Modern history

2

THE TAINT OF MY ENVIRONMENT

On a breezy day in May 1926, a crowd of Long Island swells gathered at the Oyster Bay Yacht Club to watch the season’s first regatta. Around mid-morning, several noticed that one yacht, the Snookabus, was drifting dangerously. Another sailor pulled alongside. He found a body lying on the deck.

The victim, Royall Victor, had for a decade been one of the three senior partners at Sullivan & Cromwell. Just forty-eight years old, he had suffered a heart attack and died instantly.

This was the second heavy blow to the firm in less than a year. Another of its senior partners, Alfred Jaritzky, had recently died of stomach cancer. That left just one member of the triumvirate, Henry Pierce, but he was ailing and chose to retire rather than take over. One of his last acts was to urge the firm’s co-founder and overseer, William Nelson Cromwell, to promote John Foster Dulles. Cromwell did so.

Foster became part of a four-man team running the firm, and a few months later, Cromwell made him the sole managing partner. He was thirty-eight years old and just fifteen years out of law school. Thus began his quarter century as one of the American elite’s most ruthlessly effective and best-paid courtiers.

During these years, wealthy Americans eagerly spread their money—and their interests—around the world. The United States went from being a debtor nation to a creditor nation for the first time. New York replaced London as the world’s financial capital. Clients clamored for Sullivan & Cromwell’s services. The list of those Foster represented reads like a guide to the upper reaches of American commerce, manufacturing, and finance.

In the 1920s, working for banks including Brown Brothers, Lazard Frères, Goldman Sachs, and First National Bank of Boston, Foster arranged seventeen loans to Latin American countries totaling nearly $200 million—equivalent to more than $2 billion in the early twenty-first century—and also three loans to China from J. P. Morgan. His special focus was Europe, where his clients lent more than a billion dollars during the 1920s, most of it to Germany. He had helped draft the complex terms of German reparation payments, designing a system under which Germany would borrow from foreign banks to pay off its war debts. This created a highly lucrative market in an abstruse field that he understood as well as any American. With his guidance, American banks began investing in banks in Germany, and also lending to German utility companies, private firms like Hansa Steamship Lines, the cities of Berlin, Munich, Hanover, Frankfurt, Breslau, and Nuremberg, and the state of Prussia.

The idea for these loans often came not from needy borrowers, but from Foster and his agents, who scoured Europe and especially Germany for places they could profitably place their money. “A Bavarian hamlet, discovered by American agents to be in need of about $125,000, was urged and finally persuaded to borrow $3 million in the American market,” according to one study of this practice. American banks had discovered how much money they could make by lending abroad. Foster prospered by connecting them to borrowers.

In his 1911 letter to Janet reporting the glorious news that Sullivan & Cromwell had accepted him, Foster predicted that he would himself soon be hiring new lawyers for the firm, and that came true soon after he was named managing partner. Two of the first applicants he considered would go on to play important roles in American life. One was a graduate of Columbia Law School named William O. Douglas. Later, after Douglas became chairman of the Securities and Exchange Commission and then a Supreme Court justice, Foster would say that he turned Douglas down because he didn’t seem sharp enough. Douglas told the story differently.

“I saw John Foster Dulles and decided against him because he was so pontifical,” he wrote in a memoir. “He seemed to me like a high churchman out to exploit someone. In fact, I was so struck with Dulles’s pomposity that when he helped me on with my coat as I was leaving the office, I turned and gave him a quarter tip.”

Foster and Douglas were profoundly different kinds of Americans. Beneath their encounter lay opposing beliefs about how law should be practiced, how the United States should act in the world, and, in the end, how life should be lived. Foster was a tight-lipped patrician who had become rich by serving America’s most powerful corporations and banking houses. Douglas was a passionate iconoclast who sympathized with underdogs and admired foreign cultures. One embraced religious and political certitudes, abhorred upheaval, and viewed the world from paneled suites in New York, Washington, and European capitals. The other rejected dogma, learned about the world by taking rugged trips through remote lands, and believed the United States should approach other countries “with humility” and let them solve their problems “in their own way.”

“I’m not sure I want to go to heaven,” Douglas mused later in life. “I’m afraid I might meet John Foster Dulles there.”

Not long after Foster’s odd encounter with Douglas, he interviewed another promising lawyer for a position at Sullivan & Cromwell. This one had nothing approaching Douglas’s legal mind—it took him three tries to pass the bar exam—but compensated with another asset. He was Foster’s brother.

Allen had pursued his law degree in the hope that it would open new horizons for him in the foreign service. After he earned it, however, he was offered only a posting in China at an annual salary of $8,000. He asked his older brother for advice, and Foster had an immediate suggestion: quit the foreign service and come to work for Sullivan & Cromwell. His salary would be considerably above what new lawyers normally made, and there would be other chances for enrichment. Allen accepted and joined the firm in October 1926. Ending a ten-year career at the State Department was, he wrote to a friend, “a tremendously hard decision.” He understood that he was venturing into a moral and ethical twilight.

“I want to keep as good a reputation as I can,” he wrote, “notwithstanding the taint of my environment.”

Other lawyers at Sullivan & Cromwell expressed some resentment over the way Allen was brought into the firm, but his network of global contacts quickly paid off. Within the firm he became known as “the little minister.” Although he often worked in Europe, he also became the firm’s key man for deals in Latin America. During his first year as an associate, with help from former colleagues in the State Department, he arranged for banks he represented to lend $13 million to Bolivia and $10 million to Colombia.

The first important new client Allen brought to the firm, a Social Register dandy named Arthur Bunker, had through family connections come into possession of a rich oil concession in Colombia. Royal Dutch Shell challenged his claim, but after Allen traveled to London in 1928 to present his client’s case to Sir Henri Deterding, the legendary Shell chairman, Deterding backed off. Two years later, in 1930, Colombia held a presidential election that the muckraking Washington columnist Drew Pearson accused Allen of fixing to ensure the victory of a candidate pledged to protect Bunker’s oil concession.

In recognition of these and other achievements, Allen was made a Sullivan & Cromwell partner in 1930. His first assignment was to spend a year in Paris, where the firm’s silver-haired patriarch, William Nelson Cromwell, was enjoying semi-retirement. Allen left Clover behind with instructions to join him in three months, and during those months he lived at Cromwell’s “swell suite” on Avenue Foch. Foster had by this time come to consider Cromwell an undisciplined and occasionally embarrassing eccentric, but Allen became, by his own account, “really fond” of the aging master. They developed something of the father-son relationship that Allen had lacked at home, where the stern Reverend Dulles favored his stern firstborn son.

