Wild Bill Donovan

by Douglas Waller

  DONOVAN’S PLANE LANDED in Cairo at midday on Monday, November 15, a week before the conference, code-named Sextant. He settled into the OSS’s Cairo headquarters, a walled-in villa with a broad veranda and manicured lawn, which looked like a “bastard version of the Taj Mahal,” according to Hollywood actor Sterling Hayden, who had joined the OSS as a Mediterranean operative. Meeting in the luxury Mena House Hotel at the base of the Great Pyramids, Roosevelt, Churchill, and Chiang agreed to accept only unconditional surrender from Japan and to strip her of land she had seized from China and Russia. Donovan briefed Roosevelt on the Far East intelligence the OSS possessed and lobbied Chiang on the covert operations his agency could mount to help the Generalissimo evict the Japanese from his territory. The OSS Map Division, which Donovan’s coup plotters preferred to be rid of, also delivered some three thousand maps weighing more than seven hundred pounds to Sextant.

  When Roosevelt flew to Tehran on November 27 for the Big Three meeting with Churchill and Stalin, Donovan broke off and took his plane east to Asia. He stopped first at Mountbatten’s Southeast Asia Command headquarters in New Delhi. In the Far East, Donovan was hemmed in. Douglas MacArthur, who commanded the Southwest Pacific forces, and Admiral Chester Nimitz, in charge of the Pacific Ocean Areas to the north, were waging their wars with the brute force of naval ships, airpower, and troops storming tropical beaches. Neither saw much need for Donovan’s covert operatives. That left the OSS confined to the strategically minor theaters of China and Southeast Asia. To flatter Mountbatten, Donovan had sent Ford ahead of him with a film crew to shoot a propaganda movie on the British admiral. But the movie and the tickets to Oklahoma! turned out to go only so far with Mountbatten. Donovan’s aides in the region warned him that the admiral and his staff “were laying plans to dominate OSS activities in Southeast Asia.”

  On a windy Sunday afternoon, November 28, Donovan stepped off his plane at New Delhi’s airport. Colonel Richard Heppner, a law partner from New York who now served as Donovan’s representative on Mountbatten’s staff, greeted him, along with Edmond Taylor, a reporter who had worked on Donovan’s headquarters staff but later left to be Mountbatten’s personal adviser on covert warfare. Though fresh and alert from his overnight flight, Donovan looked “incorrigibly civilian,” Taylor observed. He had a “barbershop glow” and “fleshy jowls” and was dressed in a “carelessly worn, slightly rumpled khaki uniform with the blue ribbon of the Medal of Honor sewn on the breast of his tunic.” In a Wall Street office or a conference room in the Pentagon, Donovan always was impeccably tailored, but in the field he dispensed with spit and polish, which conveyed the impression he was not, and had no intention of being, a conventional soldier.

  Heppner and Taylor drove Donovan to Faridkot House, a gaudy palace that served as Mountbatten’s official residence. Ragged Indian servants padded into and out of the admiral’s office as he sipped tea and chatted about clandestine operations with the spy chief—neither man particularly concerned about foreign ears listening in on their conversation. Donovan bragged that if Mountbatten couldn’t spare two or three thousand soldiers for an operation “just call on OSS, which would send twenty or thirty men to do the job.” Mountbatten wasn’t impressed. After a friendly but tough round of bargaining, he allowed Donovan to create a new detachment in his command, which would organize all OSS operations in Southeast Asia. But always wary of mischief from Donovan’s men, Dickie Mountbatten kept a firm hand on the detachment. Like Churchill, he viewed Wild Bill and the other enthusiastic Americans both as allies and threats to British colonial interests—which was true in the spymaster’s case. Donovan flew to Agra in the northern state of Uttar Pradesh for a tour of the Taj Mahal before heading to China. He filed a five-page report with his Washington headquarters on the grinding poverty he witnessed. British colonial rule, Donovan concluded, “stands in the way of any immediate economic development.”

