SIDNEY SOUERS: A SHORT BIOGRAPHY … WITH INTIMATIONS OF LEE HARVEY OSWALD
Most people know of Sidney Souers, if they know of him at all, for his connections to the intelligence apparatus of the United States government. Souers was deputy director of the Office of Naval Intelligence, the first director of the Central Intelligence Group (predecessor of the CIA), and executive secretary of the National Security Council. A rear admiral, he was a close friend and advisor to Harry S Truman.
Unfortunately, beyond a few all-too-brief outlines such as at Wikipedia, biographical information about Sidney Souers is scant, constrained, sanitized. Certainly, this pivotal figure in the establishment of America’s National Security State deserves to be better known than he is.
Following, then, is a modest start to a Souers biography – modest, but containing information not easily found elsewhere. An effort has been made to go beyond the official narrative and to dig into the details that shaped the man’s life. As a bonus, there will be revealed some unusual Souers connections to the family of that most elusive of all Americans, Lee Harvey Oswald.
Sidney William Souers was born in Dayton, Ohio, on March 30, 1892. The 1900 census shows him living with his parents, Edgar Daniel and Julia Catherine Souers, at 32 North Williams Street on Dayton’s West Side. Although census records indicate that Catherine gave birth to four children, Sidney was the only one to survive beyond childhood. The fate of Sidney’s sister, Irene, was particularly tragic: she died at age 2, poisoned by ingesting creosote she had found on the kitchen table. (1) (2)
Little information is available about Sidney’s youth, but it would appear that he was hard-working and determined – attributes that would serve him well in the future. By age eight he had a part-time job bicycling around Dayton posting baseball scores in shops and taverns throughout the city. This was at the dawn of the twentieth century, the heyday of baseball gambling, and Sidney’s job may have been related to wagering in the establishments he serviced. (3)
Interestingly, the Souers’ Williams Street residence was only a block or two from several iconic Wright brothers’ sites such as the Wright home (7 Hawthorn Street) and the Wrights’ bicycle shop/research facility (located variously at 22 South Williams Street and 1127 West Third). In fact, young Sidney had his well-used bicycle repaired at the Wrights’ shop on many occasions. It is tempting to think that he may also have witnessed some of the brothers’ aeronautical experiments. (4)
At any rate, sometime around 1904 the Souers family moved from Dayton to New Orleans, Louisiana, where Edgar worked as a paving and public works contractor. Sidney attended public schools in New Orleans, graduating from Boys High School (predecessor to Warren Easton High School) in 1910. The 1910 census shows the family living at 544 S. Tonti Street in the city. (5) (6) (7)
At some point shortly after his graduation, Sidney left home, traveling first to New York City by way of freighter, then to Europe by steamship. What he did in Europe is not noted in any readily available source, but he did not stay long. He returned to New York, where he took a job on a Hudson River passenger boat. In fairly short order, he accumulated a savings of some $1,000 (not bad — about $25,000 in 2019 dollars). (8)
Sidney used his savings to attend college. He began his education at Purdue University, then transferred to Miami University of Ohio, where he graduated in 1914. He was a member of Delta Kappa Epsilon Fraternity (the same fraternity to which, in later times, Gerald Ford, George H. W. Bush, and George W. Bush would belong). (9) (10)
After finishing college, Souers returned to New Orleans, where, at age 22, he began his business career. His first substantial job (after a short stint at his father’s paving company) was as a salesman with the real estate firm of Meyer Eiseman. Eiseman was a New Orleans entrepreneur, who, in addition to directing a real estate company, was a noted civic leader and investor in many New Orleans enterprises. (11) (12)
One of Eiseman’s more interesting investments was called the Orange Land Company, which, as its name implies, developed citrus producing farms in rural areas of south Louisiana. One of Eiseman’s partners in this venture was an engineer and contractor named Lewis M. Dalgarn. Dalgarn’s firm specialized in wharf construction, and was noted for having built the United Fruit Company wharves in New Orleans. (13) (14)
Lewis Dalgarn was important in Sidney Souers’ life because, on December 23, 1914, he became Sidney’s father-in-law. On that date, Sidney and Lewis’ daughter Mary Etna (“Etna”) were “quietly married” in a ceremony to which only family members and a few guests were invited. Maybe Sidney had met Etna through his employer Meyer Eiseman, or maybe the Souers and Dalgarn families knew each other through their breadwinners’ common occupation as public works contractors. At any rate, there seems to have been a solid connection between the Souers, Dalgarn and Eiseman families. (15) (16)
In addition to Meyer Eiseman’s other activities, he was the founder and president of the New Orleans Real Estate Board, an organization dedicated to professionalization and promotion of the real estate business in New Orleans. Not surprisingly, Sidney Souers became a member of the Board shortly after beginning his employment with Eiseman. (17)
In 1914, the New Orleans Real Estate Board consisted of some 50 members, the roster of which, besides Sidney Souers, contained some interesting names. First, there were the Newmyer brothers, Arthur and Leroy, members of a Washington DC family that had relocated to New Orleans due to the brothers having purchased an interest in the New Orleans Item, a leading newspaper of the time. Arthur became assistant editor of the paper, while Leroy specialized in advertising and sales. Arthur Newmyer was significant in that he would later become the founder of Newmyer Associates, a prominent but low-key Washington DC consulting firm and conduit to the inner circles of government power. (18)
Sidney Souers clearly knew the Newmyer brothers well; he even ushered at Leroy’s 1914 wedding. Whether Arthur or Leroy assisted Sidney in his future career in Washington is not known, but it is a good guess that they did. Conversely, Arthur Newmyer could well have benefitted from Sidney’s close relationship to the intelligence community and to Harry S Truman. These are matters deserving further study. (19)
Another member of 1914’s Real Estate Board was H J Balter (aka Harry John Balter, aka Bluford H J Balter, aka “Doctor” H J Balter, aka “Colonel” Bluford Balter), a charlatan who passed himself off as a doctor while operating a New Orleans weight loss clinic that eschewed diet and exercise in favor of “scientific” reducing machines. By 1917, Balter had relocated to New York City, where his operations were a failure, and he became bankrupt. He then moved back to New Orleans, where, in 1918, he made the financial coup of his life when he married Alva Oteri (nee Stevens), widow of the fruit importing magnate Santo Oteri, who had passed away at an early age. From that date forward, Balter was able to indulge in a variety of financial pursuits, including interests in a number of New Orleans real estate ventures. One of his notable assets was the Balter Building, which, in the 1950s and 60s, housed such interesting tenants as Guy Banister’s detective firm, Sergio Arcacha Smith’s Cuban Revolutionary Council, a segregationist Citizen’s Council, and John J Fogarty’s mob-connected horseracing wire service. (20) (21) (22) (23) (24) (25) (26)
To be sure, there is no evidence that Sidney Souers interacted with Bluford Balter in the years going forward, but some things are fascinating in their essence — in this case, that Souers and Balter, in 1914 at least, almost to a certainty knew each other.
With the Newmyer brothers it was a different story. Sidney Souers continued to interact with them. In fact, Sidney’s next job was with the Newmyers’ New Orleans Item, where he joined his friend Leroy in a sales position in 1915. His specialty, unsurprisingly, was real estate advertising. (27)
But Sidney Souers was destined for bigger things. One day in 1916, while making a call on Mortgage Securities Company of New Orleans, Sidney so impressed the president of the firm, Levering Moore, that he was offered a job as Moore’s assistant — on the spot. Sidney accepted and began his new job in short order. (28)
Mortgage Securities was an innovating firm for its time. As its name implies, it specialized in pooling mortgages into securities that were then marketed to the public — a type of financial instrument that is common today, but was novel in 1916. The mortgages to which the firm’s securities were tied included instruments on both urban and rural properties, particularly large plantation tracts in Louisiana and Mississippi that represented a portion of the hereditary, if somewhat distressed, wealth of the South.
