TRADING WITH THE ENEMY: AN EXPOSE OF THE NAZI-AMERICAN MONEY PLOT 1933-1949
Chapter 5: Trickery in Texas
A partner of the Rockefeller associate, Standard Oil of California, the tall, fair-haired, and dynamic Torkild "Cap" Rieber of the Texas Company was an important link in The Fraternity. Born in Voss, Norway, in 1882, this strapping young Viking became an American citizen at the age of twenty-two. Within weeks, he was master of an oil tanker loading up from Spindletop, Texas. He joined the Texas Company at twenty-three; within twenty years he was chairman; he created a tanker fleet that gave his company enormous international power by 1933. He built the Barco pipeline in Colombia, flying suspension bridges in sections from Texas to the Andes, flinging them across 5,000-foot passes. He linked up with Standard Oil of California in Saudi Arabia and in Bahrein in the Persian Gulf, obtaining a monopoly through under-the-table deals with the local rulers and the Japanese and German interests in those areas.
"Cap" Rieber supplied Franco in the Spanish Civil War, shipping oil from Galveston to Bordeaux in France and thence to Corunna, with orders not to stop for inspection by any man-of-war, including United States gunships. He supplied polymerization techniques to I.G. Farben in the Ruhr and to I.G.-Farben-connected companies in Iran, Saudi Arabia, Egypt, and Syria with the approval of the State Department.
In December 1939 he flew with Goring in a plane piloted by Pan American Airways pilot Pete Clausen on a personally conducted tour of the main centers of industrial Germany. He sailed his vessels through the British blockade to fuel the U-boats after 1939, and simultaneously sent more to aid Nazi corporations in South America. He told Life magazine in 1940, "If the Germans ever catch [any of my ships] carrying oil to the Allies they will have my hearty permission to fire a torpedo into her."
Rieber was among those, like Davis, who had high hopes for Juan Almazan's bid for the Mexican presidency to succeed in favor of the Axis. On February 12, 1940, the American Embassy in Mexico City reported that Texas Oil of Arizona was working in close collusion with affiliated oil groups including the Davis Oil Company in directing the clandestine entry of arms into Mexico. The arms were to support a possible military coup by Almazan in the event of his defeat at the polls. The report said, "Pacific Fruit Express refrigerator cars are each loaded with arms in special wooden boxes so shaped as to fit very conveniently along the sides of the wooden strips or slotted flooring that permits the drainage of the ice water to the drain pipes under the floor of these cars." The report added, "Oil company secret service operatives are ridiculing the Mexican Government for the glass-eyed vigilance on the border, as they call it, that enables them to execute adroit introduction of arms without detection." The report said, "I find that large sums of oil money are being paid out on the border for protection and I also have ascertained that Custom House officials on the American side of the line at Eagle Pass, Texas, have accepted money to facilitate the departure of arms from the U.S.A. through this American port of entry."
In 1940, Rieber worked in close collaboration with the Texas Company's German representative Nikolaus Bensmamn, who was a paid spy of Hermann Schmitz's nephew Max Ilgner in Bremen. Bensmann corresponded with Rieber and Rieber's vice-president, R. J. Dearborn, in a complicated cipher that was successfully designed to evade the British censorship office in Bermuda. The cipher was so effective that, as Bensmann wrote to the Abwehr in Hamburg on January 29, 1940, "Even lengthy espionage reports can be transmitted without running the risk of discovery." By the code, Rieber was able to send information to Bensmann about gasoline shipments to the Canary Islands and secret patents being shipped clandestinely to Berlin. These reports made their way to I.G. Farben's N.W.7. Intelligence Group, where they were examined by Ilgner. Rieber visited Roosevelt to discuss the President's attitude toward Germany; intelligence on the meetings was transferred by Bensmann's code to Berlin. Rieber's reports on every aspect of the petroleum industry in the United States rivaled those supplied by General Aniline and Film. Even restricted aircraft-production details were given, in a fifty-eight-page report that should never have left America, prepared with the cooperation of spies in the offices of Secretary of the Interior Harold L. Ickes and Secretary of the Navy James V. Forrestal. The cipher was never broken. But here is a problem. Why were these ciphers allowed to flow through Bermuda? Why were they not stopped? There is no evidence they were forwarded to London for examination.