  CHINA HAD BEEN savaged by war since 1937. Twenty-five Japanese divisions now controlled vital industries, ports, and cities in the country’s center. They had successfully bottled up Mao Tse-tung’s communist force in the northwest and pinned down Chiang’s nationalist army in the south. Roosevelt had sent General Joseph “Vinegar Joe” Stilwell to China in early 1942 as Chiang’s nominal chief of staff to keep supply routes open to the Kuomintang army and train it to fight the Japanese. A rumpled and caustic officer who had spent years in China and spoke the language, Stilwell found Chiang so frustrating to work with he considered at one point having him assassinated. The generalissimo was a brutal, corrupt, and ineffective commander who wanted the Americans to fight his war with the Japanese while he husbanded his army to battle Mao’s communists. His cunning intelligence chief was General Tai Li, a short and stocky man always dressed in a khaki coat buttoned tightly at the collar, whose teeth were laced with gold bridgework that he exposed during the rare times he smiled. Reputedly wealthy from his private monopoly of China’s opium trade, Tai Li had been dubbed Chiang’s “Heinrich Himmler” by the OSS officers who knew him. An obsessive xenophobe, he commanded over 300,000 secret agents more preoccupied with spying on the communists and repressing internal dissent than fighting the Japanese.

  Within a month after the Pearl Harbor attack Donovan had ambitious plans for moving into China quickly with a large force of covert operatives. He wanted to develop a vast OSS intelligence network on the mainland married with Tai Li’s operatives. Since Chiang could not field an effective conventional army, Donovan envisioned a guerrilla force of Kuomintang commandos molded and led by the OSS, who would take the war to the Japanese. Stilwell approved his proposal to set up an espionage and sabotage school in Chungking, Chiang’s provisional capital, to train subversives not only for China but also to infiltrate throughout Korea and Southeast Asia. Donovan, who had been brainstorming ideas for unconventional warfare with Stilwell since their first meeting New Year’s Day 1942, found him to be an able but old-fashioned troop commander, open to bringing in the OSS but never really understanding, or caring to understand, what the operatives could do for him.

  Donovan, however, was just as clueless about the problems he would face in a country so vast with a culture so alien to him and most of his men. Chiang wanted no foreigners operating independently in the territory he controlled. Donovan had to live with a fact of life: Tai Li ran espionage in Nationalist China. So far, the intelligence he doled out to Stilwell and Washington had been too little, too late, and largely irrelevant. For the United States to have the information it wanted, Tai Li had to be reoriented to spy on the Japanese instead of on his own people. American diplomats in China believed only one man could change Tai Li’s ways: Mary Miles.

  Milton “Mary” Miles had enlisted in the Navy as a sailor in 1917 but had proved adept enough to win an appointment at Annapolis and become an officer. Now a captain, he would have preferred to have been in command of a ship but saluted and followed orders for land duty in China to collect intelligence for the Navy. Weather patterns that formed over the Asian mainland swept east across the Pacific where they could spell success or failure for Nimitz’s fleet operations. With Japan holding the Malay Peninsula, French Indochina, and the resource-rich Dutch East Indies, she also depended on secure shipping lanes along the coast of China. Miles set up weather stations to radio reports to U.S. warships in the Pacific and had coast watchers track Japanese cargo vessels for Allied submarines to sink. The Navy captain also became the lone American Tai Li would talk to. In short order, Miles considered Tai Li like an older brother—China’s greatest patriot behind the generalissimo and a man of “indomitable spirit,” he declared. Tai Li considered Miles and the money he could draw from the U.S. Navy a cash cow for his secret operations and gave the officer a special nickname to flatter him: “Mei Lo Shi,” after a winter plum.

  With no other way to wedge his force into China, Donovan joined Miles, who had struck a deal with Tai Li, called the Friendship Project, for the Chinese spy chief to share intelligence with the U.S.
Navy. Donovan made Miles his Far East director for the OSS, and by April 1943 the Navy captain and the Chinese spymaster had set up the Sino-American Cooperative Organization (SACO) at Tai Li’s headquarters in Friendship Valley outside Chungking. Tai Li ran the show—he was named director of SACO and Miles was made his deputy—but Miles promised Donovan the arrangement would solve all his problems in China. The organization would collect not only weather and shipping information but also mount OSS espionage and guerrilla operations against the Japanese. Tai Li’s covert army was the best he had ever seen, Miles wrote Donovan, and “I want you to know that I will turn this outfit inside out, if necessary, to produce” for the OSS. Miles demanded complete independence in working with his Chinese friend. Any meddling by Donovan’s headquarters and he would “sever” his connection with the OSS, the captain announced at the outset. Donovan would never put up with that kind of declaration from any other subordinate, but he realized that for now Miles could dictate his terms. Stilwell received almost no intelligence that wasn’t handed to him by Chiang’s army. Donovan had to work in China through Miles and Tai Li, or not at all.

