HENRY MORGENTHAU’S TREASURY DEPARTMENT was also the architect of Operation Safehaven. The Bretton Woods Agreement of July 1944, intended to establish a liberal capitalist economic system throughout the industrial nations in the aftermath of the war, had also called on neutral countries to cease the transfer of assets across occupied Europe. In order to choke off the flight of capital from the Third Reich, on August 14 the United States and Britain brought severe pressure to bear on Switzerland to sign a trade agreement that would reduce its dealings with Nazi Germany. Now that the tide of war had turned in favor of the Allies, Switzerland was willing to comply, but in reality, the process of money-laundering was so pervasive that little was achieved to halt it. Furthermore, almost two-thirds of Switzerland’s trade was with Nazi Germany and in the midst of a world war it was difficult to judge what was illegal and what was legitimate.
Operation Safehaven was implemented on December 6, 1944, with the aim of tracking the movement of Nazi loot and assets around the world and locating those hidden in neutral countries. However, for Roosevelt and Morgenthau this plan had a wider purpose. They needed concrete evidence of illegality to bring against the major American corporations that had traded with Nazi Germany and those members of the political establishment who were sympathetic to the Nazis: men such as the crypto-Nazi Henry Ford; Joseph P. Kennedy Sr., former U.S. ambassador to London; and John D. Rockefeller Jr., son of John D. Rockefeller Sr., the founder of Standard Oil and advocate of eugenics. Some of these corporations and individuals had tried to undermine the New Deal and destabilize Roosevelt’s administration during the 1930s.
This ambitious operation sought the prosecution as war criminals of all those who ran the Nazi war machine and the industrial concerns that sustained it. Bankers and industrialists such as Abs, Schacht, Schröder, Krupp, Flick, Schmitz, and a legion of others were to stand in the dock of an international tribunal and be judged for their actions. Once they were in open court, Morgenthau would reveal years of intercepted documentation, wiretap evidence, and decrypts of Swiss bank codes and cables, courtesy of Ultra intelligence via MI6. In order to redeem themselves, the defendants would have to reveal their dealings with American corporations such as Ford Motor Company, General Motors, and Standard Oil. All the companies and banks found to have traded with the enemy would then face the full rigor of the law in the United States. It was an elegant plan for revenge, legitimized by the victory of good over evil on the battlefield.
Since Morgenthau was distrustful of both the Justice Department and the State Department, Safehaven was entrusted to a select handful of personnel in the Federal Economic Administration (FEA) of the Treasury Department. The president, through the FEA, instructed a new offshoot of X-2 counterintelligence within the Special Intelligence division of the OSS to uncover and collect evidence, particularly in neutral countries, concerning the transfers of Nazi loot and gold. However, this effort required the cooperation of OSS agents already on the ground, and in Switzerland this was problematical—since one of the suspects of Operation Safehaven was Allen Dulles himself, because of his extensive corporate connections and his links with various Nazi groups. Despite this difficulty, the investigation necessarily focused on the gold dealings undertaken by Swiss banks. This became of major concern to Swiss ambassador Bruggmann once he learned of Operation Safehaven through his indiscreet brother-in-law, vice president Henry Wallace. The exposure of the explicit links between Swiss banks and Nazi Germany would be a major potential embarrassment to the Swiss government once the war was over; accordingly, the Swiss Secret Service alerted Allen Dulles about the Safehaven investigation into his affairs.
BY FALL OF 1944, ALLEN DULLES was increasingly frustrated by Washington’s policy decisions that, in his opinion, were prolonging the war. His main concern now was to minimize the encroachment of the Red Army into Western Europe, and the best way to do that was to end the war as soon as possible by any likely means.