While Allen was in Paris, Reverend Dulles died at the family home in Watertown, New York. Allen did not return for the funeral or memorial service, partly because he was occupied with a captivating woman named Gregoire. When not with her, he was sampling other pleasures, often with Cromwell. In one letter home he reported that they had taken two ladies to lunch at the Trianon Palace in Versailles, and afterward “gave the girls a good time.” Even Clover’s arrival with their three small children did not slow him down. Paris was a carnival of the senses, and Allen, as one biographer wrote, “lived it to the hilt: a playground of monarchs reigning and deposed, where Morgans and Vanderbilts, maharajahs from India and stars from Hollywood, old wealth and new, sought perpetual gaiety in reckless expenditure, escape from the spreading depression back in America. Far from feeling revulsion at the gaudy display, Allen reveled in the luxury that other people’s money could buy.”

Indulging his desires was not all that occupied Allen in Paris. This was also the time when he solidified his reputation as a world-class international lawyer. Money was flying across Europe for reparation payments, war debts, corporate mergers, and countless investments both legal and illegal. Tottering nations were fighting for survival. Whether advising central bankers who met quietly in Basel to shape the continent’s future, pressing E. H. Harriman’s bid to buy Poland’s electric system—a bid that Prime Minister Jozef Pilsudski ultimately vetoed—or helping the J. Henry Schroder Bank expand from Germany to become a global financial power, Allen showed a flair for discreet deal making. He completed the transition from insightful but obscure diplomat to potent advocate for America’s richest men, banks, and corporations.

“He never bothered to understand the technical aspects of financial maneuverings,” one historian has written, “but under the influence of Foster and the firm, he grew sensitive to the elite’s goal of transnational power to generate prosperity for the world and, of course, themselves.”

After fourteen months in Paris, Allen returned to New York in March 1931—without Clover and their children, whom he had packed off to spend the spring and summer in Switzerland. Besides giving him time for his private pursuits, this interlude also allowed him to contemplate the scale of the economic collapse that had enveloped the United States and was spreading to Europe. Millions were out of work. Thousands of banks had failed. Between 1929 and 1932, corporate profits would fall by more than half. So would the value of American exports. Social upheaval threatened. For anyone deeply invested in the stability of global financial networks, as both Dulles brothers were, the Depression was a terrifying example of how crazy the world can become if it is not skillfully managed.

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Despite the crisis, a remarkable amount of money still coursed through the circles surrounding the Dulles brothers. Some of Sullivan & Cromwell’s biggest fees came from victims of the crash, notably $540,000 for negotiating on behalf of bondholders swindled by Ivar Kreuger, the Swedish financier and “match king” who committed suicide after his pyramid scheme collapsed in 1932. Foster’s expertise in arcane matters of international debt restructuring was in more demand than ever. His banking clients continued to lend money abroad, mostly to refinance existing debts. Enough post-war reconstruction was still under way in Europe to bring profit, though at a reduced rate, to the engineering, mining, utility, machine tool, commodity, and transport companies he represented. No fewer than fifteen of these companies—including Grand Union, Babcock & Wilcox, American Bank Note, Western Power, North American Edison, International Nickel, and American Agricultural Chemical—brought Foster onto their boards of directors or trustees.

Neither brother lacked for money. Foster earned about $300,000 per year from Sullivan & Cromwell—the equivalent of nearly $5 million in the early twenty-first century—plus stock dividends and fees for his service on corporate boards. He was often described as the highest-paid lawyer in the United States. Allen took home about half as much, princely by the standards of the time, which allowed him to buy a Manhattan town house at 239 East Sixty-First Street and a retreat at Lloyd Neck, on the north shore of Long Island. Both homes were more than comfortable, though the town house was less impressive than Foster’s, thirty blocks north at 72 East Ninety-First Street, and his home at Lloyd Neck was also smaller than Foster’s in nearby Cold Spring Harbor. Allen also did well with timely investments in several companies his firm represented, among them International Nickel, Babcock & Wilcox, and United Fruit.

“Where he was an asset to the firm was in his ability to bring in business to Sullivan & Cromwell,” one of Allen’s partners later recalled. “He was a great customers’ man. He loved the life in New York, and you began to see him everywhere, particularly where the tycoons, the company president, or their wives gather—opening nights at the Metropolitan Opera, charity balls, club dinners, squash sessions at the New York Athletic Club, tennis parties. He was a good tennis player and he knew when to lose. If he was playing with a tycoon’s wife, he made certain they would win. But if the tycoon himself was in the opposite court, he’d keep the game ding-donging along until practically the final volley, when Allen would fumble and flub. That way the tycoon felt marvelous, having won a hard-fought game, and his wife didn’t feel too bad either—after all, it wasn’t her fault they’d lost—and both felt benevolent toward Allen. Such a good loser he was, too.”

Foster brought something quite different to Sullivan & Cromwell. From his grandfather he had learned the delicate art of accumulating influence and wielding it to benefit his clients. He had a deep understanding of the global financial system, especially the bond market, and of the opportunities it presented for wealthy Americans. Although he was famously unable to remember the names of junior partners, he drew on a mind filled with legal minutiae. His appetite for work was legendary. So was his toughness in negotiation.

From a client’s perspective, they made an ideal team: one brother was great fun and a gifted seducer, the other had uncanny skill in building fortunes.

The Third Avenue elevated train had a car informally reserved for men with chesterfield overcoats—a motorman steered others away—and when Allen stepped aboard on his way to Wall Street in the morning, he often ran into his brother, who boarded three stops earlier. On many Friday afternoons, both men took the 4:50 train from Pennsylvania Station to Long Island. Once there, they found different ways to amuse themselves. Foster had a yacht and sailed when weather allowed. When it did not, he spent most of his time at home, where he relaxed by reading a detective story in front of the fireplace while his wife knitted. Allen spent his Long Island weekends partying, often at his own home. Regular guests included Archie Roosevelt, a son of Theodore’s and co-founder of an investment bank; Charles and Anne Morrow Lindbergh, one of America’s dream couples; Rebecca West, who when asked years later if she had been one of Allen’s mistresses replied, “Alas, no, but I wish I had been”; Hamilton Fish Armstrong, Allen’s best friend from Princeton; and a parade of Manhattan neighbors ranging from John Gunther to Tallulah Bankhead. Allen’s party skipped from weekend to weekend and year to year. With his cultivated charm, endless supply of stories, well-stocked wine cellar, predatory interest in women, wealth from uncertain sources, stylish blazers, and buttoned loafers, he could have stepped from the pages of The Great Gatsby.

