by David Talbot
Nixon, who had acknowledged that he was locking horns with a “rather noted scholar,” a man who held degrees from Columbia, Stanford, and Harvard, could only bow in agreement. “You are absolutely correct,” he told White.
The only committee member who found a weakness in White’s story that morning was John McDowell, a Pennsylvania Republican, who suggested that the former Treasury official had kept some suspicious company when he served in the Roosevelt administration. Several of the men whom he called “good friends,” including Silvermaster, were accused spies, McDowell pointed out. “In case we proved that these men are all part of an espionage ring, your place in history is going to be changed considerably, would you not think?” It proved to be a prophetic remark, since, after his death, White would indeed be widely condemned as a spy, a conclusion that was based largely on guilt by association.
White was certainly not entirely blameless. As the smartest man in Secretary Morgenthau’s inner council, he had sometimes operated in the Washington arena with a reckless arrogance. He was dismissive of bureaucratic protocols and saw nothing wrong with pursuing his own diplomatic initiatives with the Soviets. As White’s biographer, R. Bruce Craig, would conclude, he probably was guilty of “a species of espionage,” but a fairly benign one. There is no evidence that White handed over classified documents or subverted U.S. policy to correspond with the Soviet line. But he was guilty of frequent indiscretion when discussing policy issues with Soviet officials or with his left-wing friends and colleagues.
To White this boldness was all in service to a higher good—his dream of a harmonious global financial order. White felt that his communications with the Soviet camp were not only in line with American interests but were in keeping with the sentiments of his bosses, Morgenthau and FDR. By pursuing this dialogue, he believed he could help rope the Soviets into Roosevelt’s new world order. But White knew that he was taking a risk, and when the political mood in Washington shifted after FDR’s death, he suddenly seemed not merely idealistic but dangerous.
White claimed not to know the political affiliations of the men he helped bring into the federal government, yet he certainly must have known that some were close to the Communist Party if not actual members. To White, what mattered was that they were talented economists who brought impressive skills to government. The fact that most of them were, like him, products of eastern European Jewish families, who had worked hard to climb the academic and professional ladders while maintaining a strong sense of public service, only reinforced the bonds that he felt with them.
Despite the committee’s insistence that he disown former colleagues such as Silvermaster, White refused to do so. “You cannot erase seven or eight years of friendship with a man that way unless I see evidence, unless the court declares he is [guilty]—and until they prove he is guilty, I believe he is innocent.” It was one final, heartfelt declaration of principle from White, and it brought forth yet another eruption from the crowd. White, at pains to avoid coming across as a grandstander, apologized to Thomas. “I am sorry, Mr. Chairman, this applause is not my fault.”
After concluding his testimony, White left Capitol Hill for Union Station, where he boarded a train for New Hampshire. He and his wife had recently bought a farm there, known as Blueberry Hill, and he looked forward to some much-needed relaxation after the relentless stress of the FBI, grand jury, and HUAC investigations. On board the train, White felt chest pains, but when he arrived at the local station he insisted on continuing on to his remote farm, which lay at the end of a three-mile dirt road. The following day, August 14, he suffered a massive heart attack. Two physicians were summoned, but they declared the patient beyond their medical powers. Two days later, Harry Dexter White died at home, surrounded by his family.
For many, White seemed to be the victim of HUAC’s “special sort of tyranny,” in the words of one partisan reporter. An unusually passionate editorial in The New York Times condemned the committee for its coarse handling of White. HUAC could not be blamed for his heart disease, stated the editorial, but it could certainly be charged with having “aggravated” his condition by putting him through an investigative “ordeal” without “the due protection of laws. . . . This procedure is not the American way of doing things. It is the un-American way.” But Nixon appeared unfazed by the press furor, moving quickly forward with his inquisition of Hiss—who, after White’s passing, would serve as the next best emblem of Rooseveltian treachery.