His volume of work remained high, and his latest coup in September 1944 was the acquisition of information about the Germans’ creation of what was termed a “National Redoubt” in the Bavarian Alps, where the Nazi leadership would hide and its fanatical supporters would wage guerrilla warfare even after the military defeat of Germany. The information came from an Austrian SD officer, SS Maj. Wilhelm Höttl, via an Austrian lawyer who lived in Switzerland, Kurt Grimm. Through his law firm, Grimm had excellent contacts throughout occupied Europe; Dulles’s firm, Sullivan & Cromwell, shared business clients with Grimm and now the two men even shared the same tailor. According to a senior British intelligence officer, Grimm was “one of the three major sources of Allen Dulles’s rather remarkable operation in Bern.” Of particular interest to Dulles was the fact that Höttl was on the staff of SS and Police Gen. Ernst Kaltenbrunner, chief of the RSHA and second only to Heinrich Himmler in the SS hierarchy; Höttl thus represented another conduit to the Nazi leadership.
Although doubtful about the notion of a National Redoubt, Dulles duly passed the information to Washington. By this time, OSS communications from Bern were far more effective, thanks to another canny deal. Dulles had struck a bargain with Gen. Roger Masson, head of the Swiss Secret Service. Allied aircrews who had been obliged to make forced landings in Switzerland were held in internment camps, which by the end of the war held some 1,500 American airmen. Now, each day, up to a dozen of these USAAF personnel were allowed to work at the U.S. legation while on parole, returning to their camps in the evening. They provided a useful pool of technical expertise to Dulles and the OSS; this contravened the rules of war, but then, so did the German employment of crewmen from the Admiral Graf Spee in neutral Argentina. Communications are vital to the rapid flow of intelligence back to the decision-makers, but there was always a disconnect between the intelligence services and the Roosevelt administration. Often, current and timely intelligence assessments were ignored in favor of preconceptions and policy, not the least of which was the continuing appeasement of Stalin. No matter how often Allen Dulles reiterated the growing threat of communist expansionism in Eastern Europe, his advice was ignored.
Dulles was also targeted by German intelligence, including an elite Luftwaffe code-breaking unit designated Luftfahrtforschüngsamt (Luftwaffe radio intercept unit). When Abwehr agents learned of Operation Safehaven through their agent Habakuk, they set about frustrating its efforts, particularly in Switzerland, where it was potentially most dangerous to the ongoing German capital transfers. The Abwehr agents passed the word to Dulles that both the British and the Americans were intercepting his communications—as they themselves had been, but would now no longer be able to, thanks to their revealing their hand in this way. They, too, told Dulles that he was a subject of investigation by the Treasury Department through Operation Safehaven. He immediately changed his encryption methods to the more secure “one-time pad” system and from then on his message traffic remained secure. Transcribing the messages from the Vernam cipher is a laborious handwritten process, hence Dulles’s need for the services of interned USAAF personnel for encryption.
Dulles also exposed Henry Wallace as the source of the revelation of both the Morgenthau Plan and Operation Safehaven to Ambassador Bruggmann and ultimately to the Germans. President Roosevelt had no choice but to ditch Wallace and nominate the senator from Arkansas, Harry S. Truman, as his candidate for vice president in the upcoming presidential election. As a committed opponent of communism, Truman was far more acceptable to Dulles. At the same time, in responding to the instructions for Safehaven dated December 6, 1944, Dulles stated with casual insouciance:
Work on this project requires careful planning as it might defeat direct intelligence activities and close important channels.… Today we must fish in troubled waters and maintain contacts with persons suspected of working with Nazis on such matters.… To deal effectively … would require special staff with new cover.… At present we do not have adequate personnel to do effective job in this field and meet other demands.
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AMONG THE “OTHER DEMANDS” on Allen Dulles’s time and personnel was the creation, as of November 21, 1944, of the OSS Art Looting Investigation Unit. This had a similar remit to the Monuments, Fine Art, and Archives (MFA&A) branch already working with the field forces, but, backed by the full apparatus of the OSS, it had far greater resources.
As well as their primary task of protection, the Monuments Men catalogued all artworks found in the territories that had been recaptured from the Germans, in order to identify their true ownership and return them in due course if they had been stolen. Capt. Walker Hancock of the MFA&A, a renowned sculptor in civilian life, was now attached to the U.S. First Army. On December 15, 1944, he arrived at the quiet farming village of La Gleize in eastern Belgium, close to the border with Luxembourg. It had escaped damage during the Allied advance and now lay peacefully under a weak winter sun, with the forbidding forests of the Ardennes dark in the distance. Walker was anxious to see a famous and revered fourteenth-century wooden statue, the Madonna of La Gleize, which stood in the nave of the village church. To Hancock, it was a sublime work of art that seemed to dominate its surroundings, and he was relieved to find it untouched by the war. After a pleasant meal in the local inn, he continued his tour of the area.
