Spies: The Rise and Fall of the KGB in America (56 page)

Like Miller, Jack Fahy had moved from a life of privilege into the hothouse of radical politics in the 1930s. Born in Washington, D.C., in 1908,
he grew up in New York, where his father was senior partner of Walter J.
Fahy and Co., a stock exchange firm. After working for Senator George
Moses (R-NH) and campaigning for Herbert Hoover's election in 1928,
Fahy joined the family firm. The stock market crash of 1929 jolted him
out of Republicanism, and he joined the Socialist Party. Fahy was both
adventurous and peripatetic; at various times he attended New York University, the Institute of International Affairs in Geneva, San Marcus University in Peru, Black Mountain College in North Carolina, and Montana
State University, where he took courses in animal husbandry. He established several small companies, including a food business in Peru in 1933.
He went to Spain in 1937 to fight in the International Brigades but under
the auspices of the Socialist Party.109

Fahy was wounded in Spain and returned to the United States. He
quickly quarreled with Norman Thomas over Socialist Party policy toward the Spanish Civil War and publicly resigned, with a letter published
in the Communist Daily Worker. In the summer of 1939 Fahy met Miller,
and they set up the Hemispheric News Service. After a brief stint at the
CIAA, Fahy moved on to the Board of Economic Warfare where he held
a position as "Principal Intelligence Officer." In 1943, just as he was about
to move to the Department of the Interior to become chairman of the
Territorial Affairs Bureau, Congressman Martin Dies included him on a
list of government employees suspected of communism. He testified before Congress's Kerr Commission and claimed that his resignation letter
from the Socialist Party was "silly and foolish" and described his past association with Communists as a youthful misadventure. The commission
agreed, concluding that after 1938 he "returned to his affairs, has joined
no organizations, written no articles and made no speeches" and noted
that many persons had testified to his good character. It praised his "loyal
service" and concluded that he "has not been guilty of any subversive activity." Deciphered Soviet cables show that the Kerr Commission could
not have been more mistaken. Almost precisely when he was denying before a congressional committee any Communist involvement and proclaiming his divorce from political activity, Fahy was transmitting government documents to Georgy Pasko, secretary to the Soviet naval
attache in Washington and a Naval GRU officer. In January 1943 Naval GRU in Moscow approved a special cash payment to Fahy as recognition of his seivice.llo

Unlike his two partners in the Hemispheric News Service, Joseph
Gregg was not wealthy. The son of Russian immigrants, he was born in
Columbus, Ohio, in 19og as Joseph Greenstein. He attended Ohio State
University and held several jobs in the Midwest before moving to New
York to work for the Department of Public Welfare. In 1936 he snared a
position as a writer with the WPA. He met Fahy while both served as
truck drivers with the International Brigades in Spain. He joined Hemispheric News Service when it moved to Washington in 1941 and followed
it into the Rockefeller Commission."

In November 1945 Elizabeth Bentley told the FBI that Jacob Golos
recruited Gregg shortly after he began work for the CIAA and that she
began liaison work with him in 1942 and continued to be in contact with
him until well into 1944. She said he turned over enough ONI, Army
G-2, and FBI information on South America that came to his office that
in 1943 Golos gave him a Leica camera to photograph his material. Golos
liked to reassure his sources that their information went to the CPUSA.
In Gregg's case, she noted, she had once taken him to a private meeting
in New York to discuss Latin American affairs with Communist chief Earl
Browder. Bentley said that early in 1945 Joseph Katz told her that Gregg
"had become somewhat alarmed in passing on this information and felt
that, if this information was going directly to the Russians, he, as an American, was doing something he should not be doing. However, his Russian
contact was able to convince Gregg that as a good Communist he was
performing a service that any other good Communist would perform and
succeeded in convincing Gregg to continue with his activities. Jack subsequently told me that they were considering using Gregg as a courier or
liaison man in Washington, D.C., on behalf of the Russians .11112