For the next few years Sidney applied his keen intellect to his new position. His responsibilities increased, and he was regularly promoted. Meanwhile, he and his wife Etna lived at various addresses in New Orleans for the first few years of their marriage, but by the time of the 1920 census they were residing in the household of Etna’s parents at 1517 Nashville Road. The reason for this is not clear, but it was not because the pair was in financial straits. Sidney was rapidly becoming a successful businessman. (29)
By 1921, at age 29, Sidney had become president of Mortgage Securities. But this position represented only a portion of his burgeoning interests. Over the next few years Souers became president or director of several other insurance, mortgage and other financial firms including the First Joint Stock Land Bank, Standard Motors Finance Company and Union Indemnity Company. Moreover, he began getting involved in non-financial firms such as Cloverland Dairies and the Marine Products Company. Further, while maintaining his position at Mortgage Securities, he took a job with Canal Bank and Trust Company, at the time one of the largest banks in the South. By 1925 he would become Canal’s vice-president. (30) (31)
Sidney’s rapidly expanding business interests allowed him several opportunities to travel. In 1922, he took a cruise to Brazil timed to coincide with the Brazilian Centennial Exhibition in Rio de Janeiro in August and September of that year. Accompanied by his wife, Sidney sailed on the “American Legion”, returning by way of New York, where the ship docked on September 25, 1922. Sidney’s co-passengers aboard the “American Legion” were a remarkable lot. They included various military and industrial figures as well as a large group of archaeologists associated with the International Congress of Americanists, which had held its convention in Rio that year. At least a couple of these archaeologists, namely Herbert J. Spinden and Sylvanus G. Morley, were, or had been, ONI (Office of Naval Intelligence) operatives. Morley, ONI’s legendary “Agent 53”, arguably one of the most effective spies of WWI (who some believe may have been a model for the film character “Indiana Jones”) combined his career in Mesoamerican archaeology with a substantial clandestine workload including the recruitment of intelligence informants and agents. (32) (33) (34)
So it is fascinating that Sidney Souers, with his future roles at ONI, CIG and NSC, should have come in contact with this ONI legend in 1922. (The number of passengers aboard the “American Legion” was small, the cruise lasted nearly two weeks, and Morley and Souers were both gregarious – so it is a virtual certainty that the two would have interacted.) The question is, was it through this meeting with Morley that Souers’ initiation into espionage began? Whatever the case, the trip had a business component as well, one result of which was the underwriting of a $2,000,000 bond issuance for the Brazilian state of Ceara by Souers’ Mortgage Securities Company. (35)
But Sidney Souers’ Latin American interests did not derive solely from Mortgage Securities. Canal Bank & Trust, where Souers was vice-president, was also involved in the region. The bank had its own Latin American desk and a correspondent relationship with Banco Atlantida in Honduras. It was also banker for several leading importing firms in New Orleans, including Standard Fruit, Cuyamel Fruit, and various coffee importers. (36) (37)
Canal Bank also had a relationship with Chase Bank in New York. In fact, Chase appears to have been part owner of Canal. In the 1930s, when Canal was in trouble, Chase sent its representatives, including Oliver G. Lucas and George Champion, to clean things up. (Lucas would remain as president of Canal’s successor bank, the National Bank of Commerce, while Champion would ultimately become president of Chase itself. At a later time, in 1939, Lucas would become acquainted with the mysterious George de Mohrenschildt, for whom he supplied a letter of reference to R L Thornton at the Mercantile National Bank of Dallas.) Chase, in turn, profited from some valuable oil properties owned by Canal, as well as from an oil-related tax-dodge it learned from Canal sources. For Sidney Souers, the Chase relationship was probably his first brush with Rockefeller family interests, but it would not be his last. (38) (39) (40) (41)
Financially, the Roaring 20s were Sidney Souers’ years of greatest achievement. He knew few constraints as he swept his way through the euphoric decade. The year 1923, in particular, saw one of his most successful ventures, when he participated in the hostile takeover of Piggly Wiggly Stores (aka the Stores Company), a now largely forgotten episode that involved a “short squeeze” initiated by the firm’s founder, Clarence Saunders (for a time assisted by Wall Street legend Jesse Livermore), and an opposition group consisting of several “pools”, including a New Orleans pool of which Souers was part. (42)
The loans that Saunders contracted in order to obtain Piggly Wiggly shares were collateralized by the shares themselves, so that on default the shares would revert to the lenders. This is precisely what happened. Saunders failed in his squeeze attempt and lost control of his company. (He blamed his failure largely on the fact that Livermore had ceased working on his behalf, and had joined the other side.) Souers and his allies gained control, with Souers becoming a director of Piggly Wiggly in 1923 and president by 1925. (43) (44)
Souers’ success was due in part to his having obtained ownership of a $30,000 Piggly Wiggly note from the Interstate Trust and Savings Bank of New Orleans, which was the original lender. This was a shrewd move on Souers’ part, allowing him, rather than the bank, to profit from the financial settlement (a nice example of an old banker’s perk: let your bank, or some associated institution, assume the initial risk of an investment, and then, once the asset starts to look good, transfer ownership to yourself at an attractive price). (45)
But in addition to being financially remunerative, Souers’ participation in the Piggly Wiggly takeover broadened his circle of contacts beyond his substantial Southern connections to include several Midwestern and Eastern financiers. One of these contacts, who was to become one of Souers’ co-directors in the newly constituted Piggly Wiggly, was Joseph H. Himes, one of the richest, most powerful – but virtually forgotten – individuals in American history. In addition to being (almost certainly) one of Jesse Livermore’s mysterious “backers”, Himes was a consummate Washington insider who would later become a major stockholder and director of General Dynamics Corporation, a founder and director of Group Hospitalization, Inc. (the medical insurance provider used by the CIA), as well as being an investor and director in William F. Buckley’s Pantepec Oil Company. In fact, Himes and Buckley were close personal friends. (46) (47) (48)
Now here comes a surprise: in the 1930s, Joseph Himes was a business partner (at E. A. Pierce, a forerunner of Merrill Lynch) of Lee Harvey Oswald’s uncle (by marriage to Hattie Oswald), James Coker. (Yes, Lee Harvey Oswald’s uncle was partner at a major Wall Street brokerage firm; later he became a Washington bureaucrat at the Department of Agriculture.) Moreover, William F. Buckley had used E. A. Pierce as his underwriter for Pantepec Oil. There is thus an interesting web connecting Sidney Souers, Joseph Himes, William F. Buckley, and Lee Harvey Oswald’s uncle James Coker, about which more can be said, but must pass for another time. (Joseph Himes in particular, an éminence grise of American politics, as well as a name and face behind the hopeless abstraction “the military-industrial complex”, is desperately – very desperately — in need of a biographer.) (49)(50) (51)
But let us return to Sidney Souers. He and his wife traveled a good deal together. In addition to automobile trips to North Carolina and California, as well as the aforementioned excursion to Brazil, they motored a great deal in the New Orleans area. This led to tragedy on Sep 2, 1924, when, near Algiers, Louisiana, the automobile in which Sidney and his wife were travelling tumbled over an embankment, pinning Etna beneath the vehicle and killing her. Sidney was only slightly injured. (52) (53)
This misfortune notwithstanding, Sidney continued to pursue his business interests. As president of Piggly Wiggly, he resided for a portion of 1925 at the Hotel Chisca in Memphis, but soon returned to New Orleans to advance his ventures there. As always, his interests were expanding, soon extending as far as Europe. In 1927, he took a trip to the continent during which he made arrangements with French interests, including the Bank of Paris, to import cotton directly through New Orleans companies, thereby avoiding intermediaries. Also during this trip Souers visited Italy, where, as he told the New Orleans Times-Picayune, he became an admirer of the fascist state:
“In Italy, everybody works and everywhere there is a spirit of satisfaction. It is either work or go to jail, for Mussolini will not tolerate idleness. He has done wonders for Italy and I didn’t hear a single complaint against him from anyone in the different classes that I talked with. The result is that production is at a high peak and all the workers seem to be satisfied and are loyal to the leader.” (54)
This opinion seems surprising, but was not uncommon at the time. As will be seen, there were others who shared similar views.
Back from his European trip, Sidney Souers continued his financial, political and social advancement. He was a member of several New Orleans municipal committees such as the Rotary Club, the Safe River Committee, and the very important Association of Commerce, where he was Chairman of the Research Committee. (55) (56) (57)
But most significantly, Sidney Souers belonged to New Orleans’ ultra-exclusive Boston Club, where he achieved membership on December 24, 1923. In addition to being the home for business tycoons and New Orleans’ social elite, the Boston Club was, at the time, a notoriously racist organization. Stuart O. Landry’s 1938 history of the club waxes nostalgic for the heady days of 1874 when several of the club’s members organized street confrontations to free perpetrators of the Colfax massacre (where perhaps 100 or more black residents of Grant County were slaughtered) from their confinement. With pride, the Landry tome speaks of the “supremacy of the white man” over “negro domination” and of the Club’s support for “White League” militia groups that helped end Reconstruction in the South. Again, Sidney Souers belonged to this club. (58)
Souers’ elitism revealed itself further In the spring of 1927, the year of the great Mississippi River flood, when he and 56 other New Orleans civic and business leaders hatched a plan – supported by the governor — to dynamite levees in St Bernard and Plaquemines parishes in order to relieve pressure on the New Orleans levee system, thereby preventing flooding in the city proper. The levees were in fact dynamited, resulting in severe damage to the above named parishes and the displacement of some 12,000 persons whose homes, properties and businesses were flooded. Many of the evacuees were resettled in New Orleans warehouses. They did not prosper. (59)(60)
The signatories of the dynamiting plan, including Sidney Souers, had promised that victims of the flooding would be fully compensated for their losses. But the bankers and businessmen involved began almost immediately to break their word, using a host of lawyerly tricks to deny or reduce the claims of the aggrieved. Of course, the most powerful individuals and businesses of the parishes, including the Louisiana Southern Railroad, received substantial compensation for their losses, but most of the ordinary citizens received little or nothing, and were, in fact, charged room and board for staying in the shelters assigned to them. One “elderly negress”, for example, was awarded a mere $27 for her travails, while, in contrast, Souers’ Canal Bank received $850 for the use its yacht, and Blanc Monroe, one of the lead lawyers representing the interests of the New Orleans group, received a bonus of $25,000 for his efforts. (61)
Although it does not appear that Sidney Souers was among the leaders of this affair, he was decidedly involved, and his bank, Canal, led by its president James Pierce Butler, was definitely one of the plan’s organizers. In fact, most of the group’s meetings were held in Canal’s boardroom, although some were held at the offices of H. Generes Dufour, of the firm Dufour, Rosen, Wolff, and Kammer. Intriguingly, the receptionist at this firm, with whom group members would have had to interact when entering its premises, was a headstrong young woman named Marguerite Claverie. Marguerite would later be known as Marguerite Oswald, mother of Lee Harvey Oswald. (62)
Moving forward to 1928, Sidney’s connections led to his appointment by the governor of Louisiana to a position as one of five board members, and eventually vice-president, of the Board of Commissioners of the Port of New Orleans, popularly known as the Dock Board. This position became the center of an important political maneuver in October, 1929. The new governor, Huey Long, attempting to gain control of the Board and forcing the president, Edward S. Butler, to resign, offered the position of Board president to Souers. Souers declined, and in fact resigned from the Board entirely, claiming that he was a “warm personal friend” of Butler’s. (63)
It should be noted that this Edward S. Butler was the grandfather of the Edward S. Butler who was a founder of the Information Council of the Americas (INCA) and who debated Lee Harvey Oswald on the radio in 1963. So it is interesting that the future ONI deputy director, director of Central Intelligence, and NSC‘s executive secretary, was a “warm personal friend” of the grandfather of an important Oswald antagonist. Ed Butler, the younger, at a later date bragged that he had connections with Charles Cabell, deputy director of the CIA. But it would appear that the family’s intelligence connections ran substantially deeper. (64) (65)
By this point it should be apparent that Sidney Souers had a talent for making influential friends. In addition to those already noted, let us add E. Howard McCaleb, scion of a renowned New Orleans family, an up-and-coming lawyer who would later become Chief Justice of the Louisiana Supreme Court (and who was, amazingly, cousin-in-law to Warren Commission witness Paul Raigorodsky). (66) (67)
Another of Souers’ New Orleans friends was instrumental in jump-starting his military career, which, as noted, led to a rear admiralship and deputy directorship of the ONI. Interestingly, Sidney Souers did not serve in World War I, although he was clearly of prime age to have done so. (In the terminology of his day, he was a “slacker.”) Thus, his appointment, in 1929, as lieutenant commander in the U. S. Naval Reserve, seems to have come out of the blue. But it was Souers’ friend from New Orleans’ Southern Yacht Club and Boston Club, and Canal Bank director, Ernest Lee Jahncke, who secured him his position. Jahncke had been appointed Assistant Secretary of the Navy in 1929. (68) (69) (70)
Specifically, Sidney Souers’ was designated an officer in the Navy’s Intelligence Reserve. Of course, Souers may already have been involved with intelligence activities through his acquaintance with Sylvanus Morley, but his broader experience in the New Orleans business community was also significant. Indeed, New Orleans has always been a city of espionage and intrigue, and the city’s commercial interests have often been at the center of this tendency – even to the point of organizing political interventions in parts of Central America and the Caribbean. (More on this later.) (71)
As will be seen, this military assignment did much to define the future course of Sidney Souers’ life. But at the same time, his financial dealings were in no way diminished. In fact, the years 1928 and 1929 saw two of Sidney’s most significant business ventures.