At 5:30 a.m. in the pre-dawn darkness of the following day, an artillery bombardment by 1,600 guns saturated the area with shells. Behind this curtain of fire came seven armored and nine infantry divisions of the Fifth and Sixth Panzer Armies, while further south formations from the Seventh Army also plunged westward. Unternehmen Wacht am Rhein—Operation Watch on the Rhine—was Hitler’s last gamble for victory in the West. The strategy was to hurl his remaining armor through the Ardennes, across the Meuse River, and on to Antwerp, whose strategic port had finally become operational for the Allies on November 28. If he achieved this, he could drive a wedge between the American and the British-Canadian army groups; less realistically, he hoped that this attack would buy time for his new “wonder weapons”—jet aircraft and Type XXI “electro-drive” U-boats—to enter service in significant numbers. On December 11, the Führer had traveled from Berlin in his private train to the Adlerhorst (Eagle’s Nest) field headquarters near Bad Nauheim in south-central Germany, to exercise personal command over the offensive.
The story of the Battle of the Bulge has been told at length elsewhere. In fog and snow that initially grounded the Allied tactical air forces, the Germans achieved complete surprise. The American divisions that they first encountered either were being rested in this quiet sector after the bitter fighting for the Hürtgen Forest or were fresh from the United States. But the difficult terrain and bad weather were also an obstacle for the panzers. In June 1940, when a dash along a similar axis of advance had successfully divided the bulk of the French armies from the British Expeditionary Force, it had been difficult enough to negotiate the narrow forest roads of the Ardennes in high summer with tanks weighing no more than twenty tons. Now the roads were coated with snow and ice and progress was immeasurably more difficult for tanks weighing twice as much or more.
Despite the shock of the assault and the collapse of many units, pockets of determined American resistance formed and combat engineers made heroic efforts to destroy bridges that lay in the line of the German advance—the availability of fuel and bridges would determine the very success or failure of the German offensive. With the destruction of the bridges, the leading German battle group was forced northward off its intended line of march toward the village of La Gleize. However, the skies were clearing and the long column of armor and trucks was strafed by U.S. fighter bombers, causing the advance to falter. As American reinforcements poured into the area, the German battle group was virtually surrounded by December 20. After a fierce two-day battle, the group’s remnants broke out on foot, leaving their wounded and a small band of Waffen-SS troops to cover the withdrawal. They made their last stand in the church of La Gleize under constant American bombardment until the building was pounded to destruction and finally overrun on the twenty-fourth. On the same day, Chief of the General Staff (Army) Gen. Heinz Guderian advised the Führer to halt the offensive since progress on the other routes was now minimal and to little avail.
The shock of the unexpected offensive had caused near panic in some Allied quarters. On January 4, even General Patton confided in his diary, “We can still lose this war.” Despondency grew with distance from the battlefield, and in Washington, the U.S. Army chief of staff, Gen. Marshall, mused, “If Germany beats us, we will have to recast our view of the whole war. We will have to take a defensive position along the German frontier. The people of the United States would have to decide whether they wanted to continue the war enough to raise large new armies.” By now a bitter joke circulated among the troops: “The war might still be over by Christmas … Christmas 1950.” An aftershock struck at dawn on New Year’s Day 1945, when the Luftwaffe launched its Operation Baseplate against numerous Allied airfields in Belgium, France, and Holland, destroying some 439 aircraft, mostly on the ground. While such material losses could quickly be made up and the many German fighter pilots shot down and killed were effectively irreplaceable, the Allied commanders took this attack as further evidence of the Wehrmacht’s ability to prolong the war.
In total, beating off the Ardennes offensive cost the Americans 89,000 casualties, including 14,872 killed, making it the U.S. Army’s bloodiest battle of the war. However, German casualties were 130,000 with 19,000 killed, as well as almost 400 irreplaceable tanks lost. Within weeks, nine fresh American divisions arrived in the European theater. Hitler’s last gamble in the West had failed and the frontiers of Germany now lay open to invasion.
