Monday, September 7, 2015

Dialogue on the Morgenthau Plan

Dialogue on the Morgenthau Plan

Any thesis can only be strengthened by constructive criticism.  I have only received three critical response to my work.  One did not dispute my facts but claimed I “sounded obsessed.” Another critic wrote that the book was of considerable interest but was written for “an odious cause” and was “deliberately manipulative.”  Lastly my book was removed as a reference in Wikipedia because “it does not appear to be a reliable source.”  These comments did not help me refine my argument or correct errors.  Therefore I sent a copy of a revised version of my book to 147 individuals who would have an interest in this period of history.  I requested their critical comments.  I received few responses and the responses I did receive claimed that they were not interested.  

I was pleasantly surprised to receive a response from Roger J. Sandilands of the University of Strathclyde who is the author of The Life and Political Economy of Lauchlin Currie: New Dealer, Presidential Advisor, and Development Economist.  He is the foremost expert on the life and work of Lauchin Currie, one of President Roosevelt’s economic advisors.  I only mention Currie once in my work: “The subcommittee’s parent Advisory Committee included Harry Dexter White, Lauchlin Currie, Alger Hiss, and Julian Wadleigh.  This committee was composed of suspected or proven Soviet agents.”   Roger Sandilands disagrees with this statement and provided reasonable evidence on why he holds this belief.  He is a reasonable man and a true scholar.  He has convinced me that we might both be correct.  Unfortunately, Sandilands has revealed my own inadequacies as a writer.  He has demonstrated what a true scholar can achieve.  I did not have the time or the resources to do justice to my subject.  However, I maintain that it is still far superior to any work dealing with this subject.

The Sandlands/Dietrich Correspondence

Sent: Thursday, September 02, 2015 8:51 PM
To: Roger Sandilands
Subject: The Morgenthau Plan: Soviet Influence on American Postwar Planning
I am working on a third edition of my book, The Morgenthau Plan: Soviet Influence on American Postwar Planning (Algora Publishing).  It is a reassessment of U.S. postwar policy and a work that has been cited by several authors dealing with the postwar period.  I am providing you with a copy in the hope that you will have the time to read it and provide feedback.  Any work dealing with a complex subject usually contains errors.  I would appreciate it if you could point them out to me before publication.
Thank you, John Dietrich

From: Roger Sandilands
9/3/2015 2:17 PM
Hello: You refer to 'Verona' eight times. It's actually Venona. A more nuanced or sceptical reading of those partially decrypted files would perhaps give you a different perspective on Harry White. I attach a paper you may not have read.
Regards, Roger Sandilands

From: John Dietrich
To: Roger Sandilands <>;
Thu 9/4/2015 4:38 AM
        I appreciate your response to my message.  The “Verona” mistake was obviously a typo.  I’ve had several people edit the work and you are the first one to have caught that. I suspect that you have read Chapter 2 of The Morgenthau Plan.  I concluded that White was a “trusted individual,” not a party member, agent or spy.  I attempted to present both sides, but I start from a presumption guilt where you start with a presumption of innocence.  Credibility is our most important asset.  Without it no one would bother to listen to us.  That is why I have attempted to be even-handed.  I pointed out that Vladimir Karpov stated, "Harry D. White was not a recruited agent." Alexander Vassiliev stated, “Harry Dexter White most probably he didn’t get any instructions from Moscow.  He decided it for himself what would be best for the Soviets.  On the other hand, believing that that would be in the American interests too.  Morally there was no problem for him of doing this.  He was working in the interests of both countries.”
        Of course White was pro-Soviet.  He would not be working in the government if he was not.  President Roosevelt was also pro-Soviet.  The Soviets were a major ally of the U.S. during WWII.  To claim that Roosevelt was a Soviet agent would destroy one’s credibility.  But this does not explain White’s meeting with Pavlov during the Nazi-Soviet Pact.  There had to be more than just pro-Soviet inclinations.  Most people in the Roosevelt administration were progressives.  They had a pro-Soviet outlook.  If they were not progressives, White’s efforts would not have been effective.  Progressives wanted war with Japan and wanted the destruction of Germany.  Their views coincided with those of the Soviets.
        You state, “both Currie and White testified freely and openly and denied all of the charges.”  I believe this was SOP for Soviet “agents.”  I think Alger Hiss went to his grave denying his Soviet activities.  Chambers and Bentley may be discounted and Soviet contacts may have “puffed up” their reports.  I know quite a bit about the Morgenthau Plan and the transfer of occupation plates to the Soviets.  Defenders of White use the excuse that he was naive.  I believe White was an extremely intelligent man.  Naivety is not an excuse.  “Naïveté about Stalin was widespread.”  That is true, but it was an intentional naivety.  Soviet crimes were well publicized beginning with the murder of the Czar and his family.  Both Morgenthau and Truman came to the conclusion that White was working for the Soviets.  Truman claimed, White was “fired” “as soon as we found out he was disloyal.” 
        Perhaps we will have to wait on the unlikely opening of the GRU files.  Vassiliev did not have access to the GRU files and in 1993 the Russian Foreign Intelligence Service “did not want me (Vassiliev) to see the personal files on Harry Dexter White,” for “unexplained reasons.”  I suspect we will continue to disagree on this issue.  I hope we can do it in an amicable fashion.  If you see any more errors is my book I would greatly appreciate it if you could point them out.  Regards, John Dietrich