“My father was very, very extroverted,” his daughter Joan later recalled. “He loved to be on the go constantly. He would work hard and then he would want to go to a party, or to give a party. He wanted people around him, movement, action. My mother was an introvert and liked to have time to think about things, to read and to be alone. For an introvert, it often is painful to be around an extrovert who crowds himself and others in around you.”

During his fifteen years at Sullivan & Cromwell between the wars, Allen made eleven extended foreign trips. Letters he wrote home to Clover were full of references to other women that could at best be read as insensitive, at worst as taunting. In one he wrote of a night out with “an attractive (not beautiful) Irish-French female whom I took to Scheherazade, where we stayed until the early hours.” In another, the subject was “an English girl … rather good-looking.… Danced and drank champagne until quite late.” Other women he reported meeting included “a charming widow,” “a most pleasant companion,” “a young English damsel,” “a very delightful person,” and “a sensible soul, also by no means ugly.” After one Atlantic crossing he proudly wrote to Clover that “on the whole I have kept rather free from any entanglements, and in particular there have been no ladies on board with whom I have particularly consorted.”

“I don’t feel I deserve as good a wife as I have, as I am rather too fond of the company of other ladies,” he confessed in another letter. His sister Eleanor later wrote that “there were at least a hundred women in love with Allen at one time or another—and some of them didn’t even get to close quarters with him.”

Clover responded by focusing her attention on her son and two daughters. She also took up the cause of penal reform, and often visited prisons. While walking the streets of poor New York neighborhoods, she would stop for long conversations with beggars and people in breadlines. In letters to friends, she suggested that the ease of upper-class life made her feel guilty and ashamed. Her husband, by contrast, was an unrepentant elitist who was known never to pick up a napkin when he dropped one at dinner, preferring to wait for a servant to do it.

Soon after returning home from Paris in 1931, Allen began an affair with a tall, blond Russian émigré who had turned up at the Cold Spring Harbor Tennis Club and whose husband was chronically ill. He made no effort to hide the relationship, raving freely not just to friends but to his wife and children about his wonderful new “tennis partner.” Unapologetic adultery had become an established aspect of his character. It remained so all his life.

“Sex, it appears, was to Allen Dulles a form of physical therapy, something one did to keep himself fit for more important things,” one biographer has surmised. “Clover’s insistence on staying home with the children and her increasing preoccupation with prisoners’ rights were treated by him as a kind of betrayal of her obligation to be his good and faithful companion.… If Clover would not travel when Allen asked, then he could not really be blamed if he diverted himself with other women, always of his own class and station.”

Allen’s near-pathological womanizing, and his evident lack of interest in building a strong relationship with his wife, contrasted sharply with Foster’s endless devotion to Janet. Yet the two brothers were strikingly similar in their relationships with their children. Both were distant, uncomfortable fathers.

Foster’s three children were raised by nannies and discouraged from intruding on their parents’ world. The eldest, John Watson Foster Dulles, was moody and withdrawn, by one account “touchy, oversensitive, and highly emotional.” When he lost a game of checkers or backgammon, he would burst into tears, a reaction that shocked his ever-stoic father. Their relationship was further strained when John dropped out of college because he could generate no enthusiasm for the legal career his father had planned for him. They never found a connection, emotional or otherwise. John became a mining engineer and spent much of his life in Latin America.

His younger brother, Avery, moved even further away, not geographically but spiritually. Strolling beside the Charles River one day while a student at Harvard, Avery was struck by what he called a revelation. Soon afterward he renounced his family’s generations of Presbyterian tradition and converted to Roman Catholicism. Foster was apoplectic. Upon receiving the news, he telephoned Arthur Dean, his closest colleague at Sullivan & Cromwell.

“He called Dean,” the journalist Marquis Childs later recalled, “and said, ‘I want you to cancel all your appointments. The greatest crisis of my life has come up. I want you to read this letter I’m sending to Avery.’ And the letter was: ‘Never darken my door again. Never speak to me again. Never communicate with me again. You are no longer my son.’ And then, according to Dean’s story, from about four o’clock in the afternoon or 4:30 until 8:30 at night, he hashed this over with Dulles and persuaded him not to send the letter.”

Avery entered the priesthood and went on to become a Jesuit scholar of conservative bent. He published two dozen books and hundreds of articles on theological topics and taught religion at Fordham University. He finally reached an awkward reconciliation with his father. Near the end of his life, Pope John Paul II made him a cardinal. As Cardinal Dulles, one of his last public pronouncements was a statement criticizing the United States Conference of Catholic Bishops for being too “extreme” in seeking to expel accused pedophiles from the priesthood.

Foster’s middle child, Lillias, offended her father’s sense of order by announcing that she wished to attend college and, like her aunt Eleanor, make a career for herself. Foster believed education spoiled women, and disapproved. “He didn’t want her to learn anything, except maybe the feminine charms, which he thought she lacked,” Eleanor later wrote. Finally Lillias persuaded her father to allow her to attend Bennington College, which he mistakenly believed to be a finishing school. Later she became a Presbyterian minister, but even that did not bring her back into her father’s good graces. He remained as cool to his daughter as he was to his sons.

“His work was very important to him, and he felt a real sense of obligation toward colleagues and subordinates,” Eleanor wrote of her elder brother. “He couldn’t neglect them for his children.”

Allen’s relationship with his three children was no happier. His son, Allen Macy Dulles, tried everything to win his father’s attention, from learning chess to studying international politics, but to no avail. Acutely aware that Allen never found him “tough” enough, he enlisted in the Marine Corps. He was sent to Korea and, at the age of twenty-two, was almost killed when a shell fragment tore off part of his skull. Brain damage kept him in and out of sanatoriums and intensive care units for years.