THE MONUMENTS MAN Capt. Walker Hancock returned to La Gleize on February 1, 1945. From a distance, the village appeared to be completely obliterated. The church where the Waffen-SS had made its stand was reduced to a shell; the roof had collapsed, broken beams lay all around, the nave was knee-deep in frozen snow, and an icy wind blew through gaping holes in the walls. The church pews were piled up to form bullet-riddled barricades, and bloody bandages, ammunition boxes, and ration cans littered the ground. But in the center of this desolation Walker found the Madonna of La Gleize totally undamaged:
She stood just as he had seen her two months ago, in the middle of the nave, one hand on her heart, the other raised in benediction. She seemed hardly to notice her surroundings, focused as she was on the distant divine. But against that backdrop, she looked more miraculous and hopeful than ever, her beauty triumphant even in the midst of devastation and despair.
Chapter 11
RAIDERS OF THE REICH
THE ARDENNES OFFENSIVE CAME as a particularly rude shock to the Allied high command because it had relied for years upon Ultra intelligence for warnings of German capabilities and intentions. There were officers on the ground who had feared a major German assault against the U.S. VIII Corps’ line in the Ardennes, such as Col. Oscar Koch, the Third Army G-2 intelligence chief, but his premonitions had been ignored. There was too much reliance on Ultra among the Allied commanders, and too little on human intelligence or battlefield reconnaissance.
The masterly German deception plan for Unternehmen Wacht am Rhein had been based on strict radio silence, so there had been no opportunity for intercepts by Bletchley Park. Other security measures had included forbidding any officers privy to the plan to fly in an aircraft west of the Rhine in case they were shot down or crash-landed, and all troop movements had been made at night. By day, Allied photoreconnaissance had been compromised by the awful weather, and as they closed up to the borders of Germany the Allied troops no longer received useful information from local Resistance fighters, as they had when further west.
The great majority of German communications were now made by the latest model teleprinter cipher machines, such as the Siemens & Halske T52d Geheimfernschreiber (secret teleprinter) and the Lorenz SZ42. The T52 series of machines and their traffic were code-named “Sturgeon” by Bletch
ley Park while the Lorenz was “Tunny.” By the winter of 1944, the specialists at Bletchley Park were physically and intellectually exhausted after years of painstaking decryption work, and unraveling the secrets of the new Sturgeon and Tunny machines required yet another concerted effort. The situation was exacerbated when it was discovered that Enigma machines were now fitted with a more sophisticated version of the return cylinder that made decryption much more difficult, requiring further modifications to the room-sized protocomputer Colossus and the electromechanical decryption devices known as “bombes.” Similarly, the Luftwaffe later employed a cipher system known as Enigma Hour that automatically generated a massive number of extra permutations on encryption. Fortunately, the repeated indiscipline of some German Enigma operators—particularly in the Luftwaffe—made the task easier for Bletchley Park to decipher messages, and a shortage of Sturgeon machines at this stage of the war meant that they never posed a dangerous problem for the Allies. Nevertheless, the latter quickly realized that such technology in the wrong hands would create a serious threat in the postwar era. It was essential to capture examples of these encryption devices intact and to deny them to potential adversaries.
In February 1945, an Anglo-American organization known as the Target Intelligence Committee (TICOM) was set up to hunt for German cryptographic equipment and its operators as the Allies advanced into Germany. The TICOM teams of British and American personnel divided up any spoils of war on a “one-for-me-and-one-for-you” basis. There was by now a tacit agreement that the United States and Britain must continue to cooperate in the field of signals intelligence that had served both countries so well during the war. Together, they had broken virtually every military and diplomatic code used by the Axis powers, giving the Allies an extraordinary advantage on the battlefield. Curiously, the one state that proved to be invulnerable to penetration of its codes or ciphers was the Vatican, but then the papacy was not supposed to be in league with the Fascists or the Nazis.
Grey Wolf: The Escape of Adolf Hitler Page 14
