How CIA Money Took the Teeth Out of Socialism

How CIA Money Took the Teeth Out of Socialism by Richard Fletcher (originally published in Philip Agee and Louis Wolf, eds., Dirty Work: the CIA in Western Europe, Zed Press (pp. 188-200))

Research: USA, Susan Bidel; France, Anthony Terry and Frank Dorsey; Netherlands, Leo Hendrick; Japan, Christopher Reed; Switzerland, Alan McGregor; Austria, Ritchie McEwen; Italy, Andrew Hale; England Philip Kelly and Jenny Richards.

Since the Second World War the American Government and its espionage branch, the Central Intelligence Agency, have worked systematically to ensure that the Socialist parties of the free world toe a line compatible with American interests...CIA money can be traced flowing through the Congress for Cultural Freedom to such magazines as Encounter which have given Labour politicians like Anthony Crosland, Denis Healy and the late Hugh Gaitskell a platform for their campaigns to move the Labour Party away from nationalisation and CND-style pacifism. Flows of personnel link this Labour Party pressure group with the unlikely figure of Prince Bernhard of the Netherlands, who has for 20 years sponsored the mysterious activities of the anti-Communist Bilderberg Group launched with covert American funds.

There is no suggestion that these prominent Labour politicians have not acted in al innocence and with complete propriety. But it could be asked how such perspicacious men could fail to enquire about the source of the funds that have financed the organisations and magazines which have been so helpful to them for so long. Nevertheless, they are certainly proud of the crucial influence their activities had in the years following 1959 when they swung the British Labour Party away from its pledge to nationalisation, enshrined in the celebrated Clause IV, and back towards the commitment to NATO from which the Campaign for Nuclear Disarmament had deflected it. CIA operators take the credit for helping them in this decisive intervention which changed the course of modern British history.

The cloak and dagger operations of America's Central Intelligence Agency are only a small part of its total activities. Most of its 2000 million-dollar budget and 80,000 personnel are devoted to the systematic collection of information - minute personal details about tens of thousands of politicians and political organisations in every country in the world, including Britain. And this data, stored in the world's largest filing system at the CIA headquarters in Langley, Virginia, is used not only to aid Washington's policy-machine, but in active political intervention overseas - shaping the policies of political parties, making and unmaking their leaders, boosting one internal faction against another and often establishing rival breakaway parties when other tactics fail.

In fact the CIA carries out, at a more sophisticated level, exactly the same sort of organised subversion as Stalin's Comintern in its heyday. One of its targets in the years since the Second World War has been the British Labour Party.

The Labour Party emerged from the war with immense prestige. As the sole mass working-class party in Britain it had the support of a united trades union movement whose power had been greatly enhanced by the war, and it had just achieved an unprecedented electoral victory. The established social democratic parties of Europe had been destroyed by the dictators, while in America all that remained of the socialist movement was a handful of sects whose members were numbered in hundreds. Labour was undisputed head of Europe's social democratic family.

But as the euphoria wore off, old differences began to emerge with prolonged post-war austerity. The Left wanted more Socialism and an accommodation with the Russians, while the Right wanted the battle against Communism to take precedence over further reforms at home. And those who took this latter view organised themselves around the journal Socialist Commentary, formerly the organ of anti-Marxist Socialists who had fled to Britain from Hitler's Germany. The magazine was reorganised in the autumn of 1947 with Anthony Crosland, Allan Flanders and Rita Hinden who had worked closely with the emigres as leading contributors. And Socialist Commentary became the mouthpiece of the Right wing of the Labour Party, campaigning against Left-wingers like Aneurin Bevan, whom they denounced as dangerous extremists. Crosland, who ended the war as a captain in the Parachute Regiment, had been President of the Oxford Union, and a year later, in 1947, became Fellow and lecturer in economics at Trinity College, Oxford. Flanders was a former TUC official who became an academic specialist in industrial relations and later joined the Prices and Incomes Board set up by the Wilson Government. Rita Hinden, a University of London academic from South Africa, was secretary of the Fabian Colonial Bureau - an autonomous section of the Fabian Society which she had set up and directed since the early Forties. In this position she exercised considerable influence with Labour Ministers and officials in the Colonial Office, maintaining close links with many overseas politicians.