First, in 1928, there was the National Linen Services deal. This affair involved the consolidation of several providers of laundry services in the South, including Southern Linen Supply, Atlanta Laundries, Inc., and Crescent City Laundries. Sidney Souers, serving as investment banker for the transaction, allocated 50,000 shares of the common stock of the reorganized firm to himself. This, and other aspects of the deal, were controversial, leading to a series of lawsuits over the years, and ultimately to a charge of monopolization, which was investigated, in part, by the FBI. In the end, none of these charges was affirmed, and Sidney Souers remained a major stockholder, as well as a director, of National Linen for many years to come. (72) (73)
Next, in 1929, there was a much larger conglomeration, this time in the nascent airline industry. The restructured firm in this case was named, simply, the Aviation Company (later to become known by its acronym AVCO), which eventually became a part of Convair, then General Dynamics Corporation.
Perhaps most interesting was the scope of this transaction, which, from the point-of-view of Sidney Souers, occurred in two phases. First there was the merger of Gulf Airlines of New Orleans with Texas Air Transport of Fort Worth, to form Southern Air Transport, Inc. Canal Bank was the leading force behind this deal, with Canal’s president, James P Butler, and vice-president, Sidney Souers, becoming two significant board members of the firm. Meanwhile, a much larger venture was in the works – the above-named Aviation Company — that would include, among other firms, Universal Aviation Corporation, Colonial Airways, Fairchild Aviation, and Embry-Riddle Aviation Corporation. Organizers of this transaction were two of the nation’s leading investment banks, Lehman Brothers and W A Harriman of New York. It is not clear who approached whom, but only a few months after its formation, Souers’ Southern Air Transport was absorbed into Aviation Company. (74) (75)
Not surprisingly, Sidney Souers was named a director in the new, behemoth firm. Other interesting directors included Amon G Carter of Fort Worth; Robert Lehman, head of Lehman Brothers; W Averell Harriman, president of W A Harriman; and George Herbert Walker, Harriman’s partner and father-in-law of Prescott Bush, George H W Bush’s father. In the future, Sidney Souers would have the opportunity to interact with co-director Averell Harriman on many occasions. In fact, by 1946, both men would become integral members of the Harry S Truman administration. Insofar as AVCO, the firm would be plagued by losses during the Great Depression, and control would eventually transfer from the Lehman-Harriman group to a faction led by Errett Lobban Cord. At this time, Sidney Souers would relinquish his position on the board. (76) (77)
Sidney Souers also had an interest in sports. He was a member and official in Loyola University’s Gridiron Club as well as a key member of the school’s Athletic Council. In these positions he would certainly have known and interacted with the man who was president of the Gridiron Club — and the “driving force” behind Loyola supporters — William A. Coker. (In fact, Souers and Coker were prominently pictured in an article about Loyola on page 36 of the New Orleans Times-Picayune of November 29, 1926. Further, both men were speakers at the Loyola athletic banquet in December, 1925.) William Coker, in turn, was the brother of James Coker, Lee Harvey Oswald’s uncle. (And by the way, William Coker was also an acquaintance of Clay Shaw’s. Both men were associated with New Orleans’ “Little Theater” in the 1930s, and, in fact, appeared together in the same Little Theater production on at least one occasion.) (78) (79) (80) (81) (82)
The U. S. census of April, 1930, finds Sidney Souers living in the household of his in-laws, the Dalgarns, at 1517 Nashville Avenue, New Orleans. Financially, things were not going well. The giddy 1920s were over and the nation’s economic paradigm had changed. Almost overnight, Mortgage Securities had become insolvent, having gone into receivership on Aug 8, 1929. Canal Bank, too, while it would last a few more years, was in the throes of demise. (83)
The essential problem was real estate loans. No doubt through the influence of Sidney Souers, Canal Bank had been designated trustee and “depository” for notes secured by mortgages written by Mortgage Securities. Mortgage Securities, in turn, pooled these mortgages into “Mortgage Participation Certificates” which were sold to the public. But the lending practices of both Mortgage Securities and Canal Bank were less than prudent. According to George Champion, who came from Chase Bank in New York to straighten things out, “The bank had never thought of getting any of them [the loans] paid down. They would make a ten-year loan on a house or a farm and never say, ‘This should be amortized or cut down.’ Consequently, when the values fell out of bed there was no way to liquidate the loans.” (84) (85).
At any rate, by mid-June, 1930, Sidney Souers left New Orleans for good. He resigned his position with Canal Bank – whether voluntarily or by some degree of coercion is not clear – and took a position at Fourth and First Banks of Nashville, TN, a holding group that included Union Planters Bank of Memphis. Still, Souers retained his directorships in numerous New Orleans firms as well as his membership in the Boston Club. (86) (87)
The Fourth and First job did not last long. By the fall of 1930 Souers had taken a new position as financial vice-president of the Missouri State Life Insurance Company of St. Louis. This was in the depths of the Great Depression and Missouri State did not prosper. In fact, by August, 1933, the company was in default. It was placed in receivership by the state’s insurance commissioner, Emmett O’Malley, who allowed reorganization by a group of New York investors headed by David Milton, son-in-law of John D. Rockefeller Jr., who injected two million depression-era dollars into the firm. (Also associated with the new firm was J. Rockefeller Prentice, grandson of John D. Rockefeller, Sr.) The new company was named General American Life Insurance Company and it retained Sidney Souers as vice-president. The restructuring was not without controversy; insurance commissioners from several states complained – unavailingly — that O’Malley had not advertised for bids two weeks in advance as required by law. At any rate, the result was that Sidney Souers was bailed out – in a big way – by the Rockefellers. (88)(89)
But there is more. Acting as investment banker for the General Life transaction was the New York firm Dillon, Read. Partner and president of Dillon Read at the time was James V. Forrestal, who would later become WWII Secretary of the Navy and a few years later America’s first Secretary of Defense. As it happened, Sidney Souers and Forrestal became good friends. Their lives would intersect many times in the future. (90)
As always, Souers was not content to rest. During the 1930s he became director of several more companies including the Coca-Cola Bottling Company of Chicago, the Linen Service Company of Dallas, and the National Investors’ Group of New York. Further, in 1932, Sidney Souers was named senior Naval Intelligence officer for the St. Louis area where he handled “duties involving investigations, the development of the intelligence organization, the procurement of officers, and public relations.” Again, this appointment was likely through the influence of Souers’ friend, Assistant Secretary of the Navy Ernest Lee Jahncke (91)
In this context, it should be noted that in 1932 the U. S. Navy, including ONI, was not in a robust position. The 1920s had been, after all, a strong anti-war decade, full of peace and disarmament conferences, culminating in the remarkable but ineffective Kellogg-Briand Pact of 1928, which outlawed war as an instrument of foreign policy. In particular, conferences at Washington, London and Geneva placed definite limits on the size of navies and ships across the world. (92)
Moreover, the mood of the American people and government was pacific. Presidents Coolidge and Hoover both had pacifist leanings – particularly Hoover, with his Quaker background. Congress, in turn, was in no mood to spend, and military appropriations bills did not pass easily; in fact, the Navy’s budget was decreased on several occasions. Further, the Teapot Dome scandal did much to taint the Navy’s reputation. (93)
The nation’s attitude towards espionage and intelligence gathering had also taken a gentler turn. The excesses of WWI and its aftermath were in many cases overturned. Harlan F. Stone, Calvin Coolidge’s attorney general, for example, prohibited federal wiretapping and undercover operations, while Herbert Hoover’s secretary of state, Henry L. Stimson, shut down cryptographer Herbert Yardley’s New York “Black Chamber”, which had successfully intercepted and decoded messages for the State Department for several years. As Stimson indignantly stated: “Gentlemen do not read each other’s mail.” (94) (95)
The Office of Naval Intelligence, however, stood staunchly against these tendencies. Throughout the 1920s and beyond, ONI maintained its programs of espionage and surveillance. Further, its interests extended well beyond naval technology, strategies and fleet movements, to include surveillance of individuals and groups deemed to be inimical to the United States and its military establishment. At times this surveillance extended to breaking and entering, wiretapping and safecracking.
