Spies: The Rise and Fall of the KGB in America (39 page)

Throughout his long career as a journalist Spivak always denied being
a Communist, insisting that he was an independent motivated by antifascism. But the FBI was convinced by December 1945 that he was a secret member of the CPUSA and carried out a variety of covert tasks for
the party, as well as for Jacob Golos, the CPUSAs liaison with Soviet intelligence. In 1952 former CPUSA official John Lautner identified Spivak as a secret member of the party's security apparatus. Evidence of his
secret Communist ties caused some researchers in retrospect to question Spivak's role in the "Whalen documents" forgery. In 1930 New York
police commissioner Grover Whalen announced to the press that he had
obtained a trove of internal documents from the New York offices of Amtorg, a company that functioned as the semi-official international trade
agency of the Soviet Union. They revealed that dozens of Amtorg's staff
were Soviet spies and that Amtorg was little more than a front for Soviet
intelligence. Within a few days of Whalen's production of the documents,
however, Spivak proved that they were forgeries (rather crude ones) and
even identified the New York printer who had prepared the fake documents, although who had commissioned the printer to do so remained
unclear. Spivak's demonstration discredited Commissioner Whalen and
also tended to rebut widespread rumors that Amtorg was a front for Soviet espionage. The speed with which he revealed the forgeries convinced
some skeptics that Spivak knew they had been foisted on the police to
embarrass them.

The argument that the Whalen forgeries had been a clever Commu nist plot to discredit naive anti-Communists rather than an incompetent
anti-Communist plot to taint Amtorg with espionage was plausible. However, that view is likely mistaken. A KGB officer in New York reported on
the Whalen documents in three messages in May and September of 1930
and also sent Moscow Center copies of the forgeries, the notes taking up
more than three pages. The messages indicated no prior knowledge of the
forgeries by the KGB or any connection with their production or link to
Spivak's exposure of them. Instead, these internal KGB communications
displayed indignation at the forgeries and speculated that they had been
prepared by exiled anti-Bolshevik Russians or were "closely tied to the
crusading campaign against the USSR launched by the Pope." If the KGB
was unaware of the forgeries, it is unlikely that any Soviet or Communist
agency was involved. Although not to the extent suggested by the Whalen
forgeries, the KGB, GRU, and Comintern did use Amtorg as a cover for
covert operations. It is unlikely that any of these agencies would have
launched a preemptive disinformation attack without consulting the other
agencies that might be affected. It is also unlikely that the CPUSA would
have considered initiating such an operation, which affected Soviet interests, without informing Soviet authorities.28

At the same time that he was working to ferret out Nazi sympathizers, Spivak was, however, cooperating with the KGB. There is no indication when he became a source, but one 1935 report suggests he had been
providing information on Trotskyists as early as 1932. A 1948 KGB memo
also underscored his use against the Trotskyist target: "`Grin'-John Spivak, journalist, used on the Trotskyites until '41.
"29

The KGB also kept an eye on the activities of German intelligence in
the United States, and Spivak's investigation of pro-Nazi groups proved
useful for that task. His work on American anti-Semitism in 1934 and
1935 enabled Spivak to funnel the KGB details about Nazi financing of
German-allied groups and connections between native fascists and the
German government. One report noted that "Grin" was "a popular,
widely known journalist, a Jew." Many of his sources, including Treasury
Secretary Henry Morgenthau's niece, Josephine Pomerance, worked with
him "`without knowledge of his connection to us."' (In other words,
Pomerance thought she was only assisting an anti-Nazi journalist and was
unaware of his link to Soviet intelligence.) The KGB also noted that Spivak "receives materials from Prince" (the ADL and McCormack-Dickstein Committee consultant), who told him "that he is the only journalist
to whom he is willing to give the numerous materials he has about the
Nazis." Another Spivak source, cover-named "Zero," worked for the U.S. Committee on Investigation of the Munitions Industry (the Nye Committee) and gave him numerous documents on chemical arms, munitions
production, and technical data on specific weapons: she "`doesn't even
know that she works for us."' She was valuable enough, however, that the
KGB decided to end the indirect relationship and "`in the next few days
we will be taking `Zero' from `Grin' and including her in our network.' "3°

