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In his long career, the art dealer Otto Kallir introduced the works of Egon Schiele and Gustav Klimt to the United States, popularized Grandma Moses and pioneered the restitution of Nazi-looted art to Holocaust victims. Several of the finest paintings on display at an exhibit at the Morgan Library this summer had passed through Kallir’s hands.

But in the spring of 1938, Kallir, then known as Otto Nierenstein and one of Vienna’s most prominent Jewish art dealers, found himself arranging the sale of a painting to perhaps history’s most sinister art lover: Adolf Hitler.

Previously undisclosed correspondence, buried for nearly three-quarters of a century in Viennese archives, show Kallir in the middle of an art deal that included some of the most baneful characters of the era, including Hitler, Nazi propaganda chief Joseph Goebbels, and Bruno Grimschitz, a Nazi curator at the Austrian Gallery. Hitler wanted Portrait of a Young Lady by Ferdinand Georg Waldmüller, one of his favorite painters. And Kallir, willing or not, was the dealer who got it for him.

Kallir did not profit from the sale, except to recoup on a loan he had made to the original owner. Yet the remarkable buyer raises a remarkable question: What does Hitler’s name appearing among a long list of clients, including the Guggenheim, the Museum of Modern Art and the National Gallery of Art, do to the reputation of one of the past century’s most successful dealers?

The answer? It depends on whom you ask.

Supporters of Kallir, chief among them his granddaughter, Jane Kallir, an internationally recognized Schiele expert, and curators at Ronald Lauder’s Neue Galerie, which is named after Kallir’s Viennese showroom, say the recently unearthed letters only reinforce Kallir’s renown by revealing a man who acted as honorably as possible when thrust by the cruel events of history into an impossible situation. The documents, they argue, show Kallir wanted little to do with the sale and did not profit from it. With Hitler’s annexation of Austria imminent, and Nazi sympathizers popping up all around him, survival was foremost. Denying a painting coveted by Hitler himself could be a fatal mistake.

Kallir’s detractors, however, say that his record is now tarnished, and the provenances of scores of masterpieces sold to Christie’s and Sotheby’s, not to mention the world’s leading cultural institutions, are now shadowed in doubt. Or so argues Ray Dowd, the New York lawyer who dug up the letters, and who is currently arguing in New York’s Southern District Court over the contested provenance of a Schiele drawing once sold by Kallir.

If the two sides agree on one thing it is this: The correspondence shines a small light on a murky period darkened by decades, and offers a rare glimpse at one of the most stressful periods in the life of an art dealer faced with the upturning of his world and the potential loss of all the paintings he loved in it. And all of that turmoil could be traced back to the failed watercolorist who became the leader of the Third Reich. It is no surprise, then, that Kallir wanted to keep his role in selling Hitler a picture a secret. And long after his death, in 1978, he succeeded in doing so. 

“YOU WANT TO MOVE ON,” said Jane Kallir in her office at the Galerie St. Etienne, where drawings by Schiele, Klimt and Oskar Kokoschka hang on the walls. She said her grandfather had told many stories about his run-ins with the Nazis, including burning what he thought were original drawings by the Führer. (They turned out to be forgeries.) “This story doesn’t have a happy ending.”

“This is an example of the kind of conditions at that time and the kind of pressure that people were under and they had to say okay, okay I’ll do anything you want in order just to get out alive,” added Hildegard Bachert, a Jewish art dealer who, like Kallir, fled the Nazis. For nearly 40 years, she assisted Kallir at the Galerie, where she still works. “Kallir had to get out.”

The correspondence, consisting of typed and handwritten notes and letters between Kallir and the Waldmüller portrait’s owner, a collector named Anna von Vivenot, have been held for decades in Vienna, first in the Neue Galerie’s archives and then at the Austrian Gallery in the Belvedere palace. They were discovered by a researcher working for Mr. Dowd. Mr. Dowd has doggedly pursued any lead, no matter how seemingly tangential or faint, in an effort to prove that Kallir and his gallery sold art looted from Jews, including one of his clients.

“Showing a relationship that goes from Otto Kallir to Adolf Hitler would turn the entire Austrian and German Expressionism art world on its head,” Mr. Dowd said. “This blows a hole in [Kallir’s reputation] and we will see the house of cards start to crumble.” So far, Mr. Dowd has failed to prove anything in court, and Ms. Kallir has referred to his various subpoenas as a “witch hunt.” Mr. Dowd rejects the charge. “I am defending a lawsuit. Conducting a witch hunt against Otto Kallir is the furthest thing from my mind and utterly absurd,” he said.

This is not the first time that Kallir’s reputation has been questioned as a result of his associations in Austria. In November 1941, J. Edgar Hoover himself ordered an investigation into rumors that Kallir, who was active in Austrian refugee politics, had Nazi connections. Their report was inconclusive, but a subsequent report by the precursor of the C.I.A. exonerated him of any and all wrongdoing.

Then, as now, all the controversy circled around a Waldmüller portrait: one of the fair-skinned and languid young women whom the artist often depicted wearing bemused expressions and billowing white dresses.

This is the painting Hitler wanted.

“Hitler believed that Waldmüller and others were underappreciated, undervalued, and that some day they would be in museums and regarded like a Rembrandt,” said Jonathan Petropoulos, author of Art as Politics in the Third Reich and The Faustian Bargain: The Art World in Nazi Germany. “Waldmüller is definitely a favorite painter of Hitler and other Nazi leaders.”