Both of Allen’s daughters, Joan and Clover Todd, known as Toddy, were taken out of school at an early age and educated at an informal academy on the estate of their Long Island neighbor Archie Roosevelt. There they read romantic poetry and played with a select group of other children—among them Roosevelt’s nephew Kermit, who would later go to work for Allen and enter history as the CIA officer who directed the overthrow of Iran’s government. Joan married a prominent Austrian, then divorced him and married another Austrian, a diplomat. She returned to the United States and lived an apparently fulfilling life.

Her older sister, Toddy, was less happy. She evidently inherited her mother’s inclination to depression, and periodically suffered psychological “crises” that all but paralyzed her. Emotional imbalance disrupted both her home and school life. While in her early twenties she eloped with a college athlete her mother had hired to teach her brother sports. She married him, but the marriage soon failed. Later she married a Norwegian banker and moved with him to London. Her symptoms never abated, and she required periods of hospitalization throughout her life.

The Dulles brothers also had to deal with their independent-minded sister Eleanor, who, much to Foster’s distress, had refused to settle into marital anonymity or submit to family codes. Soon after winning her doctorate in economics with a thesis on the causes of inflation in France, Eleanor visited Paris and, at a party in Montparnasse, met an older, divorced American named David Blondheim. They began dating, and when her parents came for a visit a few months later, she told them she was engaged. Reverend Dulles, already unwell, was taken aback by the news, since Blondheim came from an Orthodox Jewish family. Foster was also unhappy, and tried to dissuade his sister from going through with the marriage. Not wishing to cause further distress, she decided that she would quietly move in with her lover instead of marrying him. Blondheim also hid the affair from his parents, knowing they too would disapprove of the “mixed” match. Finally, after Reverend Dulles died in 1931, they married. No relative of the bride or groom attended the wedding.

The discomfort Eleanor’s family felt at this cross-cultural marriage was mirrored by the disdain her husband suffered. David Blondheim’s brother broke relations with him and told him he had been shut out of the Blondheim clan forever. He was already depressive, and this devastated him. Reports about the plight of Jews in Europe upset him further. When Eleanor told him in the spring of 1934 that she was pregnant, he responded not with joy but with pangs of guilt for having fathered a half-Christian child at a moment when Jewish survival was under threat. That autumn, shortly before the child was born, he committed suicide. Eleanor was crushed. At Foster’s suggestion she dropped her married name as a way of insulating herself from memories of the tragedy.

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Soon after President Franklin Roosevelt was inaugurated in 1933, he invited Allen and an older veteran of global diplomacy, Norman Davis, who had made a fortune in the Cuban sugar trade, to the White House for a chat. They sat on the rear veranda, overlooking the Washington Monument. Though a private attorney still in his thirties—and a Republican—Allen felt at home advising Roosevelt. His background and upbringing had prepared him to move comfortably in such elevated circles.

“It was almost informal,” he wrote to Clover afterward, “and the President put on no airs.”

At the end of their chat, Roosevelt asked the two men to travel to Europe as his emissaries. They would stop in London to heal a dispute with Britain over issues of disarmament and war reparations, then proceed to Paris for an economic conference. A few days later they departed, and in Europe they held a round of meetings with Prime Minister Ramsay MacDonald of Britain, Prime Minister Édouard Daladier of France, and other statesmen. The one they most wanted to meet, though, was the fiery National Socialist leader who had just come to power in Germany.

So it was that on Allen’s fortieth birthday—April 7, 1933—he was riding a train to Berlin on his way to meet Adolf Hitler.

At four o’clock the next afternoon, the two emissaries were ushered into the Reichskanzlei, which sat just across Wilhelmstrasse from the American embassy where Allen had served as a junior diplomat thirteen years before. They were among the first foreign delegations the Führer received. Prime Minister Daladier had told Allen in Paris that Hitler had no clear foreign policy ideas, and their meeting confirmed it. Hitler spoke at length about the injustice of harsh reparations payments and insisted that he favored universal disarmament. He rambled through subjects ranging from the American Civil War to the perfidy of Poland. When Davis asked him about reports of “excesses” against dissidents, Hitler, well briefed on his guests’ role in global finance, replied that he was simply imposing order “to protect the millions in foreign capital that are invested in Germany.”

Gangs of Nazi thugs were beating Jews on German streets while Allen was there, but he came home without animus toward Hitler. When he returned to Berlin two years later, though, he found conditions worse and had what he called a “sinister impression.” He was disturbed by stories he heard from Jewish clients, and worried about the implications of Sullivan & Cromwell’s work fueling German financial and industrial power. Nazism became the first and only important subject on which the Dulles brothers seriously disagreed. Allen sensed what was coming and wished to spare Sullivan & Cromwell the stigma of collaboration. Foster could not bear to turn away.

Despite his lifelong devotion to France—which had awarded him the Legion of Honor for his work on the Versailles treaty—no country appealed to Foster more deeply than Germany. His father had studied theology at Göttingen and Leipzig, and awed him with stories of the country’s rich intellectual tradition and role in the Reformation. He had made his first visit there when he was barely into his teens. At the Paris peace conference he argued unsuccessfully that Germany should not be forced to make crushing reparation payments to the victorious allies, and later he came to believe, probably correctly, that by insisting on those payments, the world helped push Germany toward aggression. In the period between the world wars, when Foster’s legal practice became truly global, he devoted himself most assiduously to Germany. He had already developed an emotional attachment, based on his admiration for Germany’s centuries of achievement and the rigor of its social order, and a political one, stemming from his belief that it was a rising nation and a bulwark against Bolshevism. Years of work for German clients gave his attachment an economic basis as well.

From his course with Henri Bergson after graduating from Princeton, Foster had picked up the concept of “dynamic” forces in eternal conflict with “static” ones. Bergson used this dichotomy as a way to understand religion and morality, but Foster applied it to global politics, which he interpreted as “the cyclical struggle between the dynamic and the static forces of the world.” This was a way of placing nations into neat groups, which appealed to his ordered mind. During the 1930s he began describing France and Britain as “static” societies, interested only in defending what they had, and predicting that the future would be shaped by three newly creative and “dynamic” powers: Germany, Italy, and Japan.

“These dynamic peoples,” he wrote in one article, “are determined to mold their states into a form which would permit them to take their destiny into their own hands and to attain that enlarged status which, under a liberal and peaceful form of government, had been denied them.”

None of this would have mattered if Foster’s closest engagement with Germany had not come while National Socialists were consolidating power.