Despite Moscow's earlier interest in his material, by mid-1935, it
rethought his usefulness, concluding that Spivak's "potential has gone
down, because the Nazis are reorganizing their work in light of the Dickstein Committee's activities and have taken several of their people out of
the USA." One of Spivak's contacts, a detective cover-named "Courier,"
tried unsuccessfully to blackmail him, raising fears that he might be exposed as a Soviet agent. On the other hand, Moscow mused about trying
to recruit Spivak's contact, Frank Prince, who had information about the
flow of German money into the United States, for propaganda work. By
August 1935 Moscow had concluded that Spivak was no longer particularly valuable and ordered him deactivated. One positive result of his
work had been "Zero's" recruitment; she was turned over to William
Weisband, one of the KGB's several American agent handlers and couriers (see chapter 7).31

Spivak went to Europe in October 1935 to investigate Nazi activities
abroad. Before leaving, he obtained contacts from high officials in the
CPUSA. In Germany he worked closely with Martha Dodd (see chapter
8). Whether or not he informed Soviet intelligence of his investigations
or turned over data on German underground organizations is not clear,
but at some point the KGB renewed its contact with him, and a 1941
KGB memo listed him among the New York station's most valuable
agents. However, he was again soon deactivated for unspecified reasons.
But in 1943 a Moscow Center report directed that KGB officers reestablish a connection with Spivak "`with whom we haven't worked for the last
two years."' He was to be used to gather information on the subjects he
had targeted in the past: "`Gestapo agents on U.S. territory, in particular,
agents working in Ukrainian and White Guard organizations. Materials on
the work of Japanese intelligence organizations in the USA.'"32

Elizabeth Bentley told the FBI in 1945 that while she had never met
Spivak, she knew that Jacob Golos had used him extensively. Golos had
paid his traveling expenses and sent him to Mexico and California on assignments dealing with Japanese espionage and to Texas to investigate
Representative Martin Dies, the fiercely anti-Communist chairman of
the House Special Committee on Un-American Activities. After Golos's death, one of her KGB contacts, Iskhak Akhmerov, spoke to her about
Spivak's assistance. In Venona's decrypted KGB cables there are three
messages dealing with Spivak. In May 1944 he reported something about
Soviet defector Victor Kravchenko, and he visited the Soviet Consulate
to convey a letter to KGB officer Alexander Feklisov from Joe North, editor of the New Masses, asking for financial assistance.33

Spivak continued to undertake covert tasks for the Communist Party
in the early 1950s. In April 1953 he and another secret party operative,
Leon Josephson, burglarized the law office of O. John Rogge, David
Greenglass's attorney, stealing documents later published in the Communist press to discredit Greenglass. During that decade he wrote frequently under various pseudonyms, but by the time he wrote his autobiography, A Man in His Time, in 1967, he ended the book criticizing the
socialist world (that is, the Communist bloc) for being "far from socialism," suggesting that he had drifted from party circles. Settling in Pennsylvania, he died on 30 September 1981.34

Frank Laverne Palmer was at least as valuable to the KGB as Spivak.
Never an open Communist, he gave Soviet intelligence entree to the
somewhat wider world of left-wing politics and enabled it to recruit several promising sources. Born in Corning, New York, in 1893, the son of
a rail freight conductor, Palmer completed a few years of college in Colorado and found work as a printer before becoming editor of the Colorado Union Advocate in 1922. In 1927 he joined other left-wing trade
union figures such as James Maurer (Socialist and president of the Pennsylvania Federation of Labor) and John Brophy (United Mine Workers'
leader) as part of an American trade union delegation to the USSR. Upon
their return, they co-authored a positive report, Russia after Ten Years,
brought out by International Publishers, the CPUSAs publishing arm.
Palmer secretly joined the CPUSA sometime after this trip.35

In the 1930s Palmer served as managing editor of Federated Press, a
left alternative to the Associated Press whose clients were mainly trade
union newspapers, and served as the chief editor of the radical journal
People's Press. He was also a KGB agent. His journalistic duties provided
him access to a variety of matters of KGB interest. For example, in October 1935 during a trip to Washington, he "found out information from
an employee of the Committee on Investigation of the Munitions Industry, without the latter's knowledge, about the DuPont company's system
of espionage." A friend, "Mary" (this may be simply her real name rather
than a cover name) was slated to provide him entree to some State Department employees, and he intended to take advantage of the close re lationship between Mary and her cousin, Congressman Maury Maverick, to keep up to date on congressional affairs. When Moscow decided
that it wanted to plant someone close to right-wing newspaper magnate
William Randolph Hearst, it sent this memo: "`It would be desirable to
gain an insider to Hearst who would be on close terms with the managing head of that concern. Find out in detail what, specifically, `Liberal'
[Palmer] could do to that end.' "36

