by Kai Bird
Things got so bad that Stimson for a time considered firing Miles and finding a replacement who could work with Hoover. For McCloy, the dispute underscored the need for a system of centralized intelligence headed by one coordinator. His problem, however, was to find a way to persuade his own people in army intelligence—and, most notably, General Marshall—that such a coordinator would not interfere with the army’s access to raw military intelligence. Miles warned Marshall that Donovan was attempting “to establish a super agency controlling all intelligence.” Such a move, he said, “would appear to be very disadvantageous, if not calamitous.”54
Donovan brought matters to a head on May 31, 1941, when he drafted a memo outlining the establishment of a “Service of Strategic Information.” He first showed the memo to Navy Secretary Frank Knox, and then to McCloy, both of whom were sympathetic. On June 3, McCloy passed the document to Stimson with a note saying he wanted to talk with him about it.55 Later in July, he met with Stimson and Donovan to hammer out an agreement. Donovan helped to diffuse some of Marshall’s opposition by agreeing not to take military rank. At this point, McCloy pulled out a diagram Marshall had drawn up that delineated the “routine channels” for the dissemination of intelligence reports. Marshall’s diagram had all of Donovan’s reports passing through G-2 and naval intelligence before reaching the president’s desk. Donovan objected, pointing out that the president had assured him direct access. Indeed, he had told Roosevelt he wouldn’t accept the job without certain guarantees: he wanted to report only to the president, he wanted access to the president’s secret funds, and he wished to be assured that all government departments would be instructed to provide him with information upon demand. Roosevelt had agreed, though the two men also agreed that nothing should be put in writing.
With Stimson’s concurrence, McCloy now drafted a compromise based on artful language. On paper, Donovan’s routine intelligence reports would pass through War Department channels. But Donovan was assured that “he should have access to the President whenever he desired—that that was necessary to his position and it would be anyhow inevitable with the President’s temperament and characteristics.”56 McCloy specified that Donovan would report through the War Department’s Joint Planning Division, though he was authorized to carry out “supplementary activities” when requested by the president.57 The latter, of course, was a reference to whatever “second-story” operations Donovan might carry out under presidential orders. His other alterations were wholly designed to emphasize the “civilian” character of the new organization. These changes in language made it possible for McCloy and Donovan to win the military’s consent to the creation of something unprecedented in the history of the American republic, a civilian intelligence agency. That summer, Donovan set up a shop that in one form or another has never closed its doors.
He used his position as coordinator of information to build the framework of what would soon become the Office of Strategic Services (OSS). In the years ahead, McCloy could always be counted on to defend the spymaster against his opponents in the bureaucracy. The OSS thrived, and McCloy eventually saw the infant spy agency he had helped create become a major pillar of the national-security state: the Central Intelligence Agency.
By the spring of 1941, McCloy had a hand in so many different issues that others in the bureaucracy started to come to him for news about their own departments. Undersecretary of the Navy James Forrestal, who had known McCloy on Wall Street, took to coming by the McCloys’ Georgetown home in the evenings to catch up on the day’s war news. So too did Frankfurter and Dean Acheson. On the rare occasions when McCloy was not the first to learn an important piece of news, Stimson would wryly suggest that his assistant “must be weakening.”58
War production was still a major worry. McCloy and others in the War Department struggled with what amounted to a contradiction between their commitment to the principles of private enterprise and the absolute necessity of increasing war production. Because industry was not cutting back on the production of consumer items, war-production quotas were not being met. That spring, McCloy realized that the gap would have to be filled by massive government intervention in the economy. He began having discussions with Lew Douglas and others in the business community, who conveyed their worries about what such a move might mean for the country’s postwar economy. They feared that the cycle of boom, inflation, and sudden depression experienced in the aftermath of the previous war would occur all over again. Stimson encouraged him to think about the issue, and on April 23 he sat down and wrote out a memo entitled “The Problem of War Organization, Post-War Readjustment.”