The objects of ONI surveillance were the obvious — Bolsheviks, Wobblies, anarchists, Bonus Marchers and foreign consular offices– but also included labor leaders and domestic groups such as the Federal Council of Churches in America, the National Federation of Churches, the Women’s League for Peace and Freedom, Jehovah’s Witnesses, and the publishers of Negro World magazine. ONI’s agents and informers extended deeply into civilian life, including, for example, the assistant cashier of New York’s National City Bank, and the head of Seattle’s Chamber of Commerce, Eugene J. Friedlander. The organization’s tentacles also reached into the nation’s university system, where numerous professors and administrators were retained to keep an eye on students and faculty who were “ultra-pacifist.” (96)
But ONI was not alone in its zest for spying and surveillance. There was also the FBI, which, under the leadership of J. Edgar Hoover, had similar goals and sanctioned similar methods. The two agencies were, in fact, a superb match, such that by the 1930s they had become “allies”, working together on several projects and sharing information with each other. Consequently, by 1936, ONI agents were being schooled at the FBI’s training course for investigative officers. It is not surprising, then, that Sidney Souers developed a close relationship with the special agent in charge of the FBI’s St. Louis office, Gerald B. Norris, with whom he engaged in weekly intelligence meetings for many years. (97) (98)
As it happened, shortly after Sidney Souers’ ascent to senior intelligence officer, ONI’s fortunes began to change. Franklin Delano Roosevelt was elected president of the United States. Active and assertive, he was the antithesis of his predecessor, Herbert Hoover. Moreover, he was an avid Navy man, having been Assistant Secretary of the Navy during the Wilson administration. He was personally acquainted with numerous Navy officials, including Chief of Naval Operations William Standley, who had been his golfing partner prior to Roosevelt’s having been stricken with polio. Although he was primarily occupied with the Great Depression, Roosevelt managed to increase the Navy’s budget, and in fact was able to divert numerous New Deal funds to naval advantage, including a $238 million public works emergency fund that was used for naval projects. (99)
Not surprisingly, Roosevelt was a strong supporter of ONI. In fact, one of Roosevelt’s aides, Lucien Ragonnet, was an ONI officer who gave Roosevelt regular briefings on naval affairs, while Roosevelt, in turn, assigned special tasks to ONI operatives. The strengthening of ONI was particularly enhanced by the appointment of the dynamic William Dilworth Puleston as ONI director on June 4, 1934. Puleston used his greatly increased funding to add many impressive officers to his ONI staff, including Roscoe Hillenkoetter, who would later become CIA director. (100)
William Puleston, however, was not possessed of philosophical subtlety. He interpreted pacifists not as idealists trying to establish a better world, but as Communist fellow travelers, or at the very least, Communist dupes. He dramatically expanded ONI’s program of domestic surveillance, focusing on socialists, pacifists and labor leaders, as well as historian Charles Beard, Senator Gerald Nye of North Dakota, ACLU Chairman Harry F. Ward , and even Nobel laureate Jane Addams. (101)
In contrast to Puleston’s near-fanatic concern about perceived internal enemies, his approach to external dangers bordered on nonchalance. He believed that Japan and Germany posed no serious threat to America, and agreed with several pro-fascist military officers about the supposed virtues of Benito Mussolini. Puleston was particularly influenced by the notorious Pedro del Valle, who had been sent as an observer to the Italian campaign against Ethiopia in 1935, and was effusive in his praise for the fascist dictator. (102)
In fact, it was not uncommon in the early 1930s to view Mussolini benignly. It was perceived by many that he had brought order to a historically disordered Italian economy and culture; that he had “made the trains run on time.” Mussolini also gave the military great support, a trait that endeared him to Puleston, del Valle, and other American militarists.
In this environment, with his similar pro-fascist views, Sidney Souers would likely have felt comfortable. If one assumes that he followed the lead of his superiors, Souers would have spent his time investigating the usual pacifists and dissidents of his area, as well as personnel at the numerous defense plants in the St. Louis region. Further, Souers was able on at least one occasion to wheedle information from an engineer who had installed a chemical plant in Japan. Of course, Souers’ ONI position was not full-time; he continued his job with General American Life, as well as his directorships in several other companies. But he surely continued to acquire influential friends and contacts in this new milieu, so different from that of the peaceful 1920s. (103)
Indeed, the world situation in the late 1930s was rapidly changing, and these changes were being reflected in the U. S. military, including ONI. On May 1, 1937, William Puleston was replaced as ONI director by the pragmatic and outward-looking Ralston Smith Holmes. Holmes changed the focus of ONI from internal surveillance to its traditional job of monitoring and evaluating foreign threats. This was not a moment too soon, for Japan, now firmly ensconced in Manchuria, was gearing to attack China proper, while Germany was on the road to Anschluss and yet graver offences. By September, 1937, Mussolini had cemented his alliance with Hitler, and in America, the charm of fascism was fading. President Roosevelt and Congress were steadily increasing military spending, while the Navy embarked on a program of shipbuilding. (104)
Moving forward to 1940, the census of that year shows Sidney Souers living (as of April 24) at 392 Bernard Avenue in Lemay Township, Missouri, just south of St. Louis. Also at that address were Sidney’s parents, Edgar and Catherine, as well as a live-in maid. Either across the street or next door (depending on the addressing scheme used in that sector of Missouri at the time) lived “transportation consultant” and inventor of various articles of submarine apparatus, Carl Baer. One presumes that, given their common interests in nautical matters, Souers and Baer would have gotten along well, and that, given the later course of Souers’ career at ONI, Souers may have learned some useful things from Baer. One may also guess that Baer was acquainted with the aforementioned Joseph H. Himes, director of the submarine building firm Electric Boat (later General Dynamics), and former business associate of Sidney Souers and James Coker. (105) (106)
Sidney Souers continued to manage his business interests until July 22, 1940, when he was called into active service by the Navy. His first assignment was at Great Lakes, IL, where he was appointed assistant district intelligence officer for the Ninth Naval District. Great Lakes was a naval training center, and it may be presumed that Souers was involved with background checking the numerous recruits who passed through that center as the first stop in their naval careers.
After having served about a year and a half at Great Lakes, Souers was promoted to district intelligence officer for the Sixth Naval District in Charleston, SC, a position he held from February to October, 1942. Given the clandestine nature of his work, details of Souers’ achievements during this period are not readily available. There is, however, an account of a German U-boat having been captured off the coast of Charleston during Souers’ tenure. The incident was heavily reported in the press at the time, with Sidney and other naval officials involved in the capture being prominently pictured in numerous newspapers across the country. This was Sidney Souers’ first major publicity as a naval officer. He had begun to be noticed. (107)
Perhaps of greater significance, however, (at least in retrospect) was that as the Sixth District’s senior intelligence officer, Sidney Souers would have been the commanding officer for a young ONI ensign named John F Kennedy, who was stationed in Charleston at the time. Kennedy had achieved his rank largely through the influence of Alan Kirk, ONI director from March to October, 1941, who was a friend of JFK’s father, Joseph P Kennedy. In addition to his desk job, JFK was also cultivating a political career, and was, in fact, named speaker at the Fourth of July, 1942, ceremony at the Charleston base. How well Sidney Souers knew JFK, and whether he was in some way involved with JFK’s abrupt reassignment, are interesting and pertinent, but not easily answered questions. At any rate, even if tangentially, the two men must have known each other. (108) (109) (110)
As it happened, Alan Kirk’s ONI directorship had come at a very discordant time for America’s intelligence establishment. World War II was in full force, and although the United States was not formally involved, the need for intelligence was paramount. Franklin Roosevelt responded to this need in his characteristic way, establishing new offices and bureaus with similar if not identical aims, as well as granting existing agencies overlapping responsibilities. The result was a Darwinian conflict in which the fittest survived, although the losers might persist as remnants that could again become ascendant, or as it happened, portions of which might be grafted on to the surviving entities.