KGB documents largely corroborate Bentley's account. An April 1944
report stated: "On "Maxim's" [Zarubin's] instructions "Mer" [Akhmerov]
attempted several times to turn "Dir" [Mary Price], "Koch" [Duncan Lee]
"Mirage," [Robert Miller], "Hare" [Maurice Halperin], and "Gor" [Joseph
Gregg] over to "Maxim's" operatives. But each time there have been obstacles: Helmsman's [Browder's] personal approval is needed, a probationer is too squeamish and fearful, equipment is needed for communications and so forth." Akhmerov indicated that it was Bentley who was
putting up the obstacles, and "it's imperative to insist to Helmsman
[Browder] that the probationers be turned over." And they were, including Gregg. By January 1945 a report by Gorsky, Washington station chief, listed Gregg as one of the agents being managed by Joseph Katz and
noted that Gregg was being groomed to be a "group leader" of other
sources. A late 1944 retrospective report by Vasily Zarubin, station chief
before Gorsky, summarized Gregg's role: ""`Gor" is Joseph. . . , a fellowcountiyman [Communist], who was with the Lincoln Brigade in Spain
and was described by "Sound" [Gobs] as a reliable and tested comrade.
He works in the Information Section of the Rockefeller Committee on
South American Affairs. He provided a lot of interesting documented
polit. information. He worked hard and was glad to do so. He photographed documents himself with a camera that we passed to him."'
Zarubin also noted that Golos had told him that Gregg "`didn't know that
he was working specifically for us [KGB],"' a situation with which Katz
had to deal when he took over direct liaison from Bentley. 113

Gregory Silvermaster, in partnership with his wife, Helen, and their close
friend Ludwig Ullmann, led a World War II espionage network drawn
from the CPUSAs underground in Washington with more than a dozen
government sources. Initially a CPUSA enterprise that reported to the
KGB via Jacob Golos and Elizabeth Bentley, starting in late 1944 it came
under direct KGB supervision.

The broad outline of the Silvermaster network has been known ever
since Bentley's defection. The Venona deciyptions also contain dozens
of KGB cables dealing with its activities and members. KGB documents
in Vassiliev's notebooks bring out matters that postdated Bentley's involvement and fill in details about Silvermaster himself that were only
imperfectly understood. Iskhak Akhmerov, chief of the KGB's illegal station, first met Silvermaster in mid-1944, and in August 1945 he sent
Moscow Center a biographical sketch:

He is 46 years old. Born near Odessa. Father-owned a stone quarry; previously-a plain worker. In 1905, during the Odessa pogrom, his family moved
to Harbin, Manchuria. At the age of 12, he enrolled at the English school in
Shanghai, and after graduating at the age of 15, he moved to the USA. From
1915 to 1g2o he studied at the University of California and later at the University of Washington in Seattle; he worked as a laborer, as a farm-hand, in shipyards, canneries, etc. In 1917, he took part in various student and Russian immigrant organizations and held Bolshevik views. He joined the Comparty
[Communist Party] in Seattle immediately upon its foundation in 1919. He
took part in the University movement and oth. groups during the general strike in Seattle, as well as in demonstrations by Russian immigrants. He wrote
articles for the Russian newspaper, which was financed by the "International
Workers Organization."

In 1g2o, Robert [Gregory Silvermaster] left Seattle because of his asthma
and went back to California, where he worked on farms and in oth. places.
From 1924 to 1931, he taught at a Catholic college in Oakland, California. At
the time, he did not maintain systematic ties with the Comparty. In 1932, he
got his PhD from the University of California, where he was teaching at the
time. That same year, he renewed ties with the CP under an assumed name.
He worked with George Harrison, who published one Chinese and two Japanese trade union newspapers. In 1933-35, he worked for various government
agencies of the state of California and worked for George on certain confidential matters. He met "Helmsman" [Browder] in 1934, and during the general
strike in San Francisco, he gave him cover and acted as his courier during his
stay in San Francisco. He performed the same functions concurrently for the
secretary of the Japanese CP-Okano.

