Harry Dexter White

This segment on the MP deals with Harry Dexter White the Assistant Secretary of the Treasury under Henry Morgenthau.  White was one of the most influential men in the 20th century.  He was Morgenthau’s most important adviser. Morgenthau gave White responsibility for all of the Treasury's foreign policy activities and appointed him the department's representative to other agencies including the Office of Strategic Services, America's wartime intelligence service and forerunner of the CIA.  As the founder of the International Monetary Fund and the World Bank he played a large part in the creation of the modern global economic system.  He also played an important role in the creation of the UN.  He was the author of the Morgenthau Plan and a Soviet agent.  A plan that almost drove Western Europe into the arms of the Soviets.

White was a also a prodigious recruiter.  He hired more than 200 individuals for positions in his Division of Monetary Research and managed to place his “agents” into other agencies where they in turn hired fellow “progressives.”  When most of the Communists were removed from government, many of the people described as progressives remained.  They were able to staff their organizations with likeminded individuals, many of whom are with us today.  These offspring of Harry Dexter White number in the tens of thousands.  Every department of the U.S. government has a significant number of these individuals.  In the Consumer Financial Protection Bureau they jokingly refer to themselves as Dumbledore’s Army.

White recommended Colonel Bernard Bernstein for financial adviser at Supreme Headquarters Allied Expeditionary Forces in Germany where Bernstein oversaw the implementation of provisions of the Morgenthau Plan.   General Clay claimed Bernstein was (quote) “very smart and energetic but is somewhat warped in his judgment of the problem as a whole."  General Clay was highly critical of the Civil Affairs Branch. “We certainly went in there with a great number of people (Civil Affairs Branch) who were either members of the Communist party or tended in that direction.  Many of these men had come to us on Treasury teams.” (https://www.trumanlibrary.org/oralhist/clayl.htm) White induced the Chinese Nationalists to hire Che Chow-ting, a secret Communist, to a senior position in their Ministry of Finance.

Like all Communist agents in the U.S. government White had his defenders.  Edward Peterson claimed (quote) “simple-minded observers” believed the Morgenthau Plan was part of the Communist conspiracy.  Professor Jeffrey K. Olick of the University of Virginia is teaching his students and the readers of his book, In the House of the Hangman, that, "Harry Dexter White, was accused in 1948 by Joseph McCarthy's House Un-American Affairs Committee [HUAC] of being a Soviet agent."  This absurd allegation has received wide circulation, repeated by news commentator Bill O’Reilly.  Fortunately, he was corrected by his guest.  She pointed out that Joseph McCarthy was elected to the United States Senate and Senators do not control committees in the House of Representative.  White volunteered to testify before the before the House Un-American Affairs Committee and gave a rousing soliliquy on American patriotism.

Rather than going through all the evidence like the Venona transcripts, demonstrating that White worked for the Soviets I will give just one example.  In 1952, Henry Morgenthau went to the FBI and requested their information on White.  After seeing White’s file, Morgenthau said he was "very upset" because there seemed "no question but that White was working for the Russians." 

White was responsible for many pro-Soviet policies.  His role in the creation of  the Morgenthau plan will be described in detail later.

In May 1941White was approached by Soviet agent Vitali Pavlov and given instructions to recommend the U.S. take a firm stand in their negotiations with Japan. This is referred to as Operation Snow.  It was designed to remove the Japanese threat to the Soviet’s eastern front by instigating a war between the U.S. and Japan.  One of the demands in Pavlov’s note was for Japan to evacuate Manchuria, a part of China where they had made large investments.  It was obvious that Japan would never accept this demand.  White sent a memo to Morgenthau containing the Soviet recommendations.  John Morton Blum claimed that Secretary of State Cordell Hull made the White memo the basis among others for fashioning his answer to Japan.  Herbert Romerstein contended, "Hull used most of the harsh, demanding language in his ultimatum to the Japanese on November 26, 1941." Certainly White did not single handedly provoke the Japanese attack on Pearl Harbor.  But he made a significant contribution.  On January 21, 2000, in the Independent Military Review, published in Moscow, Vladimir Karpov stated that, "Stalin was the real initiator of the ultimatum to Japan" that provoked the Pacific war.  It should be noted that White’s memo was written while the Nazi-Soviet Pact was still in force.

White was instrumental in providing the Soviets with a duplicate set of plates to produce occupation currency for Germany.  R. Bruce Craig wrote "Neither White nor anyone else in a position of authority in the Treasury or State departments could have anticipated the serious economic repercussions that developed in the ensuring months as a result of the War Department's failure to address occupation-currency redemption policies and practices."  Vladimir Petrov related that the three Western allies put into circulation a total of about 10.5 billion AM Marks.  The Soviets issued on "a very conservative estimate" 78 billion.  This amounted to a loss of more than $300,000,000 for the U.S. taxpayers.  Benn Steil called White’s trust in the Russians as, “inexcusably naïve, at best” and estimated the cost at 46.5 billion dollars in current dollars.  [https://www.youtube.com/watch?v=1ZM0r5rrrZA]  Many of White’s defenders claim that his policies failed because he was naïve.  White was not naïve.  He was an knowledgeable economist.  His policies worked exactly as planned.

White’s defenders often claim that he was sympathetic toward the Soviet Union because his parents had emigrated from there.  White’s parents hailed from Lithuania.  Lithuania was an independent country until it came under Soviet control as a result of the Molotov-Ribbentrop Pact.  Soviet occupation was accompanied by the routine atrocities that always followed their conquest.  Informed people knew about these atrocities.  If White had any love for his parents’ homeland he would have been strongly anti-communist.

White’s monetary policies led to extensive black marketing.  A cheap PX wristwatch, costing $15 or $20, would sell for as high as 5,000 Russian-printed occupation marks, which could be redeemed for a $500 postal money order.  Russians paid the equivalent of $1,000 for a Mickey Mouse watch.

The corruption reached the highest levels.  Edward Peterson reported that the chief U.S. Prosecutor at Nuremberg and Supreme Court Justice Robert Jackson demanded that the military property officer acquire two grand pianos for him.  Col. Stanley Andrews commented on a group of U.S. Congressmen that came to Germany for an inspection.  “They were given Post Exchange cards which allowed them to buy anything at they wanted at the local Post Exchange. They would load up their suitcases with cigarettes, and, on at least one occasion, a very prominent congressman asked me: ‘Tell me where this black market village is?’ and he headed straight for it.” 

Diana West in her book American Betrayal received a great deal of criticism for demonstrating how extensive Soviet influence was during the Roosevelt administration.  Hundreds of Soviet agents were working for Joseph Stalin during the period: collecting information and influencing policy.  Yet highly respected historians have denied Soviet agents influenced U.S. policy.

Harvey Klehr wrote "In our more than twenty years of archivally based research on Soviet espionage in America, we have uncovered ample documentation of Soviet intelligence obtaining American technical, military, and diplomatic information but very little indicating successful policy manipulation." 

John Hayes wrote “Soviet manipulation of American policy - which by the way Soviet intelligence agencies didn’t do that.  They were into intelligence, not policy manipulation. And there are sensible reasons for that—but that’s another question.”

It is a mystery why highly respected historians would jeopardize their credibility by claiming the Soviet agents did not manipulate policy.  There are many mysteries in the account of the Morgenthau Plan.  Once it is recognized that Soviet agents played an important role in determining U.S. policy many of these mysteries are solved.