Perhaps the most important of these new intelligence organizations was the Office of Strategic Services (OSS), which had its origins in the office of the Coordinator of Information (COI), a department created by FDR in July, 1941, with Colonel William J Donovan as “coordinator of information”. By June 13, 1942, FDR had split COI into two parts, with the “strategic” or clandestine part becoming OSS. From the beginning, OSS was – like Donovan – dynamic and aggressive. The other intelligence agencies, including ONI, regarded the newcomer as an intruder on their domains, and attempted, in many cases successfully, to limit its power. (111)
Further, over and beyond these government and military bureaus, FDR maintained a private network of investigators and spies, who, in fact, surveilled the formal agencies, including ONI. These spies included men such as Vincent Astor and Kermit Roosevelt, but perhaps FDR’s favorite was John Franklin Carter (aka Jack Carter, aka Jay Franklin), an American writer and columnist who played a deep but clandestine role in the Roosevelt administration. In fact, Jack Carter spied on ONI itself, even on Director Kirk, concerning whom he delivered a report directly to FDR in 1941. (112) (113) (114)
Indeed, by 1941, FDR’s sanguine regard for ONI was on the wane. Nor was FDR alone in his assessment: ONI was being severely critiqued within the Navy establishment itself. Director Kirk, it seemed, was squarely in the “domestic security” school of proper intelligence function. He spent valuable resources investigating labor problems at defense plants and chasing down presumed alien agents. The estimable Ellis Mark Zacharias took him to task for this, warning him that “purely investigative activities … are only a very small segment of a military operational function; therefore these activities must be kept on the proper plane if the tail is not to wag the dog.” (115)
Alan Kirk, however, was not solely responsible for ONI’s predicament. There was an ongoing feud between Admiral Richmond Kelly Turner of the War Plans Division and Director Kirk concerning the proper role of ONI in the total intelligence picture. Turner’s view was that ONI should be primarily a gatherer of information, while the WPD should be in control of the overall intelligence function. Needless to say, Alan Kirk vehemently disagreed, and this dispute did much to weaken ONI’s position within FDR’s intelligence bureaucracy. (116)
But the fundamental problem with ONI ran deeper than these temporal discords. Underlying everything was ONI’s essential elitism. ONI appointments were based in many cases on wealth and social connections rather than talent and ability. According to Latin American chief John W. Thomason, “We are swollen enormously … never was there such a haven for the ignorant and well connected.” (117)
The case of William M. Brennan was indicative. Attempting to apply for an intelligence position in 1941, Brennan was turned away by ONI because – as he learned after many inquiries — his grandparents had been born in Ireland. As columnist Drew Pearson commented, “Naval intelligence, 1941 model, accepts only fourth generation Americans.” (118)
Further, ONI was permeated with racism. In the entirety of ONI there were only three African-Americans – all in minor clerical positions. The ONI view – apparently widely believed — was that African-Americans were particularly susceptible to being recruited as spies by the Japanese, and could not be trusted. Indeed, African-Americans were often selected as subjects for ONI investigation. (119)
Neither the Navy nor ONI, however, could avoid the inexorable Rooseveltian flux. Things had to change, and at least in some ways, they did. By 1942, there was a new director of ONI, the reform-minded but affable Harold Train, backed by his assistant director, the above-named Ellis Zacharias, a veritable dynamo of activity and innovation. Between them, Train and Zacharias transformed ONI into a reasonably effective intelligence agency, with an emphasis on agent education and the preparation of meaningful reports. Before long, Zacharias’s Advanced Naval Intelligence School in New York was turning out officers that were actively sought at naval stations around the world. (120)
As might be expected, the new regime generated a pronounced turnover of ONI personnel at the various naval districts across the nation. One district that had been particularly plagued with mismanagement was the Tenth, at San Juan, Puerto Rico. The situation there was so bad that important intelligence missives were left lying around the office rather than being sent to Washington as normal procedure would dictate. In consequence, Director Train appointed a new intelligence officer at San Juan in October, 1942. This officer was none other than Sidney Souers, who had been quietly establishing a reputation as a “troubleshooter” at his Charleston, SC, base. (121)
The Tenth Naval District was the home of the Caribbean Sea Frontier, which covered not only the Caribbean Sea, but included the islands of the Antilles and extended around the curve of Central America and the Atlantic coast of South America. Perhaps not coincidentally, this was also Rockefeller territory: in 1940 President Franklin Roosevelt had appointed Nelson Rockefeller Coordinator of Inter-American Affairs in the newly created Office of the Coordinator of Inter-American Affairs. The objectives of this office included propaganda and intelligence gathering specifically in the Americas, with jurisdiction separate and distinct from that of the OSS, which operated in most of the rest of the world. (122)
Further, President Roosevelt had recently given J Edgar Hoover authorization to inaugurate a “Special Intelligence Service” that established an FBI presence in the Caribbean and other parts of the Americas. The OSS’s ambitious “Wild Bill” Donovan did not like this, nor did he like the Rockefeller appointment, both of which acts diminished his own base of power. In fact, Donovan threatened Nelson Rockefeller that “there will be a transfer of the Latin American information program from your office to ours.” Rockefeller’s response was quick: he allied himself with J Edgar Hoover and coordinated his office with the FBI, such that the two organizations would share information and operations throughout WWII. The net result was that in the Caribbean at least, a large portion of FDR’s intelligence reporting derived from Souers, Rockefeller, Hoover, and their respective organizations (plus, of course, an Army G2 presence, as well as the consular offices of State). (123)
The Caribbean assignment was in many ways an ideal position for Sidney Souers, given his earlier interests in Latin America as well as his knowledge of submarines, learned perhaps from his old acquaintances submarine designer Carl Baer and Joseph Himes, director of America’s premier submarine building firm, the oddly named Electric Boat.
Souers’ New Orleans experiences as banker, board member of several businesses, and member of the Dock Board would also have served him in good stead in his new position, and his many New Orleans contacts may well have acted as informants monitoring suspicious movements of goods or persons in and out of that port, which did substantial business throughout the Caribbean and Central and South America.
In fact, several of Sidney Souers’ New Orleans friends and associates were engaged in a wartime enterprise that had important intelligence implications and was furthermore a venture in which Nelson Rockefeller was involved. This project was the establishment of International House (IH), an organization devoted to expanding trade through the port of New Orleans by providing office space, meeting places, publicity programs, cultural exchanges, trade fairs and more. But along with this emphasis on trade, IH was a natural source for intelligence gathering.
Nelson Rockefeller’s role in the founding of IH included financing, staffing, direction and leadership. We note that on January 28, 1944, in a “hemisphere broadcast” on CBS radio, Rockefeller introduced International House to the world. His influence continued with the succession of J. Stanton Robbins, Rockefeller’s special assistant at the Office of Coordinator of Inter-American Affairs, to the position of managing director of IH in November, 1944. Also with strong Rockefeller credentials was IH’s second president, Lloyd J. Cobb, who was general counsel for Pan American Southern Corporation, a subsidiary of Standard Oil of Indiana (now BP Amoco). Overall, from his post as Coordinator of Inter-American Affairs, Rockefeller was able to direct critical materials to the IH construction project in a war economy that was otherwise plagued by shortages. Intriguingly, the lead attorney for IH at its founding was Hale Boggs, who would later become a congressman and Warren Commission member. (124) (125) (126)
The list of Sidney Souers’ friends and contacts who were involved with International House is imposing. Perhaps most important was Rudolf S Hecht, a renowned banker who had served as one of the directors of the Dock Board with Souers in the late 1920s, and who has been described as “the driving force behind the founding of International House.” Other IH founders who were associated with Souers through business contacts and/or the Boston Club included Joseph W. Montgomery, Charles I Denichaud, George H Terriberry, E. O. Jewell, Adolfo Hegewisch and Theodore Brent. Brent was a close associate of Rudolf Hecht’s at Mississippi Shipping Company; he later became president of International Trade Mart where he was an associate of the Mart’s general manager, Clay Shaw. (127) (128) (129) (130) (131) (132) (133) (134)
But let us return to Sidney Souers. The Tenth Naval District at San Juan overlooked, of course, the vast Caribbean Sea, over which German ships would have to traverse to obtain critical war materials such as platinum from Colombia. The monitoring of this commerce at the various ports in his jurisdiction would obviously have occupied much of Sidney’s time, as would the submarine traffic that might harass American and Allied ships in the region. Beyond this, Souers’ intelligence activities in Puerto Rico were classified, and details concerning his activities are not readily available.
Despite his hectic schedule at San Juan, however, and in the midst of a world war, Sidney Souers managed to find time for marriage. He wed his second wife – some 20 years after the loss of his first – in Miami, Florida, on May 28, 1943. His bride’s name was Sylvia Nettell Gerstner, a Missouri woman whom Souers had undoubtedly known from his long-time residence in that state. Sylvia was a divorcee, having been married to Francis A Gerstner previously. Some 10 years younger than Sidney, Sylvia would eventually survive him by 18 years. (135)
For unexplained reasons, the Navy did not allow Sidney’s new wife to accompany him to his post in Puerto Rico. Souers was obviously not pleased, but he persevered at his job, and on December 18, 1943, was promoted to the rank of rear admiral. His career took a further leap when his friend, James V Forrestal, was appointed secretary of the Navy on May 19, 1944, and by July 24, Souers had become assistant director of Naval Intelligence. He left his San Juan assignment and headed for Washington. (136)
In many ways, Washington was a new environment for Sidney Souers. He had never lived in that city, and he was not particularly political – at least not at that point in his career. But he certainly knew some influential Washingtonians. There was the very visible James V Forrestal, of course, but there were also a couple of quieter, non-public contacts such as Souers’ old New Orleans friend, political consultant Arthur Newmyer, and his former Piggly Wiggly co-director, the secretive but powerful Joseph H Himes, who was living in Frederick MD and operated out of Washington DC at the time. Insofar as Harry S Truman, then a senator, he and Sidney were apparently not yet close, but soon would be.
