In the ever growing literature about Soviet spies who infiltrated the White House during the lofty Popular Front years of Franklin D. Roosevelt’s presidency, the most fascinating — and perhaps unexpected — was Harry Dexter White.
He was an official of the Treasury Department who later became the architect of the post-war Bretton Woods system, a new global monetary system that would become the basis of the international capitalist marketplace in a new era. Now, in a new book, Benn Steil — a Senior Fellow at the Council on Foreign Relations — deals with White’s activities as a Soviet spy.
Steil has also published an excerpt as a major article in the current issue of Foreign Affairs, available for purchase on the magazine’s website, titled “Why a Founding Father of Postwar Capitalism Spied for the Soviets.” Steil’s article is of importance for two reasons.
First: it brings to the mainstream what many of us have known for years — that the New Deal administration was heavily penetrated by Soviet spies, many of them American citizens who were working for Stalin’s intelligence agencies. Indeed, this is the focus of another new book, M. Stanton Evans and Hebert Romerstein’s Stalin’s Secret Agents: The Subversion of Roosevelt’s Government, which fills in the broader picture. The most well-known, of course, is Alger Hiss. But he was merely the tip of the iceberg.
Second: since others found evidence in the Venona papers and Alexander Vassiliev’s KGB papers of White’s espionage, the former Treasury undersecretary’s reputation was defended by many writers who saw that charge as mere anti-Communist slander. Stephen Schlesinger, for example, writes: “Among historians, the verdict about White is still unresolved, but many incline toward the view that he wanted to help the Russians but did not regard the actions he took as constituting espionage.” In a letter to the New York Times, White’s daughter argues: “The content and provenance of all these documents have been studied in depth by serious scholars and have been found to raise as many questions as they answer. However they are interpreted, it can by no means be said that they establish my father’s guilt.” She adds: “It should also be remembered that White himself vigorously and eloquently denied the accusations against him.”
Also, James J. Broughton authored an entire article devoted to exonerating White.
With the publication of Steil’s book and article, we know that White, whom Steil points out had “by 1944 achieved implausibly broad influence over U.S. foreign and economic policy,” sought to implement what Steil calls “a far more radical reordering of U.S. foreign policy, centered on the establishment of a close permanent alliance with … the Soviet Union.” In this regard, he was on the same wavelength as his friend Henry A. Wallace, who had said he would appoint White to the Cabinet if he was to become president.
To accomplish this aim, White did more than Wallace. He took the next step, and from the 1930s on “acted as a Soviet mole, giving the Soviets secret information and advice on how to negotiate with the Roosevelt administration and advocating for them during internal policy debates.” Steil goes so far as to argue that White “was arguably more important to Soviet intelligence than Alger Hiss.”
What is most fascinating, and why commentators and historians could never accept that White was working for the Soviets, is he was known as a mainstream Keynesian, and most hardly suspected that he was the type who would be working clandestinely for Joe Stalin. Steil has found what he sees as a smoking gun: “An unpublished handwritten essay on yellow-lined notepaper” among White’s scribblings in the White archives, one that other scholars missed. As Steil describes the essay, it foresaw “a postwar world in which the Soviet socialist model … would be ascendant.”
White wrote: “In every case the change will be in the direction of increased [government] control over industry, and increased restrictions on the operations of competition and free enterprise.” White also was not too concerned about the Soviet Union’s repressive system, believing that “the trend in Russia seems to be toward greater freedom of religion,” which he said was guaranteed by the Soviet Constitution. He also thought that its foreign policy was “not actively supporting [revolutionary] movements in other countries.”
Actually, this belief system was not much different from that of other advocates of the Popular Front with the Communists, including many who never would have gone to work for Soviet intelligence. It was, in fact, the attitude taken by scores of fellow travelers and apologists for the Soviets, as well as realists like Walter Lippmann, the major columnist of his time.
So the document, while interesting for shedding light on White’s views, is not as significant as Neil seems to think it is. Like Henry Wallace, White too favored a U.S.-Soviet common front and worried it would be opposed by warmongers, or by any groups “fearful that any alliance with a socialist country cannot but strengthen socialism and thereby weaken capitalism.”
But as Steil points out, White’s notes for an article that was never published does make it quite clear that he saw himself as an advocate of the Soviet system. He quotes him as writing: “Russia is the first instance of a socialist economy in action. And it works!”
As Steil himself notes, however, that view was “not out of keeping with the tenor of the times.” Adherents firmly believed that radical upheaval was inevitable, and that the future was something closer to Soviet socialism than American capitalism. It was, to put it another way, the progressive mindset of most left-liberal intellectuals of that era. But few of that point of view took the step that White did, what Steil calls “the sort of dangerous double life” of a secret agent.
As part of his work, he: stole documents which he gave to Whittaker Chambers when he was working for the Soviets in the 1930s; believed it was his duty to give the Soviets what they could not legally obtain during the years of the wartime alliance; favored a pro-Soviet foreign policy; and when he had a chance, used what powers he had to help Stalin’s regime out. In postwar Germany, White maneuvered to give the Soviet currency plates that were in Western hands, so they could print their own currency and undermine the stability of German currency in the Western sector. This allowed the Soviets to raid “the U.S. Treasury for $300-$500 million, roughly $4.0-$6.5 billion in today’s dollars.”
White might have actually been appointed by President Harry S Truman as the first head of the IMF, created at the Bretton Woods conference, but as Neil writes, J. Edgar Hoover nipped it in the bud. The FBI director told the president that they had evidence White was a “valuable adjunct to an underground Soviet espionage organization,” and that his appointment could undermine the new banking institution.
White later left government, working for Henry A. Wallace’s presidential campaign, the pet public cause of the American Communist Party, believing as Neil puts it: “The 1917 Russian Revolution had been a seminal event in the history of the struggle for human freedom.” As I noted earlier, had Wallace actually won the election, he would have made White Secretary of the Treasury, and the United States would have had a Soviet dupe as president and a Cabinet official who was an actual Soviet agent.
As an official of the U.S. working for the Soviets, Harry Dexter White betrayed his country, giving Stalin information useful to his regime when negotiating with the United States on issues such as securing a more favorable loan term than the U.S. wanted to grant Moscow, and also worked to put other pro-Soviet elements into the U.S. government. When people like White recommended friends for appointments, they were invariably pro-Communist. The goal, as always, was to “shape U.S. Government policy in the Soviet government’s interest,” or so Whittaker Chambers said back in 1953.
So White, who created or helped create a “global free-trade architecture,” believed instead in a state-dominated centralized economy, and thought or hoped that the private enterprise system would continue no longer than five to ten years after the end of World War II, after which it would not survive “as a capitalist island in a world of state trading.”
Fortunately, Harry Dexter White’s predictions were as wrong as the actions he took as a Soviet agent were immoral. What we have learned from White’s hidden career is that Stalin’s agents came in all forms, and the type of individual least expected to be one of his intelligence assets was actually one of his most important. Those who warned about Communist infiltration were correct in their fears and in their arguments. The Red-baiters, and not the Reds, had it right.