The gangsters who were really officials and the officials who were really gangsters

Frederic Wakeman has long been fascinated with the police and criminals of pre-Communist Shanghai, who were as often each other’s allies as opponents. His first book on the subject, Policing Shanghai 1927-37 (1995), described the self-subverting involvement of the new Kuomintang government’s municipal police bureau in both the opium trade and the civil war against the Communists. The Shanghai Badlands: Wartime Terrorism and Urban Crime 1937-41 (1996) carried the story into the period of the Sino-Japanese War, when Shanghai became a battleground between the Japanese army, French and British police in the foreign settlements, Chinese collaborators with Japan, KMT secret police and the Communist underground.

Relying on municipal government and police archives, foreign office records from various countries, memoirs, interviews and contemporary periodicals, Wakeman told colourful stories of assassinations, drug-running, prostitution, kidnappings, bombings and police torture. One of his arguments was that the multi-sided, no-holds-barred political combat of the 1930s eroded the idealism and discipline of Chiang Kai-shek’s new Kuomintang regime. The KMT’s corruption prepared the p0pulation to accept Japanese rule after 1941 and Communist rule after 1949, in the hope of finding relief from chaos and criminality.

Dai Li was a character in both the earlier books. In Policing Shanghai, he manages assassinations and creates a secret police force for Chiang. Before the Japanese invasion of Shanghai, he extended his powers over the city’s military and transport police, fielded Communist turncoats who conducted political arrests and assassinations, and established a bond with Shanghai’s chief drug lord and racketeer, Du Yuesheng – thereby, as Wakeman puts it, ‘intermingling criminality and patriotism’. In Shanghai Badlands, Dai creates a ‘special action corps’ to resist the Japanese, staffed partly by Du Yuesheng’s gangsters, and later masterminds most of the KMT’s assassinations in the city. Now, in Spymaster, Wakeman turns his full attention to Dai, whose story has never been adequately told because it is obscured by layers of secrecy and controversy.

Who was Dai Li? In his day, he was seldom seen, much whispered about and much feared – ‘a faceless fellow’, as Wakeman sums up the common image, ‘always shrouded in the shadows of the room while others were openly holding forth’. According to Dai’s American wartime collaborator, Commodore Milton Miles, he was ‘a very pleasant man generally, but with delicate hands and I thought he was – well, a pansy, the way I first sized him up . . . but I found out that he was a ruthless man.’ Dai was perhaps Chiang’s most trusted subordinate, ‘the only man’, in Miles’s account, ‘that was allowed in the Generalissimo’s bedroom armed at any time of day or night’.

Dai Li was born in a rural county not far from Shanghai in 1897: a time when the Chinese imperial system was breaking down and men with a modicum of new-style education could make themselves into members of a new elite. But there was no proven path to success. Dai’s choice, at the age of 30 (after some years of drinking, whoring, gambling and odd-jobbing), was to enrol in Chiang’s nationalistic and, for its time, highly modern military academy at Whampoa. As Chiang saw it, the academy would train a ‘party army’ that would reunify China under the Kuomintang, and then modernise and democratise the country in keeping with the philosophy of the recently deceased Sun Yat-sen. What instead developed was a military regime that grew increasingly violent and corrupt as it faced the challenges of Communist insurgency, liberal dissent, Japanese invasion, economic collapse and fiscal insolvency.

Soon after arriving at Whampoa, Dai gained Chiang’s trust by reporting to him on the loyalties of other cadets. Like many of Dai’s biographers, Wakeman attributes this behaviour more to Dai’s traditional ideas of personal loyalty than to opportunism, though the two were hard to distinguish so long as Chiang remained in charge. Dai was smitten by Chiang’s authoritative bearing and nationalist rhetoric, and aspired to become his ‘hound and horse’. After a period of testing, Chiang circumvented Dai’s nominal superiors to give him special jobs and the right to report to him directly. Gradually he enlarged Dai’s portfolio with more sensitive tasks: anti-Communist intelligence gathering, often through kidnapping and torture; establishing underworld relationships; managing assassinations; setting up guerrilla bands to fight the Communists and the Japanese.

