The Presidential Slush Fund.

• Author: GROSE, PETER

The inside story of how the fund established to help stabilize the dollar, supplemented by enemy assets during World War II, financed the first U.S. coven operations after the Cold War.

Over the centuries, as every graduate student of history knows, presidents and potentates have had their slush funds to carry out discreet activities of statecraft that they would prefer not to explain in public. In the United States, the practice started with George Washington himself, and for his purposes he seemed to manage quite well with disbursements in the hundreds of dollars.

By the middle of the twentieth century, with the United States emerging as a global power and heading into a cold war with international communism, the covert doings of ages past were growing into an art form of intelligence -- and a major arm of foreign policy. On June 18, 1948, the National Security Council of the Truman administration secretly approved its Directive 10/2, a clandestine program for infiltration, sabotage, and subversion of the newly imposed communist regimes of Eastern Europe.

Since both the new Central Intelligence Agency, established barely a year before, and the Joint Chiefs of Staff were skittish about entering into the uncharted waters of covert action on such a scale, Truman's NSC created a new government agency to do the job that the top policymakers felt had to be done if the world was to be saved from communism.

The new creation was called the Office of Policy Coordination (OPC), an opaque label for the command headquarters running operations for which, the NSC mandated, the United States government could "plausibly disclaim any responsibility." (This was the origin of the doctrine, later infamous as its cynicism became all too evident, of "plausible deniability.") Recruitment of agents to parachute behind the Iron Curtain, their training, and logistical support became the secret mission assigned to a creative and energetic New York lawyer and World War II intelligence veteran named Frank G. Wisner.

Wisner's obvious first task, before any of the skullduggery could be mounted, was to scrounge up the cash to pay for it all. For this, the NSC blithely had made no provision. And it had to be cash on trust; the purposes for which it would be disbursed could not be openly described. "The heart and soul of covert operations" Wisner learned from his savvy legal counsel, Lawrence Houston, is "provision of unvouchered funds, and the inviolability of such funds...