The new Socialist Commentary immediately set out to alert the British Labour movement to the growing dangers of international Communism, notably in a piece entitled "Cominformity', written by Flanders during a period spent in the United States studying the American trade union movement. The journal's American connections were further extended by its U.S. correspondent, William C. Gausmann, who was soon to enter the American Government Service, where he rose to take charge of US propaganda in North Vietnam, while support for the moderate stand taken by Crosland, Flanders and Hinden came from David C. Williams, the London Correspondent of the New Leader, an obscure New York weekly specialising in anti-Communism. Williams made it his business to join the British Labour Party and to take an active part in the Fabian Society.

This close American interest in Socialism on the other side of the Atlantic was nothing new. During the war the American trade unions had raised large sums to rescue European labour leaders from the Nazis, and this had brought them closely in touch with American military intelligence and, in particular, with the Office of Strategic Services (OSS), whose chief in Switzerland and Germany from 1942 to 1945 was Allen W. Dulles, later, of course, to become famous as head of the CIA in its heyday.

The principal union official in these secret commando operations had been Jay Lovestone, a remarkable operator who had switched from being the leader of the American Communist Party to working secretly for the US Government. And as the Allied armies advanced, Lovestone's men followed the soldiers as political commissars, trying to make sure that the liberated workers were provided with trade union and political leaders acceptable to Washington - many of these leaders being the ~migr~s of the Socialist Commentary group. In France, Germany, Italy and Austria the commissars provided lavish financial and material support for moderate Socialists who would draw the sting from Left-wing political movements, and the beneficiaries from this assistance survive in European politics to this day - though that is another story.

In America the New Leader came to provide one focus for these activities, organising a weekly meeting of minds for professional anti-Communists in the unions, universities and government service, both at home and abroad. It had a relatively large paid staff and a world-wide network of overseas and roving correspondents. Its guiding spirit as Executive Editor and business manager was Sol Levitas, a Russian emigre who had worked with Trotsky and Bukharin during the Russian Revolution of 1917 and had fled from Stalin's prisons to the US in 1923, bringing with him a life-long hatred of Bolshevism. Amongst Levitas's "boys", as he liked to call them, were Melvin J. Lasky, an ex-Trotskyist from New York City College who joined the staff in 1941; Daniel Bell, a former Managing Editor of the New Leader who is now a professor at Columbia University; and Irving Brown, Lovestone's hatchet man in the European trade unions.

The New Leader claimed to be independent, but in 1949 it carried a piece by Allen Dulles advocating a "commission of internal security", to examine subversive influences in the US and to "use the institutions of democracy to destroy them" which, in the light of Dulles's work helping the White House reorganise 055 as the Central Intelligence Agency, was rather like the head of MIS writing for the New Statesman. And at this time too, although the New Leader was issuing frantic appeals for funds to pay off its $40,000 worth of debts, it started appearing in April 1950 as a new New Leader with an expensive Time-like magazine format.

The importance of this dramatically reborn publication for British and European Labour parties was that it now began openly to advocate the infiltration of foreign socialist parties, echoing the arguments of James Burnham who, in his book The Coming Defeat of Communism, proposed that "the Western World, led by the United States should go over to the offensive by using the same sort of methods - open and covert - that the Kremlin has so massively employed". Allan Flanders contributed an article to the revamped magazine on the British Labour Movement, and in 1954 Denis Healey, who had entered Parliament as a Labour MP in 1952, became the New Leader's London correspondent.

American Cold War strategy, as Burnham and the New Leader had proposed, now moved into the financing of world-wide front organisations, and in June 1950 the free world's top men of letters were duly assembled in the Titania Palace Theatre in the US zone of Berlin, before an audience of 4,000, to faunch the Congress for Cultural Freedom, a body whose purpose was to "defend freedom and democracy against the new tyranny sweeping the world". It was no coincidence that the main organiser and chairman of the Congress was Melvin Lasky, who in 1948 had been 'lent' by the New Leader to the US High Commission in Berlin, where he had set up a successful literary magazine, Der Monat. with the encouragement of General Lucius D. Clay, head of the military government. Nor that the man chosen to head the permanent secretariat of the congress was an official of the American military government, Michael Josselson, who administered and arranged the financing of the vast organisation.