From: Roger Sandilands
9/4/2015 11:05 AM
Thanks for your courteous reply that indicates how you attempt to be measured and balanced in your book. Apart from some general skimming, I have so far only read up to page 65. I was fascinated by the discussion of the origins of the Morgenthau Plan. Interesting that White seems to have been initially sympathetic to the softer tone of the SHAEF report that so incensed both Eisenhauer and Morgenthau p.50. And on p.60 White was much more moderate regarding the coal mines of the Ruhr. So maybe you could be a little more nuanced at the point (top p.60) where you dispute Boughton's view that White 'believed that no country could prosper unless other countries could prosper as well'. At this point, White does seem to be agreeing (even if FDR and Morgenthau were not). And White was well aware of how the hard Versaille Peace Treaty damaged everyone. There is a long Anti-Depression memorandum that he, Currie and P T Ellsworth wrote at Harvard in 1932 that understood this and called for cancellation of Germany's reparation payments.
Morgenthau's said of the Ruhr: "That is the place where war can spring from, and that is the place that closed down the steel mills of Birmingham, the coal mines in England, that caused the misery and the low standards of living in England.  . . . It is the competition.  . . .
This reminded me of a conversation that Currie had with J M Keynes in England in February 1945. Keynes expressed similar anxieties. It's in my biography of Currie, and since it and some related discussion touches on the Morgenthau Plan, I thought it would interest you. I attach the relevant five pages.
Another thing that you may interest you, as supplementary to the testimony of Karpov, Pavlov etc on White (p.29), is a long email to me in the same vein from Major-General Julius Kobyakov, deputy director of the KGB’s American desk in the late 1980s. I attach it too.
Roger Sandilands
   PS: I consider the allegation (p.44) that White committed suicide to be pure conjecture, highly unlikely, and in bad taste.
  PPS: Churchill's view seems to have softened between your p.52 and p.53.

