STATE DEPARTMENT FLOODED

Mr. Braden related his experience with an effort to reorganize the State Department in 1945. His testimony both supported and supplemented information supplied by Eugene Dooman in the IPR hearings (IRP-H, p. 703) and by J. Anthony Panuch (p. 841) in the subcommittee's hearings on interlocking subversion in Government departments.3

Eugene Dooman was one of the Far East experts in the State Department replaced in a general shift in personnel in that area which brought the anti-Nationalist China group into power.

Mr. Panuch, formerly Deputy Assistant Secretary of State in charge of security, testified before the subcommittee on June 25, 1953, on plans in 1945 to reorganize the State Department and to "blanket in" the wartime agencies.

In his appearance before the subcommittee, Mr. Braden also described this attempt "to take all of these various alphabetical agencies OWI and BEW-FEA, and the Coordinator's office and superimpose them on the State Department." He said that he had resisted the effort to have "this swarm of people coming in from these outside agencies," and that he had considered many of these people to be "utterly inexperienced and incompetent."

Mr. Braden directed his testimony primarily toward one phase of this 1945 reorganization, a project to be known as the Office of Research and Intelligence, involving over a thousand people to be brought into the State Department. He said this proposal was made by Dean Acheson, the Under Secretary of State, at a top echelon meeting in his office. A memorandum of about 1,000 pages was presented to the meeting in the late afternoon with the warning that "this is going to the Hill this afternoon." The assembled officials were asked for their immediate comments.

Mr. Braden testified that he protested that there was "not one single item or function I can find in these pages which is not being fully and competently performed by the Office of American Republics Affairs." He called the plan "a complete duplication," "an extravagance" and "an inefficiency." Loy Henderson was quoted by Mr. Braden as stating at the meeting that "this same thing applies to the Office of Near Eastern Affairs. This is a duplication *** there is no rhyme or reason for it." The proposal which would have involved "a complete reorganization of the State Department" was finally abandoned. Mr. Braden said he was told that this proposal had emanated originally from the Office of Special Political Affairs, then headed by Alger Hiss.

After General Marshall was appointed as Secretary of State, the officials who had opposed these reorganization plans were either ousted or dispersed. J. Anthony Panuch, Deputy Assistant Secretary, author of the memorandum opposing the plan, was ousted immediately. James C. Dunn was sent as Ambassador to Italy. Loy Henderson was sent to India and later to Iran. Braden withdrew from the Department a year and a half later in 1947.

In our IPR hearings, we have referred to the cordial comment of the Daily Worker of October 7, 1945, on the proposed changes:

"With the assistant to Assistant Secretary of State James C. Dunn, Eugene Dooman, who was chairman of SWINK, the powerful interdepartmental committee representing State, War. and Navy, and former Acting Secretary Joseph Grew out, the forces in the State Department which were relatively anti-imperialist were strengthened. They were able to push through certain directives which had been held up in committee heretofore ***"

Mr. Braden characterized the group he was fighting in the State Department as "opposed to private enterprise and to our system and way of life" and as opposed to his efforts "to defend American legitimate interests."

BRADEN'S WARNINGS IGNORED

The danger of Communist penetration in Latin America had been the subject of repeated warnings by Spruille Braden to the State Department beginning in 1941. One such warning, dated July 22, 1944, declared:

Attention is respectfully invited to my several dispatches commenting on the strong, intelligent, and efficient Communist organization in Cuba; their drive for Negro membership; their tie-in with the Russian Legation; the unnecessarily large staff in that mission; the Communists' employment of secret inks and ciphers *** (H., p. 1378).

Another, dated December 6, 1945, stated that "Communist antiUnited States action throughout the hemisphere is so coordinated and synchronized that there is no doubt that it is being directed from one central point" (H., p. 1383). To these repeated warnings, Mr. Braden never received any acknowledgment. "I had the feeling," he declared, "of walking up the stairs in the dark."

Mr. Braden described the pattern of operation of the group which he characterized as collectivists in the State Department.

Then these collectivists, even though underlings, would draw up these papers proposing policies and action and with the tremendous volume of work coming on the top echelon, the Secretary of State, or even the Assistant Secretaries, frequently then cannot go over every single one of these papers. The decisions are made by these people working at the lower levels writing these papers, writing the agreements, doing all the rest of it ***. They take advantage of their superiors' ignorance of a given area or subject (H., pp. 1391–1392).

