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Lauchlin Currie

Lauchlin Currie was born on October 8, 1902, in West Dublin, Nova Scotia. He attended the London School of Economics and received his Ph.D. from Harvard University. Currie was an instructor and tutor at Harvard and a professor of International Economics at Fletcher Graduate School.

The Federal Reserve began to pay more attention to money in the latter part of the 1930s. Central to these efforts was the Harvard economist Lauchlin Currie, whose 1934 treatise, The Supply and Control of Money in the United States, was among the first to provide a practical empirical definition of money. His definition, which included currency and demand deposits, corresponded closely to what we now call M1. Currie argued that collection of monetary data was necessary for the Federal Reserve to control the money supply, which in turn would facilitate the stabilization of the price level and of the economy more generally. In 1934, Marriner Eccles asked Currie to join the Treasury Department, and later that year, when Eccles was appointed to head the Federal Reserve, he took Currie with him. He later become Assistant Director of Research and Statistics for the Board of Governors of the Federal Reserve System.

In 1939, President Roosevelt appointed Currie to one of six new administrative assistant positions created by the Reorganization Act of 1939. In 1941, was named head of the Economic Mission to China. It took Roosevelt's personal envoy, Dr. Lauchlin Currie, to broker a compromise between two renowned American fighters: General Joseph W. (Vinegar Joe) Stilwell and General Claire L. (Old Leatherface) Chennault. The scrap was over which policy the United States would pursue in the war's most frustrating arena, the China Burma-India theater. Chennault's grandiose plan envisioned the defeat of the Japanese through an increased air effort against Japanese supply lines, shipping, and air forces. Stilwell advoated a continued effort to reform the Chinese army.

Currie, a White House assistant who handled lend-lease matters for China, had developed a rapport with Madame Chiang and other key Chinese officials during a trip to China in 1941. Currie was among the strongest of Stilwell's critics. After a trip to China in the summer of 1942, during which Chiang expressed his displeasure with the feisty American general, Currie recommended to the President that Stilwell be sacked. The President agreed to dispatch an air advisory mission to China. It was this decision that resulted in creation of the American Advisory Group, which became popularly known as the “Flying Tigers.” But the battle between Currie and the War Department continued during 1942, and military crises and strategy took up more and more of the President's time, Currie found himself being edged out. After the war, Currie was one of those blamed for losing China to the control of Communists.

In 1943-1944 Currie ran the Foreign Economic Administration where he played a major role in recruiting or recommending economists and others throughout the Washington administration, prominent examples are John Kenneth Galbraith, Richard Gilbert, and Adlai Stevenson.

An article appeared in the October 31, 1944, New York Daily Mirror reporting a speech by Governor Bricker stating that he declared Lauchlin Currie was a Federal employee with a subversive record. Currie was one of seven individuals named in Bricker's speech to "conclusively prove Roosevelt and the New Deal are in the hands of the radicals and the Communists."

In late January 1945, the United States, United Kingdom, and eventually, France, put together a delegation to go to Switzerland to negotiate the cessation of all trade between Germany and Switzerland. The delegation was headed by Lauchlin Currie. The involvement of Currie and Assistant Secretary of the Treasury Harry Dexter White in the negotiations is significant for another reason: both men were longtime agents for the Soviet secret police organization, the NKVD. It is not certain if the actions by Currie or White during the negotiations with the Swiss were in any way affected by their role as Soviet agents. Soviet goals probably did not differ much from those of the other Allies when it came to limiting Nazi economic activity in Switzerland.

Both men figure prominently in the US Army translations of the NKVD messages from 1943 to 1946, known as Venona and issued by the Army Security Agency. Currie, known as PAZh (Page) and White, whose cover names were YuRIST (Jurist) and changed later to LAJER (Lawyer), had been Soviet agents since the 1930s.

Senior KGB officials may have become worried when Currie apparently told Soviet contacts (possibly in spring 1944) that the Americans were about to break a Soviet code. Currie had access to signals intelligence at the White House and could have heard overoptimistic rumors that Arlington Hall would soon be reading Soviet messages. Currie's tip probably was too vague to have alarmed Soviet cryptographers, but it might have worried higher-ups in Moscow. Indeed, the only change observed in the characteristics of the Soviet messages around that time appeared to be a cosmetic correction implemented to please higher authority. On 1 May 1944, KGB code clerks began using a new message starting-point indicator for telegrams--a change that ironically would make work easier for Arlington Hall crypt-analysts.

US perceptions of the Soviets began shifting after the war had been won. Two defections in autumn 1945 galvanized US counterintelligence. Igor Gouzenko, a GRU code clerk in the USSR's Ottawa Embassy, revealed to Canadian authorities that the Soviets had indeed penetrated the Manhattan Project and other agencies. A few weeks later, Elizabeth Bentley gave the FBI details about spies in the State and Treasury Department, OSS, the Pentagon, and even the White House. By mid-November 1945, the White House knew the outlines of the defectors' stories and had heard of their accusations against dozens of US Government employees, including high officials such as White House aide Lauchlin Currie, OSS executive assistant Duncan Lee, and Dexter White.

Currie resigned his position with the Government on June 30, 1945, and opened his own consulting business. In 1949 he had been selected to head a very prestigious World Bank Mission to Colombia. After presenting the Mission report in Washington in September 1950 he accepted a very attractive contract from the Colombian government to return to help implement the World Bank proposals. Currie returned to the US to testify to the McCarran Committee in December 1952, and that no charges were ever laid against him (and he never invoked the Fifth Amendment), not because he would not return but because he was never indicted. Since the 1950s he returned to the US on many occasions, including for a meeting with Walt Rostow in the White House in 1961.

The muggy Washington summer of 1948 grew even hotter when news media reported that a "blonde spy queen" three years earlier had given federal investigators convincing evidence of widespread Soviet espionage in America during World War II. In a few days the world learned her name--Elizabeth Bentley--and heard her and another ex-Communist agent, Whittaker Chambers, repeat their charges before Congress. On 31 July Elizabeth Bentley testified before the House Committee on Un-American Activities (HCUA), publicly accusing Harry Dexter White and Lauchlin Currie of being Soviet agents. Truman dismissed the accusations as false and politically motivated. Mrs Roosevelt spoke out strongly in public to defend Currie against Elizabeth Bentley's allegations.

According to John Earl Haynes and Harvey Klehr, evidence that Currie cooperated with Soviet espionage is convincing and substantial. Historians Allen Weinstein and Christopher Andrew also conclude Currie was a Soviet asset.

James Boughton, official historian of the International Monetary Fund, and Roger Sandilands of Strathclyde University who ardently defended Harry Dexter White and Lauchlin Currie in the face of clear and convincing documentary evidence of their espionage on behalf of the Soviet Union. The new evidence neither justifies nor excuses the excesses of domestic American anticommunism ordinarily subsumed under the label McCarthyism. But it does require a more complex and nuanced understanding of domestic American anticommunism than many historians in the 1970s, 1980s, and 1990s were willing to provide.

Sandilands stated "None of the VENONA messages reveal Currie as passing information directly to the Soviets, only via other government economists. Elizabeth Bentley did not identify him as a communist and said he never passed on documents. In fact one fragmentary VENONA decrypt (August 1943) does say he passed on to George Silverman (a Harvard classmate in the 1920s), a memorandum, possibly "about a political matter", for the State Department. Another (March 1945) has the Moscow NKVD chief complaining that Currie's American so-called "controller" (Gregory Silvermaster) would not let the Soviets have direct access to him and that he mainly (but not exclusively) would give information only verbally, his relations with Silvermaster having been expressed "only in common feelings and personal sympathies".

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