Rieber obtained British Navicerts or certificates of authorization to send his supplies to Germany through the British blockade after Britain and Germany were at war. He bartered the shipments for nine tankers built for him in Nazi yards and delivered to him under the Norwegian flag with British consent after September 3, 1939. In 1940, Rieber sold all German interests in Texas Company's German patents for $5 million. He arranged contracts with I.G. Farben in which he supplied plans of all the motors and installations of American Navy yards and Army forts that he provided with gasoline and oil.
Some of Rieber's employees were loyal Americans. They wrote to the State Department and even the President demanding that Rieber be exposed. They alleged that he hired Gestapo agents as lubrication engineers and that emissaries of the German military authority in Norway were staying with Rieber in New York. On August 2, 1940, an employee of Rieber's Beacon Research Laboratory wrote the State Department that Rieber was "a representative of Hitler in this country." The employee added that "the entire executive staff of the Texas Co. is pro-Nazi and openly boasts of it as well as being willing to do all within its power to injure the English and help the Germans." The letter went on:
Two men from Germany are now at the laboratory, neither one being a technical man, and as nearly as we can determine, they are here solely for the purpose of learning all they can about this country so that if an invasion is made, they will have had a chance to send to the enemy all of the essential information about industrial plants and areas. They were "economists" in Germany and were assigned to the work in engineering in our laboratory -- work they are not equipped to do. One of these men is an outright propagandist for Hitler. Contacting all the people of German extraction in America and holding meetings at his home, preparing the way for the proposed German invasion of his country. He has taken pictures of the entire area, completely mapped the district by photography and is constantly wandering over the district taking pictures of strategic areas.
The visit to New York that year of Nazi Fraternity associate Gerhardt Westrick (see Chapter 6) exposed Rieber to such unwanted publicity that several shareholders in the Texas Company demanded that there be a housecleaning and that Rieber must retire for the company's own good.
On August 20 fifteen directors of the corporation walked grimly into the Texas Company boardroom on the twenty-fifth floor of the Chrysler Building. They had to reach a decision on the future. They argued for seven hours, trying to find some way to clean up the board's image after the unwelcome attention Texas Co. had been getting. They knew that the press coverage of the Rieber Westrick association could cause a catastrophe in business. Walter G. Dunnington, the prominent Manhattan attorney who represented the estate of railroad pioneer James J. Hill, the Texas Company's biggest single stockholder, insisted that Rieber must go. Prominent banker William Steele Gray, Jr., and stockbroker Henry Upham Harris agreed. Texas oilman John H. Lapham and Chicago banker Walter J. Cummings wanted to have Rieber take a vacation until the bad publicity blew over. But Rieber's second-in-command, the smooth, soft-voiced William Starling Sullivant Rodgers, was eager to take Rieber's place and made no bones about seeking Rieber's dismissal.
Rieber was asked to present his own point of view, which largely consisted of boomingly delivered sweet nothings. The result was that the board asked for his resignation. However, he continued to exercise influence behind the scenes. The adroit W.S.S. Rodgers took over from Rieber. He linked up with the Rockefeller empire by going into partnership with Harry D. Collier, cheerful chairman of standard Oil of California, and the former Jersey Standard employee Jimmy Moffett. Rodgers formed Caltex, which jointly bought up millions of dollars' worth of oil from the Arabian Sea. The banker was James V. Forrestal, of the board of the Nazi General Aniline and Film, who was about to become Under Secretary of the Navy.
Saudi Arabia had intricate economic and political links with Hitler. On June 8, 1939, Khalid Al-Hud Al-Qarqani, royal counselor of Ibn Saud, was received by Ribbentrop in Berlin. Ribbentrop expounded to Khalid his general sympathy toward the Arab world and pointed out that Germany and the Arabs were linked by a common foe in the shape of the Jews. Khalid answered that Ibn Saud attached the greatest importance to entering into relations with Germany. Ribbentrop was concerned that Ibn Saud might have a special relationship with the King of England. This had been played up in the press. Khalid set Ribbentrop's mind at ease. He stressed that the king hated the British, who hemmed him in. By contrast, Khalid stated, Ibn Saud was sympathetic toward Mussolini. The conversation ended with salaams and Heil Hitlers.
