Donovan

by Richard Dunlop

  The manicurist was attractive, which didn’t detract from Donovan’s interest in her, but the tidbits of information that she gave him about the other people attending the conference were what really mattered. “It’s always important to find out all you can about people, to know who they are, and how they behave,” Donovan explained to Murphy. “Then you can have a better chance of bringing them together.”

  Donovan made friends with the political leaders of the Southwest. “Governors, secretaries, political people, I saw them all with Donovan,” said Murphy. “They were brilliant people in their fields, but Donovan was the most brilliant of them all. He could measure their thoughts and get them into agreement. He worked hard, day and night, met different elements to conciliate, persuade. He never compromised a principle.

  “ ‘You may be right, and I respect your view,’ Donovan would say, ‘but I think I’m right and I’m going to have to insist on it.’ ”

  Donovan was at his best when he could meet with one or two of the delegates at a time. He could draw them out, charm them so that they made compromises just to please him. He showed a formidable understanding of the history and geology of the area and of the engineering and agricultural problems involved.

  During each recess in the negotiations, Donovan hurried back to Washington, because this was at the time he was being considered for the Hoover cabinet. By April most of the points at issue had been settled, but the Imperial Valley people still were reluctant to approve any upriver dams or irrigation projects that might siphon away water that they needed for their irrigation canals.

  Finally, on June 14 Donovan could report to President Hoover that the conference was near agreement. Donovan convened the delegates in Washington for a final session. The Colorado River Compact made possible the construction of Boulder Dam, which Hoover was able to announce later in 1929.

  At the same time that Donovan was chairing the Colorado River Commission, he was planning a new law firm. Henry Rerrick Bond had been assistant secretary of the treasury under Coolidge, in charge of internal revenue. Donovan and Bond announced their partnership on October 9.

  “They had a balanced firm from the start,” according to Jim Murphy. “Bond was the firm’s tax expert, and antitrust was Donovan’s specialty.”

  The Washington offices were in a 23-room suite on the tenth floor of the new Shoreham Building. Donovan had made Frank Raichle his New York City partner, and the offices of Donovan and Raichle were in the Lee Higgins Building at 41 Broad Street. Donovan and Raichle also had offices in Buffalo’s Marine Trust Building. When soon afterward Donovan’s New York landlord went bankrupt, he moved the firm to 2 Wall Street, where his own corner office overlooked Trinity Church and Broadway. Donovan placed a walnut bust of George Washington in his office as an inspiration, and he often gazed out the window at Trinity Church, where Alexander Hamilton, whose brand of conservative patriotism he admired, lay buried.

  “Sometimes at night I think I can see the ghosts of the early American patriots rising from their graves to look with wonder at what their descendants have done with this island of Manhattan,” he once told a visitor.

  When a visitor came into the room, Donovan waved him to a dark green leather couch along one wall. He rarely conversed from behind his desk but perched on the other end of the couch or sat in a nearby red leather armchair, which he once said was his favorite chair in all the world. It was his “think chair.” Sometimes he would ask Jane Smith or Walter Berry, his secretaries, to take all phone calls and keep callers away, and he would lean back in this chair and ponder his problems, which ranged from law cases to the latest intelligence on events in Europe. Occasionally also he stretched out on the couch and catnapped.

  In the spring Raichle had told Donovan that he was going to get married. “Very interesting,” said Donovan. “I have a piece of advice for you. Don’t give up your woman friends. They’ll tend to improve your manners.”

  Raichle helped to set up the New York offices, but after his marriage he preferred to live in Buffalo. Carl Newton and George Leisure, the latter a highly skilled trial lawyer who had been trained by Clarence Darrow, were among the other early New York partners. Over the years the firm kept changing partners and growing until it metamorphosed into Donovan, Leisure, Newton, Lumbard, and Irvine, one of the foremost law firms on Wall Street. Donovan and his partners were to handle some of the major cases of the 1930s.