The Congress seemed to have unlimited funds which were said to come from Jay Lovestone's union in America, and CCF, as it came to be known, was soon organising political seminars and student exchanges, and publishing literature on a world-wide basis in support of the new youth organisations which suddenly emerged to fight the Communists - notably the International Student Conference at Leiden in the Netherlands.

In 1953 the Congress for Cultural Freedom launched Encounter, an English language monthly which was an immediate success under the editorship of Irving Kristol, another of Levitas's New Leader proteges and an exLovestoneite, and soon a bewildering range of publications in several languages had joined the CCF stable, with Encounter becoming one of the most influential journals of liberal opinion in the West.

As the CCF network grew it embraced many prominent figures in the British Labour Party - among them Anthony Crosland, who began attending CCF seminars, where he met Daniel Bell, who was at this period moving away from journalistic red-baiting in the New Leader towards academic respectability. Bell's thinking was later summarised in his book The End of Ideology, and it formed the basis of the new political thesis set out in the major work that Crosland was now writing and which was published in 1956 under the title The Future of Socialism. The book had also been influenced by the arguments put forward at the Conference of the Congress for Cultural Freedom held in the previous year in Milan, where principal participants had included Hugh Gaitskell, Denis Healey and Rita Hinden as well as Daniel Bell and a bevy of American and European politicians and academics.

Put at its simplest. Bell and his colleagues argued that growing affluence had radically transformed the working-class in Europe - and Britain - which was now virtually indistinguishable from the middle-class, and thus Marx's theory of class struggle was no longer relevant. Future political progress, they thought, would involve the gradual reform of capitalism and the spread of equality and social welfare as a consequence of continued economic growth.

Crosland's book, though not original in content, was a major achievement. In over 500 pages it clothed the long-held faith of Labour's new leader Hugh Gaitskell in the academic respectability of American political science and was immediately adopted as the gospel of the Party leadership. Labour's rank-and-file, however, still clung to their grassroots Socialism, and Gaitskell's obvious preferences for the small coterie of cultured intellectuals and visiting foreigners who met at his house in Frognal Gardens, Hampstead, alienated the Party faithful, and gave added bitterness to the internecine quarrels that were to follow Labour's defeat in the 1959 election.

In 1957 Melvin Lasky had taken over the editorship of Encounter which had, by then, cornered the West's intelligentsia through its prestige and the high fees it was able to pay. Lasky was a trusted member of Gaitskell's inner circle and was often to be seen at his parties in Hampstead, while Gaitskell became at the same time a regular contributor to the New Leader. Sol Levitas would drop in at his house on his periodic tours to see world leaders and visit the CCF in Paris.

It was during the Fifties furthermore, that Anthony Crosland, Rita Hinden and the other members of the Socialist Commentary group adopted the argument put forcibly in the New Leader that a strong united Europe was essential to protect the Atlantic Alliance from Russian attack, and European and Atlantic unity came to be synonymous in official thinking as Gaitskell and his friends moved into the Party leadership. They received transatlantic encouragement, furthermore, from a New York-based group called the American Committee on United Europe, whose leadership was openly advertised in the New York Times as including General Donovan, wartime head of OSS. George Marshall, the US Secretary of State, General Lucius D. Clay and Allen Dulles of the CIA.

This high-powered and lavishly-funded pressure group - whose thesis was essentially that a United Europe would defend America's interest against Russia -financed in Europe the so-called 'European Movement', whose inspiration was a friend, of Hugh Gaitskell's, Joseph Retinger, an elderly Polish James Bond, who, after a professional career as an ~minence grise. had come to rest at the Dutch court under the patronage of Prince Bernhard.