In typical fashion, the naval establishment continued to appoint new ONI directors every year or so, such that during Sidney Souers’ two year Washington tenure, he served under three separate superiors: Roscoe Schiurmann, Leo Hewlett Thebaud, and Thomas B Inglis. By all accounts, Souers worked well with these men, and ONI continued to advance its reputation as an effective agency by becoming more organized and by participating in broader intelligence concerns such as attempting to obtain military and scientific information from a soon-to-be-defeated Germany. Thanks to his continuing excellent performance, Sidney Souers was promoted again, on November 8, 1944, to the position of deputy director of ONI. (137)
By the end of 1944, it was apparent that the United States and its allies would win the war, and the various intelligence establishments were already contemplating their role in a post-war environment. The perception was rapidly developing that the new enemy would be the Soviet Union, and for its part, ONI under Leo Thebaud and Sidney Souers began reverting to its old ways, emphasizing anti-Communism and domestic surveillance. Further, the idea was advanced on several fronts, particularly by the OSS’s William Donovan, but also by Thebaud and Souers, that the national interest would be well served by the establishment of a “central” intelligence agency that would coordinate and consolidate the seemingly haphazard Rooseveltian system. (138)
These issues became particularly acute after April 12, 1945, when President Franklin Roosevelt died and was succeeded by his vice president Harry S Truman. FDR had been, after all, an absolute master in managing the mélange of bureaus, agencies and intelligence bodies that he had fashioned (in fact, he probably enjoyed the game), but his successors were mortals of lesser mien who craved a simpler environment. Further, it was perceived that the United States had not been adequately prepared for WWII, and that a new design was needed that would keep America in a permanent state of readiness. The issues of military and intelligence centralization became paramount.
In terms of military centralization, the major issue was the unification of the various military branches under a single administrative body, which, as a practical matter, meant the creation of a new Department of Defense to replace the Departments of War and the Navy. Harry Truman was in favor of this move – he even wrote an article advocating it – but James V Forrestal was opposed, fearing that it would diminish the stature of the Navy, which had historically been regarded as America’s first line of defense, but which was now being upstaged by the Air Force, then a part of the Army. Of course, Forrestal also opposed diminishment or dissolution of ONI, but this is not to say that he was opposed to centralization entirely. Rather, Forrestal was a “corporatist” — that is to say, he believed that the existing military and intelligence bodies (“corporations”) should continue to exist largely as they always had, but that they should inform and advise a larger centralized organization that would in turn consolidate intelligence matters and pass this intelligence on to Congress, the President, and other entities to whom this information would be useful. (139)
In this context, it should be noted that Forrestal’s corporatism was concerned with more than just military and intelligence matters. In fact, corporatism as it was understood in the first half of the twentieth century was a broad political-economic philosophy that defined what was believed to be an optimal way of organizing society — a philosophy that encouraged existing organizations and interest groups, as well as representatives of business, to work together to advance the common good through their alliance with government. In Europe, corporate bodies included not only large business concerns, but also unions, trade guilds, professional organizations, and even religious bodies. In America, however, corporatism had more of an ad hoc nature, consisting of operational structures such as committees, commissions, boards and authorities, with membership drawn from both the private sector and government. Examples would include such WWI and WWII groups as the Army Navy Munitions Board, the War Production Board and the National Research Council.
Economically, corporatism was seen as a middle ground between the extremes of laissez-faire capitalism and big-government socialism. The idea was that the private and public spheres could meet in the middle to cooperate in formulating policies favorable to all levels, and in particular, unite the various “corporations” of society to work in harmony with the largest political organ of all, the state. This philosophy found much support, particularly in Europe. Although the intent of such structuring may have been benign, it must be noted that corporatism eventually became a fundamental principle of fascist regimes such as Mussolini’s Italy, Hitler’s Germany and Franco’s Spain, as well as Salazar’s quasi-fascist Portugal. (140)
James Forrestal’s corporatism derived partly from his own experience, but also through interaction with his good friend and advisor, Ferdinand Eberstadt, who held a deeply corporatist philosophy. Eberstadt, like Forrestal, had a Wall Street background, but he had also spent time in 1913 and 1914 studying in Berlin and Munich, where he absorbed much of the corporatist thinking that prevailed in the German academy at the time. (141)
Closely associated with Eberstadt’s corporatist philosophy was his “Good Man” concept. Eberstadt believed that only a select few individuals, who had proven themselves to be successful in private enterprise, had the talent, ability, desire and drive to advance the public interest when called upon to do so. These “Good Men” were particularly predominant during WWII when the exigencies of mobilization motivated many businessmen to accept “dollar-a-year” positions managing and advising government in their areas of expertise. (142)
Ferdinand Eberstadt was known to keep lists of such Good Men throughout his life. Although some of these Good Men were industrial leaders, as might be expected, it is significant that nearly 75% of them were from Wall Street firms, either in law, investment, or banking. (Eberstadt’s idea of corporatism clearly did not derive from the syndicalist end of the spectrum, as did much of Europe’s.) A sampling from Eberstadt’s lists includes such names as Averell Harriman, Walter Lippman, Henry R Luce, Lewis L Strauss, John J McCloy and Allen Dulles. (Intriguingly, but perhaps not surprisingly, two of these “Good Men” – McCloy and Dulles – would later serve on the very corporatist Warren Commission, an ad hoc body formed to investigate the assassination of John F Kennedy.) (143)
This brings us to one of America’s most important post-war documents, the thoroughly corporatist Eberstadt Report, significant in that it was to be the blueprint for America’s National Security State, as would later be codified in the National Security Act of 1947.
James V Forrestal commissioned Ferdinand Eberstadt to write the report soon after FDR’s death. The idea was to counter the consolidation proposals advanced by the Army and Donovan’s OSS. In essence, Forrestal and Eberstadt believed that corporatism would bring a broader set of viewpoints and expertise into the arena of governance and policymaking than could be achieved by pure democracy. They believed that an easy flow of business executives – and in particular, Wall Streeters — in and out of Washington, to serve on boards, committees, as well as taking positions in existing bureaucracies, would lead to an optimally functioning military. According to Eberstadt:
“Interest of the American people in our Military Establishment is not best obtained simply through appeals to public opinion. It can be based on much more substantial grounds if means are provided for active participation in various phases of military affairs by groups particularly concerned with aspects of military policy. Thus the degree of public support will be greatly affected by the extent to which the representatives of labor and industry are called upon to cooperate in mobilization planning, and experts in many other civilian fields are provided with opportunities to contribute their knowledge as it relates to national security problems. Educational institutions and scientific laboratories can serve as channels of communication between the military and civilians. An arrangement with the universities and with industrial and scientific laboratories by which skilled men move back and forth between Washington and their own principal employment is needed.” (144)
A nice definition and design for a “military-industrial complex”, it would appear.
But Ferdinand Eberstadt did not write his report alone. He recruited a number of experts, each of whom contributed a section corresponding to his expertise. Significantly, the man he chose to write the section on intelligence was Sidney Souers. Like Forrestal and Eberstadt, Souers took a broad view of the national intelligence function.
Specifically, writing in the Eberstadt Report, Souers advanced the idea that military intelligence should be only one part of the nation’s overall intelligence structure, which should also include “attaches, observers, research experts, and secret agents, as well as the press, representatives of commercial firms, and agencies of the civilian departments of the Government.” Souers also focused on intelligence “analysis, evaluation and synthesis”, recommending the hiring of personnel with expertise in areas dealing with military, industrial, technical and scientific matters, among others. (145)
Overriding all of these intelligence sectors, Souers emphasized, should be a “Central Intelligence Agency to coordinate and, as far as practicable, unify all foreign intelligence activities and to synthesize all intelligence concerning military, political, economic, and technological developments abroad for the benefit of those responsible for the determination and execution of governmental policy pertaining to national security.” To this recommendation, Ferdinand Eberstadt added the creation of a National Security Council to further coordinate and formulate policy, utilizing such intelligence as might be gathered by the CIA. Further, Eberstadt advocated the establishment of a National Security Resources Board to monitor, and, if necessary, direct the flow of vital resources in the economy in times of emergency. (146)
As it happened, the demise of one of Forrestal, Eberstadt and Souers’ rivals for a central intelligence organization occurred just five days before the completion of the Eberstadt Report. This event was the dissolution of the OSS, announced by President Truman on September 25, 1945, to take effect on October 1. In making his decision, Truman was heavily influenced by the Park Report, the result of yet another of Franklin Roosevelt’s extra-curricular spying forays, begun shortly before FDR’s death, and delivered to Harry Truman on the very day the ex-President died. The Park Report was highly critical of William Donovan and the OSS, documenting several instances of erratic and careless behavior on the service’s part. In essence, the report largely neglected the positive results that OSS had achieved during WWII, while emphasizing the negatives. But Harry Truman was swayed. (147)
OSS was not entirely demolished, however. Rather, (partly through the efforts of “Good Man” John J McCloy) parts of it were dispersed, with one part, the Research and Analysis Branch, going to the State Department, while the more clandestine Secret Intelligence and Counter-Espionage unit was transferred to the War Department (i.e., the Army).