  “Donovan’s law work was built on antitrust cases,” said Jim Murphy. “He devoted the minimum time to his law practice, since he had no interest in accumulating a fortune, in making money for money itself. His interest was in world affairs.”

  When Murphy wanted to set up his own office, Donovan permitted him to take with him any cases he was working on. The Donovan law firm paid his salary for six months to help him get started. Murphy moved down one floor to the ninth floor, but Donovan still gave him special assignments. “His own office might be losing money,” said Richard Greenlee, a young Donovan partner, “but he sent business to Jim Murphy.”

  During those years of his greatest legal success, Donovan was a lawyer’s lawyer, an expert in appellate litigation as well as antitrust work. He argued a number of landmark cases before the Supreme Court.

  “He had the ability to reduce complex problems to simple terms,” explained Greenlee. “Instead of being content to see a corporate problem on paper, he would go to see factories and plants to observe concrete details. He then could understand the situation better, make pictures with words, and convince his listeners.”

  “He was intuitively brilliant,” added Guy Martin, also a Donovan partner.

  Donovan was always after the truth, determined to get at the facts and exhausting every conceivable way of unearthing them. On some cases he amassed incredible mountains of facts and figures and marshaled all of his evidence in clear and logical ways. This approach foreshadowed his vast intelligence undertakings of the future.

  In the Humphrey case in 1935, Donovan argued before the Supreme Court that the President of the United States did not have the right arbitrarily to remove the chairman of the Federal Trade Commission. “The power to fire is the power to control,” he claimed.

  The Supreme Court agreed with Donovan, and it is generally believed that this decision played an important role in President Franklin Roosevelt’s later attempt to pack the court. Roosevelt also believed that the power to fire is the power to control, and he had no intention of letting an uncooperative Supreme Court balk his complete control of the federal government.

  During the Depression, producers of bituminous coal in Appalachia drew close to bankruptcy, and miners were being laid off in vast numbers. The mine owners came to Donovan with a plan to organize a joint selling agency representing 73 percent of the Appalachian coal producers. When John Lord O’Brian’s antitrust division attacked the organization as being monopolistic and in restraint of trade, Donovan insisted that the organization was a necessary measure of “economic self-defense.” O’Brian won the case in a federal court in Asheville, North Carolina, but Donovan appealed to the Supreme Court and won. Chief Justice Charles Evans Hughes wrote the opinion supporting Donovan.

  “I think that it is a healthy sign to see that the Court is ready to approve a plan for the correction of abuses in industry when the industry itself shows the honesty and intelligence to try to work out a solution,” Donovan wrote.

  In 1929 Donovan served without fee as counsel to an investigation of bankruptcy scandals in New York. As the Great Depression deepened, bankruptcies increased, and by the time unscrupulous lawyers had finished with a case, creditors were lucky to get eight cents on a dollar of a debt. A federal judge, Francis A. Winslow, resigned in disgrace, a lawyer killed himself, and 12 other attorneys were indicted. Donovan’s task was to investigate what was wrong with bankruptcy procedures and recommend reforms. A Yale Law School staff helped Donovan study 1,000 separate court files and listen to the testimony of 4,000 witnesses. The report filled 12 volu
mes covering bankruptcy proceedings not only in the United States but in foreign countries as well. The enormous fact-finding effort, depending as it did upon the work of so many people, all coordinated by Donovan, also foreshadowed some of the huge intelligence-gathering enterprises of the future OSS years.

  The final 358-page summary was submitted by Donovan to Judge Thomas D. Thacker of the U.S. Court, Southern New York District, in April 1930. Donovan urged the creation of a federal bankruptcy administrator to take the burden off the federal judges. The administrator would be appointed by and responsible to the President. This would speed up cases, save time and money, and eliminate the opportunities for legal cupidity. Donovan’s work became the basis for congressional reform of the federal bankruptcy laws.

