The Covert Operations Behind the Federal Reserve System: Black Ops & The Soviet Sphere

August 4, 2018

Compiled by Lisa Phillips of

When currency was backed by gold, a central bank’s main function was to maintain the value of the issued currency in terms of gold. For example, if a central bank created too much money against the gold reserves in the banking system, an increasing number of people would begin to exchange their currency for gold. To combat this, a central bank would be forced to raise interest rates and decrease the money supply. The higher interest rates would incentivize people to exchange gold for larger savings on deposit that earn interest. Banking reserves – gold – would return to the banking system and the economy would return to balance. The prime reason for insisting on defining currency in terms of a precious metal was to provide a self-correcting braking mechanism to the creation of money.

At least that was how it was supposed to work, but behind the scenes, the Exchange Stabilization Fund was operating without oversight of the US Congress and the US Treasury, accountable to no one.

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Harry Dexter White

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Harry Dexter White, the seventh and youngest child of Joseph Weit and Sarah Magilewski, was born in Boston on 9th October, 1892. His parents were Jewish and came from Lithuania, who had settled in the United States in 1885.

During the First World War he joined the United States Army. He was commissioned as a lieutenant and served in France in 1918. On his return home he studied economics at Columbia University and Stanford University. He did not complete his Ph.D. at Harvard University in 1930. It was published three years later as The French International Accounts, 1880–1913.

In 1934, Harry Dexter White was appointed to the Treasury Department. Soon afterwards he joined what became known as the Ware Group. It was led by Harold Ware, the son of the well-known radical, Ella Reeve Bloor. Ware was a member of the Communist Party of the United States and a consultant to the Agricultural Adjustment Administration (AAA). He established a “discussion group” that included Harry Dexter White, Alger Hiss, Nathaniel Weyl, Laurence Duggan, Nathan Witt, Marion Bachrach, Julian Wadleigh, Henry H. Collins, Lee Pressman and Victor Perlo. Ware was working very close with Joszef Peter, the “head of the underground section of the American Communist Party.” It was claimed that Peter’s design for the group of government agencies, to “influence policy at several levels” as their careers progressed”.

Harry Dexter White and Whittaker Chambers

Whittaker Chambers, a Soviet spy, was a key figure in the Ware Group: “The Washington apparatus to which I was attached led its own secret existence. But through me, and through others, it maintained direct and helpful connections with two underground apparatuses of the American Communist Party in Washington. One of these was the so-called Ware group, which takes its name from Harold Ware, the American Communist who was active in organizing it. In addition to the four members of this group (including himself) whom Lee Pressman has named under oath, there must have been some sixty or seventy others, though Pressman did not necessarily know them all; neither did I. All were dues-paying members of the Communist Party. Nearly all were employed in the United States Government, some in rather high positions, notably in the Department of Agriculture, the Department of Justice, the Department of the Interior, the National Labor Relations Board, the Agricultural Adjustment Administration, the Railroad Retirement Board, the National Research Project – and others.”

Susan Jacoby, the author of Alger Hiss and the Battle for History (2009), has pointed out: “Chambers, among others, would testify that the eventual penetration of the government was the ultimate aim of a group initially overseen in Washington by Hal Ware, a Communist and the son of Mother Bloor… When members did succeed in moving up the government ladder, they were supposed to separate from the Ware organization, which was well known for its Marxist participants. Chambers was dispatched from New York by underground Party superiors to supervise and coordinate the transmission of information and to ride herd on underground Communists… with government jobs.”

Soviet Spy

Harry Dexter White was recruited as a spy by Jacob Golos. White (codename Kassir, later changed to Jurist, Lawyer and Richard) joined a spy network that included Laurence Duggan (Frank), Michael Straight (Nigel), Nathan Silvermaster (Pel), Ludwig Ullman (Polo), Martha Dodd (Liza), Victor Perlo (Raider), Mary Wolf Price (Kid), Helen Lowry (Madlen), George Silverman (Aileron), Charles Kramer (Plumb), Frank Coe (Pick), Harold Glasser (Ruble) and John Abt (Moris). Chambers claimed that White was willing to “turn over to him certain official Treasury documents which could then be photographed.” The photographs were then passed on to Joszef Peter, the “head of the underground section of the American Communist Party.” Chambers had also received (and kept) four pages of handwritten notes on important Treasury and State Department business.

