Spies: The Rise and Fall of the KGB in America (40 page)

There were signs that the KGB had become dissatisfied with Palmer's work in 1935. One memo complained that he and John Spivak were
"crossing paths and could expose one another." The memo described
Palmer as a "failed agent, since people approach him on their own initiative." ("Failed" in this case meant his links to Soviet intelligence were
known to too many people.) The memo stated that consideration had
been given to deactivating Palmer and Spivak, and they were to be "excluded from the estimate for '36," indicating that no funds would be included for their secret stipends.41

Despite these misgivings, however, the KGB continued its relationship with Palmer. While still with Federated Press, in 1937 Palmer moved
to Chicago to help start a Communist-aligned newspaper, the Midwest
Daily Record, where he worked closely with its managing editor, Louis
Budenz. (Whether it was at this time or earlier that Palmer linked Budenz
to the KGB is unclear.) A KGB report noted that one of its officers visited him there, and "thanks to Liberal [Palmer], one of the workers in
London was given a cover (he was sent a reporter card and an official letter with credentials." Sometime later that year, Palmer broke politically
with the CPUSA for unspecified reasons but appeared to have continued
his association with KGB. A 1941 Moscow Center report on intelligence
activities in the United States listed "Liberal" as "connected with us at
present" and among the twenty-two "most valuable" agents of the KGB
American station, but there were no details about his activities. However,
sometime in 1941 or early 1942 the KGB lost contact with Palmer. In
mid-1942 the KGB New York station located him, but for unspecified
reasons Moscow Center "gave instructions not to re-establish the connection." Shortly afterwards, the cover name "Liberal" was transferred to
a new agent, Julius Rosenberg, and Palmer was not mentioned for the
remainder of World War II. Although the KGB deactivated Palmer, he
remained in good standing. As noted, Moscow Center's 1948 memo on
KGB assets exposed by defectors listed Palmer as among those compromised by Louis Budenz's 1945 defection. It also, however, suggested that
Soviet intelligence was no longer in touch with Palmer, noting that his
place of employment was "unknown."42

While Louis Budenz identified many Communists in his testimony,
his only public mention of Frank Palmer was as a defender of the
CPUSAs civil liberties. He may, however, have informed the FBI of
Palmer's role because his one-time recruiter apparently cooperated with
the FBI to some extent. Investigating Budenz's charge that Bernard
Schuster had been in charge of anti-Trotskyist work in New York from
1936 to 1938, J. Edgar Hoover ordered his agents to show Schuster's pho tograph to "Frank Laverne Palmer who was instrumental in launching
Louis Budenz into his Soviet espionage activities." A follow-up message
made reference to Palmer's FBI file, and its title designation indicated
that he had been investigated for espionage. Another FBI report noted
that Palmer had admitted engaging in espionage for the Soviets between
1931 and 1938 and working with KGB officer Iskhak Akhmerov. He was
never tried, he never testified to a congressional committee, no one ever
publicly accused him of espionage, and his role in Soviet espionage has
gone unnoticed by historians.43

1. F Stones Weekly was modeled on an earlier iconoclastic periodical of
independent left journalism that started publishing in the 1930s: In Fact,
the brainchild of George Seldes, a radical journalist for more than eighty
years. Like Stone, Seldes and his In Fact co-founder, Bruce Minton, had
unacknowledged links to the CPUSA and Soviet intelligence. Born in
New Jersey to immigrant Russian parents in 1890, Seldes worked as a
war correspondent beginning in 1917 and covered the Soviet Union in
the early 1920s. But Soviet authorities expelled him and several other reporters when they discovered they were evading censorship regulations.
Moving to Italy, Seldes filed press reports that implicated the Mussolini
regime in political assassination, and Fascist officials booted him out of
Italy as well. The left-wing slant of his work as a correspondent for the
Chicago Tribune increasingly angered its publishers, and he resigned in
1928 to write You Can't Print That, a harshly critical study of press bias
and censorship. Other exposes followed, and he also covered the Spanish Civil War for the New York Post. Returning to the United States in
1940, Seldes launched In Fact in partnership with Bruce Minton. The
publication eventually gained more than 175,000 subscribers. It combined muckraking articles, including the first on the link between cigarettes and cancer, with left-wing polemics about the dangers of fascism.
In Fact lost much of its audience in the early Cold War and ceased publication in 1950, but Seldes continued to turn out a stream of books. He
testified in executive session before Senator Joseph McCarthy's Senate investigating committee in 1953. He published his autobiography, Witness
44
to a Century, when he was 96 and died in 1995 at the age of 104.