Foster had helped design the Dawes Plan of 1924, which restructured Germany’s reparation payments in ways that opened up huge new markets for American banks, and later that year he arranged for five of them to lend $100 million to German borrowers. In the seven years that followed, he and his partners brokered another $900 million in loans to Germany—the equivalent of more than $15 billion in early-twenty-first-century dollars. This made him the preeminent salesman of German bonds in the United States, probably the world. He sharply rejected critics who argued that American banks should invest more inside the United States, and protested when the State Department sought to restrict loans to Germany that were unrelated to reparation payments or that supported cartels or monopolies.

Foster made much money building and advising cartels, which are based on agreements among competing firms to control supplies, fix prices, and close their supply and distribution networks to outsiders. Reformers in many countries railed against these cartels, but Foster defended them as guarantors of stability that ensured profits while protecting economies from unpredictable swings. Two that he shaped became global forces.

Among Foster’s premier clients was the New Jersey–based International Nickel Company, for which he was not only counsel but also a director and member of the executive board. In the early 1930s he steered it, along with its Canadian affiliate, into a cartel with France’s two major nickel producers. In 1934 he brought the biggest German nickel producer, I.G. Farben, into the cartel. This gave Nazi Germany access to the cartel’s resources.

“Without Dulles,” according to a study of Sullivan & Cromwell, “Germany would have lacked any negotiating strength with [International Nickel], which controlled the world’s supply of nickel, a crucial ingredient in stainless steel and armor plate.”

I.G. Farben was also one of the world’s largest chemical companies—it would produce the Zyklon B gas used at Nazi death camps—and as Foster was bringing it into the nickel cartel, he also helped it establish a global chemical cartel. He was a board member and legal counsel for another chemical producer, the Solvay conglomerate, based in Belgium. During the 1930s he guided Solvay, I.G. Farben, the American firm Allied Chemical & Dye, and several other companies into a chemical cartel just as potent as the one he had organized for nickel producers.

In mid-1931 a consortium of American banks, eager to safeguard their investments in Germany, persuaded the German government to accept a loan of nearly $500 million to prevent default. Foster was their agent. His ties to the German government tightened after Hitler took power at the beginning of 1933 and appointed Foster’s old friend Hjalmar Schacht as minister of economics.

Allen had introduced the two men a decade earlier, when he was a diplomat in Berlin and Foster passed through regularly on Sullivan & Cromwell business. They were immediately drawn to each other. Schacht spoke fluent English and understood the United States well. Like Dulles, he projected an air of brisk authority. He was tall, gaunt, and always erect, with close-cropped hair and high, tight collars. Both men had considered entering the clergy before turning their powerful minds toward more remunerative pursuits. Each admired the culture that had produced the other. Both believed that a resurgent Germany would stand against Bolshevism. Mobilizing American capital to finance its rise was their common interest.

Working with Schacht, Foster helped the National Socialist state find rich sources of financing in the United States for its public agencies, banks, and industries. The two men shaped complex restructurings of German loan obligations at several “debt conferences” in Berlin—conferences that were officially among bankers, but were in fact closely guided by the German and American governments—and came up with new formulas that made it easier for the Germans to borrow money from American banks. Sullivan & Cromwell floated the first American bonds issued by the giant German steelmaker and arms manufacturer Krupp A.G., extended I.G. Farben’s global reach, and fought successfully to block Canada’s effort to restrict the export of steel to German arms makers. According to one history, the firm “represented several provincial governments, some large industrial combines, a number of big American companies with interests in the Reich, and some rich individuals.” By another account it “thrived on its cartels and collusion with the new Nazi regime.” The columnist Drew Pearson gleefully listed the German clients of Sullivan & Cromwell who had contributed money to the Nazis, and described Foster as chief agent for “the banking circles that rescued Adolf Hitler from the financial depths and set up his Nazi party as a going concern.”

Although the relationship between Foster and Schacht began well and thrived for years, it ended badly. Schacht contributed decisively to German rearmament and publicly urged Jews to “realize that their influence in Germany has disappeared for all time.” Although he later broke with Hitler and left the government, he would be tried at Nuremberg for “crimes against peace.” He was acquitted, but the chief American prosecutor, Robert Jackson, called him “the facade of starched respectability, who in the early days provided the window dressing, the bait for the hesitant.” He baited no one more successfully than Foster.

During the mid-1930s, through a series of currency maneuvers, discounted buybacks, and other forms of financial warfare, Germany effectively defaulted on its debts to American investors. Foster represented the investors in unsuccessful appeals to Germany, many of them addressed to his old friend Schacht. Clients who had followed Sullivan & Cromwell’s advice to buy German bonds lost fortunes. That advice, according to one study, “cost Americans a billion dollars because Schacht seduced Dulles into supporting Germany for far too long.”

Foster never took responsibility for this fiasco, but Allen referred to it during an after-dinner speech at a Wall Street club. He admitted that Sullivan & Cromwell had “permitted debt to pile up too fast and too high and took bad moral risk,” but insisted that it had given lenders “the finest legal protection,” and that all should realize there was “no safeguard against economic conditions such as the last few years.” With war spreading in Europe—and with Sullivan & Cromwell a powerful force not to be alienated—even investors who took huge losses saw no alternative to accepting them.

Foster had clear financial reasons to collaborate with the Nazi regime, and his ideological reason—Hitler was fiercely anti-Bolshevik—was equally compelling. In later years scholars would ask about his actions in the world. Did he do it out of a desire to protect economic privilege, or out of anti-Communist fervor? The best answer may be that to him there was no difference. In his mind, defending multinational business and fighting Bolshevism were the same thing.

Since 1933, all letters written from the German offices of Sullivan & Cromwell had ended, as required by German regulations, with the salutation Heil Hitler! That did not disturb Foster. He churned out magazine and newspaper articles asserting that the “dynamic” countries of the world—Germany, Italy, and Japan—“feel within themselves potentialities which are suppressed,” and that Hitler’s semi-secret rearmament project simply showed that “Germany, by unilateral action, has now taken back her freedom of action.” Allen felt quite differently. After returning from Berlin in 1935, he told his brother that the time had come for the firm to close its Berlin office and the subsidiary in Frankfurt.

Foster was stunned by his brother’s suggestion that Sullivan & Cromwell quit Germany. Many of his clients with interests there, including not just banks but corporations like Standard Oil and General Electric, wished Sullivan & Cromwell to remain active regardless of political conditions. He agreed. If the firm’s Jewish clients in Germany were in difficulty, he suggested, its lawyers could avoid trouble by simply staying away from them.