Whittaker Chambers was his main source of contact: “Harry Dexter White, then the chief monetary expert of the Treasury Department, had been in touch with the Communist Party for a long time, not only through his close friend, George Silverman, but through other party members whom he had banked around him in the Treasury Department. He was perfectly willing to meet me secretly; I sometimes had the impression that he enjoyed the secrecy for its own sake. But his sense of inconvenience was greater than his sense of precaution, and he usually insisted on meeting me near his Connecticut Avenue apartment. Since White was not a party member, but a fellow traveler, I could only suggest or urge, not give orders. This distinction White understood very well, and he thoroughly enjoyed the sense of being in touch with the party, but not in it, courted by it, but yielding only so much as he chose.”

Whittaker Chambers worked for Boris Bykov who complained about about the poor quality of the documents they were receiving from Harry Dexter White. Chambers now contacted Joszef Peter, the “head of the underground section of the American Communist Party.”I explained the problem to him and asked for a Communist in the Treasury Department who could ‘control’ White. Peters suggested Dr. Harold Glasser, who certainly seemed an ideal man for the purpose, since he was White’s assistant, one of several Communists whom White himself had guided into the Treasury Department. Peters released Dr. Glasser from the American Communist underground and lent him to the Soviet underground. Glasser soon convinced me that White was turning over everything of importance that came into his hands.”In an interview Harold Glasser gave to the FBI Glasser admitted that by 1936 he had become an important figure in the President Franklin D. Roosevelt government. He claimed he was “engaged in assisting President Roosevelt in the inauguration of various economic plans in furtherance of the New Deal” and worked “on nights and weekends at the Treasury Department and at White’s residence” and put in “considerable overtime working on these plans requested by the President.”In August 1939, Isaac Don Levine arranged for Whittaker Chambers to meet Adolf Berle, one of the top aides to President Franklin D. Roosevelt. After dinner Chambers told Berle about government officials spying for the Soviet Union: “Around midnight, we went into the house. What we said there is not in question because Berle took it in the form of penciled notes. Just inside the front door, he sat at a little desk or table with a telephone on it and while I talked he wrote, abbreviating swiftly as he went along. These notes did not cover the entire conversation on the lawn. They were what we recapitulated quickly at a late hour after a good many drinks. I assumed that they were an exploratory skeleton on which further conversations and investigation would be based.”According to Isaac Don Levine the list of “espionage agents” included Harry Dexter White, Alger Hiss, Donald Hiss, Laurence Duggan, Lauchlin Currie, Charles Kramer, John Abt, Nathan Witt, Lee Pressman, Julian Wadleigh, Noel Field and Frank Coe. Chambers also named Joszef Peter, as being “responsible for the Washington sector” and “after 1929 the “head of the underground section” of the Communist Party of the United States. Chambers claimed that Berle reacted to the news with the comment: “We may be in this war within forty-eight hours and we cannot go into it without clean services.” John V. Fleming, has argued in The Anti-Communist Manifestos: Four Books that Shaped the Cold War (2009) Chambers had “confessed to Berle the existence of a Communist cell – he did not yet identify it as an espionage team – in Washington.” Berle, who was in effect the president’s Director of Homeland Security, raised the issue with President Franklin D. Roosevelt, “who profanely dismissed it as nonsense.”

Harry Dexter White and Henry Morgenthau

In December 1941, Harry Dexter White was appointed assistant to Henry Morgenthau, Jr., the Secretary of the Treasury, to act as liaison between the Treasury and the State Department on all matters bearing on foreign relations. He now had access to extensive confidential information about the economic situation of the USA and its wartime allies. At this time White was being supervised by Jacob Golos and was part of a network led by Nathan Silvermaster. In January 1942, a senior officer of NKVD in Moscow stated that White was “one of the most valuable agents”.