At 3:15 P.M. on June 17, 1939, Hitler received Khalid Al-Hud at the Berghof. The reception was given worldwide attention. It was agreed throughout Europe that the meeting was a blow to Britain. As a result of it Emil Puhl and Walther Funk's Reichsbank gave Ibn Saud a credit of one and a half million Reichsmarks from Hitler's personal treasury for the purchase of 8,000 rifles, 8 million rounds of ammunition, light anti-aircraft guns, armored cars, a special Mercedes for the king, and the building for a munitions factory. Soon afterward, Emil Puhl arranged a further loan of 6 million marks that was paid in installments for the rest of the war.
These arrangements were in effect on November 28, 1941, when the Grand Mufti of Jerusalem, the leading legalist of the Arab kingdoms and among the bitterest enemies of the Jews, met with the Fuhrer in Berlin. The Grand Mufti, with the authorization of the Arab world, expressed his admiration of Hitler and named the same enemies: the English, the Jews, and the communists. He promised to guarantee assistance in war by acts of sabotage and revolution. He offered to raise the Arab Legion from all available Moslem men of military age. He indicated support for Vichy France. Hitler replied that Germany was locked in a death struggle with two citadels of Jewish power: Great Britain and Soviet Russia. It went without saying that all practical aid would be given to the Arab countries in return for Arab support. The Fuhrer said, enjoining the Mufti to "Lock it in the uttermost depths of your heart," that the Fuhrer would carry on the battle for the total destruction of the Judeo-Communist empire in Europe, that the German armies would soon reach the southern exit of Caucasia, and that as soon as this happened, the Fuhrer would give the Arab world the assurance that its hour of liberation had arrived. He would force open the road to Iran and Iraq and destroy the British world empire.
This crucial meeting took place five months after an arrangement had been entered into by Caltex in collusion with Roosevelt. In June 1941, jolly James Moffett of Caltex went to the President with a proposal. Moffett stated that in order to insure that Ibn Saud remained loyal to American interests (in other words, did not hand Caltex over to Germany or supply General Erwin Rommel with oil) the Treasury must advance $6 million a year to Ibn Saud. Moffett said this with the knowledge that the $6 million per annum would not in any way affect Ibn Saud's ongoing relationship with Hitler. Indeed, at the same time Emil Puhl was paying Ibn Saud more than one million marks a year.
Roosevelt agreed to this deal with a Nazi collaborator. He was greatly influenced by Jesse H. Jones, Secretary of Commerce, who by now was part owner of the Davis Oil Company. On July 18, 1941, following a meeting with Moffett, Roosevelt wrote to Jones: "Dear Jesse. Will you tell the British I hope they can take care of the King of Arabia -- this is a little far afield for us."
Roosevelt bypassed Congress and entered into an arrangement that was entirely against the rule book. Saudi Arabia was emphatically not a lend-lease country. If it were known that Ibn Saud as Hitler's close ally in Nazi pay was being bribed by the President to protect an oil company, there would have been a major public outcry. Roosevelt ordered Harry L. Hopkins, who was in charge of Lend-Lease, to arrange with Britain for the money to be paid to the king under the table. Lend-Lease to England was to be surreptitiously increased.
The arrangement continued for two years. Not only did money flow to Arab countries but a vast range of products, many of which were in short supply in the United States, and all of these were sent to organizations or individual merchants who were known to have supported pro-Axis and subversive movements from the late 1930s until then. No screening of any kind was done by the United States, Middle East Supply Center on the reshipment to the Axis of petroleum, mineral oil, fuel products, rubber, and automobiles.
