBI summary of the episode. “Smith is a ‘stinker’ & not a little one either.”

The general resigned from government service in August 1954, one of 273 persons to leave the State Department after being investigated by the FBI. Officially, he retired for “health reasons, ” but suspicions lingered that Smith was a communist agent. In 1956 his pattern of contact with suspected Soviet spies was discovered to include onetime close associate Edward Ellis Smith, CIA’s first man in Moscow, who confessed to having been compromised by the KGB during Bedell Smith’s tenure as ambassador. A later KGB defector alleged that the Soviets had compromised and recruited as an agent a U.S. ambassador to the Soviet Union, though the defector did not know whether it was Smith, or his predecessor Averell Harriman, or someone else. But in Smith’s home, after his death in 1961, scores of still classified government documents were found, including directives on dozens of military campaigns—most of them stamped Secret, Top Secret, or Eyes Only. And an official CIA account of Smith’s tenure, partially declassified in 1992, would contain a suggestive deletion. Immediately after discussion of John Davies’ suspected disloyalty and Smith’s entrance into the State Department —the very juncture at which Smith came under FBI investigation, and where one would expect some treatment of the suspicions against him—there would be only the words: “thirty six-page chapter deleted.”

AT SEVENTY YEARS OLD, Bill Donovan knew that he was going to die, but he was not simply going to fade away. He had hoped desperately for seven years to be named CIA director when the Republicans reclaimed the White House, and was crushed when Dulles, some twenty years his junior, received the post. Putting his field-energetic but disorganized former protege in charge of Central Intelligence was akin to “making a marvelous telegraph operator the head of Western Union, ” Donovan believed, but there was nothing he could do. Privately, he blamed the FBI director for his failure to become DCI, and OSS veterans later claimed that Hoover had been “leaking some very damaging personal information about Donovan to President Eisenhower … when Donovan was under serious consideration for appointment as the Director of the CIA.” The genesis of the rumor appears to have been a deeply resented dig by the Bureau into the question of Donovan’s loyalty.

Tracking his movements upon direct orders from Hoover—“We must certainly follow and keep alert to his manipulations, as they bode no good for FBI”— informants continued to locate Donovan around the blurry margins of clandestine service. In February 1950, a U.S. Naval Intelligence source reported that Donovan had gone secretly to China with General Claire Chennault, ostensibly to take possession of some airplanes whose ownership was in dispute, but actually “for espionage purposes and to establish air bases for bombing Russia in event of a war with that country.” In September 1951, Donovan was said to be “in Italy on an undercover assignment checking on the murder of Captain Holohan, ” an OSS commando killed in the mountains of Italy in 1945 while carrying $100,000 in covert funds, which was never found. When Donovan returned from a foreign journey in May 1951 with one of his arms in a sling, the Bureau noted rumors that Wild Bill was “wounded in a fight between intelligence agents in Arabia.”

Other reports indicated that Donovan was still in close touch with CIA. A special CIA liaison officer was appointed to maintain contact with him; FBI records imply that this was Security Director Edwards. In September 1950, as Bedell Smith was settling in as DCI, Smith and Dulles had called on Donovan in New York to discuss matters, and on the 21st of the month Donovan sent Smith the first of many letters transmitting old OSS documents, giving advice on organization, and recommending former OSS personnel. That Donovan was sending Smith OSS records and intelligence from other sources did not prevent the two men from being “rather patronizing in their attitudes toward one another, ” as Lawrence Houston later said, and CIA soon had its fill of Donovan. In November, when DeLoach advised Edwards of a report that Donovan had hired former OSS-CIA security man James Bielaski to investigate Elizabeth Bentley, Edwards was all in favor of reining Donovan in. He told DeLoach that he received approximately six letters each week from Donovan, advising him how to run CIA. Edwards said he was tired of such “trivial tripe” and that he was going to tell Donovan that he should keep his hands off governmental affairs. Hoover noted in blue ink, “I thought Edwards would get fed up with Gen. D.”


Yet as late as August 1952, after Papich had replaced DeLoach, the Bureau’s Liaison Section was still receiving allegations from an ONI source—soon confirmed by the Agency itself—that “Donovan was employed in some capacity by CIA.” The source claimed to know of “150 pounds of confidential CIA material [designated] for transmittal to General William Donovan at his law address in New York City.” The material, a secret study of Chinese terrain, had been sent to Donovan by “a CIA operator in Tokyo”—probably Thomas Bland, who had been with OSS in Berne. “ONI has been endeavoring for quite some time to determine whether or not Donovan is an employee of CIA, ” Hoover was told. The ONI sources had “contacted CIA, told them of the material and asked if Donovan was a CIA employee. The individual at CIA … did advise that Donovan was ‘a part-time consultant.’ ”

Whatever Donovan was doing for CIA, he could not have been content with such a sideline role. In March 1953, after he was named a consultant to the Mutual Security Agency (MSA), which distributed foreign aid, the Bureau heard that “Donovan wanted to set up an intelligence office in connection with his work for Mutual Security.” When MSA belatedly asked the Bureau for a routine check of its files “for any subversive derogatory data” on Donovan, an FBI agent warned MSA “of Donovan’s attempts to subvert the Bureau in the domestic intelligence field, ” and stressed that “it would be better procedure to check before such appointments are made or announced. “MSA claimed that Donovan was being used only intermittently, but Hoover remained concerned, jotting on one memo: “All Donovan needs in anything is an entering wedge.”