Harry Dexter White’s death signified the final collapse of Washington’s New Deal order and the unique brand of utopian internationalism that he had championed. It was men like Nixon and Dulles who now moved into the vacuum.
By 1952, Richard Nixon’s triumph as a Cold War inquisitor had won him the number-two spot on the Republican presidential ticket headed by war hero Dwight D. Eisenhower. But on September 29, Drew Pearson, Washington’s leading muckraker, dropped a bombshell on Nixon—one of his favorite targets—that briefly threatened to end his political career. The story was part of a larger theme of corruption that reporters like Pearson believed hovered over Nixon’s career. Nixon, the humble son of Whittier, always seemed hungry for ways to profit from his public service.
Earlier in the race, Pearson had discovered that Nixon’s wealthy Southern California supporters had set up a slush fund for the politician’s personal use—a revelation that had nearly forced the vice presidential candidate to resign as Eisenhower’s running mate. It took Nixon’s brilliantly homespun TV address to the nation—which would go down in history as the “Checkers speech” after the black-and-white cocker spaniel that had been given to Nixon’s daughters by a supporter—to preempt the budding scandal and save his political career. “And you know, the kids love the dog,” Nixon told the largest audience that had ever tuned in for a political speech. “And I just want to say this right now, that regardless of what they say about it, we’re going to keep it.” His shameless performance managed to transform a case of blatant political corruption into a domestic drama that touched the hearts of millions of Americans.
Nixon’s enormous relief was shared by the GOP power brokers who had picked him for the race. It was the Dulles-Dewey group that had tapped Nixon for vice president. Their decision was conveyed to Eisenhower by Herbert Brownell Jr., a fellow Wall Street attorney who had taken a leave from his blue-chip firm to run the Republican campaign for the White House. The GOP brain trust convinced the aging general that the young senator from California not only brought regional balance to the ticket but the kind of slashing energy and anti-Communist fervor that the campaign needed.
But now, in the final weeks of the presidential contest, Pearson was again on the verge of blowing up Nixon’s career. Reporting in his widely syndicated Washington Merry-Go-Round column, Pearson revealed that the vice presidential candidate had left out something very important from his Checkers speech: namely, his crooked relationship with a Romanian industrialist named Nicolae Malaxa. The wealthy Romanian émigré had collaborated with the Nazis during the war, and later with the Communist regime that took over his homeland. But Malaxa’s reputation, Pearson reported, did not discredit him with Senator Nixon, who pulled strings on his behalf to allow him to continue living in the United States and to procure a major tax break for him.
Pearson knew that Nixon had performed these favors for Malaxa in return for an impressive bribe. But, lacking the documentary evidence, the columnist had to leave this crucial piece of evidence out of his story.
There was indeed a smoking gun: a $100,000 check from Malaxa deposited in Nixon’s Whittier bank account. But Pearson was unable to get his hands on it. In a twist of bad luck for Nixon, one of the tellers at his bank branch turned out to be a Romanian refugee who loathed Malaxa. He sent a photostatic copy of the check to political rivals of the notorious industrialist in the exile community, who in turn forwarded the copied check to their contact in the CIA, Gordon Mason, chief of the agency’s Balkans desk.
By fall 1952, A
llen Dulles was the number two man at the CIA and was in line to take over the agency with an Eisenhower-Nixon victory in November. As deputy director, Dulles was already making the agency his own, working with loyal associates like Frank Wisner—who would soon take over the agency’s action arm—on ways to escalate the covert war against the Eastern bloc. But the ambitious plans that Dulles and Wisner were hatching for a long-awaited Republican presidency suddenly seemed in peril when Gordon Mason walked into Wisner’s office with a copy of the Malaxa check. “Jesus Christ!” Wisner burst out. “We’d better see Allen Dulles.”