  Donovan’s aides started out optimistic. With enough money and equipment from the OSS “Miles will be of tremendous assistance,” one wrote him. Donovan flew to China on December 6, 1943, however, to fire Mary Miles.

  The Sino-American Cooperative Organization proved a boon for the Navy. Miles eventually assembled 2,500 officers and enlisted men in China, who collected reams of weather and targeting information for the sea service. It was intelligence Tai Li had no interest in so he gave the captain a free hand to collect it. Miles boasted that he knew every enemy harbor, river, and port in China and Southeast Asia like the back of his hand. But Donovan soon realized he was being shortchanged. Miles did not send a single intelligence report to OSS headquarters until four months after the joint organization with Tai Li had been formed and what finally trickled into Washington and Stilwell’s command was inconsequential, such as Japanese magazines and digests from Indian newspaper articles, or intelligence summaries edited by Tai Li with no way for Donovan’s men to determine their credibility. Tai Li refused to let the OSS officers interview his agents or observe the guerrilla attacks he claimed they were carrying out against the Japanese. He also blocked Donovan’s men from launching independent espionage operations in China against the Japanese. Tai Li feared the OSS agents might dig up political and military secrets on the Kuomintang along the way, which Chiang did not want them to see.

  Donovan was in a straitjacket. Tai Li acted like a little dictator and Miles did nothing to discourage him. John Davies, who was detailed to Stilwell as his diplomatic officer, warned Donovan in a memo before he flew to Asia that the Navy captain had proven to be an “excessively naive” American planted in a country he did not understand, who was being played for a sucker by Tai Li. While Donovan wanted to take the fight to the Japanese, Tai Li still ran what amounted to a “racketeer mob”—now with better training and more sophisticated equipment from the OSS. Stilwell had already concluded the joint intelligence operation wasn’t “worth a damn.” Donovan found the situation even more galling because by the end of August he had poured twenty-five intelligence officers, research analysts, and propagandists into Friendship Valley along with $110,000 for Miles’s expenses and had gotten practically nothing in return. For Donovan, the final insult came when Miles wrote him that even with the open bank account Tai Li enjoyed from the OSS, the Chinese general kept “a little black book” on foreigners he distrusted, which included many of Donovan’s officers. Donovan thought it was time to confront Tai Li and be rid of his sidekick, Mary Miles.

  Donovan, in fact, had already begun working around the Chinese general. In early 1943, he had sounded out the State Department about sending one of his officers to Mao’s communists in the north. State blocked this for the moment for fear of antagonizing Chiang. Donovan’s China officers who did not work under the Sino-American Cooperative Organization tried to recruit their own agents, paying some with opium and at one point even running a bordello to ply sex for secrets. Before he landed in Chungking, Donovan had his plane stop at Kunming in southwestern China to arrange for an OSS detachment to provide targeting intelligence to Brigadier General Claire Chennault, the maverick Flying Tigers commander who now led the 14th Air Force attacking Japanese troops on the mainland. But as far back as April 1942, Donovan had begun his most secret operation behind Tai Li’s back.

  Cornelius Vander Starr was a New York insurance magnate and international investor who had spent two decades in Shanghai. Among the many businesses Starr had accumulated by his early fifties was the English-language Shanghai Evening Post and Mercury, which he founded in 1931 and which the Japanese seized in 1939 after they swept through the east coast metropolis at the mouth of the Yangtze River. Donovan, an old friend, had asked Starr to join his operation in January 1942 as his top intelligence officer for Asia. Starr had begged off because of the demands of his multinational enterprise, but he passed along the names of other international businessmen Donovan could hire and helped him set up an insurance unit to mine the records insurance companies had on buildings in Axis countries, which helped the Air Force select bombing targets. Starr also wrote a memo to Donovan on how to organize business covers in Asia for his intelligence.