Palmer was particularly useful in work directed against other leftwing organizations because Federated Press reporters covered their activities and had access to inside information about them. For example,
he was part of the KGB's anti-Trotsky offensive in the United States. Several memos from 1935-36 show that he provided details on people close
to American Trotskyist leader James Cannon:

"Liberal" [Palmer] gave information about Louis Francis Budenz, who used to
be the editor of the magazine "Labor Age" (where "Liberal's" wife worked).
..."Liberal's" conclusion: There are 3 or 4 people with information that is of
interest to us, all of whom are on close terms with Cannon and familiar with
current events in Europe. Everyone else-out of the loop, they know whatever is known to the general public. "Bearing in mind `Liberal's' potential,
we are conducting work with him on identifying the persons surrounding
Muste .... Cannon, and other Trotskyite `leaders' here, who, while not in
leadership positions, are nevertheless up to date on Trotskyite organizational
activities. -37

Palmer's journalistic access to left-wing organizations also assisted his role
as a talent spotter. In addition to recruiting I. F. Stone, his most notable
success was the aforementioned Louis Budenz, a veteran left trade union
activist and journalist. In the early 193os Budenz was an associate of Abraham J. Muste in the American Workers Party (AWP), a small independent
Marxist group. But when Muste led the AWP into a merger with the Trotskyists, Budenz, impressed by the CPUSAs shift toward what became
know as its "Popular Front" stance, joined the Communist Party. Like
Palmer, he also assisted the KGB's anti-Trotskyist operations. He quickly
became part of the CPUSAs senior leadership and rose to the position of
managing editor of the Daily Worker However, in 1945 he reverted to
the Catholicism of his youth and became a fierce anti-Communist
polemicist.
- - - - - - -- - - - -- - - -

Although his veracity was often challenged after his well-publicized
denunciations of former associates, the documents quoted in Vassiliev's
notebooks confirm Budenz's often-doubted participation in Soviet espi onage. A 1948 memo on the damage done to Soviet intelligence by defectors included Budenz as one of the renegades and identified five participants in Soviet intelligence who were potentially exposed to American
authorities by Budenz. One was Grigory Rabinovich, a doctor and KGB
officer sent to the United States in the 1930s under Russian Red Cross
cover to supervise penetration of the American Trotskyist movement. The
other four were Americans who had worked for the KGB. One was
Palmer, and the memo noted that he had assisted in recruiting Budenz.
The others were Zalmond Franklin, a veteran KGB courier, and two people, Robert Menaker and Sylvia Caldwell, deeply involved in the KGB's
anti-Trotsky operations (see chapter 8).38

When the KGB was rebuilding its American operations in 1933,
Palmer was listed among its "former sources" with whom contact needed
to be (and in his case was) renewed. Two of his earlier recruits were also
noted: "Through "Liberal" [Palmer]-Art. Kallet (mechanical engineer
at the National Bureau of Standards, and E. F. Schink, director of the
trade organization, Technic Research." In 1932 Kallet and Schink had
authored ioo,ooo,ooo Guinea Pigs: Dangers in Everyday Foods, Drugs,
and Cosmetics, a huge best-selling book that marked the advent of the
modern consumer movement. Both Kallet and Schink had backgrounds
as engineers, and in 1933 Kallet joined Schink's young organization, Consumer's Research, which tested consumer products for safety, effectiveness, and reliability. ("Technic Research" in the quote above was likely a
KGB officer's translation garble of an attempt to render "Consumer's Research" into Russian.)39

The brief note in the 1933 document does not indicate whether Kallet
and Schink were helpful after Palmer was reactivated. But Kallet remained close to Communist Party activists. By late 1934 relations between
Kallet and Schink had soured. Schink grew increasingly unhappy with demands by Consumer's Research employees for higher wages and union
recognition. And he came to suspect that a faction dominated by secret
Communists was attempting to take control of the organization he had
founded. In September 1935 the workers went out on strike. Schink and
his supporters retaliated with strikebreakers, armed guards, and charges
that the strikers were "reds." Kallet orchestrated a "public trial" of Schink
for betraying the workers, and he and the fired strikers went on to create
a new organization, Consumers Union. Arthur Kallet became director and
Frank Palmer a member of the board. (Kallet was also a contributing editor to People's Press, the radical newspaper edited by Palmer. )40