Major-General Julius Kobyakov’s letter to Roger Sandilands

From: "Кобяков Юлий" <> To: <> Sent: Monday, December 22, 2003 1:01 PM Subject: White & Currie
Dear Roger,
I tremendously enjoyed your article. And I liked the thoroughness and clarity of your and Dr. Boughton's presentation. Since you might still be interested in that matter I would like to share with you some of my thoughts on the subject. Back in the late 80s I did an extensive research on the archive materials related to our intelligence work in the U.S. in the 30s and the 40s. From the scientific/historical point of view that was virtual "terra incognita", but my interest was not purely academic. At that time as the deputy head of the American department I was interested in utilizing whatever positive experience could be gained from studying those archives. At the top of my list were, naturally, cases of our "penetration" of the White House, the State, the Treasury, etc. In this connection I examined the files on Currie (PAGE) and White (LAWER/YURIST) and was disappointed. There was nothing in the PAGE file to suggest that he had ever wittingly collaborated with the Soviet intelligence. The file itself was put together in the late 40s when the damage, wrought by defections of Bentley and Chambers, was being accessed. In fact, Currie was no more than a sub-source (if my memory serves me right - in the orbit of Nathan Silvermaster). However,in the spirit of machismo, many people claimed that we had an "agent" in the White House. I believe, Akhmerov like anybody else was prone to that weakness. Hence, Gordievsky's reference to his conversations with Akhmerov on that subject should be taken with a spade of salt. Equally unimpressive was a file on White. There was no record that someone had pitched or otherwise recruited him and set the terms of his cooperation with the Soviet intelligence. There was nothing in the way of clandestine communications arrangements, etc. White for all practical purposes might be categorized as a sub-source, which not necessarily denigrates the quality and value of the information that was attributed to him. But to categorize an individual as an agent or a spy we need to prove that he "wittingly" cooperated with the "foreign intelligence service", and "fulfilled the tasks", assigned to him. That's how the Soviet intelligence defines its agents, and, I believe, that American intelligence works along the same lines. Among the members of my profession there is a sacramental question: "Does he know that he is our agent?" There is very strong indication that neither Currie nor White knew that. As for the authors of "The Haunted Wood", and what they had to say about Currie and White on the basis of information they allegedly picked up in the SVR archive files, my position is as follows. I would not venture passing judgment on Mr. Weinstein as a historian, but Mr. Vassiliev (who, I believe, had actually accessed the files) had never made his mark as an intelligence officer. He was a junior trainee in my department, and I had debriefed him in 1990 when he decided to quit the service. At that time he certainly lacked sophistication and deep background knowledge of intelligence history needed to interpret those files and put things in their proper perspective. I have no way to tell, if in the ensuing years he had improved his skills. When General Pavlov approached me for a permission to go public with the White's story, I balked. I had the authority to set in motion a process that eventually may have led to declassification of the White file, but I though it inappropriate. Not for fear of revealing great secrets, but on ethical grounds. After all, the man had died proclaiming his innocence, and he never had his day in court. I was shocked when I learned that General Pavlov eventually made his way to the printing press. And the highlight of his book was a description of his meeting with White in 1941. Judging by Pavlov's account, he meticulously observed the trade craft that was SOP for the NKGB at that time. He used magazine as a recognition sign, he asked his partner to make an order in a restaurant so as not to betray his foreign accent. He was so consistent in observing this rule that he made the man he had invited to breakfast pay for both of them. But briefing White on what Akhmerov wanted to tell White was even more daunting task than ordering scrambled eggs and Pavlov had to let White read the paper he had brought with him. When White finished reading that paper and tried to put it in his pocket, Pavlov snatched it from him - rules of the Soviet intelligence forbade to leave to the agent anything that might implicate us. It is hard to tell, what did Mr. White took Pavlov for. According to Pavlov, he had contacted White as a friend of a certain China scholar Bill Grinke (Akhmerov), whom White allegedly had met casually at a private party in 1939. Akhmerov in the process of building his cover studied at the Beijing university for about 10 month. By 1939 he had lived in the U.S. for several years and with his slightly Oriental looks could well pass for a foreigner other than Russian (he was Tartar, fluent in Turkish). Pavlov, on the other hand, had a map of Russia on his face and "hammers" and "sickles" all over him. I have no reason to suspect Gen. Pavlov of deliberately "embroidering" his story, though, I disapprove of his "outing" White. But in 1941 both parties obviously had its reasons for holding that meeting: Pavlov had an intelligence mission to perform, White may have indeed been very much impressed by Akhmerov and wanted to meet his messenger. As for the elements of espionage trade craft that Pavlov demonstrated... There is no telling if White recognized it as such. I know a few examples when an intelligence officer, acting on a false premise that he had an agent before him, employed trade craft and his partner did not object, taking it just as somewhat peculiar behavior.
It looks like I begin to ramble, but I thought it might interest you.
With the best wishes, Julius

From: Roger Sandilands
9/4/2015 2:27 PM
By coincidence, after reading about Colonel Bernard Bernstein in your book, I saw an article about him in Today's Times (attached).
Roger S