White and Silvermaster were now two of the most important spies that the Soviets had. Golos was now forced to had over this network to Vassily Zarubin. He reported in October, 1942, that “Silvermaster and his people… were productive sources… We already receive from them… valuable materials… One could satisfy one’s self with it. However, if… one can count on them as a serious base now and in future, they must be taught our work, included in our network, and attached to us.” Zarubin was told that “at one time Lawyer (White) was a probationer (agent) of the neighbours (GRU)”. He added that as White was such an important agent he should be “singled out a special illegal (a spy without diplomatic cover) to work with him”.

Nathan Silvermaster Group

In 1943 they became concerned that some people in positions of authority had correctly identified him as an agent. (This was possibly reference to the details of the list of agents that Whittaker Chambers had passed to Adolf Berle. It was not until 1943 that the FBI began investigating the names on the list.) However, the Soviets believed that had happened because his close associate, Nathan Silvermaster, had been named as a communist by the House of Un-American Activities Committee. An investigation by the Civil Service Commission could not confirm Silvermaster’s Communist associations nor could an Office of Naval Intelligence inquiry. Lauchlin Currie used his position as special adviser on economic affairs to President Franklin D. Roosevert, to help quash the inquiry. Vassily Zarubin reported in October 1943: “Recently (Silvermaster) told us that (Currie) made every effort to liquidate his case: when (Silvermaster’s) case was given for examination to the committee (White House security personnel) attached to Captain (the President), (Currie) managed to persuade the majority of members of the committee to favor repealing this investigation… He believes that the investigation will be stopped.”

Iskhak Akhmerov took over the running of the Silvermaster group in December 1943. Akhmerov met Silvermaster for the first time on 15th March, 1944. In his report he commented that Silvermaster was “a man sincerely devoted to the party and the Soviet Union… politically literate, knows Marxism, a deeply Russian man… known in Washington as a progressive liberal… and understands perfectly that he works for us.”

Allen Weinstein, has pointed out in his book, The Hunted Wood: Soviet Espionage in America (1999): “Silvermaster’s major government’s sources remained faithful… Treasury Department official Harry Dexter White remained an ongoing source of information, documents, and policy assistance, using his friend Silvermaster as a conduit to Soviet intelligence throughout the war years.” White was also making good progress in his career. Vice-President Henry Wallace later claimed that if President Franklin D. Roosevelt died during this period (1940-44) he would have appointed White as his Secretary of the Treasury.Vassily Zarubin replied that White was “a very nervous and cowardly person” and was constantly worried about the possibility of exposure. White told another Soviet agent on 31st July, 1944, that he was “ready for any self-sacrifice; he himself does not think about his personal security, but a compromise would lead to a political scandal… and the discredit of all supporters of the new course. Therefore he would have to be very cautious.” Although he agreed to meet again the following month he “proposes infrequent conversations lasting up to half an hour while driving in his automobile.”

Morgenthau Plan

Harry Dexter White was the principal architect behind the Morgenthau Plan. The original proposal outlined three steps after the defeat of Nazi Germany: (1) Germany was to be partitioned into two independent states. (2) Germany’s main regions of industry were to be internationalized or annexed by neighbouring nations. (3) All heavy industry was to be dismantled or destroyed. The plan was discussed at the Quebec Conference on 16th September, 1944. Winston Churchill agreed to the plan. The memorandum drawn up by the two countries concluded that “is looking forward to converting Germany into a country primarily agricultural and pastoral in its character.”

White passed a copy of the agreed plan to Iskhak Akhmerov. However, someone in White’s department with access to details of the plan leaked it to the press. Although President Franklin D. Roosevelt denied the existence of the plan, Joseph Goebbels used the Morgenthau Plan as a propaganda coup to encourage their troops and citizens to fight on against Allied forces. As Toby Thacker, the author of Joseph Goebbels: Life and Death (2009) has pointed out: “He (Goebbels) welcomed the news of the Morgenthau Plan, which entailed the punishment of German war criminals and the destruction of German industry, when this emerged after the Quebec conference, and served as a useful confirmation of the line he had previously promoted.”