He began by observing that, “Large as the war effort appears in comparison with recent years, it is inadequate in view of the needs. . . . The proportion of our national income devoted to armament is minute compared with that of the totalitarian powers. Business as usual, ‘guns and butter’ concepts should be discarded. . . .” He bluntly stated, “The war effort will necessarily entail extensive centralization of power. . . .” The government would have to force industry to restrict consumer production and allocate raw materials for war production. New “governmental emergency organizations” were needed to administer what economists came to call a “command economy.” All this was a given. But what concerned McCloy was how centralization could be effected without making it a permanent feature of the economy. He warned that “the political or governmental emergency organizations should provide their own termination, but unless economics ‘permits’ such termination, it may not be realized.” Though centralization was necessary to win the war, it could also permanently alter the “American way of life.” If it was not managed properly, the country risked a postwar depression “so severe that dissatisfaction from unemployment, deflation, etc. may sweep over all political organization, all principles, all legal guarantees.”59 The war effort, in other words, might build a permanent socialist economy.
His answer was a set of policies designed to ensure that Roosevelt’s emerging “command economy” would be entirely transitory. First, instead of creating new industrial capacity, the government should whenever possible restrict consumer production. This would help restrict inflation and the dangers of any postwar collapse in demand. Second, “Where war expansion is unavoidable, it should be made, so far as possible, temporary in nature.” Stringent excess-profit taxes should be levied. Wage rates, he said, should not be allowed to increase, and the work week should be increased from forty to forty-eight hours. Rationing and price controls would have to be used, but “as little as possible.”60
The policies McCloy advocated in April 1941 were those that generally governed the administration of the entire war-economy for the next four years. The Office of Production Management, the Supply, Priorities and Allocation Board, and the War Production Board—uniformly staffed by Republican business executives—operated much as the “emergency organizations” McCloy described in his memo. Whenever possible, pickle plants were temporarily transformed into pontoon plants, and General Motors turned out tanks instead of private automobiles.61
Americans still did not think of themselves as a nation at war, but McCloy and his friends—men like Lew Douglas, Frankfurter, Acheson, Lovett, and Bundy—talked among themselves as if Congress had already declared war. Douglas, for instance, wrote Frankfurter early that summer, “Time is slipping away from us and with it, I fear, victory.”62 Worse, they feared that the American people were not behind them. Even at Harvard that June, the orator of the Class of ’41 concluded his speech by saying, “Fellow classmates—let us avoid being sent overseas.”63
McCloy was appalled by such isolationist sentiments, and did everything he could to prepare the country to intervene in a war that was not going very well. Hitler seemed prepared to invade Britain at any moment. In the Far East, the Japanese armies continued to advance inside China. On April 13, 1941, Tokyo surprised everyone by signing a neutrality pact with the Soviets. This seemed to confirm Britain’s isolation in Europ
e and utter dependency on America. On June 22, however, the strategic situation dramatically changed. Hitler abruptly invaded the Soviet Union. Like Churchill, who quickly embraced his new ally, both McCloy and Stimson felt only relief that Hitler’s armies would at least for a time be occupied elsewhere. But they estimated that Hitler’s diversion to the East postponed an invasion of Britain by only a few months. On July 2, as the Germans rapidly advanced all along the Russian front, McCloy hit bottom: “The news from the war in Russia is getting worse and worse. . . . Altogether, tonight I feel more up against it than ever before.”64
As Washington’s humid summer season unfolded, McCloy spent a little more time outside the city. The war news was universally dismal, but he had the personal satisfaction of anticipating the birth of a second child. At the age of forty-two, Ellen was once again pregnant. She spent much of the summer out of Washington’s heat, with her family in Hastings-on-Hudson. In July, she gave birth to a daughter, whom they named Ellen. McCloy managed to couple his frequent visits to see his wife and new daughter with several fishing expeditions. That summer, Lew Douglas introduced him to another avid fly-fisherman, Representative Willis Robertson of Virginia. It was the beginning of a lifelong friendship. In August, he and Robertson flew up together for a long weekend of fishing on the Little Moose River in the Adirondacks. Lew Douglas joined them and later wrote another occasional fishing partner, Senator Tom Connally of Texas, about the trip: “You may have seen McCloy when he was in earnest about this fishing business, but if you haven’t, I can assure you that all he needs to completely disguise himself is an egg beater. He has practically everything else hanging around his neck except the gadget that breaks eggs and a mill stone—and I suppose his brother-in-law serves as that.”65