Seldes was unequivocal when he appeared before Senator McCarthy's
committee. Pressed about membership in the CPUSA, he vehemently
denied it and also denied Louis Budenz's charge that he was under Com munist Party discipline. When he and Minton had started the magazine
in 1940, he claimed he had no idea that his partner was a Communist
and found out only when the party publicly announced his expulsion in
1945. Seldes presented himself as a critic of the Soviet Union and blamed
the demise of In Fact on his increasingly anti-Soviet writings after World
War II; "I began writing a series of articles against Moscow. The result
was that many of my readers, whom I realize must have been Communists, canceled subscriptions." Assuaged by Seldes's agreement that North
Korea was an aggressor and his denials of party membership, McCarthy
did not bother to have him testify in public.45

Seldes lied. He had been a member of the CPUSA. In the spring of
1940, the KGB New York station informed Moscow:

"In order to activate our station's political work, particularly in view of the beginning of the presidential reelection campaign (activization of the internal political life of the USA), we have decided to identify, through `Sound' [Gobs],
the most qualified, proven American newspaper workers, who have interesting
connections and resources for covering the behind-the-scenes activities of political party leaders as well as of individual financial groups, Roosevelt's administration, individual departments, etc. The head master of the local fellowcountrymen [Communist Party] recommended the two aforementioned
individuals through Sound: Robert Miller and George Seldes. The former has
only just applied for membership in the organization (meaning a secret enrollment), while the latter is a longtime fellowcountryman [Communist], who is
listed on a special register.... They both run independent newspaper agencies
(financially well-off and independent), which we could put to successful use."

"The head master of the local fellowcountrymen" at the time was Earl
Browder. Jacob Golos ("Sound") was the CPUSA liaison with Soviet intelligence. "Special register" was a term for a secret roll kept by the
CPUSA for Communists whose party membership was not through the
usual party organization (that, too, was secret). Such members were not
assigned to party units and were kept isolated from other recruits, and
only a small number of senior party officials knew of their membership.46

While there is no further mention of recruiting Seldes, his partner,
Bruce Minton, was recruited and actively used. Minton continued to
work openly on party projects while editing In Fact, serving as an editor
of the CPUSAs literary journal, New Masses. As for his work with Seldes,
the KGB New York station informed Moscow that it had been told this
was CPUSA work: "On assignment from Browder, he issues the bulletin
`In Fact' together with Seldes." Minton was, however, more than just a se cret Communist journalist; he was deeply enmeshed in the Communist
Party underground and was one of its links to the KGB.47

Minton had been born Richard Bransten into a wealthy California
family. He married an even wealthier woman, Louise Rosenberg, heiress
to a San Francisco produce fortune, and dabbled in the movie industry
as a screenwriter. After their divorce, he moved east and assisted in editing New Masses under the name of Bruce Minton. He had joined the
CPUSA during the San Francisco dock strikes of 1934, which is when he
probably met Nathan Gregory Silvermaster, who served as a courier for
Earl Browder during that period. When Silvermaster arrived in Washington in 1935, on Browder's advice he dropped public Communist activity and confined his open political activities to conventional liberal
causes. Just before going to prison on a fraudulent passport charge in
1940, Browder gave Golos permission to approach Silvermaster in order
to expand CPUSA intelligence activities in Washington. Golos, in turn, assigned his old friend Minton as liaison to Silvermaster and the group of
mid-level government officials, all secret Communists or ardent Soviet
sympathizers, he was assembling.4s