  Donovan also served without remuneration as counsel to a New York State legislative committee that investigated the Public Service Commission. This too led to reforms. In 1931 he was New York State chairman of the American Legion’s drive to find jobs for the increasing armies of unemployed, and his committee found work for 100,000 men. He was chairman of the Emergency Unemployment Relief Committee’s Morale Committee, and he was a member of the board of arbitration in the labor controversy between the American Train Dispatchers Association and the Boston and Maine Railroad. He served in all these capacities without pay.

  The busy Donovan commuted back and forth between New York and Washington on the Pennsylvania Railroad. On Fridays he often took the Congressional Limited with Jim Murphy from Washington to New York, where he kept a suite at the St. Regis Hotel and later an apartment on Beekman Place. He’d work on the train or bring along somebody with whom he had business to discuss.

  “He knew a lot of artists, writers, and performers,” recalled Murphy, “and sometimes one of these people would ride with us. Alexander Woollcott came down from New York several times just to ride back on the train to New York with him. He would phone me to find out on what train Bill had a reservation, and he’d either meet Bill in the station or on the train.”

  Donovan would often carry a huge stack of books aboard the train. He read at great speed.

  “You can’t possibly know what you’ve just read,” Murphy said one day.

  “You check me,” replied Donovan.

  “I’d pick out a book, and he’d dictate a complete synopsis of the book, together with any detail that I asked for,” remembered Murphy.

  In New York City on a Saturday night, Donovan and Murphy often dined together and then went to Brentano’s bookstore. There Donovan would browse through the latest titles and buy volumes on politics, foreign affairs, and biography. He read everything but novels, which he considered a waste of time. He did, however, have a deep affection for 18th-century poetry. As he read, he would mark passages in the book with a pencil, because this helped the information sink deep into his memory. He kept a lectern in his office so that if he grew tired of reading at his desk, he could read standing up.

  Donovan’s interests were wide-ranging and his ability to concentrate incredible. Ned Putzell, another friend, remembered going to see Donovan at his New York apartment and finding him stretched out on a cot, reading a book and listening to a news report from abroad on the short-wave radio, while his masseur kneaded his back. He studied the German language, because he was convinced that he would need to speak German in the future, and he learned everything he could about intelligence problems all the way back to biblical times. The intelligence services of the Byzantine Empire held a special fascination for him.

  Both in New York and Washington, even in the winter, Donovan often kept the windows open in his office. “He wore a three-piece suit of wool,” said Van Halsey, Donovan’s stockbroker. “You’d have to put on a fur coat to go and see him in his office.”

  Murphy was a frequent guest in the Donovan home in Georgetown. He dined with him, and sometimes worked with him after dinner so late that Donovan would ask him to stay the night. “He wouldn’t go to bed until three,” said Murphy. “Then he’d be up at six.”

  Donovan would walk into Murphy’s bedroom. “Come on, Jim!” he would say. “It’s time for breakfast.”

  On most nights Donovan slept only three or four hours, but then he catnapped for ten minutes or so if he felt drowsy during the day.

  He seemed to hunger for companionship. He loved parties, particularly if beautiful women were present, and on such occasions he was witty and charming. Since he was solicitous of the ladies, he always had his pick of them, married or unmarried, and he took full advantage of this. Women usually found him much more understanding than their husbands, and many asked his advice and counsel on all kinds of problems.

  What Ruth Donovan thought of his dozens of feminine admirers and his affairs can only be surmised. Jim Murphy remembered only that from time to time Ruth and Bill Donovan would quarrel over money. She had been born wealthy, and her husband had been born poor. She seemed to have a much greater appreciation of the value of wealth than he did, and she found his life-style extravagant. Usually during these years she either kept to their summer home on the Massachusetts South Shore, where she had the sympathetic and friendly support of old friends, or stayed in New York at their Beekman Place apartment. Yet let Ruth have any trouble or illness, and Donovan rushed to her side.

  Donovan spent as much time as he could with his teenage children. “Patricia had her father’s energy and intelligence,” said Guy Martin, “David his mother’s shyness.” Donovan found himself trying to rein his daughter in. When she talked about going on a round-the-world cruise on the schooner Yankee, an adventure that would have appealed to him when he was a youth, he refused to approve (he finally relented a few years later). On the other hand, he tried to spur his son on.