Retinger had, furthermore, secretly persuaded Shepard Stone of the US High Commission in Germany to finance his European Movement out of so-called "counter-part funds" - Marshal Aid repaynients which the Americans banked in Europe. Later he promoted select gatherings of European and American politicians, businessmen, aristocrats, top civil servants and military leaders to propagate the ideals of Atlantic and European unity. Invitations to these Bilderberg Group meetings -named after the Dutch hotel where the first gathering was held in 1954 - were issued personally by Prince Bernhard on Retinger's recommendation. Few of those who received the card of invitation embossed with the Royal Netherland coat of arms declined to spend three or four days in civiised discourse with the world's leaders in luxurious surroundings - certainly not Hugh Gaitskell and Denis Healey, who were founder members of the Group along with such diverse personalities as the President of Unilever and Sir Robert Boothby.

Healey, an ex-Communist, had been head of the International Department at Transport House before entering Parliament in 1951. He was a convinced supporter of Atlantic Union and spread the message through Socialist Commentary and the New Leader, for whom he wrote nearly 80 articles before joining the Labour Government as Defence Minister in 1964.

While top people were relaxing with Prince Bernhard, the Congress for Cultural Freedom was establishing solid ties with the coming man of the British Labour Party. Anthony Crosland, who was by now acknowledged as the Party's chief theoretician. He had lost his seat at Westminster in the 1955 election, but in the following years was travelling regularly to Paris to plan the International Seminars of the CCF with Melvin Lasky and Michael Josselson under the directorship of Daniel Bell. Michael Josselson, who in 1967 admitted that he had for 17 years been channelling CIA money into the CCF, has described to us Crosland's role at this period. Crosland's contribution, he says. was "encouraging sympathetic people" to participate in the seminars sponsored by the Congress all over the world. Hugh Gaitskell travelled in these years to Congress functions in Milan 1955. New Delhi 1957, the island of Rhodes 1958 and Berlin 1962. Crosland himself travelled to Vienna in 1958, to Berlin in 1960 and to Australia and Japan in 1964 on a Congress-sponsored tour.

He was at this date a member of the International Council of the CCF after nearly a decade working to re-model European Socialism in the image of the American Democratic Party, a cause for the sake of which the CCF had financed a systematic campaign of congresses, seminars and private gatherings for leading Socialists throughout Europe. This had been backed up by the fullest publicity in Encounter, Preuves. Monat and the other CCF journals - whose influence was further extended by discreet arrangements with Socialist Commentary for publishing each other's pamphlets and articles.

Rita Hinden was by now the editor of Socialist Commentary and playing a similar role to Crosland in picking African participants for Congress seminars. Michael Josselson describes her as "a good friend of ours. We relied entirely on her advice for our African operations". She also visited India and Japan on a CCF-sponsored trip after the Suez crisis, speaking on the theme that traditional Socialism was irrelevant in a modern capitalist society where there was full employment.

This was the nub of the matter. Many of Europe's Socialist parties still had old-fashioned Marxist notions written into their rule-books, which had become an embarrassment to their leaders. A glaring example was the British Labour Party whose Clause IV -"common ownership of the means of production, distribution and exchange" and so on - sounded to some like a passage from the Communist Manifesto. The proof of its irrelevance seemed provided by the 1959 General Election in which Anthony Crosland regained h& seat at Westminster, but which represented a catastrophic defeat for the Labour Party. The day after Labour's defeat, Roy Jenkins, Anthony Crosland and Douglas Jay were among a small group who met with Gaitskell at his home. They decided that the time had come for Labour to drop its old commitments and get rid of its cloth cap image which had become an electoral liability.

Douglas Jay immediately wrote the now celebrated article which appeared in Forward the following week, calling for the abandonment of Clause IV and a change in the Labour Party's name. And early in 1960, Socialist Commentary commissioned Mark Abram's firm, Research Services Ltd., to carry out an attitude survey on "Why Labour Lost". The results were published in the journal's May to August number, and they confirmed the Gaitskell thesis that nationalisation was a liability. This Abrams survey had been turned down by the Labour Party Executive before the 1959 election as being too costly. But now Socialist Commentary found the money to pay for it, and in February 1960 William Rodgers, General Secretary of the Fabian Society since 1953, organised a letter of support to Gaitskell signed by 15 young Parliamentary candidates. Shortly afterwards, a steering committee was set up with Rodgers as chairman, and including some of the signatories of the Gaitskell letter together with Crosland, Roy Jenkins, Patrick Gordon Walker, Jay, other Party members from Oxford and some sympathetic journalists. This group started work on a manifesto to be released in the event of Gaitskell's defeat in the defence debate at the Party Conference. This duly occurred in the autumn of 1960, when the Campaign for Nuclear Disarmament triumphed in its campaign to win the Labour Party to a neutralist programme.