In 1935, he relocated to Washington to work in government agencies: the
Resettlement Administration .... the Maritime Labor Board .... the Farm
Security Administration, and the Board of Economic Warfare. In 1935-39, on
Helmsman's advice, he neither made contacts in Washington nor in NY (that
is, contacts with the CP). On "Helmsman's" advice, "Robert" took part in the
liberal movement. Before going to prison, "Helmsman" gave Sound [Gobs]
permission to approach Robert with the aim of expanding our work in Washington. Robert soon became the handler of a group consisting of Peak [Frank
Coe] and Sachs [Solomon Adler], with the subsequent addition of Aileron
[George Silverman] and Richard [Harry White]. The latter two were in contact with anoth. group, which conducted analogous work. 114

The most important member of the Silvermaster network and the most
highly placed asset the Soviets possessed in the American government
was Harry Dexter White, assistant secretary of the treasury. More than
two dozen KGB documents, spanning 1941 to 1948, spell out his assistance to Soviet intelligence. 115

White was born in 1892 to a family of Lithuanian Jewish immigrants,
his father a successful entrepreneur who built a small chain of four hardware stores. He served in World War I as an Army officer, graduated from
Stanford University, and received a PhD from Harvard. White joined the
Treasury in 1934 and rose swiftly, becoming director of the Division of
Monetary Research in 1938, assistant to the secretary of the treasury in 1941, and assistant secretary of the treasury in 1945. Secretary of the
Treasury Henry Morgenthau's extensive diary shows that no individual
had greater influence on him in the late 193os and during World War II
than White. He and John Maynard Keynes were also the chief financial/technical architects in 1944 of the historic Bretton Woods monetary
agreement, which structured international monetary policy for decades
to come. President Truman appointed White the first American director
of the International Monetary Fund (IMF) in 1946. Vice-President
Henry Wallace regarded White as a trusted adviser and confidant and
stated that had he become president, White would have been his secretary of the treasury.116

New KGB materials fill in the gaps in the existing body of evidence
regarding White's participation in espionage. Whittaker Chambers stated
that in the mid-1930s White had been a source for his GRU-CPUSA network. He had provided information both in oral briefings and in handwritten summaries, one of which Chambers hid in 1938 and produced in
1948, along with State Department documents provided by Alger Hiss.
Chambers described White as more of a Soviet sympathizer than a disciplined CPUSA member, someone who cooperated with the party underground to the extent he wished but didn't take orders, an attitude that
occasionally irritated Chambers's GRU superior. White's independence
continued when he came into the KGB's orbit in the early 1940s. In 1944,
Vasily Zarubin, in the report on his tenure as New York KGB station chief,
wrote: ""`Jurist" [White] is rough around the edges and a lot of work has
to be done on him before he will make a valuable informant. To date he
has reported only what he deemed necessary himself."' Earlier Moscow
Center had told the KGB New York station: "'According to information
we have received, "Jurist" [White] at one time was a probationer [agent]
for the neighbors [GRU]. We will communicate detailed information
about him separately. He should, at last, be properly recruited for work
and taken on for direct communications. In view of "Jurist's" value and
the necessity of adhering to the rules of covert work, we consider it advisable to assign a special illegal to work with him."'117

Moscow Center assigned a high priority to establishing direct access
to White and wanted to remove Silvermaster as an intermediary, but this
goal was difficult. First, as Elizabeth Bentley told the FBI in 1945 and as
Venona decryptions confirmed, Silvermaster fiercely resisted being removed from the loop, jealous that it diminished his importance. Second,
given White's high standing in Washington, direct meetings with a Soviet
contact required great care. The KGB was not, however, concerned that White himself was under an illusion that his information only went to
the Communist Party. Akhmerov reported: "`When asked what `Jurist'
[White] knew about `Pal's' [Silvermaster's] work, the latter replied that
J' knows where his info. goes, which is precisely why he transmits it in the
first place."' A Soviet operative held the first direct covert KGB contact
with White in July 1944. White answered a series of questions about
American foreign policy, and the report on the meeting went on to say:
"As regards the technique of further work with us jurist [White] said that
his wife was ready for any self-sacrifice; he himself did not think about his
personal security, but a compromise would lead to a political scandal and
the discredit of all supporters of the new course, therefore he would have
to be very cautious.... Jurist has no suitable apartment for a permanent
meeting place; all his friends are family people. Meetings could be held
at their houses in such a way that one meeting devolved on each every 45 months. He proposes infrequent conversations lasting up to half an
hour while driving in his automobile." Silvermaster, however, was angered
by the meeting, and his hostile reaction to having been bypassed appeared to have caused the KGB New York station to defer additional direct contacts for a time. 118