From: John Dietrich
To: Roger Sandilands <>;
Thu 9/4/2015 4:38 AM

        I am deeply indebted to you for pointing out some new areas of research.  I still stand by my basic position.  However, you have demonstrated that this is a much more complex subject than I had envisioned.  I only mention Laughlin Currie once in my manuscript: “The subcommittee’s parent Advisory Committee included Harry Dexter White, Lauchlin Currie, Alger Hiss, and Julian Wadleigh.  This committee was composed of suspected or proven Soviet agents.”  You apparently knew the man and investigated him thoroughly.  He was obviously a highly intelligent man with complex views.  From your research it would appear highly unlikely that he was a Communist.  However, that does not necessarily mean that he did not supply the Soviets with classified information.  I assume he was a progressive who shared many of the views of our wartime ally.  He may have thought it his patriotic duty to work with the Soviets.  The FBI has a file mentioning Currie:
        I have no idea what the FBI based this report on.  And that is the problem with this subject.  No source can be trusted 100%.  I started out as a skeptic and after corresponding with you I feel like I have stepped through the looking glass.  Biographers approach their subject with a bias.  Autobiographies are self-serving.  Government archive publications have been sanitized and many records have disappeared.  Even the Venona transcripts can be doubted because “in the spirit of machismo” people claimed they had an “agent” in the White House or other government agency.
        In your letter from Julius Kobyakov he claims that he was unimpressed by the file on Harry Dexter White.  He saw no record that White had been recruited.  Did he have access to all KGB and GRU files?  Were these files sanitized?  Is Kobyakov reliable?  In Lewis Hartshorn’s book, Alger Hiss, Whittaker Chambers and the Case That Ignited McCarthyism, Hartshorn writes: “Most interesting were the posts by Julius N. Kobyakov, a former Soviet intelligence officer who had personally conducted an official search of KGB archives to see if Alger Hiss had been a paid or unpaid Soviet agent or source.  Kobyakov discovered nothing to implicate Hiss, and he was further assured by his colleagues with access to the classified GRU archives that Hiss had never been a source for military intelligence.”  If Kobyakov is correct, Alger Hiss may be added to the list of falsely accused.
        I attribute the suggestion that White committed suicide to John Koster.  It may be in bad taste but it is one of three possibilities: suicide, assassination, or the more likely, natural causes brought on by the strain of testifying.  Suicide can not be ruled out in light of the July 1944 report claiming that White did not think about his personal security but feared political scandal that could discredit the “new course.”
        In dealing with the Morgenthau Plan you describe it as a “pastoralization” plan.  This was not Morgenthau’s or White’s description.  I am pretty confident this was a Churchillian innovation.  Pastoral is defined as having the simplicity, charm, serenity, or other characteristics generally attributed to rural areas.  He was attempting to put lipstick on a pig.  The plan was genocidal and he knew it.
        This subject still arouses powerful passions.  It is not like a study of the Punic wars.  I have attempted to provide an accurate account.  Of course I am unaware of my own bias.  But I have tried to be fair.
        Regards, John Dietrich

From: John Dietrich
To: Roger Sandilands <>;
Thu 9/6/2015 10:46 AM
Roger, I would like to know if you would object to me putting our correspondence on my blog.  I will delete your email address.  Regards, John

From: Roger Sandilands
9/6/2015 1:03 PM
John: That would be fine by me.
I'd like to add a comment on your statement: "From your research it would appear highly unlikely that he was a Communist. However, that does not necessarily mean that he did not supply the Soviets with classified information. I assume he was a progressive who shared many of the views of our wartime ally. He may have thought it his patriotic duty to work with the Soviets."
Indeed it was his "patriotic duty" and also his authorised duty, including directly by FDR, to communicate with the Soviets. I think his role can be understood from the following excerpt from my 2009 article, "An Archival Case Study: Revisiting The Life and Political Economy of Lauchlin Currie", in  Robert Leeson ed., Archival Insights into the Evolution of Economics (volume 3): American Power and Policy. Palgrave Macmillan, pp.105-33.
Roger [PS: You can post my email address if you wish, since it is readily available on the web anyway.]