In 1937, Kallir borrowed the painting from von Vivenot for an exhibit in the gallery of Friedrich Welz, a Salzburg art dealer, who later revealed himself as an enthusiastic Nazi supporter. As collateral, Kallir gave von Vivenot the painting’s insurance value of 2,000 Austrian schillings, according to the documents. Plans for the exhibit fell apart, and Kallir tried to return the painting and reclaim his money.

But with the Nazis threatening to invade Austria, von Vivenot stalled, and on March 11, 1938, hours before Hitler’s troops marched into Austria, Kallir begrudgingly extended the deadline on the loan.

“I need the money,” Kallir wrote.

The situation in Austria was becoming dire. Over the next month, Nazis arrested tens of thousands of Austrians and stripped Jews and political opponents of the Anschluss of their voting rights. Kallir, a financial backer of the deposed chancellor, Kurt Schuschnigg, was in trouble on both counts. On April 10, Austrians ratified their annexation by Germany with a nearly 100 percent vote.

The balance of power had dramatically shifted, and Kallir had an arrest warrant against him for financially supporting Schuschnigg. He made plans to flee.

On April 13, as Kallir packed his belongings, booked a train to Switzerland and made arrangements for his longtime secretary to take over his gallery—a so-called “friendly Aryanization”—he received another letter from his debtor. Now von Vivenot demanded the painting be sold for 6,500 schillings, 4,500 schillings more than its original price. And she had a specific buyer in mind. “On behalf of my mother, I am giving you the small Waldmüller portrait ‘Young Girl,’” wrote von Vivenot’s son in the letter. He concluded, “It is a precondition that the painting becomes the possession of Imperial Chancellor Adolf Hitler.”

IT'S UNCLEAR FROM THE LETTERS how Hitler’s name was first introduced into the deal. Ms. Bachert, Kallir’s friend and colleague, has a theory.

“[Nazi curator] Grimschitz probably said he would pay him 6,500 schillings for the picture,” Ms. Bachert, 86, said. “He negotiated with Kallir, and put him under enormous pressure.”

Kallir wrote von Vivenot four days later informing her that the picture had arrived into Hitler’s possession.

“Dr. Grimschitz, the commissarial director of the State Galerie, personally took the painting to Berlin where, according to information from Dr. Grimschitz, Dr. Goebbels acquired it in order to present it to the Imperial Chancellor as a gift,” Kallir wrote on April 17, 1938. “These are the facts and circumstances which you, Madame, wished to receive in writing.”

When von Vivenot demanded her profits from the sale, Kallir explained that he had not yet received any of the money and that he resented von Vivenot’s son hassling him. Finally, on May 11, 1938, von Vivenot, in a looping script, confirmed the receipt of her payment of 4,500 schillings. Kallir had subtracted the 2,000 schillings she owed him. The unsavory business was done.

Within weeks, Kallir fled from Vienna to live in Lucerne and Paris before arriving in New York on August 22, 1939, aboard the S.S. Ile De France with his wife and two children. That same year he opened the Galerie St. Etienne, where he would eventually give Klimt and Schiele their first one-man shows. He became a leading figure in the Austrian refugee movement.

“Otto Kallir introduced Egon Schiele and Gustav Klimt to an American audience at a time when there was very little interest in Austrian and German art,” said Renee Price, director of Mr. Lauder’s Neue Galerie New York. “He was a true pioneer who systematically created a market for these artists.”

The Hitler sale seemed to be buried behind him.

But Kallir’s involvement in refugee politics earned him enemies. A whispering campaign resulted in a blind item published in the Washington Daily News on November 28, 1941, claiming Kallir was an “agent for Hitler and Mussolini” and “procured the favorite Waldmuellers [sic] and Alts for Der Feuhrer.”

The article, according to his family, caused Kallir to suffer from a heart attack soon after it was printed.

“I remember, I was there,” Ms. Bachert said. “It was awful.”

Considerably more disconcerting was that, within a week, Kallir had also come under F.B.I. scrutiny, with Hoover ordering his agents to look into the matter.

“It is desired that the New York Field Division make an appropriate inquiry concerning subject Nierenstein to determine whether he is engaged in activities inimical to the best interests of this country.”

One Austrian refugee in particular, a former propaganda officer named Willibald Plöchl, repeatedly denounced Kallir to the F.B.I. He was later outcast from the refugee group after an unsuccessful power grab. His nephew Gerhardt Plöchl recently published a book in Vienna with the goal of rehabilitating his uncle’s reputation. The book has been a source for Mr. Dowd.

That Kallir was the target of an investigation is far from incriminating.

“They would oftentimes open a case, and many, many, many times it was just an unsubstantiated rumor or someone trying to get back at somebody,” said Greg Bradsher, the senior archivist with the National Archives and Records Administration who oversaw the agency’s Holocaust assets project. “And many times, many, many pieces of paper can be documented, and at the end there’s nothing.”

The investigation lasted for more than a year. Interviews by agents in three field offices yielded hundreds of pages of documents, many marked secret, in an effort to determine whether Kallir was a threat to the war effort. They never reached a conclusion, but in 1942, the Office of Strategic Services, the wartime intelligence agency that would later become the C.I.A., judged Kallir innocent.

“These attacks were not justified,” the report concluded.

“This was the most precarious moment for a Jew, because anything that went wrong and you’d be sent to a concentration camp,” Ms. Kallir said. “I can’t imagine what it was like to endure the day-to-day persecution and humiliation and compromise that you had to endure under those circumstances.”

Or as her grandfather put it in his last correspondence to von Vivenot on April 17, 1938: “The entire matter is also very unpleasant for me.”