Eventually, Dai’s empire was labelled the Bureau of Investigation and Statistics – Juntong for short – under the Military Affairs Commission, which Chiang chaired. But Juntong was far more than either an intelligence operation or a military police force. It had few specifically military functions, other than to spy on the regime’s officer corps. Wakeman is probably right to sum up its functions under the sobriquet ‘secret service’. But Juntong lacked the organisational crispness and discipline that the term suggests. To enforce the regime’s hold over a share of the country’s illegal opium revenue, it offered protection to narcotics factories and participated in narcotics smuggling – all managed through an agency called the Opium Suppression Bureau.

It does not appear from Wakeman’s account that Dai performed any of his jobs all that well. His men seem corrupt, his intelligence units are penetrated by agents of his Communist rivals, Zhou Enlai and Kang Sheng, his underworld cronies cheat him and his guerrilla bands scatter when faced by the enemy. Wakeman says that the Communist Shanghai counter-espionage chief, Chen Geng, set up a central committee meeting under the nose of Dai’s agents in 1931 by establishing a fake hospital and bringing in the delegates wrapped in bandages. Dai’s boot camps seem to have been located in ill-equipped, run-down rural schoolhouses, where one gets the impression that little higher-order training took place. There is a comic side to the lessons Dai’s men received on how to snatch pedestrians from the sidewalk into moving cars without attracting a crowd. His most successful assassinations seem to have been those carried out against liberal intellectuals with no ability to protect themselves. It may be that this impression of haplessness derives in large part from Wakeman’s reliance on the memoir of a one-time Dai subordinate who later turned Communist, Shen Zui. Shen’s account is indispensable, but it is also a sophisticated propaganda product that does what the Chinese Communist Party wanted it to do: portray Dai as at once terrifying and feckless.

From his extraordinary range of sources, Wakeman has put together as clear a picture of Dai’s organisation as I can imagine anyone obtaining. But it is hard to say how meaningful this information is. The organisation was complex and constantly shifting: there were overlapping and competing chains of command, units were set up and then dissolved, assignments changed. There were constant purges, promotions and transfers. Juntong did any sort of business that Chiang wanted done, or hinted that he wanted done. It is hard to tell in retrospect which pieces of the apparatus were vital, which moribund, which were real and which fake, and which of them, if any, achieved the things they claimed to achieve. It is hard to know whether Dai really had half a million officers and agents under arms in the mid-1940s, or whether he really set up checkpoints virtually overnight in Sichuan in the late 1930s in ‘every conceivable public facility’ including movie theatres and public bathhouses.

The impression that emerges is of a vast personal network, animated by feudalistic personal loyalties, vague scraps of nationalist and militarist ideology, masculine bonding rituals and fear of brutal punishment, that reported inefficiently to one over-burdened top man with little horizontal co-ordination; and that selected strong-arm methods over any others because they were quick and convenient. By running this network, Dai served Chiang’s short-term goals while materially assisting his longer-term, unintended project of destroying the Kuomintang’s legitimacy and effectiveness.

Dai died before this occurred, and, providentially, just after his master had first shown signs of serious dissatisfaction with his work. Shortly after the victory over Japan, for reasons that are not clear, Dai came to believe that Chiang intended to abolish his organisation and to redistribute his powers among other intelligence and police officials. While he was flying round the country making arrangements, either to stave off this eventuality or to deal with the aftermath, his plane crashed in a rainstorm. The date was 17 March 1946.

In the last nine years of his life, and the last third of the book, Dai’s story takes us away from Wakeman’s familiar Shanghai terrain and eventually to the wartime KMT capital of Chungking. It also opens up the fascinating and historically resonant topic of Dai’s co-operation with the American military. In the innocent days of World War Two, Commodore Miles could say of him that ‘he might have been a skunk and all those things,’ but ‘I liked him.’ Wakeman, however, writes with the moral clarity of hindsight – after the American adventures in Vietnam, Guatemala, Chile and Argentina.