McCloy had met Senator Connally, the chairman of the Senate Foreign Relations Committee, during the Lend-Lease debate. In August, during the emotional debate surrounding the vote on extending the draft for another year, he got to know such leaders in the House as John McCormack and Sam Rayburn. He was shocked when the House decided by only one vote—203 to 202—to extend the draft for another year, and complained to Grenville Clark, “The vote constituted about as good news as Hitler has had for a good many months. In my judgement something should be done about the Republican Party. There seems to be a group now in control who are determined to ride the issue of isolationism as the best means of getting home to office and be damned about the country.”66
McCloy and many other interventionists, however, were greatly exaggerating the influence of the isolationist camp. After more than a year of unofficial war, opinion polls showed that a majority of the American people favored intervention. Whatever their frustrations, the fact was that interventionists like Stimson, Clark, and McCloy had won every major battle in the last year: the destroyer-for-bases deal, Selective Service, Lend-Lease, convoying, and now the extension of the draft.
But these political victories were not enough for those who believed America was already part of a global war. On September 19, 1941, McCloy flew out to Jackson, Michigan, to address the Michigan Bar Association. His language was blunt and alarmist: “We have as much chance of ignoring this war as a man has of ignoring an elephant in his parlor. . . .”67 He estimated the Germans had three hundred divisions, totaling some nine to ten million men. By comparison, he warned, the United States had only thirty-three divisions, and the German air force “is as large as our entire army.” Not meaning to sound defeatist, he ended by asserting that America had the resources, or would soon have them, to respond to “any task.”68
He was quite right. Despite the isolationists, a reluctant Congress, and the inefficiencies of private industry, the country’s minuscule army of 1940 had grown into an enormous military establishment by the autumn of 1941. There were now six times as many combat divisions ready for action as in 1940. The army had grown from 260,000 men in May 1940 to an anticipated 1.5 million by the end of 1941. The air corps had grown from 6,000 pilots to 22,000 pilots in the same period. Whereas only 2,500 aircraft had been manufactured in all of 1939, almost that many were being produced each month by the end of 1941. Some estimates later concluded that U.S. armament production was already greater than the combined production of Germany, Italy, and Japan.69
These facts were not generally known at the time. The perception was often just the reverse; newspapers focused on the German Army’s technical prowess and string of victories. If any attention was paid to American war production, reporters were apt to chase stories on waste and labor agitation. When Walter Lippmann read McCloy’s speech, he asked for an appointment to discuss the defense buildup. The columnist worried that America could not sustain its own large military capacity and simultaneously supply Britain and the Soviet Union with the supplies they so desperately needed to hold off the Nazi onslaught. America, he thought, should cut its own military forces and serve only as the arsenal for the war efforts of others.70
Their meeting in late September did not go well. McCloy was constantly interrupted by phone calls. Initially, Lippmann seemed impressed by his factual description of the country’s war production capacity, but afterwards he wrote a column proposing a reduction in the size of the U.S. Army. In response, McCloy circulated a long memo blasting his position: “The underlying fallacy in the Lippmann theory lies in the belief that the greatest industrial nation in the world when joined with the British Empire cannot supply enough for itself and those now in the shooting stage of war. True, we cannot supply all the needs at once but the Lippmann point of view is merely opportunism today at the expense of the insurance of ultimate victory.”71
His dispute with the famous columnist served to confirm his suspicions of intellectuals like Lippmann. Such pundits, he thought, were too easily swayed by fancy ideas and their own introspective opinions. They lacked, McCloy felt, the lawyer’s training to look for the “cold figures.” But he was also convinced that the American people would not make the sacrifices necessary for a “maximum production effort” unless they were producing in large measure for their own troops. He therefore equated Lippmann’s call for a reduction in U.S. troop strength as nothing less than a step toward appeasement: “. . . a negotiated peace is at the root of the Lippmann article—not a complete victory.” Talk of an eventual negotiated peace between Britain and Germany, leaving the Nazis in control of continental Europe, was not uncommon. But for McCloy America was already at war, and he would settle for nothing short of a German surrender.72
Unknown to Lippmann, throughout that summer McCloy had been working on a set of highly secret war plans to guide the president in the event America entered the war. “Victory Parade” stipulated the creation of a ten-million-man army, half of which would be used in an invasion of Nazi Europe by July 1943. The plan postulated that, in the event of a two-ocean war, the United States would concentrate first on defeating Germany. News of such grandiose contingency plans might have been deadly political ammunition in the hands of America Firsters. But McCloy and others working on “Victory Parade” had so far been successful in keeping it a secret.