Bretton Woods Conference

In 1944 Harry Dexter White was most probably the most important figure at the Bretton Woods conference. He argued for an end to economic blocks and a greater use of free trade agreements. Henry Morgenthau, Jr claimed that by the establishment of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), would see an end to “economic nationalism”. These institutions were intended to prevent some of the economic problems that had occurred after the First World War. White argued strongly that the Western nations should develop better economic and political relationships with the Soviet Union.

White argued that in the 1930s “the necessary monetary and financial basis for international prosperity had been weakened by competitive currency depreciation, by exchange restriction, by multiple currency devices.” After the war “only through international cooperation will it be possible for countries successfully to apply measures directed toward attaining and maintaining a high level of employment and real income which must be the primary objective of economic policy.”

James M. Boughton has pointed out that Broughton shared many of the views held by John Maynard Keynes: “Part of the conventional wisdom about the origins of the IMF is that it was a response to the depression of the 1930s and was designed primarily to prevent a recurrence of global deflation. Certainly the avoidance of ruinous competitive devaluations and of trade and exchange restrictions was uppermost in both Keynes’s and White’s thinking, but they saw those policy errors as creatures of the 1920s, as the result of the mercantilist debacles that flowed from the Versailles peace conference. Such mistakes had contributed to the depression and then had fed on it, but they would have been just as disastrous if they had led instead to an inflationary spiral. White saw the avoidance of either deflation or inflation as a precondition for sustained economic growth, as did Keynes. He was no fan of the classical gold standard, but he argued persistently within the U.S. Treasury for a stable monetary standard that the government could manage with some flexibility but that would still link the U.S. dollar firmly to gold. His plan for the IMF placed the dollar and its ties to gold at the center of the international monetary system, in the belief that it would provide a stable anchor for policies conducive to growth.”

In December 1944, Anatoly Gorsky sent a report back to Moscow that White and his assistant, Harold Glasser, was still supplying the Soviets with information: “White… phoned me and asked me to come and get the information Gromyko was interested in. On December 11, I went to Morgenthau’s department. (White) was not in the office, but one of his secretaries showed me to his assistant, on whose office door was written: Assistant to the Director of the Division of Monetary Research. (White’s) assistant named turned out to be (Harold Glasser). We have tried to organize Glasser’s work through Elizabeth Bentley, Victor Perlo and others… but these circumstances may be used to develop this official acquaintance in order to switch then to direct connection with a Soviet operative.”

After the death of President Franklin D. Roosevelt White felt less confident of holding his job in the Treasury Department. President Harry S. Truman sacked Henry Morgenthau, Jr. and replaced him with Fred Vinson. The new Secretary of the Treasury, did not share Morgenthau’s confidence in White’s abilities. White complained that Vinson no longer consulted with him about policy. Vladimir Pravdin reported back to Moscow: “Although Vinson outwardly treats him in a friendly manner… White is convinced that the question of his dismissal is a matter of weeks or months.”

Elizabeth Bentley exposes Harry Dexter White

On 7th November, 1945, the Soviet agent, Elizabeth Bentley, met with Don Jardine, FBI agent based in New York City. On that first day she talked for eight hours and gave a thirty-one-page statement. She gave a long list of Soviet spies that included Harry Dexter White, Lauchlin Currie, George Silverman, Nathan Silvermaster, Charles Kramer, Victor Perlo, Mary Wolf Price and Ludwig Ullman. Jardine was convinced she was telling the truth. “There wasn’t any question in my mind that we hit gold on this one.” They soon discovered that White, Currie and Kramer had all been named by Whittaker Chambers in 1939.

Kathryn S. Olmsted, the author of Red Spy Queen (2002), has pointed out: “Within days of Elizabeth’s first statement, the FBI launched a massive effort to verify her charges. Tom Donegan, the FBI’s counterespionage chief, led the effort…. By December 1945, seventy-two special agents were working on the biggest espionage case in the FBI’s history. Elizabeth had their attention now. These numbers were necessary because the bureau wanted to follow, spy on, open the mail of, and listen to the phone calls of the men and women Elizabeth had named in her statement. Within two weeks, agents were following Maurice Halperin, Robert Miller, Victor Perlo, Greg Silvermaster, Helen Tenney, Lud Ullmann, Harry Dexter White, George Silverman, Charles Kramer, Duncan Lee, and several other lesser figures in the network. The bureau also made plans to break into the Silvermasters’ house. Soon, reams of reports would deluge FBI headquarters detailing who had attended a party with Harry Dexter White and who had been invited for Christmas dinner at the Silvermasters.”

