On Harry Dexter White and Pearl Harbor

In the recent TLS I have an essay on Benn Steil’s new book on Bretton Woods. Unlike some notices, mine is critical. You can read mine here.

For a quick primer on where I stand on Bretton Woods, here’s an excerpt from the TLS:

…the Great Depression showed that the gold standard came at a price – it bound governments to worsen the economic slump, forcing prices to fall further by seeking to preserve convertibility to gold. As countries left gold – Britain went off in 1931, the United States in 1933 – they began to recover from the crisis. The Bretton Woods system acknowledged this lesson by permitting nations to adjust the peg that fixed their currencies to each other in case of need.

To prevent such adjustments from coming too often, members chipped in to the International Monetary Fund, on which they could draw to cover short-term international imbalances.

And to enable more nations to join the system, signatories also contributed to the International Bank for Reconstruction and Development (generally known as the World Bank) which would guarantee and make loans to rebuild war-torn countries and develop poor ones.

Thus the exchange rate regime would establish a prosperous status quo of trade at levels that would ensure full employment and high real incomes; the Fund would help maintain this status quo; the Bank would ensure over time that more nations could join the ranks of the prosperous and participate in this status quo.

The Bretton Woods system operated for twenty-five years, until in 1971 the United States, under President Richard Nixon, abandoned it. The Bretton Woods era saw low, stable inflation rates and high, stable economic growth. Indeed, the economic historian Michael Bordo’s comparative examination of monetary systems (including the old gold standard and the modern regime of floating currencies) shows that Bretton Woods performed “by far the best on virtually all criteria”. Capitalism has never looked more attractive than during this short happy period.

Which puts a sharper point on one of the most peculiar, if not poignant paradoxes of Bretton Woods: its major US architect was a Soviet spy.

So, to be clear, I wouldn’t argue that Bretton Woods was without flaws. But Steil says that Bretton Woods was “an economic apocalypse in the making”. (If you missed the apocalypse, it isn’t here yet. You have to wait.) And like Steil – and nearly everybody else – I think Harry Dexter White passed information to the Soviets. (To be precise, I think there is good evidence he passed information to the GRU in the middle 1930s and then to the NKVD (the later KGB) in the middle 1940s. I lay out some this story in the TLS essay.) Steil thinks White was not only a Soviet spy, but that he caused US intervention in World War II to benefit the USSR.

The story that Steil gives is dubious on its face. An NKVD officer, in his memoirs fifty years onward, remembered having lunch with White in May 1941 and asking him, “Did the United States recognize the Japanese threat, and was it determined to do something to counter Japanese aggression?”

Now, there are problems with the story already. Leave aside the source being a much-after-the-fact memoir. Note that the date is May 1941 – this is the month after the Soviets signed a neutrality pact with Japan, and a month before the Germans violated their neutrality pact with the Soviets. There is therefore no obvious reason why the Soviets should at this point want the US to go to war with Japan, let alone be anxious for it, as they are in Steil’s account. To be sure, one might concoct an explanation as to why this might be so, but Steil doesn’t, and should.

White did, in mid-1941, write a memorandum about US relations with Japan. At this time he was an assistant to the Treasury Secretary, Henry Morgenthau, Jr. Morgenthau was certainly close to Roosevelt, but he was (to repeat) the Secretary of the Treasury, not of State. Which is to say he was not at the center of US-Japan negotiations at this time. (Harvey Klehr notes this here.)

Steil’s argument is that the concessions which White’s memo asked of Japan “were unrealistic; the Japanese would never accept them. This, at least, was what Soviet intelligence was counting on.” Thus, if the White memo were presented to Japan it would ensure a war – that’s what the Soviets meant to happen. White thought the opposite, saying he aimed at “the successful transformation of a threatening and belligerent powerful enemy into a peaceful and prosperous neighbor.” So if he was acting as a Soviet agent because the Soviets wanted the US at war with Japan, he was not acting very effectively.

White presented his memo to Morgenthau; Morgenthau sent it to State; some of its language did find its way into a communiqué. As the historians William Langer and Everett Gleason write, it would “lose its identity and become merged in the final draft of a State Department document” – a memorandum from Hull to the Japanese presenting ten points, delivered on November 26.

Steil says that “That White was the author of the key ultimatum demands [i.e., those of November 26] is beyond dispute.” Clearly this statement is untrue; historians do not generally believe that White was the author of this document.

Moreover, it is not “beyond dispute” either that this document was “the key” document, or even an “ultimatum” in the run-up to Pearl Harbor. As Roberta Wohlstetter writes,

… the documents of these critical days in November make clear that history has many candidates for the “initial incident” in the last moments of tension before war, and what finally sparks the explosion is largely a matter of accident. When Secretary Hull presented his Ten Point Note, the Pearl Harbor task force had been under way for 24 hours.

So, contrary to Steil, I do not know of any reading of the scholarship, however charitable, that can justify Steil’s use of the phrase “beyond dispute”.

Then there is the question of sourcing. For his Pearl Harbor section, Steil relies on the decades-later reminiscence of an NKVD officer, as noted, and on the 2002 book by Jerrold and Leona Schecter, Sacred Secrets. There’s a problem with that, though. John Earl Haynes and Harvey Klehr describe the Schecters’ work as showing how

faulty memories, Soviet intelligence agency disinformation campaigns, sloppy citations, misplaced trust in documents provided by unidentified sources under unexplained circumstances, egregious lapses in logic and judgment can lead to conclusions unsupported by evidence.

The Schecters deposited the documents on which they depended in the Hoover library, to be available after ten years. Haynes and Klehr looked at them when they became available, and published their findings in 2011.

We did … find four purported KGB documents that internal evidence clearly indicates are inauthentic. All four documents purported to report on the espionage activities of Harry Dexter White, a senior US Treasury official who cooperated with Soviet intelligence in the 1930s and 1940s.… Sacred Secrets uses three of these fake documents in sections of the book dealing with Harry White. We do not suggest that the Schecters are responsible for creating these inauthentic documents or were aware of their inauthenticity and presume their unidentified suppliers of purported KGB material are the responsible parties. The Schecters, however, should have checked.…

Steil should have checked his sources, too. Haynes and Klehr say in that passage, it’s worth noting, that they’re sure that White spied for the Soviets. Yet they do not find the Schecters reliable.

The tale that White played an instrumental role in causing the Pearl Harbor attacks is so far from “beyond dispute” that cursory attention to scholarship would have tempered any such declaration.

Furthermore, what does it have to do with Bretton Woods? Steil gives it an extended section at the conclusion of his chapter introducing Harry Dexter White. But it is hard to understand why. These stories about White originate with scholars who thought US involvement in World War II was a terrible idea.

The war against Japan upset the whole structure of the international balance of power in Asia. The United States destroyed the one power that was able to check the flow of that Red tide in the Far East.… With the fall of Japan the last barrier to Russian domination of the Far East was removed.… The present Soviet military might, which threatens our national security, is the direct product of billions of lend-lease aid, coddling of Communists in high places in the American Government and failure to understand the basic drives of world Communism.

I do not think that Steil believes the war against the Axis was a bad idea. But I do not know what he does believe that makes the implausible Pearl Harbor story an important part of his book about Bretton Woods.

Then there is the whole thing about gold. But I’ve gone on too long already; maybe more on that another time.

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