  By the end of 1942, however, Starr took his intelligence work for Donovan an important step further. He formed a front company for the OSS, called Metropolitan Motors Overseas Incorporated, and arranged for one of his associates, a Canadian named James Arthur Duff, who had been born in China, to return to Kunming as its president and pretend to import cars. Duff’s real job, along with another OSS undercover agent and a Hong Kong smuggler he brought with him, was to recruit snitches to feed intelligence on the Japanese.

  Starr formed another, even bigger, front company for Donovan: the Shanghai Evening Post and Mercury, which he reconstituted with editions published in New York and Chungking. Donovan kept it one of the most tightly held secrets in his organization. Again, little paperwork was produced on this operation and Donovan ordered that few people in headquarters be cleared to know about it. The “S Project,” as it became known, “can be blown sky-high if dealt with lightly and treated in a careless manner,” one highly classified memo warned. Donovan had good reason for concern over leaks. Beyond the danger exposure posed for Starr’s newspaper, the spymaster was circumventing Tai Li and Chiang with his own clandestine intelligence organization in their country. Stilwell was briefed but Donovan kept the project secret from Miles.

  The OSS put up $350,000 to start the New York and China editions and Donovan eventually agreed to subsidize the Chungking paper to the tune of $500,000 a year, a huge sum in that day. His agents posed as reporters on the news staffs for the New York paper, which started publishing New Year’s Day 1943, and for the Chungking paper, whose first edition rolled off the press on October 31, 1943, less than a fortnight before Donovan left for Asia. The Metropolitan Motors and Shanghai Evening Post fronts ended up with mixed results. The agents on the New York paper compiled dossiers on five thousand Asians or Americans with Asia connections in the United States who could help Donovan’s organizations with information. Duff, who eventually had a falling out with Starr, tried to collect military information under his business cover but admitted later that the product was paltry and not worth the money Donovan paid for it. Like all Westerners in China, Duff and the other American agents in Starr’s two networks stood out and were kept under close watch by Tai Li’s men. They were reduced to collecting largely “rumors and tall tales,” Duff believed. “They would have done just as well if they were sent to the South Pole to gather intelligence amongst the penguins.” The reporters in Chungking, who divided their time between writing real news for the paper and filing secret cables to Stilwell’s headquarters and the OSS in Washington, produced 1,500 reports over two years, practically all of which dealt with political and economic conditions in China or Japan. William La
nger’s academics in the research department found their reports on such subjects as “Japanese Banking Institutions” and “Chinese Communications Facilities” valuable, but none of them much help for “immediate war operations.” Tai Li, not Donovan’s reporters, held the key to military secrets.

  Shortly before two o’clock on Thursday afternoon, December 2, 1943, Donovan’s B-24 Liberator bomber, with a full combat crew and .50-caliber machine guns bristling from four turrets, landed at the military airport along the bank of the Jialing River, which with the upper reaches of the Yangtze intersected Chungking. Encased in a wall built during the Ming Dynasty, Chungking was a fortress city atop a cliff, protected from Japanese invasion by mountains and impenetrable gorges to the east. Fertile rice paddies and vegetable gardens stretched up to the wall, while inside, the city teemed with fresh fruit stands and squealing pigs brought in from the countryside and sedan chairs and rickshaws lifted and pulled by coolies. A quarter-million refugees from Chiang’s Nationalist government who fled the Japanese had invaded the city of 300,000 and taken over hotels and office buildings for their ministries as well as the best villas outside the walls for their military headquarters and private residences.

  Tai Li and Miles stood on the airport tarmac waiting as the fuselage door opened and Donovan climbed down the ladder from the bomber. The Chinese spy chief knew his American counterpart was coming with a long list of complaints about the product being delivered to the Office of Strategic Services. Donovan had no grounds to gripe, Tai Li thought; the Chinese had been more than generous with the Americans. Tai Li decided to smother the OSS director with Oriental civility and send him on his way. He had a motorcade whisk Donovan to a sumptuous house in Jarling Village outside the city and offered him the run of nearby Friendship Valley, where Tai Li kept his mansion and office.