FBI Director J. Edgar Hoover sent a hand-delivered letter to the President’s Military Aide, General Harry H. Vaughan, at the White House, reporting information that “a number of persons employed by the government of the United States have been furnishing data and information to persons outside the Federal Government, who are in turn transmitting this information to espionage agents of the Soviet government.” The list included the name of Harry Dexter White.

On 4th December, 1945, the FBI sent a detailed report entitled “Soviet Espionage in the United States”. It was based on the Bentley accusations and the follow-up investigations. President Harry S. Truman later claimed that White had been “separated from the Government service promptly” upon receipt of this information. However, on 23rd January, 1946, Truman nominated White as U.S. Director of the International Monetary Fund.

House of Un-American Activities Committee

Elizabeth Bentley testified before the House of Un-American Activities Committee (HUAC) on 31st July, 1948, that Harry Dexter White was a Soviet spy. On 13th August, White appeared before the committee. Before the hearing, White had sent a note to J. Parnell Thomas, the chairman of the HUAC, asking for rest periods of five or ten minutes for each hour of testimony as he was recovering from a severe heart attack.

During his testimony Harry Dexter White denied that he was a communist: “The principles in which I believe, and by which I live, make it impossible for me to ever do a disloyal act or anything against the interests of our country… I believe in freedom of religion, freedom of speech, freedom of thought, freedom of the press, freedom of criticism and freedom of movement.” He admitted that he knew some of the others that Bentley had accused of being communists. However, this was not evidence that they were members of a spy network but because they played softball and volleyball together. Thomas responded with snide humour: “For a person who had a severe heart condition, you certainly can play a lot of sports.” Furious, White explained carefully that he had played sports before he developed a heart condition.

Harry Dexter White died of a heart attack three days later on 16th August, 1948. Henry Wallace, the Progressive Party presidential candidate claimed that White was “a victim of the Un-American Thomas Committee”.

Copyright by John Simkin ( © September 1997 (updated August 2014).