So in October 1960 Rodgers and his friends released their manifesto in 25,000 copies with widespread Press coverage. Calling for "Victory for Sanity" - a dig at their old enemies the "Victory for Socialism" group - they appealed to Party members to rally behind Gaitskell and his Conference call to "fight and fight and fight again". They also issued an appeal for funds with which to continue the campaign, and in mid-November Rodgers reported to the steering committee that many small donations had been received, together with a large sum from a source which wished to remain anonymous.

Rodger's windfall enabled the group to take a permanent office and appoint paid staff. The title "Campaign for Democratic Socialism" was chosen and a six-man Executive Committee set up with Rodgers as full-time paid Chairman. The Committee was told that available funds were sufficient for a year's activities, and CDS thus had a start on its opponents who, in spite of their widespread support in Labour constituencies and trades unions. were unable to raise more than a few hundred pounds over the following year and had to rely entirely on volunteer workers. At CDS's disposal were field-workers in the constituencies and unions, whom it supported with travelling expenses, literature and organisational back-up, tens of thousands of copies of the manifesto, pamphlets and other publications, plus a regular bulletin, Campaign, circulated free of charge to a large mailing list within the movement. And all this was produced without a single subscription-paying member.

CDS achieved its objectives. The unions cracked under the pressure and the Labour Party returned to the Atlantic fold at the Party Conference in 1961 after a campaign by the most effective pressure group the Party had ever seen. Rodgers was its driving force. With financial backing assured, he created an organisation whose influence was out of all proportion to its original support among Party members. Whoever put up the money could justly claim to have changed the course of the history of the Labour Party and Britain in the 1960s.

Nor did the importance of CDS vanish totally after it had restored the Labour Party to commitment to NATO, for its adherents felt bitterly betrayed when Hugh Gaitskell later qualified his support for Common Market entry at the Brighton Conference in 1962. Standing at the back of the hail Rodgers turned to the Party press officer. John Harris - later Roy Jenkin's PR man - and said "I'm through with that man, John". Anthony Crosland, furthermore, supported Gaitskell's compromise and so also lost the backing of the ardent marketeers, who henceforward rallied around Roy Jenkins.

The main significance of all these divisions was that they helped Harold Wilson to capture the leadership on Gaitskell's death. Finding the Parliamentary Party moulded in the Gaitskell image, its policies firmly rooted in Crosland's Future of Socialism. Wilson made no attempt to alter the package which became the programme of the next Labour Government.

Throughout this post-war period the Party apparatus remained firmly in orthodox hands. particularly the International Department of which Denis Healey had been head until he entered Parliament in 1951. Then in 1965 his old post was taken over by J. Gwyn Morgan, one of the rising generation of Party and union officials whose careers began in the National Union of Students, to whose Presidency he had been elected in 1960 on an anti-Communist ticket. As President he took charge of international affairs, representing the Union in the International Student Conference at Leiden, and on leaving the NUS in 1962 he became Assistant General Secretary of ISC in charge of finance. In this capacity he negotiated with the American foundations which supplied the bulk of ISC funds and supervised expenditure of the several million dollars devoted to world-wide propaganda and organisation. In( 1964 he became Secretary General of ISC.

In his five years' association with the organisation he visited over 80 different countries and got to know personally many heads of government and leaders of the world's principal social democratic parties. An ardent pro-European and active supporter of Roy Jenkins, he was an obvious choice to fill the vacant slot as head of Labour's Overseas Department at the beginning of 1965. Two years later Morgan was promoted to the newly-created post of Assistant General Secretary of the Labour Party, with the expectation that he would fill the top job on Harry Nicholas's retirement.