JONATHAN MITCHELL ON HARRY D. WHITE

Jonathan P. Mitchell added additional significant details to the subcommittee's record regarding Harry Dexter White. Mr. Mitchell was formerly a reporter and European correspondent for the New York World. He was Washington correspondent for the New Republic magazine from 1935 to 1941, writing under the nom de plume of TRB. Subsequently, he attended the Institute for Advanced Study at Princeton.

In 1939, Mr. Mitchell was asked by Secretary of the Treasury Morgenthau to draft a speech on the advantages of venture capital as furnished by private enterprise. The speech was never delivered, however. Mr. Mitchell was informed by Assistant Secretary of the Treasury Gaston that Harry Dexter White "wouldn't stand for it" (H., p. 1425).

Mr. Mitchell testified that while he was at the Institute for Advanced Study, a number of his colleagues were advisers to the Treasury. He said that they reported to him their observations of White's conduct.

These colleagues of mine attended quite regularly the staff conferences of the Secretary. There was a general meeting with perhaps 50 or 60 persons present, once a week, and the people from the institute would very often have worked out plans for technical-they were interested in the technique of carrying the very large war debt at that time. They had worked out procedures, plans, and so on, with Secretary Morgenthau; that is they had given

him their advice, and the Secretary accepted it. At these meetings, these plans would be chewed to pieces.

After a great deal of careful observation and comparing of notes, they were convinced that each time the opposition came from the same quarter; namely, Mr. White, and they took to watching him at the meetings, and they caught him passing notes to people who then got up and raised extraneous subjects or presented opposite views. They found that whenever these devices didn't work, Mr. White himself would wait until he was certain the Secretary was about to leave, and then rise and say, "I would like to summarize what has been said here today," and he would summarize it without any relation to what actually had been said (H., p. 1426).

Either the action would be taken in the sense that Mr. White desired, or no action would be taken at all (ibid.).

Mr. Mitchell decided to interview White on or about August 5, 1945, at a luncheon. In the course of this discussion, White outlined his basic philosophy. The fact that this philosophy dominated so important a policymaking official in our Government is highly significant and would tend to explain his conduct. White revealed that he was an ardent devotee of the views of Harold Laski as outlined in the latter's book, Faith, Reason, and Civilization. White in the conversation held that more and more in the future, international trade and private business in general would be dominated by governments, both during the war and thereafter. He called Laski's work the most profound book written in his lifetime. Summarizing the thesis of the Laski book, Mr. Mitchell described it as follows:

I think the thesis could be put as saying that the Second World War was the end of a great historic period, and that private business or capitalism had proved itself inadequate, and that the faith which underlay it, the Christian faith, no longer had any validity for the people who were living then; and that, happily, the Russians had worked out a new system of economics and a new faith which could replace capitalism and Christianity (H., p. 1430).

In the course of the hearing, the subcommittee inserted into the record a review of some of White's functions in Government, as follows: Member of the Interdepartmental Group To Consider International Economic Problems and Policies in 1940; head of Treasury Department's Division of Monetary Research which produced a memorandum entitled "Proposal for a Stabilization Fund of the United and Associated Nations"; member, with V. Frank Coe and Lauchlin Currie, of an interdepartmental group known as the Cabinet Committee which met in Secretary of the Treasury Morgenthau's office on May 25, 1942, to consider the "Preliminary Draft Proposal for United Nations Stabilization Fund and a Bank for Reconstruction and Development of the United Nations and Associated Nations"; chairman of the interdepartmental committee known as the American Technical Committee, of which V. Frank Coe was a fellow member, and which was to a large extent responsible for the final form of the Monetary Fund and Bank; writer of a letter to British representative Lord Maynard Keynes dated July 24, 1943, reconciling United States and British monetary proposals; September 4, 1943, received from Assistant Secretary of State Adolph A. Berle, Jr., the State Department's proposal for an International Investment Agency; presented the Morgenthau plan on Germany at meeting of State, Treasury, and War Departments; praised by the Daily Worker of November 20, 1953, for his "demand for a program to consolidate Soviet-American economic and political cooperation" and for calling for real aid to "Latin Amer

ica and to China-instead of the 'aid' with political strings attached which the Wall Street bankers required"; author of memorandum dated March 7, 1944, to Secretary Morgenthau on "Proposed United States Loan to the U. S. S. R."; author of memorandum dated March 31, 1939, together with William Henry Taylor, Irving S. Friedman, and Sonia Gold, cited in testimony as involved with an underground group of the Communist Party; coauthor with Harold Glasser of a memorandum dated September 7, 1944, on "Is European Prosperity Dependent Upon German Industry?"; coauthor with Harold Glasser of the memorandum, dated March 31, 1939, calling for closer economic ties with the U. S. S. R.; given "full responsibility for all matters with which the Treasury Department has to deal having a bearing on foreign relations" by Secretary Morgenthau on December 15, 1941.