An apparent solution to the “Donovan problem” appeared in June 1953, when Eisenhower decided to make him ambassador to Thailand. But like Smith and all other State nominees, Donovan had to undergo a full FBI field investigation. A special inquiry into the former OSS Director began with “Urgent” cables to FBI field offices on June 15, and Donovan’s well-known indifference toward communists in OSS soon led the Bureau down long, dark avenues of suspicion. Informants described Donovan as “soft and mushy” and a “bubblehead” because he never “got tough” with communists. It was also noted that Donovan had formed a committee asking President Eisenhower to oust Senator McCarthy, and that his law firm not only harbored communist sympathizers, but defended suspected Soviet spies. “There is considerable information regarding Donovan’s ‘soft policy’ toward pro-Communists,” the inquiry supervisor informed Assistant Director Ladd on July 17, and “running out and documenting this information” was going to cause a “delay in completing this case.”

What disturbed FBI investigators most about Donovan was not that he had allowed communists to work for OSS, and thereby risked compromise of U.S. secrets to the Soviets. The real problem was rather that Donovan willfully impeded investigation of suspected spies, and thereby prevented full inquiry into secrets lost. Even before Pearl Harbor, as early as November 1941, a memo warned Hoover: “The Donovan office has ordered all existing lists (those prior to November 1st) of its employees destroyed so that newspapers could not learn how many Communists and phonies had been on their pay roll prior to this date.” In September 1942, Donovan advised the Bureau he would “take no action” in the matter of a communist employee, Donald Niven Wheeler. In 1943, OSS received information that Assistant Treasury Secretary Harry Dexter White was a Soviet agent, but Donovan protected White, the FBI believed, “because he was one of the main contacts in the Treasury Department for unvouchered funds used by OSS in their operations.” In early 1945, according to Bentley, Donovan had called OSS officer Maurice Halperin and told him that he knew he was a Soviet agent, yet had withheld that information from the FBI, and in 1947 he had offered Halperin free legal counsel. And in 1948, Donovan had launched a concerted offensive against Elizabeth Bentley, the prized FBI source who named so many OSS officers as Soviet agents, by hiring James Bielaski to investigate her and “break down her testimony.” Donovan claimed he was only standing by men he believed in. But to FBI investigators conducting the special inquiry in June and July 1953, he certainly seemed to have taken things a bit too far.

What did it all mean? Donovan himself had written, in the context of criticizing the FBI’s loyalty work, that “intelligence … must take several cases and by the use of the technique of analysis and synthesis, evaluate the material and seek a pattern.” In Donovan’s own loyalty case, the pattern was damning indeed. The entire grain of his career had gone against everything the FBI tried to do on the matter of domestic subversion. Was Donovan merely trying to spite his old enemy, Hoover? Was he first duped by communists, then embarrassed into covering up his blunders? Could he be viewed as a (perhaps unwitting) agent of communist influence, in the sense that the cumulative effect of his actions, over twenty years, had helped the Soviet cause? Might he not even be a Soviet spy?

Army counterintelligence investigators, trying to run down wartime security leaks, had pondered this last possibility in 1952, and had asked the FBI if it possessed any evidence that Donovan might have been a “subversive.” The FBI had replied negatively then, but by July 15, 1953, when the results of its special Donovan inquiry were sent to the Secretary of State Dulles, the Bureau could not be so sure. Donovan’s long tolerance of communism was noted prominently in the case summary, and though there was no clear evidence of disloyalty, Hoover personally stressed to Dulles that this was “not to be construed as a clearance.”

Dulles and Eisenhower sent Donovan to Bangkok anyway, probably grateful to have him out of Washington. In his one year as ambassador, Donovan helped turn Thailand into the anticommunist bulwark of Southeast Asia, but the Bureau continued to marshal suspicions against him. On April 16, 1954, an informant told the FBI that a Mrs. Hugo Steiner, a native of Germany, was shipping large quantities of microfilm to Wild Bill in Thailand, and might be sending “classified information” she obtained from Donovan to “unfriendly nations.” Questioned by the FBI, Steiner claimed she was employed by Donovan to research “sabotage during the American Revolution.” Twelve days after this report reached Hoover, the FBI began a “correlation search” into Donovan, and over the next year and a half compiled a massive seven-hundred-page catalogue of his alleged sins, much of which would remain classified, nearly forty years later, on national-security grounds. Donovan’s people later claimed that during this period microphones were discovered in his New York law office, and that they had been planted by the FBI. The Bureau’s suspicions may even have rubbed off on the Agency: according to former OSS officer Richard Dunlop, Donovan found himself being followed, in Thailand, “by what he at first took to be Soviet agents. Then … he learned that the agents were from the CIA. Allen Dulles apparently did not trust his old mentor.”