Harry Dexter White and the History of Bretton Woods

November 9, 2013

by James Boughton

Why does Benn Steil’s history of Bretton Woods distort the ideas of Harry Dexter White?
The modern world economy materialized in the mountain air of Bretton Woods, New Hampshire, in July 1944. Three weeks after the D-Day landings on the beaches of Normandy, delegates from forty-four Allied countries gathered at the Mount Washington Hotel to devise institutions meant to foster multilateral cooperation, financial stability and postwar economic reconstruction. Their expressed goals were not just economic; the delegates were convinced that the success of the Bretton Woods conference would ensure world peace as well as prosperity. In the words of the most famous of the attendees, John Maynard Keynes, their efforts could create a world in which “the brotherhood of man will have become more than a phrase.” But first they had to overcome deep divisions rooted in national interests.Two men dominated the planning for Bretton Woods and the negotiations at the conference. On one side, representing the declining power of Great Britain, was Lord Keynes, the most famous economist in the world and an unpaid adviser to the UK Treasury. For several years, he had been refining his plan to create an International Currency Union, a kind of global central bank that would create its own money (“Bancor”) to lend to indebted countries like Britain so they could import more goods than they were able to export in the lean postwar years.On the other side, representing the ascendant power of the United States, was an obscure Treasury Department official named Harry Dexter White. Although he was hardly known outside Washington, White was a brilliant, Harvard-trained economist who was empowered and completely trusted by Treasury Secretary Henry Morgenthau Jr., in turn a close friend and trusted adviser of President Franklin Delano Roosevelt. For three years, White had been working on his own plan for an International Stabilization Fund that would steady foreign exchange rates by persuading countries to peg their currencies to the US dollar, while pegging the value of the dollar to a fixed price for gold. White’s fund would lend dollars—and, potentially, other convertible currencies or gold—to debtor nations, but on tighter terms than were envisaged by Keynes. These two plans were reconciled at Bretton Woods to create the International Monetary Fund (IMF).The “battle” between Keynes and White was a tense and occasionally explosive but mostly collegial negotiation conducted in the midst of World War II. It was a struggle between two vastly different men on behalf of two countries that were immensely powerful in vastly different ways. White had the upper hand, and only partly because the United States held most of the world’s gold and was the only creditor country of any relevance. Circumstances also gave White the high moral ground. Britain was desperate to hold on to its empire, its system of “imperial” trade preferences and its “sterling area” of countries pegging their currencies to the pound. In the United States, the Roosevelt administration was eager to tap into markets in the British orbit, and it therefore favored a more rapid and complete opening up of trade and finance. In White’s plan, lending by the fund would be secondary to its focus on creating an open multilateral financial system.Because Roosevelt and Morgenthau saw the greater purpose of Bretton Woods as promoting a lasting opportunity for peace, White also viewed Great Britain as a secondary player in this scheme. Of far greater portent was the US relationship with the Soviet Union. Although the USSR, like Britain, was a US ally that was being impoverished by the war, White foresaw that it would hold the key to world security in the aftermath of the conflict. A prosperous Russia would provide a counterweight in Europe to Germany (still the enemy), and trade with Russia was potentially valuable for the West.White spent some five months in the run-up to Bretton Woods in a series of meetings in Washington with a high-level delegation of experts from the Soviet Union, explaining the benefits of joining the proposed international agencies and responding to their concerns about the apparent capitalist nature of the enterprise. His efforts succeeded to the point of getting the Soviet delegation to sign the Articles of Agreement at Bretton Woods, but at the end of 1945 Joseph Stalin decided not to join the IMF, which he feared (not without cause) would be controlled largely by the United States.The history of Bretton Woods and the creation of the postwar international financial system has been told often and well in numerous books and articles. The latest contribution, The Battle of Bretton Woods, by Benn Steil of the Council on Foreign Relations, purports to add to our knowledge but gets the history consistently wrong. It would be tempting to ignore it, except that Steil’s account creates a dangerously misleading history not only of how and why today’s financial system came into being, but also of the motives that guided White’s efforts.