For years Foster had done richly rewarding work at the Sullivan & Cromwell office in Berlin, a splendid suite at the Hotel Esplanade that was decorated with gold ornaments. A combination of sentiment and political blindness left him unable to step back and ask himself larger questions that might have shaken his view of the world.

This put Foster at odds not only with Allen but also with their sister Eleanor, who had traveled to Nazi Germany and was horrified by what she saw. She appealed to Foster to change his mind, but he never took her seriously and told her she was “working herself up” over nothing. He rejected President Roosevelt’s denunciations of repression in Germany as demagoguery aimed at “drumming up mass emotionalism.” Much of his political energy during the 1930s, the lawyer-diplomat John J. McCloy later recalled, was aimed at “rationalizing this Hitler movement.”

On a summer day in 1935, Sullivan & Cromwell partners met in their Wall Street conference room to decide whether to cease operations in Nazi Germany. Foster opened the meeting with an impassioned speech warning that pulling out would cost the firm much money and “do great harm to our prestige.” Allen replied that his recent trip had convinced him staying in Germany was impossible.

“You couldn’t practice law there,” Allen said. “People came to you asking you how to evade the law, not how to respect the law. When that happens, you can’t be much of a lawyer.”

The other partners agreed. “It would seem better to me if we didn’t represent in any way any German clients,” said Arthur Dean, perhaps the most respected of them. Finally it was left to Foster to ask, “Who is in favor of our closing down our operation in Germany?” All raised their hands.

“Then that is decided,” he said. “The vote is unanimous.”

By some accounts, Foster wept after pronouncing those words. Later he backdated the announcement by a year, to make it appear that the firm had closed its German offices in 1934 rather than 1935. He and Janet, however, continued to visit Germany as the Nazi regime tightened its grip on power, making trips in 1936, 1937, and 1939. Apparently nothing he saw disturbed him. He supported the neutralist America First committee—Sullivan & Cromwell drew up its articles of incorporation without charge—and roused its members with speeches denouncing Churchill, Roosevelt, and other “warmongers.” Hitler impressed him as “one who from humble beginnings, and despite the handicap of alien nationality, had attained the unquestioned leadership of a great nation.”

“Only hysteria entertains the idea that Germany, Italy, or Japan contemplates war upon us,” he assured businessmen at the Economic Club of New York on March 22, 1939. This was a year after Hitler had incorporated Austria into the Reich, and barely a week after his troops seized Czechoslovakia.

Not even the Nazi invasion of Poland later that year changed Foster’s mind. Two months afterward he gave a speech lamenting Britain’s declaration of war against Germany and asserting that there was “neither in the underlying causes of the war, nor in its long-range objectives, any reason for the United States becoming a participant.” This set off bitter arguments between the brothers, often over dinner at Foster’s retreat in Cold Spring Harbor. Foster had published a plea for “alterations of the international status quo” in order to head off “powerful forces emotionally committed to exaggerated and drastic change.” Allen understood this as a call for accepting the rise of Nazism as a way to fight Bolshevism, and he was appalled.

“How can you call yourself a Christian and ignore what is happening in Germany?” he demanded of his brother. “It is terrible.”

At least one other senior partner at Sullivan & Cromwell, Eustace Seligman, was equally disturbed. In October 1939, six weeks after the Nazi invasion of Poland, he took the extraordinary step of sending Foster a formal memorandum disavowing what his old friend was saying about Nazism.

“I regret very much to find myself, for the first time in our long years of association, in fundamental disagreement with you,” Seligman wrote. “Your position is that the Allies’ moral position is in no respect morally superior to Germany’s, and in fact you go further by implication and apparently take the view that Germany’s moral position is superior to the Allies’.… I can see nothing in it which furnishes any logical basis for the position you have now come to. I think it is unfortunate from your own point of view that you are taking this position publicly.”

Allen had made his final visit to Nazi Germany in 1938. Upon returning to New York, chilled by Hitler’s rise and perhaps eager to find a career more fulfilling than corporate law, he surprised his family and friends by announcing that he had decided to run for a seat in Congress from Manhattan’s East Side. He jumped into the Republican primary and proved to be an eager if uninspiring candidate, speaking to neighborhood groups, giving radio interviews, and winning endorsements from both the New York Times and theNew York Herald Tribune. In a rare show of family togetherness, his teenage daughters and eight-year-old son handed out leaflets on street corners and stuffed envelopes at campaign headquarters in the Belmont Plaza Hotel. On the stump Allen denounced “state socialism” and pledged to work for the “restoration of private enterprise,” but did not demonize President Roosevelt in the fashion of more militant Republicans. On the night of the primary, he followed the returns from home, and before retiring he understood that he had lost. It was no great trauma, and in fact the race won him admiration in Republican circles. Some even mentioned him as a possible future candidate for governor.

Foster criticized the New Deal far more forcefully than his brother. Soon after Roosevelt proclaimed the first of his relief programs, Foster wrote a letter to the New York Times asserting that instead of launching new programs, Roosevelt should have taken the opposite approach by “radically” cutting government spending. Later he accused Roosevelt of “attempting to stir up class feeling.” He was outraged by Roosevelt’s desire to regulate the securities industry, and testified against the proposed Securities Act at a congressional hearing. After it passed, he told his clients it was unconstitutional and advised them, “Do not comply; resist the law with all your might, and soon everything will be right.” He tried to persuade a Supreme Court justice, Harlan Fiske Stone, to resign and direct Sullivan & Cromwell’s ultimately unsuccessful challenge to the law. Stone declined—and lamented in passing that the flow of talented lawyers to firms serving corporate power “has made the learned profession of an earlier day the obsequious servant of business, and tainted it with the morals and manners of the market-place in its most anti-social manifestations.”

The Dulles brothers were paragons of the Wilsonian idea that came to be known as “liberal internationalism.” They believed that trouble in the world came from misunderstandings among ruling elites, not from social or political injustices, and that commerce could reduce or eliminate this trouble. This was a refined version of the “open door” policy the United States had embraced for decades—a policy that might better be called “kick in the door” because it was aimed at forcing other countries to accept trade arrangements favorable to American interests. At its core was the reassuring belief that whatever benefited American business would ultimately benefit everyone.

