Broker, Trader, Lawyer, Spy - Eamon Javers [29]
President Theodore Roosevelt, eager to expand his executive authority, leaped into the debate. He dismissed the worries of the civil libertarians in Congress, writing, “There is no more foolish outcry than this against ‘spies’ only criminals need fear our detectives.” Roosevelt, always blunt, said that Congress was reluctant to create a detective force because the congressmen feared they would become targets of investigation. That accusation didn’t sit well with members of Congress.
Attorney General Bonaparte had to proceed carefully in July 1908, when he reorganized his staff and appointed Chief Examiner Stanley W. Finch to head a small group of special agents. That was against the will of many in Congress, but Bonaparte’s special force managed to survive heated debate on Capitol Hill. The force would grow to become the Federal Bureau of Investigation.1
With the rise of the FBI as a national police force, the need for private corporate detective services gradually dwindled, and the Pinkertons were forced to consolidate, maintaining a core business around their still profitable activities: keeping watch against corruption at horse-racing tracks, chasing jewel thieves, and providing uniformed guards for corporate plants.
Although this era was the heyday of the fictional private eye, such as Sam Spade, the years of the two world wars and the early cold war saw increasingly centralized national investigative and intelligence capability under control of the federal government, not the private sector. From the founding of the FBI to the creation of the Central Intelligence Group in 1946 (it became the Central Intelligence Agency in 1947), the government was consolidating ever more intelligence and investigative power in its own hands.
In those days, private eyes were better known for working on their own, cultivating a disdain for law enforcement, and sometimes using illicit tactics to solve cases. And those cases were often small-time stuff: missing people, insurance fraud, and divorces—lots of divorces.
But even as companies ceded their defense against criminals to government authorities, many found they still needed offense: intelligence-gathering operations against their competitors. Corporate espionage never went away. It just went farther underground.
WITH NEW TECHNOLOGY, the spying became ever more sophisticated. The investigator Sam Dash* chronicled the rise of corporate espionage involving bugging and wiretapping during the early twentieth century in his classic book The Eavesdroppers. He found corporate spying in small towns and in the nation’s capital. In Toledo, Ohio, in 1932, for example, investigators came across an extensive wiretap setup in a hotel room next to the headquarters of an agricultural group, the Farmers’ Producers Association. This group had been discussing boosting the price of milk, and the evidence showed that the room had been bugged for days. As a result, somebody had advance warning of the price increase, although it’s not clear who ordered the spying. (Today’s commodities traders still use esoteric intelligence techniques to get advance information on market pricing—in a later chapter, we’ll see that they’re now using satellites to gather intelligence.)
In Washington, D.C., Dash wrote, a “raiding squad” from the Federal Communications Commission (FCC), acting on a tip in 1935 or 1936, found wiretapping equipment in a building near the brand-new Supreme Court building. The wiretappers had been using the equipment to listen in on the phone lines of Supreme Court justices. The spies were never found—not surprisingly,