* * *Part of the problem is confusion about the economics. A central element of what Keynes and White were trying to create was a way to have stable exchange rates and prices and economic growth. That required limiting—or in Keynes’s view, eventually abolishing—the international role of gold as a base for money. No one at Bretton Woods was arguing for a return to the classical gold standard that had prevailed before World War I. That system suffered not only from its inflexibility but also from large, arbitrary and capricious changes in the supply of gold. In the gold-standard era, prices were stable on average over the decades, but they rose and fell in response to the presence or absence of new discoveries. Nations prospered or suffered depending on where and when gold might be found. The delegates at Bretton Woods wanted a new system that would depend importantly on the cooperative management of money by central banks. The only dispute was over how best to discipline the system by circumscribing central bankers’ scope for discretionary policies.Steil’s analysis of the role of gold in the Bretton Woods negotiations is colored by his own nostalgia for the classical gold standard. He criticizes Keynes—the father of macroeconomic theory—for not understanding gold’s monetary role. “Keynes blamed much on the gold standard,” Steil writes, “that he might just as well have blamed on the weather.” He concludes that Keynes favored controls on financial capital flows only because he failed to appreciate what a return to the gold standard could have offered: “Keynes argued that speculative capital would, without controls, periodically wreak havoc…. Yet speculative capital does this precisely because of the lack of a credible anchor for the exchange rate, such as gold provided during the late nineteenth century.” In truth, Keynes understood exactly what the problem was, and he knew that a return to gold would not solve it. A system without the gold standard requires a means of allowing flexible policy-making within real constraints. Keynes never found a fully effective solution, but he was surely on the right path.The second, and larger, problem is political. Steil accepts the belief—long propagated on the right—that White’s negotiations with the Soviets amounted to espionage and were motivated by his secret admiration for the Soviet economic system. Steil makes much of a handwritten document that he claims to have discovered, but which he has simply misunderstood and misinterpreted. The document, which resides among White’s personal papers in the manuscript library at Princeton University, is an incomplete first draft for an article on the postwar political arrangements that would soon be enshrined in the UN Security Council. Though undated, the draft was written soon after the publication of Walter Lippmann’s bestselling 1943 book U.S. Foreign Policy, to which it refers admiringly, and probably before the formalization of the proposed United Nations organization at Dumbarton Oaks in October 1944.In this unpublished draft, White argues—as he regularly did in public—that the best way to prevent a postwar resurgence of military aggression by Germany or Japan would be to maintain the alliance among the four great powers: the United States, the United Kingdom, the Soviet Union and (Nationalist) China. That, of course, is exactly what was envisaged in the creation of the Security Council in 1945. (White omits France, which seldom got any respect in those days.) He notes that the main objection in the United States to continuing this Grand Alliance after the war is repugnance for the Soviet economic system, and he therefore dismantles that objection and argues that the Soviet system is not so different from every other country’s as to make it unfit for cooperation with the West. Nowhere—either in the unpublished draft or anywhere else—does he suggest a preference for the Soviet system over that of the United States. Although Steil acknowledges correctly that “there is no evidence that [White] admired communism as a political ideology,” he hints that heretofore dubious accounts of White’s “secret” admiration for the Soviet economy are now “wholly credible.”* * *Steil devotes a good part of his book to rehashing old charges that White spied for the Soviets by conveying documents and general information to them, and he suggests that the Bretton Woods agreements were skewed to favor the Soviet economy. In other words, the IMF was a Communist plot! Steil presents no new evidence for the charge, and his argument is dangerously misleading. Yet it’s worth a closer look. White was not a Communist and had no obvious motive, so why do some people think he was a spy? Three reasons have been suggested, and each is suspect and weak.First, White had several friends and associates who were involved with the US Communist Party. He certainly knew they were sympathetic to communism and the Soviet Union, and he seems to have been indifferent to their political views and activities. Those relationships fed accusations of guilt by association during the McCarthy era. More seriously, they exposed him to charges of complicity in specific crimes committed by people around him. At least one of his subordinates at the Treasury supplied documents, some drafted by White, to a cell of American spies known as the Silvermaster group. (Nathan Gregory Silvermaster, the alleged head of this group, was a longstanding friend of White’s.) Whether White knew what they were doing is purely a matter of speculation. How much credibility does one grant secondhand accounts claiming that these spies said that a document came “from Harry,” when one of their number had personal access to a copy of the document in the normal course of Treasury business?Second, after the end of the war, when White had become famous as the author of the Bretton Woods agreements, two notorious fabulists told the FBI, and later the general public, that White was a spy for the Soviets. One, Elizabeth Bentley, had been a member of the Silvermaster group. She turned informant for the FBI and eventually linked White to Silvermaster through the people who had conveyed Treasury documents. She never met White and had no direct knowledge of whether he was involved in the Silvermaster ring other than by having such people working in his office. Even the FBI had serious doubts about her credibility.