When Bernard Berger, of the Board of Economic Warfare handling the Middle East, brought up complaints on shipments by Caltex's subsidiary Aramco* to the enemy, the State Department and its local consulates put every kind of obstacle in his way. At first their excuse was that the Middle East was British-sponsored territory and that it was up to the British to check the loyalty of enemy consignees. After excruciatingly slow dealings, the State Department agreed that U.S. diplomatic missions in Teheran, Baghdad, Jerusalem, Cairo, and Jidda should agree to the screening, but months after the agreement was made, Berger was complaining (on December 23, 1942) in a memorandum to his superior, H. A. Wilkinson, that "No one has lifted a finger in implementing the proposals." He continued to point out that the failure of the State Department and British Intelligence was responsible for the dangerous Fifth Column run by the Nazis in the Middle East. He urged the appointment of a trade intelligence officer in the headquarters of the American Commission in Cairo. Nothing was done about this.
Berger specifically mentioned the powerful Middle Eastern companies operating in Saudi Arabia, Syria, Iraq, and Iran; the Grand Mufti of Jerusalem; and Hitler. He also named a smuggling ring which, he discovered, was paying for imports through graft used in obtaining export licenses. Berger was only just able to avert an arrangement whereby an unnamed U.S. senator was about to pay a bribe to Henry Wallace to grant commission for licensing. Yet another company, with offices in Istanbul and New York, was also known to be trading with the enemy with State and British cooperation. In 1943, Forrestal appointed William Bullitt as his special Assistant Secretary. They were joined by Massachusetts Senator David I. Walsh, chairman of the Senate Naval Affairs Committee, an equally extreme isolationist America Firster and supporter of Irish nationalism. These Machiavellis brought pressure to bear in Washington to change the existing arrangements. They told Roosevelt that British influence was "becoming excessive" in Saudi Arabia and that the present deal should be stopped. Instead, the American government should invest directly in Aramco. Apart from Forrestal's financial involvement, his and Bullitt's motives were clear. Despite the fact that Ibn Saud was still closely interlocked to Hitler, they wanted the American government to aid him against British influence.
The conspirators were afraid that Harold Ickes, who was still fighting protection for the corporations, would object to these arrangements. On February 27, 1943, Bullitt dropped in to see the embattled Secretary of the Interior and tried to shake his morale by saying that State Department critics had "told me the boys took pretty sharp exception to the fact you are showing interest in oil outside of the United States. This is the exclusive function of the Department of State."
Forrestal and Bullitt were constantly in Ickes's office to enlist him in the cause. Unfortunately, he succumbed to their blandishments. The two swayed Ickes into believing that there was a British threat to American interests in Saudi Arabia. They even succeeded in having him talk to the President about the matter. Ickes listened when Bullitt said at a meeting on May 29, 1943, "The British are already laying plans to establish a branch bank in Arabia. I wouldn't put it past the British to have King Ibn Saud assassinated, if necessary, and set up a puppet who will see the oil situation through their eyes." Bullitt went on, "There is a secret agreement between Churchill and the President." (If such an arrangement indeed were envisaged, then it was because Ibn Saud was in league with the Nazis.) The result was that Ickes helped to press through the arrangement for investment in Aramco.
Meanwhile, Roosevelt, without telling Ickes, issued a document authorizing a transfer of Saudi Arabia to the status of a lend-lease country, stating, "I hereby find that the defense of Saudi Arabia is vital to the defense of the United States." But the deal for direct government investment in Aramco fell through.