As he had long demonstrated, Frank Wisner was quite willing to recruit from among the ranks of ex-fascists for his espionage operations in Eastern Europe—many of whom he had slipped past immigration authorities into the United States despite their barbaric wartime records. But Wisner, somewhat mysteriously, had insisted on drawing the line with Nicolae Malaxa, whom he considered a particularly “unsavory” character. In a March 1951 CIA memo, Wisner had even urged that Malaxa—who had finagled his way into the United States after the war as part of a Romanian trade delegation—be deported. Wisner had served as the OSS station chief in Romania, and he considered the country his turf. He was acutely sensitive to the factions and feuds within the Romanian exile community, where Malaxa provoked feelings passionate enough to tear apart all hope of a united anti-Soviet front.
Despite Wisner’s feelings about Malaxa, he realized that Allen Dulles was deeply implicated in the Romanian’s “unsavory” story. Dulles had not only been Malaxa’s lawyer, he had introduced him to Nixon. The Malaxa money trail, in fact, led in many compromising directions, including Nixon’s bank account, Dulles’s law firm, CIA front organizations like the National Committee for a Free Europe, and even some of Wisner’s own secret combat groups. The Romanian industrialist, who reportedly stashed away as much as $500 million (worth over $6.5 billion today) in overseas accounts before he fled to the United States, had made himself extremely useful as a shadow financier for the underground Cold War.
Malaxa was the type of charming scoundrel with whom Dulles enjoyed doing business. The Romanian oligarch had no ideology; he believed only in opportunity. He had a witty sense of humor and the dark good looks of a dashing werewolf, with thick black hair and a pronounced widow’s peak. He conducted himself with a cynical, Mittel-European confidence that everyone had a price, greasing his way through life by smoothly slipping cash to all the right people. Bribery came so naturally to Malaxa that he once tried to buy off the dedicated U.S. Immigration and Naturalization Service prosecutor who was handling his case—a man who, to Malaxa’s great surprise, turned out to be incorruptible.
He began his career in modest fashion, as a locomotive repairman, but he had a talent for making connections and opening doors, and soon he amassed a small fortune as a manufacturer of railroad equipment. In the 1920s, he and his family moved into a mansion in Bucharest, where he entertained the capital’s high society, and befriended the mistress of King Carol II, Madame Magda Lupescu. In a deft, Game of Thrones–like move, he cemented his royal connections by arranging for his own daughter to become the mistress of the king’s son, Prince Michael. By forging a partnership with the king, who proved equally avaricious, Malaxa became a dominant player in the country’s steel, munitions, and oil industries.
In the 1930s, as Hitler built his war machine in Germany, King Carol’s rule came under increasing pressure from a homegrown fascist movement known as the Iron Guard. The virulently anti-Semitic organization blamed Jews for Romania’s woes and targeted prominent Jewish figures such as Madame Lupescu. Despite the debt he owed the king’s mistress for her patronage, the ever-opportunistic Malaxa began currying favor with the Iron Guard as the group grew more powerful, financing its activities and flying its flag from the roof of his stone mansion.
In September 1940, the Iron Guard forced King Carol to abdicate and a pro-German fascist government took power in Bucharest. With Hitler’s influence expanding in Romania, Malaxa made another nimble move, merging his industrial empire with that of Herman Goering’s brother Albert. “Your interests, my dear Mr. Malaxa, are the same as ours,” the Nazi industrialist warmly assured him.
In January 1941, Malaxa’s green-uniformed Iron Guard thugs, feeling betrayed by Romania’s new fascist government, launched a coup attempt, using the industrialist’s mansion as a base for their assault. During the coup, the Iron Guard fell upon the country’s Jews in one of the most horrific spasms of violence in Romania’s history. Thousands of Jews in Bucharest were rounded up and beaten and tortured, including one group of more than a hundred—among them children as young as five—who were marched into a municipal slaughterhouse and butchered. The Iron Guardsmen hung their victims, some still alive, on meat hooks and “mutilated them in a vicious parody of kosher slaughtering practices,” according to one later account. The Iron Guard’s Bucharest pogrom was so depraved that it shocked even the country’s fascist regime, which appealed to Hitler to help put down the uprising.