For Woodrow Wilson, the Dulles brothers, and nearly every powerful American business leader of their eras, the label “internationalist” was a badge of honor. They believed that business should be the vanguard of American expansion, and that state power should be used whenever necessary to promote and defend it. Their enemy, for much of the 1920s and ’30s, was isolationism, the belief that the United States should pull back from foreign engagements. Isolationists saw internationalists as agents for bankers and others who profited by ensnaring Americans in the web of global finance—which is precisely what the Dulles brothers were.

Wilson’s agonizing and ultimately unsuccessful campaign to win congressional approval for American entry into the League of Nations showed the Dulles brothers and others on Wall Street that internationalism had potent enemies. To resist those enemies, and to work toward a world that would welcome American corporate and political power, the brothers and a handful of their friends had decided to create an invitation-only club, based in New York, where the worldly elite could meet, talk, and plan. Above all they were moved by the conviction that as the United States grew to global power, its political leaders urgently needed guidance from bankers, businessmen, and international lawyers. To provide this guidance in a systematic way, they brought their new club into being in 1921. They called it the Council on Foreign Relations. Its motto was a single Latin word that spoke volumes: ubique, meaning “everywhere.”

This was an era when American foreign policy was the province of a small elite, and the men who founded the council were all certified members. Its first president, Norman Davis, was an eminent diplomat who had been Wilson’s assistant treasury secretary and undersecretary of state—and who, a decade later, would accompany Allen to Berlin to meet Hitler. Among its other founding members were Elihu Root, a corporate lawyer who had been Theodore Roosevelt’s secretary of war; Newton Baker, who had been Wilson’s secretary of war and then co-founded the Baker Hostetler law firm, which represented multinational corporations; and other former Wilson advisers including Isaiah Bowman and Archibald Coolidge. Coolidge was the founding editor of the council’s journal, Foreign Affairs, which made its debut in the summer of 1922 with articles by Foster and Root, among others. After Coolidge’s death in 1928 the editorship passed to Allen’s lifelong friend Hamilton Fish Armstrong. He held the job for nearly half a century, including a period in the 1940s when Allen served as the council’s president.

“No nation can reach the position of a world power, as we have done, without becoming entangled in almost every quarter of the globe in one way or another,” Foster wrote in what could be taken as a summary of the council’s internationalist credo. “We are inextricably and inevitably tied to world affairs.”

In the 1930s and 1940s members of the council, including Foster, produced more than six hundred classified policy memos for the State Department. So secret was this pipeline that even members of the council who were not directly involved did not know it existed. Nonetheless the council’s intimacy with senior policy makers in Washington was evident, leading some to view it as a nerve center of America’s hidden “permanent government.” The journalist and historian Peter Grose may have been closer to the truth when he described it as “part research center, part influence on government, and throughout a club of cultivated gentlemen (women were admitted to membership only the year after Allen’s death) who comfortably smoked cigars and pondered matters of state over their glasses of port.… Allen also found the Council to be a useful forum for flattering distinguished foreign guests. He would invite them to speak and, over dinner afterward, develop friendly relations that could be turned to business advantage.”

*   *   *

Promoters of “internationalism” were eager above all to preserve stability. Like many of them, Foster saw authoritarian leaders like Hitler as valuable allies in the fight against Bolshevism. Regimes that maintained order and disciplined themselves economically, he believed, were always better than those that pandered to groups impatient for social change.

“It is a well ordered domestic economy which provides the greatest assurance of peace,” Foster told the International Chamber of Commerce in Berlin in 1937. “The problem of international peace is but an extension of the problem of internal peace.”

In the period between the two world wars, Sullivan & Cromwell became the largest law firm in the United States. Even calling it a law firm, as Peter Grose has written, was missing the point. He described it as “a strategic nexus of international finance, the operating core of a web of relationships that constituted power.… The firm did offer legal associates to draft contracts, preserve estates, and argue in courtrooms, but this was not the profession of law as practiced by Foster and Allen Dulles. Their Sullivan & Cromwell sought nothing less than to shape the affairs of all the world for the benefit and well-being of the select, their clients.”

Success allowed the Dulles brothers to become rich, establish themselves as pillars of private power, and set out on courses that would shape history. Yet although they came to see the world through the same polished lens, their personalities remained opposite. A European banker who worked with both men wrote afterward that he was struck by the contrast.

“What a difference between them!” he marveled. “John Foster looked like a clergyman … vivid and somewhat nervous. Allen [was] quiet, relaxed, but at the same time hard-working.… Allen relied on his brains, and John Foster on his faith.… Allen was certainly more broadminded than his brother, and that is why his contacts with people were so much easier. I think Allen was loved by the men who worked with him, while John Foster was respected.”

Eager to promote his ideas—and himself—Foster produced a stream of articles, not just for sophisticated journals like Foreign Affairs, the New Republic, and the Atlantic Monthly but also for mass-circulation magazines like Life and Reader’s Digest. Business groups sought him out for speeches. He emerged as a foreign policy “wise man” and moved steadily toward public life. His interest in the Republican Party deepened through his relationship with Thomas Dewey, a promising lawyer he had sought to hire as a litigator for Sullivan & Cromwell. Dewey chose instead to run for district attorney. He was elected and won several headline-grabbing cases, including one against leaders of the organized crime syndicate known as Murder, Inc. In 1938 Dewey became the Republican nominee for governor of New York and, although he lost, his campaign made him a rising star in the party. Foster became his mentor in matters related to foreign affairs, thereby finding a new and powerful channel toward political influence.

Some of the men Foster met and worked with during these years imagined him as a future Supreme Court justice. His own ambition ran further. He believed he had become one of the few Americans who truly understood what his country and the world needed. In unguarded moments he dared to reflect on his prospects of rising to the presidency.

Allen was hardly less ambitious. He never considered himself a possible president, but for years imagined becoming secretary of state. He thought he might be on his way when President Roosevelt considered naming his friend Norman Davis to the post in 1933. Roosevelt, however, was disturbed by the taint of scandal that had enveloped Davis as a result of his business dealings in Cuba, and chose Senator Cordell Hull of Tennessee instead.

One of the most striking aspects of the Dulles brothers’ careers in the period between the world wars was the ease with which they moved between service to government and to private clients. Sometimes they served both at once. In a later age, their conflicts of interest would have been considered not just unethical but illegal. Yet no one asked them for financial disclosures, and few eyebrows were raised when they found ways to profit from their diplomatic assignments.