Instead of giving the United States a rich supply of oil after the deal was made, W.S.S. Rodgers and Harry Collier held America to ransom. Meanwhile, the Nazi involvement in Saudi Arabia became more and more extreme. The State Department and Department of the Interior did not have to rely on Army Intelligence reports from Britain and their own G-2 agents to discover the extent of that involvement. Details of it leaked into such liberal publications as Asia and the Americas and Great Britain and the World. From these sources, from German Foreign Office document 71/51181 (July 22, 1942) and from recently declassified secret reports prepared by British Intelligence on Walter Schellenberg of the Gestapo, it is possible to determine the extent of Nazi influence on Ibn Saud in the middle of the war. The Grand Mufti of Jerusalem was, until the time of Italy's collapse as an Axis partner, living in Rome, working with the agents of Kurt von Schroder's friend and associate Ambassador Franz von Papen in Ankara, Turkey, to send out agents through the Arab states. In Saudi Arabia fanatical Arabs were trained as Nazis at German universities and schools. From a headquarters in a carpet shop in Baghdad, Dr. Fritz Grobba, German minister to Iraq, ran espionage rings, subsidized Arabic newspapers and clubs in the Saudi Arabian capital of Jidda, The German TransOcean News Agency functioned as an espionage and propaganda agency in Jidda. The Nazi spy Waldemar Baron von Oppenheim, until recently in the United States and Syria, was headquartered in Saudi Arabia. Many Nazis flocked in disguised as tourists or technicians. They constructed roads and built factories. They formed German-Arab societies and learned Arab language so as to address crowds and whip them up into a fanatical support of Hitler. Ibn Saud, as always, played both ends against the middle, protesting admiration for Roosevelt and Churchill while authorizing his personal representative Rashid Ali EI-Kilani to continue to represent him in Berlin and address the Moslem society there.
Wilhelm Keppler, founder of the Circle of Friends, friend of ITT's Sosthenes Behn, and under secretary of the German Foreign Office with substantial shareholdings in I.G. Farben, made Saudi Arabia his special provenance. He laced the country with economic agents who spread out as far as Iran and Iraq. By 1944 the United States was seriously short of oil. It cost Aramco ten cents a barrel to bring up oil in Bahrein and twenty cents in Arabia, plus a royalty of fifteen cents to the Sheikh of Bahrein and twenty-one cents to Ibn Saud in addition to the existing bribe. Suddenly, W.S.S. Rodgers of Texas Company and Harry Collier of California Standard informed Ickes that the price to America would be $1.05 a barrel, take it or leave it. With his back against the wall, Ickes had to accept. Worse, Rodgers and Collier paid no income tax on the sale because they were registered in the Bahamas. They made $120 million at the expense of the U.S. government -- on an investment of no more than $1 million.
Ickes tried to buy the oil companies' stock in the interests of national defense and the economic needs of the nation. But he encountered constant resistance from Collier and Rodgers. First Collier would agree, then Rodgers would hold out; then they reversed their positions. They also said that they had doubled Aramco's royalty payments to Ibn Saud. Ickes checked with the Arabian Embassy and found that the statement was a lie; he blamed Forrestal for not having the sales figures checked.
How was this possible? Because Caltex and Aramco still had plants in the State Department.
What grievous situation existed in the State Department that allowed such infiltration? The elements of anti- semitism and secret sympathy for the Nazis' form of government had been there since the early 1930s. In the Department's uncomfortable, crowded, and antiquated building, there were daily collisions between the embattled liberal faction and the right-wing extremists. Behind the scenes as ambassador-at-large, William Bullitt was the prime schemer in assuring that the extreme right wing in the Department retained a sophisticated neutralism in time of war. He set out to remove the single most powerful force against world fascism: Sumner Welles.
Welles was a strong opponent of The Fraternity's deals with Saudi Arabia and South America. Intelligence reports told him how deeply Hitler had penetrated Saudi Arabia, that Ibn Saud was one with Hitler despite Saudi Arabia's phony breaking off of diplomatic relations with the Axis -- a sop to the public -- and that much of the investment of the American government in pipelines on behalf of Caltex/Aramco would go straight into enemy hands. He was opposed to the arrangement with Vichy because he believed that in propping up Marshal Henri Petain's regime the United States was allowing its gates to be left wide open to Hitler's commercial, political, and espionage agents.
Welles's personality was cold, authoritative, and detached. Tall, elegant, and flawlessly tailored, he came from the top of the East Coast Establishment. Wealthy in his own right, a career diplomat from the first, he had been at school with Roosevelt at Groton and frequently entertained Franklin and Eleanor in his exquisite house at Oxon Hill. His wife was socially prominent, and he had a growing family. Despite his strongly liberal stance he was acceptable to the Establishment because he seemed to represent the finest virtues of the ruling class.
Yet he had a weakness. He was a bisexual. At night this pillar of the Washington community would disappear from his house on the excuse of working late at the office and, in disguise, make his way into parks, toilets, and places of assignation and perform intercourse with blacks. He presumably paid for sex because he was afraid that a genuine affair would expose him.