After the coup was suppressed, Malaxa was jailed as a leader of the conspiracy and his industrial empire was confiscated by the Nazis and the Romanian government. But, in 1944, as the advancing Soviet army drove the Germans out of Romania, Malaxa again rose from the ashes, insinuating himself into the new Moscow-backed regime. He was the only Romanian capitalist to whom the Communist government returned his industrial property.
Nevertheless, Malaxa was savvy enough to realize that his future was not bright in a Communist Romania. He had already taken the precaution of salting away much of his huge fortune in U.S. accounts. After the war, by making a generous distribution of bribes—including jewels, Cadillacs, and cash—Malaxa persuaded Romanian officials to allow him to travel to the United States, ostensibly on trade business for the country. He arrived in 1946 and never returned home.
Malaxa wisely chose to apply for permanent residency, instead of American citizenship, knowing the process was not as demanding. But his résumé was so eyebrow raising that his battle to stay in the United States would drag on for years. Malaxa’s OSS, CIA, FBI, and INS files bulged with condemnations of his morally dexterous, shape-shifting life. One government report labeled him “notorious.” Another called him “the most perfidious man in Romania.” He was a “master of the art of bribery” who had ushered in an “era of corruption” in Romania. He was a flagrant “opportunist” who “had been on all sides of the fence at various times.” He had gone from playing “Hitler’s game” to someone who “must be considered an agent of the Soviet government and of the Romanian Communists in the United States, even if he himself is not a Communist at heart.”
According to a 1952 CIA memo, “perhaps the most concise appraisal of Malaxa” came from an American diplomat who found him “entirely unscrupulous, turning with the wind, and like a cat [he] has developed to a high art the knack of landing on his feet. He is considered to be essentially a dangerous type of man.”
None of this mattered to Allen Dulles when Malaxa turned up at his office at Sullivan and Cromwell. The pertinent fact was that the Romanian had a huge fortune, and he was willing to spend millions of it where Dulles wanted him to. In return for financing Dulles’s far-flung anti-Communist network—which stretched from Buenos Aires to Bucharest—Malaxa secured Dulles’s influential help in his battle to stay in the United States. Some of Malaxa’s treasure went to prominent Romanian exile leaders who hoped to take power after the Communist regime was toppled. Other funds went to Juan Perón’s Argentina, where Malaxa was involved in a rising neofascist movement, and France, where he underwrote “scholarships” for exiled Romanian “students” who turned out to be veterans of the vicious Iron Guard.
By 1948, Malaxa was ensconced in a luxurious apartment on Manhattan’s Fifth Avenue, but his wheeling and dealing had begun to attract unwanted press attention. In May, gossip columnist Walter Winchell exposed the notorious collaborator who was freely enjoying the city’s pleasures—the “Balkanazi o
n Broadway,” he called Malaxa. Winchell noted that the “distinguished” firm of Sullivan and Cromwell had recently dropped the Romanian as a client, presumably because he had grown too hot.
But Dulles did not abandon Malaxa; behind the scenes, he entrusted the Romanian’s immigration battle to his political protégé Nixon. In return for Malaxa’s substantial gift of $100,000, the California senator began vigorously lobbying INS officials on his behalf and pushing an immigration bill through Congress that was designed to win Malaxa U.S. residency. When those efforts stalled due to determined resistance from legislators who were repelled by the émigré’s past, Malaxa and Nixon tried a different tack. With the help of Nixon cronies in Southern California, Malaxa announced that he was setting up a pipeline factory in Whittier that he called the Western Tube Corporation. Nixon wrote a letter to the Defense Production Administration, claiming that Malaxa’s project was “strategically and economically important, for both California and the entire United States.” The Western Tube factory was never built, but the phantom project succeeded in winning Malaxa a huge tax windfall. And it kept alive the Romanian’s immigration campaign. California congressman John Shelley later denounced the Western Tube affair as “a complete fraud, a springboard for [Malaxa’s] entry to the United States.”