On returning from Thailand for health reasons in August 1954, Donovan again took up the practice of law, and lost more than one case from lack of preparation. He was slipping, but he still dreamed that he might replace Dulles. He spent the rest of the 1950s waiting for the calls that never came, exiled by presidential ingratitude, insensibly sinking into the languid indifference of private life. Former OSS men remarked sadly that “once he had direct access to the president; now his audience might be a Junior Chamber of Commerce or a Women’s Club luncheon.”

It was perhaps an easy excuse to credit the old soldier’s decline to his archenemy Hoover, but the belief died hard among his admirers. There was a lingering suspicion that Hoover had collected “dirt” on Donovan and used it to keep him from becoming DCI. Old Donovan hands like Helms would allege that Hoover played “a very skillful game” with knowledge of the sexual habits of prominent people. Houston would hint darkly that “The last thing Wild Bill would have done was collect information about people and use it against them —which Hoover did all the time.” If that kind of talk was an underground river in Washington during the FBI director’s lifetime, and a standard anti-Hoover allegation after his death, embittered OSS veterans were its fountainhead.

Down to the end of the century, FBI and CIA men would each tilt at the honor of the other’s legendary founder, and the personal and interagency rivalries informed a smarmy politics of reputation. Hoover was said to have spread the rumor that Donovan had contracted syphilis in orgies with prostitutes, while Donovan’s men may have been the genesis of a Mafiahomosexual blackmail thesis advanced after Hoover’s death. OSS veterans said that Hoover lived “queerly, ” and decades later ex-CIA men like Richard Helms would insist that the FBI Director had refused, first to acknowledge, and then to vigorously prosecute, the Mafia. By some poorly sourced accounts, Donovan ordered a secret probe of Hoover’s relationship with Clyde Tolson; journalist Anthony Summers has even speculated that this Donovan investigation yielded a “sex photograph” which later fell into the hands of underworld figure Meyer Lansky, perhaps via OSS officers who served in Italy. Summers suggests “that Edgar had tried and failed to find smear material on General Donovan, that Donovan in turn found smear material on him and that the material found its way to a top mobster, to be used against Edgar for the rest of his life.” There is no proof of such a scenario, however; nor does it explain why such material was never used for its alleged purpose: to keep Hoover from hurting Donovan’s career.

Whatever effect Hoover’s machinations did have on the decline of Donovan’s professional fortunes became irrelevant after February 1957, however, when Wild Bill suffered a stroke. He lived out most of the next two years in his apartment overlooking the East River, seldom leaving his bed. Loyal to the last, OSS colleagues like Houston came to visit when they could. Propped up with pillows, Donovan stared out a window toward the east, and told his nurse he saw Russian tanks rolling across Queensboro Bridge to take Manhattan. On February 8, 1959, at age seventy-six, he died.

Hoover sent Mrs. Donovan a note of condolence, but Top Secret memoranda cynically recorded FBI worries that CIA might soon attempt a refurbishment of Donovan’s reputation. “There is a good possibility that an autobiography of Donovan will be published in the not too distant future, ” Hoover’s number-three man, Assistant Director Al Belmont, was cautioned on the day after Donovan’s death. “Because of his colorful career, it can be anticipated a movie will follow the book. CIA undoubtedly will take every opportunity to make certain that the movie places CIA in a favorable light.”

Neither the autobiography nor the movie ever came into being, but in his waning months there had occurred an event by which Donovan would always be remembered, and which no Hooverian hostility could ever taint. After his first stroke, in 1957, CIA had decided to award its architect and spiritual father the National Security Medal, the highest award the Agency could offer, and just about the only one left for a man who was one of the most decorated soldiers in American military history. Having recently seen Donovan and knowing his health was fading, Houston went to Dulles and suggested “that we get this medal to the old boy while he’s still going.” Dulles said, “You take one of the Air Force planes and go up now.” Houston did; he pinned the medal on Donovan’s pajama top, then asked his old boss about a portrait CIA planned to have done. Donovan was making fairly good sense at that time, and they talked about which artist might do it. Houston returned to Washington, and the portrait was started from photographs. Then, in spring 1958, Donovan had a second stroke, and was badly off, so CIA had him flown down to Walter Reed Army Hospital in Washington, where the intensive care was the best in the world. Houston and Colby and others would go out and see him; on some days he was pretty good, and on others he would just babble at the ceiling. But finally they got his portrait done, and hung it on the ground floor of the Administration Building, where Donovan had started up his central-intelligence dream with COI almost eighteen years before; now it was headquarters of CIA. Houston checked with Donovan’s nurse to find what appeared to be a good day, went out, and picked him up. As they drove toward CIA, the old man’s mind was really wandering, and he was very nervous that maybe children would get in front of the car. But they pulled up to CIA headquarters and Houston said, “Come on in, General. I’ve got something to show you.” They led him in, and showed him the portrait—a pretty good likeness of Wild Bill. He looked at it, and he straightened up. Full attention! He stood there, and said, “Great! Great!” And with that he stomped out, sort of parade-stepped to the car. They drove off, and Donovan took a piece of paper and a pencil out of his pocket, and he started writing: “Memorandum to the President.” Then his hand just trailed down the paper; he was gone.

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THE GRAY GHOST

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