William Bullitt had long heard rumors about Welles. When Welles was ambassador to Cuba, there had been talk of relationships with young Cuban boys, some of them underage. Welles had left the Caribbean under a heavy cloud. Roosevelt had chosen to ignore the stories.
Bullitt had gone to see J. Edgar Hoover in 1940 after his return from Paris and asked him to investigate Welles. Hoover, who was himself alleged to be homosexual, knew all of the secret places where the homosexual community met. He decided to act at once.
On September 16, 1940, a solemn funeral was held in the chamber of the House for the beloved speaker William Bankhead. Two special trains left Washington for Jasper, Alabama, for the burial. On the homebound train were Roosevelt and virtually his entire Cabinet, including Welles.
As the train chugged into the night, two Pullman porters Hoover had hired went into Welles's bedroom. They first flirted with him and then blatantly offered themselves for a price of $100. Welles, who was drunk, seemed to ignore the fact that the President, Attorney General Robert Jackson, Harold Ickes, and practically everybody in the government was in the same car.
Hoover had his men stationed in the adjoining bedroom. Welles's drunken conversation, and the sexual acts that followed it, were noted down.
When the train returned, Hoover's men presented the evidence to him. Bullitt had a meeting with Hoover and went over the report. He took it to Roosevelt in the Oval Office. The President refused to read it but instructed Hoover the next day to obtain more evidence. He was evidently playing for time, worried about a confrontation with Welles.
Bullitt and Hoover spent the next three years amassing a thick dossier on Welles. "Pa" Watson, secretary to the President, was in charge of the investigation. Bullitt absurdly charged that Welles's wife was having an affair with a Russian spy and that Welles was being blackmailed by communists to leak State secrets to Russia. On October 24, 1942, Hoover called at the Wardman Park Hotel apartment of Cordell Hull. Hull had asked to see him, saying that he was gravely concerned by stories about the improper actions of Welles. He told him that he knew Hoover had made an investigation and asked whether Hoover would give him the report so that he could evaluate the evidence. Hoover confirmed that he had made the report on behalf of Roosevelt. He suggested that Hull contact another of Roosevelt's secretaries, Marvin McIntyre, to obtain the report. Hull said he would deal with it.
Hull and Hoover kept pressing Roosevelt to look at the file. On April 27, 1943, Senator Owen Brewster of Maine called to see Hoover. He had discovered that Hoover had made the investigation and knew whom the FBI had questioned. Hoover told him that indeed an investigation had been made but that "no conclusions have been reached." Brewster went to see Hull and Biddle and decided to take the matter up with the Truman defense committee to investigate the whole affair. Biddle, evidently alarmed by the potential of such a public inquiry, decided to go to the President.
Faced with the fact that his long cover-up for Welles might be revealed, Roosevelt was forced to bow to pressure from Biddle and his supporters and ask for Welles's resignation. A delighted Bullitt suggested coolly to Roosevelt that perhaps Welles should be sent to Russia as a diplomatic representative. Roosevelt was not impressed. Not only did he disconnect all contact with Welles, he verbally thrashed Bullitt and never spoke to him again. It was the ruination of Welles 's career, but Bullitt never recovered from the results of his expose.
The catastrophe wrecked the State Department overnight. Welles's carefully built-up policy of opposing appeasement in time of war was shattered at a blow. The Department fell apart.
The exposure of Welles distracted attention from the fact that Aramco supporter David I. Walsh of Massachusetts was exposed in a similar scandal.
The scandal broke when Naval Intelligence officers and city detectives raided a homosexual brothel in Brooklyn and arrested the proprietor, Gustave Beekman. District Attorney William O'Dwyer and Naval Intelligence officers discovered that the brothel was a nest of Nazi agents. One of those who mingled with those agents was Senator Walsh. In an affidavit made in Raymond Street jail following his arrest, Beekman gave detailed testimony about Walsh. He said that Walsh used to come to his bordello on Sunday afternoons -- at least ten times between July 1941 and March 1942. Beekman reported that he saw the senator in close conversation with another customer, described only as "Mister E," who was known as "the Nazi's ace spy in the U.S." Mister E would arrive with sailors and would question them on their ships, their comings and goings and destinations. Mister E was accompanied by a number of Germans who were also acting as espionage agents. The spies specialized in luring soldiers and sailors and determining information from them.