But early in 1967 the US journal Ramparts revealed that since the early Fifties the National Student Association of America had, with the active connivance of its elected officers, received massive subventions from the CIA through dummy foundations and that one of these was the Fund for Youth and Student Affairs which supplied most of the budget of ISC. The International Student Conference, it appeared, had been set up by British and American Intelligence in 1950 to counteract the Communist peace offensive, and the CIA had supplied over 90 per cent, of its finance. The Congress for Cultural Freedom was similarly compromised. Michael Josselson admitted that he had been chanelling CIA money into the organisation ever since its foundation - latterly at the rate of about a million dollars a year - to support some 20 journals and a world-wide programme of political and cultural activities. Writing of Sol Levitas at the time of his death in 1961, the editor of the New Leader, William Bohm said "the most amazing part of the journalistic miracle was the man's gift for garnering the funds which were necessary to keep our paper solvent from week to week and year to year. I cannot pretend to explain how this miracle was achieved.we always worked in an atmosphere of carefree security. We knew that the necessary money would come from somewhere and that our cheques would be forthcoming."

The "Miracle" was resolved by the New York Times: the American Labour Conference for International Affairs which ran the New Leader had for many years been receiving regular subventions from the J. M. Kaplan Fund, a CIA conduit.

The CIA had taken the lessons taught back in the early Fifties by Burnham and the New Leader to heart. With its army of cx-Communists and willing Socialists it had for a while beaten the Communists at their own game -but unfortunately it had not known when to stop and now the whole structure was threatened with collapse. Rallying to the agency's support, Thomas Braden, the official responsible for its move into private organisations, and Executive Director of the American Committee on United Europe, explained that Irving Brown and Lovestone had done a fine job in cleaning up the unions in post-war Europe. When they ran out of money, he said, he had persuaded Dulles to back them, and from this beginning the world-wide operation mushroomed.

Another ex-CIA official, Richard Bissell, who organised the Bay of Pigs invasion, explained the Agency's attitude to foreign politicians: "Only by knowing the principal players well do you have a chance of careful prediction. There is real scope for action in this area: the technique is essentially that of 'penetration' . . . Many of the 'penetrations' don't take the form of 'hiring' but of establishing friendly relationships which may or may not be furthered by the provision of money from time to time. In some countries the CIA representative has served as a close counsellor... of the chief of state."

After these disclosures the CCF changed its name to the International Association for Cultural Freedom. Michael Josselson resigned - but was retained as a consultant - and the Ford Foundation agreed to pick up the bills. And the Director of the new Association is none other than Shepard Stone, the Bilderberg organiser who channelled US Government money to Joseph Retinger in the early Fifties to build the European Movement and then became International Director of the Ford Foundation.

When Rita Hinden died at the end of last year after 20 years as editor of Socialist Commentary. George Thomson - a pillar of CDS who resigned recently from Labour's front bench with Roy Jenkins - paid tribute to her key role in transforming the Labour Party. In the Fifties, he said, her "ideas were greeted with outraged cries of 'Revisionism'. But by the mid-Sixties the revisionism of Socialist Commentary had become the orthodoxy of the Labour Movement." And Denis Healey's comment was equally revealing. "Only Sol Levitas of the American New Leader." he said, "had a comparable capacity for exercising a wide political influence with negligible material resources." He obviously hadn't paid a visit to Companies House whose Register shows that in recent years Socialist Commentary has been drawing on a capital reserve of over £75,000.

Through its network of front organisations, magazines and subsidies the CIA in the late Fifties and early Sixties had a decisive effect on Socialism throughout Western Europe. and in Britain in particular, but the Gaitskellism that it backed is now on the retreat. For those Labour leaders who, in all innocence, built their careers in the seminars of the Congress for Cultural Freedom and the columns of Encounter or the New Leader, rather than in the trade union branch or on the Conference floor, are now feeling the lack of a mass base within the Party.

Attacked by Gaitskell at the Labour Party Conference in 1960 as a fellow traveller, Michael Foot retorted 'but who are they travelling with?' and the question is one that other members of the Party echo. For the chairmen of the world's largest capitalist organisations, monarchists, Ex-Nazis, commanders of the American and German forces, the Crown Princes of Europe and CIA agents do indeed make strange travelling companions for Socialists.