The Navy, however, got nothing. This alarmed Sidney Souers. He wrote a memorandum to Ferdinand Eberstadt suggesting aggressive action to bring the Navy in on the developing intelligence battle. This recommendation was followed up upon by Eberstadt and Forrestal, who began to engage in intense lobbying efforts to get their version of an intelligence organization approved. (148)
The major party on whom influence was to be exerted was, of course, Harry Truman. But there were problems: Truman was neither a corporatist, nor a Navy man, as FDR had been. So although James Forrestal was an important member of Truman’s cabinet, there was a philosophical gulf that separated the two men.
Still, there was a significant, if informal, path of ingress to the Executive Branch, and it was one that Sidney Souers was particularly advantaged to exploit. This was the Missouri connection – viz., the tendency for Harry Truman to select his advisors from among politicians and businessmen he had known back in Missouri. In particular, Truman’s White House staff included a lawyer and Naval officer named Clark Clifford (later to become Secretary of Defense under Lyndon Johnson), who was in turn an old St. Louis friend of Sidney Souers’. And so it happened that through Clifford, Sidney Souers was able to establish a foothold for corporatist thought in the Executive Branch. In fact, Truman and Souers got along exceptionally well. Further, Harry Truman had a predilection for intelligence: he felt he was not receiving enough of it, and was in favor of an agency that could integrate information from several sources and send reports to him on a daily basis.
And so it came to pass, after much inveigling, that the Central Intelligence Group was formed. Established by executive fiat, it was not nearly what Sidney Souers and his party had wanted. It had not enough power, funding, or independence. Still, it was built very much on the American-style, ad hoc, corporatist model: viz., just get the prototype off the ground, draw talent from existing entities, establish a presence, and be ready to take over once the formal niceties have been established. What was weak would eventually become strong. According to Souers:
“I did not consider the Executive Order of January, 1946 setting up the CIG as anything but a preliminary step. The next most important step was to give permanence to a Central Intelligence organization by Congressional Act, along the lines set out in the Executive Order. We were to act as a holding agency, until such time as a fully functional agency took over our intelligence tasks.” (149)
Candidates to head the new agency were few, although interestingly they included future CIA director Allen Dulles. On the recommendation of Secretary of the Navy James V Forrestal, however, as well through the “Missouri connection”, it was Sidney Souers that Truman appointed. Souers’ position – and the beginning of America’s central intelligence establishment — became effective on Wednesday, January 23, 1946. (150) (151) (152)
As CIG chief, Sidney Souers’ primary mandate was to centralize the nation’s intelligence services (hence the designations “Central Intelligence Group” and “Central Intelligence Agency”). Given the numerous inter-agency rivalries that existed at the time (and still do), this was not an easy task. But given his experience and contacts, Sidney was a reasonable choice to head the effort.
And what was it that needed consolidation? Reducing the then-existing intelligence environment to its most important factors, we may discern five essential elements or tendencies: 1) the military, 2) the corporate, 3) the scientific/investigative, 4) the diplomatic, and 5) the highly activist, swashbuckling OSS. Of course, from a corporatist point of view, it was it was not necessary – or even desirable — that these essences be totally absorbed or replaced, but simply that they occupy some organic presence in the new body, and that there be sufficient flow of information toward the new center. (The OSS was perhaps the exception to this rule: over time, as we shall see, its essence seems to have been incorporated wholly into the new CIG/CIA.)
The first of these five incorporative influences was, of course, the one with which Sidney Souers had had the most direct and recent experience – the military, and in particular, ONI. But it should be recalled that Souers was a reformer within ONI. In contrast to the old ONI – paranoid, shape-shifting, and focused on the “danger-within” –, Sidney Souers was consistent, organized, and not particularly egotistic. The portions of ONI that he would have wished to include were the more recent, professional, Zacharias-type elements, as opposed to those of the clubby, elite establishment of yore. The ONI imprint on CIG was definitely represented by Souers and Forrestal’s vision, and no other.
The second source from which Souers absorbed some of his new entity’s essences was the corporate world. This may seem somewhat surprising, but, in fact, the influence was profound, and Souers’ extensive business experience was essentially important. Partly, of course, this relates to his and Forrestal/Eberhardt’s corporatist philosophy; but the relationship runs far deeper, and in fact goes far in explaining why his nature and appeal of American corporatism is so intimately imbedded.
(Much more to come, if I get around to it. But I thought I’d publish what I’ve done in case I can’t find time to finish.)
To come: Sidney Souers’ strange — very strange — relationship to J Edgar Hoover; further corporatism; Reily Coffee Co.
(1) 1900 U S Census, Ohio, Montgomery County, City of Dayton, Ward 5, Enumeration District 52, Sheet 19A.
(2) Marietta Daily News, Dec 31, 1898, p. 1.
(3) Good Government (National Civil Service League), Vol 74 No 1, Jan-Feb, 1957, p. 5.
(5) Current Biography: Who’s News and Why, 1949 (New York: H. W. Wilson, 1950), p. 577.
(6) New Orleans Times-Picayune, June 15, 1910, p. 7.
(7) 1910 U S Census, Louisiana, New Orleans, Ward 3, Enumeration District 45, p 11.
(8) Ralph E. Weber, Spymasters: Ten CIA Officers in Their Own Words (Wilmington, DE: Scholarly Resources, Inc.), p. 1.
(9) New Orleans Times-Picayune, March 4, 1925, p. 2.
(10) John Smith Kendall, History of New Orleans (Chicago: Lewis Publishing Company, 1922), Volume 3, p. 933.
(11) New Orleans Item, August 16, 1914, p.39.
(13) New Orleans Item, June 20, 1914 p. 11.
(14) New Orleans Times-Picayune, Jan 10, 1943 p. 2.
(16) New Orleans Times-Picayune, December 25, 1914, p. 6.
(17) New Orleans Times-Picayune, November 15, 1914, p 24.
(19) New Orleans Times-Picayune, April 21, 1916, p 11.
(20) Soard’s 1916 New Orleans City Directory p. 114.
(21) New York Times, September 1, 1917.
HARRY J. BALTER, physical culture expert o! 234 West Seventy- Street, formerly of New Orleans, has filed a petition in bankruptcy with liabilities $3.088 and …
(26) New Orleans Item, March 13, 1917, p. 2.
As a side note, it is interesting that at one point the director of the Balter weight loss clinic was the Nicaraguan revolutionary leader (and later-to-become Sandinista), Pedro Jose Zepeda. This was a peculiar pairing to say the least — but must remain a story for another day.
And another side note, here is Bluford Balter’s former home in Pass Christian, MS: http://www.thebellebanne.com/index.htm
(27) Weber, p. 1.
(28) http://cdnc.ucr.edu/cgi-bin/cdnc?a=d&d=DS19550224.2.6 :”Admiral Souers Guest of Long-Time Village Residents” Desert Sun (Palm Springs, CA), February 25, 1955, p 1.
(29) 1920 U S Census, Louisiana, New Orleans, Ward 14, Enumeration District 244, Sheet 13A.
(30) Current Biography, op cit.
(31) New Orleans Times-Picayune, March 4, 1925, p. 2.
(32) Passenger list, “American Legion”, departing Rio de Janeiro September 12, 1922, arriving New York September 25, 1922. (Available at Ancestry.com.)
(33) Charles H. Harris and Louis R. Sadler, The Archaeologist Was a Spy: Sylvanus G. Morley and the Office of Naval Intelligence (Albuquerque, University of New Mexico Press, 2003).
(35) New Orleans Item, October 2, 1922, p. 2.
(36) The Bankers Magazine, Vol. 90: January, 1915, p.83.
(37) Arthur E. Carpenter, “Gateway to the Americas: New Orleans’s Quest for Latin American Trade, 1900-1970” (Ph.D. dissertation, Tulane University, 1987), 59-60.
(38) James Grant, Money of the Mind: How the 80s Got That Way (New York: Farrar, Straus and Giroux, 1994), p. 324.
(39) Carpenter, p. 60.
Note: it is fascinating that George de Mohrenschildt was hanging around New Orleans in 1939, the year of Lee Harvey Oswald’s birth. So here is a wild speculation: was de Mohrenschildt Lee’s father? And if so, who was Lee’s mother? Maybe not Marguerite – but how about beauty queen Ann Burroughs, who was living in the Oswald household at the time of the 1940 census? De Mohrenschildt had an eye for feminine pulchritude, did he not? Further, was this Ann Burroughs related to the Burroughs family of the Bethlehem Lutheran Home, where Lee and his brothers spent a part of their youth? (There is an elderly doctor in Luling, LA, who would probably know about this: he lived at the Bethlehem home when LHO and his brothers were there, and has the same surname as the aforementioned Ann.) OK, enough speculation.
(41) John M. Barry, Rising Tide (New York: Simon & Schuster, 1997), p. 237.
(42) Mike Freeman, Clarence Saunders and the Founding of Piggly Wiggly: The Rise and Fall of a Memphis Maverick (Charleston, SC: The History Press, 2011), 66-97.
(43) Baton Rouge Star Times Advocate, March 4, 1925, p. 13.
(44) John Brooks, “A Corner in Piggly Wiggly”. New Yorker June 6, 1959, pp. 128-150.
(45) New Orleans Times-Picayune, May 20, 1923, p. 5.
(48) Priscilla L. Buckley and William F. Buckley, Jr. (ed.), W. F. B. – An Appreciation (New York, privately printed, Priscilla L. Buckley, 1959), 174-5.
(49) New York Times, January 30, 1940, Business and Finance Section, p. 29.
(50) New Orleans Times-Picayune, January 25, 1935, p. 23.
(52) Orleans Death Indices 1918-1928, volume 189, p. 485.
(53) Columbus (GA) Daily Inquirer, Sep 3, 1924, p. 1.