According to Beekman's attorney, Harvey Strelzin, who is still in practice in New York, Roosevelt decided to use the episode. Since Walsh was restricting supplies of ball bearings, oil, and other strategic products to the Navy in the interests of isolationism, Roosevelt decided to make a deal with Walsh. If he let Walsh off the hook, Walsh must aid the war effort. Walsh agreed instantly. Strelzin says Roosevelt asked Hoover to have Beekman reverse his testimony. Hoover grilled Beekman cruelly and impersonally with several of his toughest men for several hours around the clock until Beekman cracked and changed his story. Later he tried to change it back on the offer of a substantial check from the New York Post, but it was too late. At Beekman's trial under the famous Judge Samuel Leibowitz, Beekman told the truth.
The isolationist clique protested the accusations and demanded that there be a full public exoneration for Walsh. At a stormy meeting of the Senate, Burton K. Wheeler and two other isolationists, Gerald P. Nye and Bennett C. Clark, jumped to their feet and called in concert for a sweeping investigation with a view to punishment of all persons who had conspired to smear Walsh.
Wheeler shouted, "This is a diabolical attempt on the part of certain individuals ... to smear every member of the Senate who has disagreed with them on matters of foreign policy." Senator Clark urged that Mrs. Dorothy S. Backer, "the old hussy who runs the New York Post," should be "brought before the bar of the Senate."
Wheeler attacked Judge Leibowitz: "If I were a Federal judge, I would have him impeached," and, ironically in the context, he called for a cancellation of the financing of the Post by the Federal Reserve Bank. Senator Nye urged, "Let this matter not be dropped here. An investigation will reveal a secret society which for two years have [sic] been engaged in gathering such information as would permit the smearing of individual members of the Senate."
The Nation investigated the matter and found that indeed Walsh had been seen in conversation with suspected Nazi spies who lured soldiers and sailors to the "house of degradation" for the purpose of obtaining military secrets. The magazine discovered that the FBI had made Beekman recant his original statement after hours of high-pressured questioning. The Nation wrote, "So summary an attempt to bury an unpleasant affair may involve the sidetracking of a full and open investigation of the house in Pacific Street." The editorial added, "We can't afford to encourage [Nazi Fifth Columnists] by covering up the case ... The Nation strongly supports the Post's demand for a full and public inquiry."
It goes without saying that the "full and public inquiry" never took place and that Walsh remained chairman of the Naval Affairs Committee. The following year he was in part responsible for the Aramco swindle.
On October 5, 1942, Judge Samuel Leibowitz sentenced Beekman to five to twenty years in Sing Sing. In March 1947, James Moffett of Caltex, gravely ill and in agony in his hospital bed following a major operation, decided that with death facing him, he should unburden himself of the details of the Aramco affair. He had another motive that was slightly less altruistic: Caltex owed him $6 million for his rake-off on the deal.
He went to Welles's nemesis, Senator Owen Brewster, and asked for a full-scale inquiry into Aramco. He made such a stink in the press that Brewster had to go ahead: Inevitably, since Walsh had been deactivated, Brewster appointed Burton K. Wheeler to investigate Moffett's charges. Barely audible, Moffett gave a halting address on May 5 in which he outlined the plan. The committee called for Roosevelt's files in the matter. President Truman declined to permit a search of the late President's papers at Hyde Park. On May 7, 1947, the executors of Roosevelt's estate explicitly denied permission for a search, citing a July 16, 1943, directive by the President that all his letters of a sensitive character should be locked up for between ten and fifty years.
On May 25, because of overwhelming public pressure, part of the file showing Moffett's original correspondence with the White House was revealed. But the executors of the Roosevelt estate blocked the bulk of the appropriate documents.
The only ray of light for Moffett in this harrowing ordeal was that Truman was forced by public pressure to remove Wheeler from the special investigative council on June 4.