While “Uncle Bert” was a senior State Department official and later secretary of state, Foster did not hesitate to ask him to do favors for Sullivan & Cromwell clients. Lansing gave Foster letters of introduction that allowed him to reach elite circles during his first trips abroad on Sullivan & Cromwell business, and dutifully showed up at dinners Foster arranged to impress his clients. When he sent Foster to represent the United States in Central America in 1917, he knew that Sullivan & Cromwell was pressing President Chamorro of Nicaragua to accept a loan from one of its clients, Seligman Bank, and was also legal counsel to the government of Panama. While Foster worked for the War Trade Board, he helped direct loans worth $400 million to railroads, cotton growers, food producers, and manufacturers, including several that were his clients. His work helping to design the Dawes Plan for German reparation payments and its successor, the Young Plan, opened rich new markets for banks that Sullivan & Cromwell represented.

Allen also benefited from the clubby ethos that shaped political and corporate cultures in this era. The columnist Drew Pearson wrote that he often secured State Department approval for foreign loans through connections to former colleagues, arranged “over a few rounds of golf.” In 1927, just five months after he began work at Sullivan & Cromwell, the State Department named him legal counsel to the American delegation attending a naval disarmament conference in Geneva. For the next six years he divided his time between representing the United States at conferences like this one and working as a Sullivan & Cromwell lawyer. His legal clients included shipbuilders, steelmakers, and others with direct interest in the outcome of disarmament conferences. Pearson repeatedly accused him of conflict of interest for taking on diplomatic assignments while earning his living as an “operator for the bankers.” Later, Allen admitted that there might have been some truth to the charge.

“Possibly I shouldn’t have done it,” he wrote to a friend. “You remember what happened to Lot’s wife.”

During the late 1930s, as war began spreading across Europe, Allen became involved in a secret organization known enigmatically as “the room.” It was a private forum, based in an unmarked apartment on East Sixty-Second Street, where bankers, businessmen, and corporate lawyers—a total of about three dozen—met to exchange the most sensitive information they had gathered about events unfolding around the world. Nearly all had either backgrounds in intelligence or unusually deep contacts in foreign capitals. Among them were Winthrop Aldrich, chairman of the Chase Manhattan Bank; Vincent Astor, who became known as “the richest boy in the world” after his fabulously wealthy father went down with the Titanic; the investment banker Theodore Roosevelt Jr., a son of the former president; David Bruce, a son-in-law of the banker Andrew Mellon who went on to become the only American to serve as ambassador to Britain, France, and West Germany; the publisher and investment banker Marshall Field III; Sir William Wiseman, a broker at the Wall Street firm of Kuhn, Loeb & Co., who had served as liaison between the British and American intelligence services during World War I; and William Donovan, a war hero who had become a Wall Street lawyer and was honing his interest in intelligence. These patricians not only advised the Roosevelt administration on covert operations abroad, but willingly arranged corporate cover for agents undertaking them.

In 1940 Allen and Foster looked forward to the Republican National Convention in Philadelphia, which they hoped would nominate Thomas Dewey for the presidency. The delegates did not cooperate, choosing instead a New York lawyer, Wendell Willkie. Allen was disappointed. Foster, who loathed Willkie for his militant anti-Hitler views and sympathy with the New Deal, was disgusted.

After the final vote in favor of Willkie, Allen, who was a delegate from New York, was easing his way back through his crowded hotel lobby when another delegate approached, clapped him on the back, and said, “Let’s go into the bar and talk.” It was William Donovan, one of Allen’s friends from “the room.” Like others in the secret group, Donovan was concerned that the United States seemed about to enter a global conflict without a real intelligence service. He laid out his arguments and finished with a simple observation that would change Allen’s life and the course of history.

“We’ll be in it before the end of 1941, and when we are, there are certain preparations which should already have been made,” Donovan said. “That’s where you come in.”

Not for nothing had Donovan become known as “Wild Bill.” Ten years older than Allen, he was a wiry and pugnacious Irishman who had led a cavalry troop against Pancho Villa in 1916 and won the Medal of Honor for valor in France during World War I. After the war he had become a successful corporate lawyer and was the Republican candidate for governor of New York in 1932. He had a fascination with combat, and had made his way to the front lines during Italy’s invasion of Ethiopia and the Spanish Civil War. Despite being a Republican, he had a good relationship with Roosevelt from the days when they were both active in New York politics.

During his barroom chat with Allen, Donovan revealed a secret. He had just returned from London, where he had been on a private mission for Roosevelt. A series of meetings with Prime Minister Winston Churchill had convinced him that the war would continue, and that ultimately the United States would fight.

“While in Britain he also made a study of the organization and techniques of British intelligence,” Allen later wrote. “He was convinced that America’s military planning and its whole national strategy would depend on intelligence as never before, and that the American intelligence setup would have to be completely revamped.”

In 1940 there was little in the way of an “intelligence setup” in Washington. Networks established during World War I had been allowed to atrophy. At least eight government agencies, including the Federal Communications Commission and the departments of state, treasury, labor, and commerce, gathered foreign intelligence, but none knew what the others were doing. Much of what the White House learned about foreign countries came from private citizens like Donovan, who during the late 1930s spent part of his time as a self-appointed intelligence agent in Europe. In Washington, one of Donovan’s aides later recalled, he “began to beat on Roosevelt about the importance of a central intelligence, a strategic intelligence function. He had made a life’s study of the impact of intelligence on world events. He had collected enough for four or five volumes on the subject.”

Donovan was assembling a team of clandestine officers to work for an agency that did not yet exist, to serve a president who had yet to be persuaded. Allen Dulles, who was one of America’s few experienced spies, was an obvious recruit. He had never really left the intelligence business. Sullivan & Cromwell told clients that it had “unusual and diversified means of obtaining information,” and much of it came from Allen. He was thrilled to realize that the era of privatized, hit-or-miss intelligence gathering was ending, and that Washington would soon return to the business of coordinated espionage and covert action.

Diplomacy had shown Allen the ways of the world. Corporate law had made him rich. Now Donovan was offering him a chance to return to the shadows in which he had worked so successfully during World War I. He would play just the kind of role he wanted in the world: decisive but secret.

“When do you want me to start?” he asked when Donovan finished making his pitch.

“As soon as the election’s over,” came the reply. “I’ll call you.”

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