(54) New Orleans Times-Picayune, September 20, 1927, p 14.
(55) New Orleans Item, May 6, 1920, p. 9.
(56) New Orleans Item, December 23, 1922, p. 3.
(57) New Orleans Item, April 16, 1922, p. 4.
(58) Stuart O. Landry, History of the Boston Club (New Orleans: Pelican Publishing Company, 1938), pp. 115-6, 245.
(59) New Orleans Times-Picayune, April 27, 1927, p 3.
(61) Barry, Rising Tide, p. 350, 357, 359.
(63) New Orleans Times-Picayune, October 19, 1929, p. 1, p. 8.
(64) Donald Gibson, The Kennedy Assassination Cover-Up Revisited (New York: Novinka Books, 2005), pp. 153-4.
(65) Carpenter, Gateway, op cit., 236.
(66) New Orleans Item, April 21, 1916, p. 11.
(67) New Orleans Times-Picayune, May 1, 1921, p. 31.
(68) New Orleans Item, April 4, 1919, p 13.
(70) Admiral Souers Guest of Long-Time Village Residents” Desert Sun (Palm Springs, CA), February 25, 1955, p 1. op. cit.
(71) Arthur B Darling, “Arthur B Darling Interview: Souers, Sidney” CIA Freedom of Information Act (FOIA) Electronic Reading Room p.5. https://www.cia.gov/library/readingroom/docs/1952-01-01b.pdf
(72) Tucker et al. v. National Linen Service Corp. et al, 188 F.2d 265 (5th Cir. 1951) http://law.justia.com/cases/federal/appellate-courts/F2/188/265/65513/
(74) New Orleans Times-Picayune, February 23, 1929, p 1.
(75) New Orleans Times-Picayune, May 10, 1929, p 1, 10.
(77) Rudy Abramson, Spanning the Century: The Life of W. Averell Harriman, 1891 – 1986 (New York: William Morrow and Company, 1992), pp. 205-6.
(78) New Orleans Times-Picayune, December 22, 1926, p 15.
(79) New Orleans Times-Picayune, November 29, 1926, p 36.
(80) New Orleans Times-Picayune, October 9, 1932, p 28.
(81) New Orleans Times-Picayune, December 20, 1925, p 26.
(82) Note: William Coker almost certainly knew Alton Ochsner as well. Both men were members of the American Cancer Society, with Ochsner being the society’s president, and Coker the Orleans parish chairman. (New Orleans Times-Picayune, April 2, 1950, p 19.)
(83) Interstate Trust BankingCo. v.Breckinridge, 189 La. 1057 (La. 1938). https://casetext.com/case/interstate-trust-banking-co-v-breckinridge
(84) William N. Goetzmann and Frank Newman, Securitization in the 1920s (Cambridge, MA, National Bureau of Economic Research, 2010), Working Paper 15650. http://www.nber.org/digest/may10/w15650.html
(85) Grant, op. cit., p. 326.
(86) New Orleans Times-Picayune, June 19, 1930, p 5.
(87) Current Biography, op cit. p. 578.
(88) Dallas Morning News, March 1, 1946, Section II, p. 2.
(89) Moberly Monitor-Index, September 8, 1933, p.1.
(91) Current Biography, op cit. p. 578.
(93) Phillips Payson O’Brien, British and American Naval Power: Politics and Policy, 1900-1936 (Westport CT: Praeger Publishers, 1998), 180-181.
(95) Jeffrey M. Dorwart, Conflict of Duty: The U. S. Navy’s Intelligence Dilemma, 1919-1945 (Annapolis, MD, Naval Institute Press, 1983), p. 40.
(96) Dorwart, Conflict of Duty, p. 12, 16, 38, 53, 79.
(97) Dorwart, Conflict of Duty, p. 69.
(99) Dorwart, Conflict of Duty, p. 58, 59.
(100) Dorwart, Conflict of Duty, p. 59-61.
(101) Dorwart, Conflict of Duty, p. 82-83.
(102) Dorwart, Conflict of Duty, p. 87-88.
(104) Dorwart, Conflict of Duty, p. 90 ff.
(105) 1940 U S Census, Missouri, St. Louis County, Lemay Township, Enumeration District 95-186, Sheet 13A.
(107) Washington (DC) Evening Star, May 8, 1943, p.8.
(108) Sara L. Sale, “Admiral Sidney W. Souers and President Truman.” Missouri Historical Review 86.1 (1994), p. 59.
(114) Dorwart, Conflict of Duty, p. 162-3.
(115) Dorwart, Conflict of Duty, p. 152
(116) Dorwart, Conflict of Duty, pp. 157-8.
(117) Dorwart, Conflict of Duty, p. 188.
(118) Lexington (KY) Herald, Sep 14, 1941 p. 32.
(119) Dorwart, Conflict of Duty, pp. 121, 188, 193.
(120) Dorwart, Conflict of Duty, pp. 202-5.
(121) Dorwart, Conflict of Duty, p. 211.
(122) United States Senate, Final Report of the Select Committee to Study Governmental Operations With Respect to Intelligence Activities: Supplementary Detailed Staff Reports on Foreign and Military Intelligence, Book IV (Washington, U.S. Government Printing Office, 1976), p. 5. https://archive.org/stream/finalreportofsel04unit#page/4/mode/2up
(123) Gerard Colby and Charlotte Dennett, Thy Will Be Done (New York: Harper Collins Publishers, 1995), pp. 112-3.
(124) Carpenter, Gateway, 79-80.
(125) Fortune, Vol. XLV Number 6, June, 1952, p. 128.
Note: Lloyd J. Cobb is a worthy research subject for many reasons beyond the scope of this study, but to whet the appetite consider:
 the mysterious and unsolved death of Cobb’s former law partner, Joseph Merrick Jones, in March, 1963;
 the likelihood that, through his dealings with the Cravath & Swain law firm during Pan Am Oil’s merger negotiations with Standard Oil in the late 1920s, Cobb may have become acquainted with later-to-become Warren Commission member John J. McCloy, then a Cravath partner;
 the strong likelihood that Cobb knew the above-mentioned Joseph H. Himes (former partner of Lee Harvey Oswald’s uncle), given that Himes, through the inheritance of his wife, was a major stockholder of Cobb’s Pan Am Oil;
 the career and racist associations of Cobb’s brother Alvin “Vote Right – Vote White” Cobb;
 Cobb’s close – very close –relationship with William George Helis, who was in turn associated with mobster Frank Costello, mentor of Carlos Marcello;
 his connections with Clem Sehrt, friend of Marguerite Oswald;
 his association with Nazi Stormtrooper Herbert von Einsieden, whom he introduced to the Young Men’s Business Club of New Orleans in May of 1933 to the strong disapproval of several of that organization’s members — all the more curious since Cobb was himself one-quarter Jewish;
 somewhat off-topic but interesting nonetheless, the career of Cobb’s colorful son-in-law George E. Block, former Chairman of the University of Chicago’s Department of Surgery, a professional and behavioral clone of Alton Ochsner, whom he knew;
 the Yorkville, IL manifestation of Cobb’s agricultural interests, Sunny Valley Farm.
 and finally, one may wonder whether there is a linear relationship between Lloyd J. Cobb’s Clover Hill/Marydale property, which was at least in part a dairy farm, and Sidney Souers’ Cloverland Dairy. Cloverland’s plant in Slaughter, Louisiana, was in the neighborhood, after all…
(127) Carpenter, Gateway, 78.
(128) New Orleans Times-Picayune, March 25, 1927, p 3.
(129) New Orleans States, May 24, 1918, p 11.
(130) New Orleans Times-Picayune, November 29, 1926, p 36.
(131) New Orleans Times-Picayune, July 27, 1924, p 6.
(132) New Orleans Times-Picayune, May 18, 1929, p 9.
(133) New Orleans States, March 28, 1919, p 8.
(134) New Orleans Times-Picayune, July 5, 1948, p 87.
(135) Current Biography, op cit.
(138) Dorwart, Conflict of Duty, p. 224-6.
(139) Jeffrey M Dorwart, Eberstadt and Forrestal: A National Security Partnership, 1909-1949 (College Station, Texas: Texas A & M University Press, 1991), p. 1-10, 83.
(141) Dorwart, Eberstadt and Forrestal, p. 17.
(142) Dorwart, Eberstadt and Forrestal, p. 7.
(143) Dorwart, Eberstadt and Forrestal, pp. 8, 181-3.
(144) Ferdinand Eberstadt, Unification of the War and Navy Departments and Postwar Organization for National Security, “The Eberstadt Report” (Washington, United States Government Printing Office, 1945), p. 16
(145) Eberstadt, p.159-63
(147) Tim Weiner, Legacy of Ashes: The History of the CIA (New York: Doubleday, 2007), pp. 4-8.
(149) Danny D Jansen and Rhodri Jeffreys-Jones, “The Missouri Gang and the CIA” in Rhodri Jeffreys-Jones, North American Spies (Lawrence, Kansas: University Press of Kansas, 1991), pp. 132-3.
(150) Ludwell Lee Montague, General Walter Bedell Smith as Director of Central Intelligence: October 1950 – February 1953 (University Park, Pennsylvania: The Pennsylvania State University Press, 1992), p. 13.
(151) David F. Rudgers, Creating the Secret State: The Origins of the Central Intelligence Agency, 1943 -1947 (Lawrence, Kansas: University Press of Kansas, 2000), p. 91.
(152) Sale, op. cit., p 60, 61.