Moffett was unable to push Aramco to produce the text of the oil concession agreement with Ibn Saud. The council ruled that the request for the document should be quashed "to protect the defendant, the government of Saudi Arabia and the government of the United States from annoyance and embarrassment."
As the facts gradually came to light despite every effort to suppress them, Congress was rent apart by violent debates.
On April 25, 1948, Senator Brewster delivered a broadside to an almost empty and notably indifferent Senate. He described the Aramco action as "an amazing picture of corporate greed when our country was in its most bitter need." Senator William Langer of North Dakota said, "The men who have put over this oil deal ought to be in the penitentiary. These men, who have called upon American boys to go into foreign lands to protect their oil interests, are traitors to America. They ought to surrender their citizenship or have it taken away from them." Brewster and Langer charged that three former Navy Department aides in the Justice Department were at that moment blocking a new investigation into the scandals. The investigation was indeed blocked.
On February 1, 1949, Moffett brought suit in federal court in New York for $6 million in damages against Caltex's Aramco on the ground that he had made the original arrangements between Roosevelt and Secretary of Commerce Jesse Jones and that he had not been given his promised rake-off.
Jones tried to avoid appearing at the hearing. The matter was so embarrassing to him that he feigned illness. But Moffett had connections. He arranged for a friend of his in the FBI to follow Jones to the Twenty-Nine Club on East Sixty-first Street on the night that Jones was supposed to be having a heart attack. The FBI report read: "The witness Jones played poker on the night of November 16, 1948, until 2 A.M. and in the course of the evening the stakes ranged as high as $4,000 a hand and on one occasion they said Jones backed a straight in a pot involving approximately $4,000 against four 4's." The report continued, "No doubt backing a straight against four 4's with $4,000 in the pot has been the cause of many a heartache, but to my knowledge it never has been recommended as a cure for heart trouble."
Next day, Federal Judge Samuel H. Kaufman said that Mr. Jones must be compelled to appear and that "if Mr. Jones indicated signs of fatigue as a result of his poker game" he could retire from the proceedings for a few moments during the course of the day.
Jones appeared on November 26. Asked for records of the transactions for Aramco, he said jovially, "I don't keep a diary because I don't plan to write a book like Mr. Morgenthau and some others and I kept no Dictaphone in my desk -- I'd like to put that into the record, too!" Moffett's attorney, William Power Maloney, who had been the scourge of Nazi agents until Senator Wheeler had him dislodged from the Nazi Sedition Trials of the 1940s, pressed Jones for more details. Jones answered that his memory was "vague of the entire matter" and that he had "even forgotten the name of his secretary" whom Maloney was trying to find as a material witness. Asked about Roosevelt's note suggesting to him that the British should "take care of the King of Arabia," Jones gave a calculated reply. He said, "I scribbled the note during a Cabinet meeting, handed it to the President and asked him to write it down in his own handwriting, so I could let them know it was his decision as well as mine."
Jones claimed he had no legal authority to grant the loan and had had no intention of doing so, but that he wanted to let "a Mr. Moffett and a Mr. Rodgers" who had discussed the loan with him know that they "could not get any help from the United States Government." This curious example of perjury was presumably intended to absolve Jones of any complicity in the illicit measure. The implication was that Moffett and Rodgers ** had gone ahead on their own.
Suddenly, Jones added, "Judge Kaufman, I'd like to ask the bench a question off the record."
The judge told him to go right ahead.
Jones said, "I've been given $195 by Mr. Maloney and $225 by the other side to come here in January to testify. I want to know whether I have to return the money because I think I ought to keep it."
Judge Kaufman told Jones, "You will have to return the money if the subpoena is dismissed."
"Oh, don't do that, Judge, don't do that," Jones replied, to loud laughter in court.
It was in this spirit of levity that the entire case was conducted. Inevitably, Aramco came out the winner. Moffett was awarded one million one hundred dollars by the jury in settlement of his claims. But the judgment was set aside by the trial judge.
* Arabian-American Oil Company.
** W.S.S. Rodgers of the Texas Company.