The record also reflected that Harry Dexter White was the official Treasury representative on the following interdepartmental and international bodies: The Interdepartmental Lend-Lease Committee; the Canadian-American Joint Economic Committee; the Executive Committee on Commercial Policy; the Executive Committee and Board of Trustees of the Export-Import Bank; the Interdepartmental Committee on Inter-American Affairs; the National Resources Committee; the Price Administration Committee; the Committee on Foreign Commerce Regulations; the Interdepartmental Committee on Post-War Economic Problems; the Committee on Trade Agreements; the National Munitions Control Board; the Acheson Committee on International Relief; the Board of Economic Warfare; the Executive Committee on Economic Foreign Policy; the Liberated Areas Committee; the O. S. S. Advisory Committee; the United States Commercial Corporation; the Interdepartmental Committee on Planning for Coordinating the Economic Activities of United States Civilian Agencies in Liberated Areas; White was also chief architect of the International Monetary Fund as well as its first United States executive director.

As already pointed out, White had "full responsibility" for all matters "having a bearing on foreign relations" in which the Treasury was involved from December 15, 1941. Beyond this, the colleagues of Mr. Mitchell observed White's technique of domination over general Treasury affairs. Against this background, there is considerable significance in the following passage from the Memoirs of Cordell Hull, former Secretary of State:

The Secretary of the Treasury, Henry Morgenthau, Jr., who ranked next to me in the Cabinet, often acted as if he were clothed with authority to project himself into the field of foreign affairs and inaugurate efforts to shape the course of foreign policy in given instances. He had an excellent organization in the Treasury Department, ably headed by Harry White, but he did not stop with his work at the Treasury. Despite the fact that he was not at all fully or accurately informed on a number of questions of foreign policy with which he undertook to interfere, we found from his earliest days in the Government that he seldom lost an opportunity to take long steps across the line of State Department jurisdiction. Emotionally upset by Hitler's rise and his persecution of the Jews, he often sought to induce the President to anticipate the State Department or act contrary to our better judgment. We sometimes found him conducting negotiations with foreign governments which were the function of the State Department. His work in drawing up a catastrophic plan for the postwar treatment of Germany, and inducing the President to accept it without consultation with the State Department, was an outstanding instance of this interference (H., p. 1445).

As the subcommittee has previously shown, the "catastrophic plan for the postwar treatment of Germany," was actually the brain child of Harry Dexter White.

On July 2, 1952, the subcommittee recommended that consideration be given to investigation by some appropriate agency of the following: (a) Possible Communist infiltration into and influence upon the Treasury Department and other agencies forming and administering fiscal and monetary policies and affairs of the United States;

(b) The role of Alger Hiss in foreign affairs and the formulation of foreign policy of the United States and his influence on personnel decisions in the State Department (IPR R., p. 226).

Nevertheless, as far as the subcommittee is aware, no study of the policymaking activities of Hiss and White have ever been made by either the State Department or the Treasury.

CONCLUSIONS

1. Alger Hiss, Harry Dexter White, and their confederates in the Communist underground in government had power to exercise profound influence on American foreign policy and the policies of international organizations during World War II and the years immediately thereafter.

2. They had power to exercise profound influence on the creation and operation of the United Nations and its specialized agencies.

3. This power was not limited to their officially designated authority. It was inherent in their access to and influence over higher officials, and the opportunities they had to present or withhold information on which the policies of their superiors might be based.

4. Hiss, White, and a considerable number of their colleagues who helped make American foreign policy and the policies of international organizations during crucial years have been exposed as secret Communist agents.

RECOMMENDATIONS

1. The State and Treasury Departments should immediately institute comprehensive studies to determine the whole extent of the policymaking activities of Alger Hiss, Harry Dexter White, and other State and Treasury officials who have been exposed as members of the Communist underground.

2. These studies should be under the control and direction of persons who were not identified in any way with Hiss, White, or any of their confederates, either in the making of policy or the exercising thereof. 3. The results of these studies should be made public at periodic intervals.

SECTION VI

RADIO OPERATORS AND NAVY FILES

ADMIRAL STATON'S STORY

Throughout its entire existence, the subcommittee has concerned itself with these questions:

How did the United States Government become infiltrated with underground Communists?