From Grand Alliance to Cold War
Currie’s wartime role in foreign economic affairs was to come under intense scrutiny soon after Roosevelt’s death in April 1945. The Roosevelt administration had been assiduously promoting good relations with the Soviet ally and hoped that the close wartime cooperation would be continued postwar. Currie had been intimately involved in negotiations with the Soviets over wartime loans and their participation at Bretton Woods in late 1944 when it was still hoped that they would join the new multilateral institutions being established there.[i]<>
Another of Currie’s official involvements with the Soviets followed upon his high-profile assignment in January 1945 as head of an allied delegation to Bern to persuade the Swiss to block Nazi gold stored in Swiss banks and to prohibit further shipments through Switzerland of materiel for Kesselring’s forces in Italy. Currie’s personal memoirs (in a transcript of some oral history tapes), refer to his last interview with President Roosevelt upon his return from Switzerland in March 1945. The Swiss President had asked Currie to convey a private message to President Roosevelt that the Swiss were disturbed by their very poor relations with the Soviets, and that ‘they would appreciate it very much if Roosevelt would use his good offices to prepare the way for a better relation, to stop the attacks by the Moscow press on them as they would like to establish diplomatic relations’. (The Swiss feared their own interests were under threat with the Soviet advance into Central Europe.) Roosevelt said, ‘I don’t think I’d better give in the idea officially. You know everybody in the Swiss Embassy and in the Soviet Embassy.’ Currie then mentioned having met the Soviet cultural attaché. Roosevelt said splendid, and urged Currie to make the appropriate connections himself, informally, since ‘he was confident that what had to be done surely had to come from me’.
The ‘Soviet cultural attaché’ actually turned out to be the Soviets’ chief KGB officer in the Washington Embassy, Anatoly Gorsky. Many of Gorsky’s wartime coded cables to Moscow were later partially decrypted by the National Security Agency, some as early as 1946 or 1947. This work, now famously known as the ‘Venona’ project, was top secret until the release of some 2900 decrypted cables in 1995-96. Persons mentioned in these cables were scrutinised during the Cold War for evidence that their involvement with the Soviets was espionage rather than part of their official duties. Currie and his old friend Harry Dexter White were among those mentioned in the cables and both came to very public attention when in 1948 their names were mentioned by ex-Soviet agent Elizabeth Bentley in open testimony before the House Committee on Un-American Activities (HUAC). Though she had never met them herself, she claimed that White and Currie had passed on information to other Washington economists who were consciously abetting her own espionage activities. Currie and White both demanded to appear before HUAC to rebut these charges. White, in particular, caused a sensation with his robust handling of pointed questions from Congressman Richard Nixon. Their testimony appeared to satisfy the Committee at that time, though the strain contributed to the fatal heart attack that White suffered on his way home from the hearings.

[i] A revealing insight into contemporary attitudes toward the Soviets and hopes for continued economic and political cooperation after the war, is given by the erstwhile Assistant Secretary of State, Sumner Welles, The Time for Decision (October 1944). Currie was close to Welles from the summer of 1940 when they were both involved in embargo policies against Japan. Currie’s memoirs (Currie, 1953, pp. 152-3) record that Welles was ‘unquestionably one of the most competent persons I encountered in Government’ and that he ‘could understand why the President always preferred to deal with Welles [rather than Secretary Cordell Hull] when he could’. Currie contrasted Welles’s ‘competence and forcefulness’ with Hull’s ‘jealousy and vindictiveness’ that eventually forced Welles’s resignation in August 1943.


The innocence or guilt of Laughlin Currie is relevant because it reflects on other members of his circle.  Roger Sandilands approaches Currie and others with a presumption of innocence and maintains that presumption.  I see enough evidence to convince me that White was certainly guilty.  White was an economic genius and not a economic idiot.  He was more moderate than Morgenthau regarding the coal mines and he was aware of how the Versailles Peace Treaty had damaged everyone.  The Soviets followed contradictory policies after the war.  They wanted Germany destroyed and at the same time to provide reparations.  White’s moderation does not necessarily mean that he was not working in the interests of Stalin.  
Major-General Julius Kobyakov, deputy director of the KGB’s American desk in the late 1980s, provides a defense of both White and Currie.  He writes, “There was nothing in the PAGE (Currie) file to suggest that he had ever wittingly collaborated with the Soviet intelligence.”  What “files” was he referring to?  It would appear that he was only referring to the KGB files because he relied on associates to provide him the information in the GRU (military intelligence) files.  He claims that White and Currie were “no more than a “sub-source” “in the orbit of Nathan Silvermaster.”  What is a “sub-source?”  Kobyakov also claimed that there was nothing in these files to implicate Alger Hiss.  His comment of Currie appears to corroborate the FBI’s contention that he was a member of the Silvermaster group.  Here is where Sandilands and I might both be correct.  Did Currie “wittingly collaborated with the Soviet intelligence?”  He might be correct.  He knows a great deal more about Currie’s thinking than I do.

I am much more familiar with the case of Harry Dexter White.  It is difficult to believe that he was looking out for U.S. interests in his involvement with the Japanese ultimatum, the transfer of occupation currency plates to the Soviets and his authorship of the Morgenthau Plan.  He met with a Soviet agent during the Nazi-Soviet Pact on the recommendation of “a certain China scholar Bill Grinke (Akhmerov).”  He supposedly met “Bill” two years previously “casually at a private party.”  He was handed a note containing Soviet goals for provoking a war with Japan.  Should he not have been suspicious?  Instead of reporting the incident he composed a memo containing demands based on this note.

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