In a report he wrote on Minton, Golos listed "Bruce's primary contact
-Gregory Silvermaster, an economist at the Treasury Department."
While he juggled his work for the New Masses and In Fact, Minton also
collected material that Silvermaster had accumulated from his contacts
and fellow agents in the government and carried it to New York for Golos,
who then passed it on to the KGB New York station. Beginning in mid1941, a steady stream of material reached Moscow through Minton.
From July through October 1941 seven reports were received from "In-
formator" (Minton's cover name) detailing what senior officials in Washington knew about a wide array of topics. In July the KGB New York station told Moscow it had received from Minton reports "On the average
number of bombers used by Britain for nighttime and daytime raids on
Germany in the three weeks preceding 13 July of this year.... On the
Japanese government's order regarding the departure of Japanese families on a private basis from the U.S.... On the export of German currency, in the millions, to the U.S." In August it received a Minton report
on statements Washington officials had received from the U.S. military attache in London: "`1) German troop morale in the area of Pskov is poor;
z) the British have requested information from their military mission in
Moscow to use in planning their calculations for a two-to-three-year war;
3) the Germans recently sent from West. Europe four groups of long range bombers with a full bomb load for raids on Moscow; 4) the British
Air Ministry believes that the bombers attacking Moscow are flying out
of airfields situated 250 miles west of Smolensk."' Minton also reported:

At lunch on 31 July Knox proposed a wager that the Germans would occupy
Moscow, Leningrad, Kiev, and Odessa by 1 September. Morgenthau took the
wager. On i August he announced this to his colleagues. Sullivan (Morgenthau's deputy, a conservative) backed Knox. Consul General Foley sided with
Morgenthau. Colonel Gunter said that Soviet commanders are well trained
but "unpolished," like the French. He argues that the Germans will soon
break through in the south and north from Smolensk and will encircle Moscow. He obviously obtained this information from his friend, the German attache in Washington.

Minton also forwarded reports received by senior American officials on
FDR's policy on assistance to the USSR and Morgenthau's positive influence on him, opposition from the War Department to sending war materiel to the USSR, evaluation of Soviet anti-aircraft defenses, German
plans to develop its navy, FDR adviser Harry Hopkins's private impressions from his trip to Moscow, the discussion in the American cabinet
meeting prior to presidential special envoy Averell Harriman's departure
for Moscow, the position of Secretary of Commerce Jesse Jones on financial assistance to the USSR, and more. Minton was the courier for
these reports, and likely all of them originated with the CPUSA-based
network led by Gregory Silvermaster.49

In late 1941 the KGB sent Vasily Zarubin to the United States to take
charge of its American operations. On 27 November 1941 Moscow Center sent a cable to him in New York summarizing its view of the chief networks available to him and what should be done with them. (Zarubin was
then in transit, apparently not reaching New York until January 1942.)
Reflecting satisfaction with the reports it had been receiving, Moscow
Center stressed the need to develop Minton and Silvermaster's group
due to its access to "Cabinet departments and the White House." Moscow
Center sent the following information to Zarubin:

""Informator's" [Minton's] and "Pal's" [Silvermaster's] group. This group,
besides these two sources, consists of the following: "Jurist" [Harry Dexter
White], "Peak" [Frank Coe], "Polo" [Ludwig Ullmann] and "Sachs" [Solomon
Adler], and the courier, "Pal's" wife.

"Informator," as a courier, requires meticulous work in training him to get
accustomed to systematizing the materials he processes and teaching him the operational techniques of meetings, obtaining materials, and receiving verbal
messages. Continue to use him on the communications line with "Pal" and simultaneously groom him as a future deputy station chief.

"Pal." Future use of him should be directed toward studying the possibility
of recruiting [Lauchlin] Currie and thereby infiltrating Roosevelt's immediate
inner circle. Simultaneously with intensifying the cultivation of opportunities
for obtaining information directly from his workplace, give him the assignment
to get as close as possible to Currie.

`Jurist" represents the most valuable source from this group. His capabilities, thanks to his proximity to Morgenthau, are very substantial. We should
focus our work with him on obtaining important documented and verbal information. In this regard it is essential to train the source to transmit exactly what
he has heard and to extract from his interaction from Morgenthau's inner circle information that is of most interest to us. Simultaneously study and cultivate both Morgenthau's connections and his own.