  Van Halsey handled Donovan’s stock investments. “He had no more idea of financial deals than a cat,” he recalled. “It was also hard to catch him when a decision had to be made.”

  Donovan would phone Halsey with an order to buy this stock or that. “I want you to buy some National City Bank,” he said one day.

  “Why, Bill? Why?”

  “Charlie Mitchell says that it’s going sky high.”

  On the morning that the stock market crashed, Bill Donovan phoned Halsey. “I want you to buy some more National City.”

  “Bill, your account won’t stand it. You’ve got too much already, Bill. We just can’t do it.”

  “Charlie says you’ve got to.”

  “We’ll have to get more collateral.”

  National City Bank went up to $550 a share, and then fell to $55. “We were able to rescue Bill’s account,” said Halsey, “and he was able to climb out of it.”

  Within a few months after the stock market’s fall, Donovan was ready to plunge into stocks again, and Halsey had to remind him rather grimly that there are four words in the English language that an investor couldn’t use—“if only” and “next time.”

  Throughout these hectic years of public service and private law practice in Washington and New York, Donovan continued to think of himself as a Buffalonian. He gave the Buffalo Club as his voting address, and he stayed there when he returned to the city without Ruth.

  “He had a room on the top floor,” said Phil Impelliteri, the club manager. “He would have breakfast at the club and then be gone all day, return for dinner, and then go for a long walk.”

  Bill Donovan would walk up Delaware Avenue past the big Rumsey house, where he had courted Ruth, or down to the waterfront and the grain elevators that he had known as a boy. At Christmastime Ruth and Bill and their children would arrive in Buffalo for the holidays. They stayed in the house on Delaware Avenue, and there was much good cheer and singing around the piano. Then the children would return to school, Ruth would go back to New York, and Bill more often than not would go to Washington.

  The deepening world economic depression was causing fearful strains on the nations of Europe, and from time to time Donovan crossed the Atlantic to observe firsthand the unfolding crisis. Some
times he had legal business to attend to as well, and sometimes he claimed to be traveling for pleasure.

  Usually Donovan managed to make his trips without attracting public attention, but when he returned on June 4, 1931, on the Ile de France, he had to be brought ashore in an ambulance. While he was playing tennis on the sports deck of the liner, his right leg suddenly collapsed under him. When the ship’s surgeon examined him, he discovered torn ligaments around the knee that had been injured by a bullet in World War I. Donovan spent the remainder of the crossing in bed. When shipboard reporters flocked into his stateroom to interview him, he deprecated his injury. When they asked what he had been doing in Europe, he replied that he was not in government service and now had only a common garden variety of law practice. Not many of the reporters believed him.

  In September 1931 Donovan went on a more significant trip, which he managed to keep so secret that even today there is little record to be found of it. On September 18, a bomb blew apart the tracks of the South Manchurian Railway near Mukden. The Japanese, who controlled the railroad under the terms of a lease forced upon China, blamed the Chinese for the incident; the Chinese in turn blamed the Japanese. Donovan intended to find out exactly who was to blame. The tracks were repaired in a few hours, but the Japanese found the explosion sufficient excuse for launching an invasion.

  Donovan found himself in the same part of Manchuria that he had crossed with Ambassador Morris on the Siberian trip of 1919. He also found that some of the young Japanese officers he had met 12 years before were now in high command positions. They bluntly told him that China was destined to be part of Japan’s necessary sphere of influence, and the United States would do well to accommodate itself to this. Chinese contacts told Donovan that not only the bombing but other incidents had been manufactured by the Japanese. In the summer of 1931, Manchurian soldiers in the pay of the Japanese pushed a Japanese officer off a sidewalk in Mukden. When he objected, they drew their knives and cut him to pieces. The Japanese government demanded to know what had happened. The soldiers announced that they had been picked by their superiors in the Chinese Army to murder Japanese officers.