The truth about SACO – the Sino-American Co-operative Organisation, jointly run by Miles and Dai, and based in Chungking from 1942 to 1945 – was long obscured by two factors. One was American naivety. According to Wakeman, the 2500-odd American instructors who served in the organisation had little idea whom they were training or what their students really did (or, for that matter, which student was which). A second screen was erected by the Chinese Communists, who made SACO a staple of their anti-American message. CCP propagandists portrayed heroic underground Communists battling the KMT in and around Chungking, and the brutal tortures visited on political prisoners at the SACO camp in a place called Happy Valley, where Dai’s minions exercised their sadistic skills under the eyes of American advisers. With the assistance of the voluble and untroubled Commodore Miles – Wakeman draws heavily on his published memoirs and personal and official papers – Spymaster shows that this portrait, though incomplete, is largely true. SACO started as a project to obtain weather reports from the Japanese-occupied Chinese interior to aid American pilots. It evolved into a plan to train Chinese guerrillas to harass enemy forces, for which the Americans supplied weapons, communications equipment and training. The American military commander in Chungking, General Joseph Stilwell, and his successor, Albert Wedemeyer, were against the project, as were the State Department and the OSS. They all had moral qualms about co-operating with Dai; and in any case doubted his ability to deliver anything useful.

Yet Miles won the bureaucratic battles. He even added what he called ‘a sort of "pilot” FBI school’ run by former FBI, Secret Service and New York Police Department officers, who taught the Chinese about ‘weapons, lie detectors, police dogs, shackles, truth serum, ballistics kits’ and other tools of ‘surveillance, interrogation and intelligence evaluation’. The students, according to Wakeman, included ‘the most horrendous of the Nationalist regime’s secret police units charged with the persecution – including the kidnapping, torture and killing – of "progressive” elements throughout Free China during the years that SACO flourished’. Wakeman does not establish whether American instructors actually observed or participated in torture sessions at Happy Valley, but he leaves no doubt that such sessions regularly occurred. SACO, he concludes, provides ‘a sinister precedent for similar secret service activities later under the auspices of the Central Intelligence Agency’.

One of the book’s most valuable contributions is the deeper understanding it provides of the pathologies of Chiang’s rule. Even when he was in deep political and military trouble, he retained a starchy remoteness and an aura of invincibility that convinced his subordinates he knew what he was doing. Neurotic about neatness and punctilio, he was demanding and unpredictable, alternately doting and punitive, in a way that kept his followers eager to divine and serve his wishes. Although Chiang’s disastrous career afforded many occasions for self-doubt, he seems never to have suffered from it. In all these respects he resembled his rival Mao Zedong, different as the two men were in many other ways.

It is hard to say why Chiang trusted Dai so nearly completely. Dai knew all the dirtiest secrets of his rule. To him, however, they were not dirty secrets but necessary acts of will. Chiang and Dai came from the same province and from similar, relatively humble social backgrounds, and were only ten years apart in age. When Dai demonstrated his resolve to give lifelong fealty to Chiang, Chiang knew that the commitment was real. Dai shared his mystical nationalism, his faith in the use of force, his belief in the leader principle and his illusion that iron will conquers all. Both valued personal loyalty more highly than any ethical ideal. In this sense, both were gangsters. As the rest of Chiang’s regime crumbled, Dai’s network, for all its flaws, was the only instrument of control he had left.

Chiang and Dai trusted hardly anyone but each other, and never trusted each other fully. Thus the layer on layer of redundant organisational structures; the bifurcated lines of reporting, where half the information was passed up the official hierarchy and the other half up a secret channel; the competing police forces, some of them unaware of the existence of the others; the inner, outer and still-more-outer organisational layers of secret societies that were covers for still-more-secret societies; the inner sanctums that were not the true inner sanctums; the secret credos that were not the true secret credos; the gangsters who were really officials and the officials who were really gangsters; the incoherent marriage of military, fascist, underworld, modern technocratic and traditional knight-errant cultures in a self-defeating form of belief and activity that must in the end have been a mystery even to the men who set it up.