Roosevelt had requested such an overall strategic road map the previous July, and ever since McCloy had been meeting regularly with General Leonard T. Gerow, chief of the War Plans Division, to discuss the plan. Late in July, he sent Gerow “his shot” at a reply to the president’s request. He and Gerow had a basic dispute over how one could properly estimate what it would take to defeat the Germans. Gerow’s initial war plan started with the number of troops the Germans had at present equipped—estimated then at forty to fifty armored divisions—and then calculated how many American troops would be needed to defeat them. McCloy thought it was all wrong to “use manpower as the sole base.” Shouldn’t, he asked Gerow, war-production capacity, not troop levels, be the key variable?73
Gerow assigned the task of drafting a response to his aide, Major Albert C. Wedemeyer, a bright young officer who had spent several years studying the German military machine.74 McCloy was to
ld, “It would be unwise to assume that we can defeat Germany by simply outproducing her. . . . Wars are won on sound strategy implemented by well-trained forces which are adequately and effectively equipped.”75 Gerow’s textbook approach to the problem prevailed for the moment.76
McCloy didn’t give up. There was nothing clever or strategically brilliant about his approach to the problem. He simply began with the fairly unorthodox assumption that modern warfare was foremost a matter of economics, not manpower or troop deployment. Such views naturally irked some of the professional military officers around him. Gerow, Wedemeyer, and others sometimes thought McCloy was entirely too sure of himself, and found his intrusions into their discussions irritating.77 In this instance, McCloy’s figures were regarded by Gerow and others in the War Planning Division as verging on the fantastic. In an undated memo prepared around September 1941, McCloy argued that the anti-Axis powers would need a minimum preponderance of three to one in equipment over the enemy in order to prevail. He called for tripling present production of all armaments, particularly tanks, citing the heavy loss of tanks by the Soviets over the summer as an example of the kind of losses that should be expected in an offensive against the Nazis.78 “Victory Parade” was a constantly evolving document, but at every meeting of the War Plans Division to discuss the plans, McCloy could always be counted on to argue the case for larger war-production estimates and a larger army.
Throughout the autumn of 1941, he worked at a feverish rate. War production, Lend-Lease operations, and intelligence issues were all a routine part of his daily agenda. He was also troubleshooting problems with the press and irate members of the public. His public-relations style was blunt, even heavy-handed. When Time magazine ran a critical story on army morale, he simply called up Henry Luce and lodged a vigorous complaint.79 And when a prominent Ithaca, New York, clergyman wrote to criticize an army officer in Colorado who had barred his men from attending a church hosting America First meetings, McCloy wrote a long letter back in which he argued, “We have to restrain our liberties to preserve them, and in my judgement, we should be prepared to restrain them far more than the country now gives indication of being willing” to accept.80