The other informant, a Time magazine journalist named Whittaker Chambers, may have met White in the late 1930s; Chambers was in the Communist Party and at the time associated with many people on the left. When suspicions arose a decade later, White denied having ever met him, but Chambers habitually used a variety of aliases, so the truth is obscure. Chambers dramatically produced a microfilm for the FBI, dubbed the “Pumpkin Papers,” literally pulling it out of a pumpkin on his farm in 1948. The film contained, among other items unrelated to White, images of four pages of lined paper on which White had scribbled notes on various topics. Anyone who has worked in a bureaucracy like the Treasury Department would recognize these pages as the kind of notes taken during the meetings that consume so much of an official’s day. Chambers claimed, to the FBI and later in his autobiography, that White had given him the notes to convey to Soviet intelligence. But when called to testify before a grand jury, Chambers admitted that White had never personally given him any documents. As with almost every aspect of Chambers’s stories, the truth is elusive: how he obtained the notes and why he never gave them to his friends in the party are unanswerable questions.

Third, in the 1990s, the US government declassified several thousand Soviet cables from the ’40s that it had intercepted, partially decrypted and translated in a project known as VENONA. Some fifteen or so of those cables include references to White. Taken out of context and accepted as literal truth, these reports from Soviet intelligence agents appear to confirm White’s complicity in espionage. In context, however, the story is more benign. Although the VENONA interceptions lasted throughout the war and into the early postwar years, all of the cables mentioning White date from April 1944 through June 1945. Several refer or relate to two meetings in April and August 1944 between White and a Soviet agent code-named Kol’tsov, or to Soviet efforts during that period to gain better access to White and even to recruit him as an agent. At that time, White was meeting regularly and with full public disclosure—the Treasury even issued a press release—with a delegation of Soviet officials in preparation for the Bretton Woods conference. At least one of those delegates was periodically reporting back to Moscow, suggesting that he was succeeding brilliantly at gaining access to White. (Kol’tsov was most likely N.F. Chechulin, the deputy head of the state bank.) Those cables look incriminating until you realize that they are a one-sided and self-serving depiction of conversations with a US official who was simply doing his assigned job. Moreover, the seemingly nefarious implications of the cables have never been corroborated.

* * *

In May 1945, during the conference in San Francisco to establish the United Nations, White granted an interview to a Russian named Vladimir Pravdin, who was accredited to the conference as a journalist for Tass, the Soviet news agency. Pravdin cabled his gleanings to Moscow in terms similar to Kol’tsov’s. In each of these cases, it looks suspicious that White was freely discussing US policy issues, including matters such as how strongly the United States might object to a proposed veto for the Soviet Union over Security Council discussions. (If the transcription is correct, White was wrong in implying that the United States might yield on that issue.) But even if one accepts Pravdin’s report as gospel, the revelations were, at worst, indiscreet gossip and far from espionage.

To understand Steil’s aim in this book, consider again the “eureka” document that is supposed to reveal White’s secret longing for a Soviet-style economy. White noted there, with some satisfaction, that every modern economy—Soviet, American or what have you—relies on a mix of government and private sector activities. The differences in economic systems are important and large, but not so fundamental as to deter the United States and the Soviet Union from continuing to cooperate in an alliance with other major powers. To Steil, White’s position is heresy because it elevates government alongside the private sector as an important actor in the economy. White’s “private views on the inevitable global spread of Soviet-style planning,” Steil writes, “suggest he was far more interested in locking the United States and Russia into political alliance than in the creation of a system to revive trade among private enterprises.” Not only does this passage distort White’s views, it also reveals Steil’s politics. Get government out of the way, eliminate bureaucracies like the IMF, bring back the gold standard, and the world will be a better place. White had a different view, and that was all it took to set the hatchets in motion.



After months of work, the video series on the Treasury’s Exchange Stabilization Fund is finally finished!  Why you should watch these five videos: It is impossible to understand the world today without knowing what the ESF is and what it has been doing.  Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA’s black budget, and is the architect of the world’s monetary system (IMF, World Bank, etc).

ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness).  It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, HIV, and worse… These five videos are the “answer” I have arrived at after three years of blogging on They took me a month and a half to make (and months of research). You will not find the material covered anywhere else. – Eric deCarbonnel

This five part video series explains the theft of America’s gold, who did it and why.

Part 1:5 Covert Operations & The Exchange Stabilization Fund & Its History

Part 2:5 Covert Operations & The Exchange Stabilization Fund & Its History

Part 3:5 Covert Operations & The Exchange Stabilization Fund & Its History

Part 4:5 Covert Operations & The Exchange Stabilization Fund & Its History

Part 5:5 Covert Operations & The Exchange Stabilization Fund & Its History


Published (mirrored) on January 26, 2016 courtesy of 911truthncDotOrg


For more information on the Federal Reserve:

The Federal Reserve: Public Enemy Number One

The Money Masters

The Silvermaster Spies


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