Spies: The Rise and Fall of the KGB in America (50 page)

The KGB's plan to draw Duggan fully into its apparatus was delayed
by the imbroglio over Alger Hiss's attempt to recruit Noel Field for his
GRU-linked network and the subsequent fear that Hiss, Field, and Duggan had all been exposed to each other as Soviet sources (see chapter 1).
Hiss had also made a direct approach to Duggan, urging him to meet
with Frederick Field, (no relation to Noel), a secret member of the
CPUSAs covert arm. Massing met with the Duggans in mid-May 1936,
and Boris Bazarov, illegal station chief, reported: ""`Jurist" [Hiss] called 19 [Duggan] and asked him to receive [Frederick] Field and speak with
him. (Jurist knows "19" through the capital's circle of supporters of `New
Deal' policies.) 19 informed Redhead [Massing] that he had not given
Field any sort of reply and was putting it aside until her arrival (of which
19 was informed ahead of time).... 19 then reported that he would favor
not having a connection with Field, not because it would be more secure,
but because he, by being linked directly with us (he identified our country by name), can be of greater value."' In 1948 Whittaker Chambers testified to an executive session of the House Committee on Un-American
Activities that he had asked Frederick Field to approach Duggan to explore a relationship with Chambers's GRU-linked apparatus, of which
Hiss was a part. He said that Field reported: "Duggan was already connected with another apparatus." Inasmuch as Bazarov's 1936 report on
the incident states that Hiss set up Frederick Field's meeting with Duggan, it appears that Chambers in 1948 had forgotten his use of Hiss to set
up the meeting with Field.51 Bazarov went on to say:

"1g [Duggan] further reported that overall his line of action is completely
clear to him and that the only thing that induces him to stay in a job he despises in the department, having to wear a dinner jacket for z weeks at a time
when attending a reception every evening (with nearly zo countries in his division), is the notion of being useful to our cause. He reported that he is not
quite firm in the saddle yet and does not yet have access to everything. Many
envy his extraordinary career, a career highly unusual for one of his age (he is
32-33), but after several months he will consolidate his position. It is true that
he is widely known as a liberal and a typical New Dealer and that his family is
known for its liberalism. But this is not a problem. To be on the safe side, he
asked that we meet with him once a month and would very much like our man
to make shorthand notes of the meetings. He is unable to give us documents
for now, but later, apparently, he will manage it."52

Massing left for Paris in July 1936 to join her husband after arranging for Duggan to meet with Norman Borodin, a young KGB officer. A
report Borodin wrote in 1948 regarding his work with Duggan brings out
the latter's nervousness and need for reassurance:

"Around the end of 1935 or the beginning of 1936 (I can't remember the
exact date), agent "Redhead" [Massing] gave us a lead on her acquaintance,
"19" [Duggan], telling us that he was sympathetic toward the Soviet Union
and the American Comparty. She agreed with him that the Communist
George Ryan ... would come to Washington from NY to discuss, or rather, receive information about the situation in the State Dep., where he was working at the time as Chief of the Latin American Division. After some hesitation, 19
agreed to meet once. I left for Washington soon after, along with the station
chief, `Nord' [Bazarov].

I contacted ig by phone at his apartment, calling myself Ryan, and we
agreed to have dinner together at one of the hotels in Washington. At dinner,
we began our conversation by discussing the international situation, and then I
turned the conversation to State Dep. employees; I asked for descriptions of
the senior staff, the functions of various divisions, etc. "ig" readily answered
my questions and then asked whether I represented the New York Comparty.
I replied that I was a Communist, though not directly affiliated with the American Comparty, and that therefore he should not be afraid to meet with me
from time to time for similar discussions.

At first, ig categorically refused to have future meetings, saying that he
couldn't bear the risk; his wife was pregnant and he had to think about his
family's welfare. He believed that sooner or later, the authorities could record
his meetings with me, and then he would be fired from the State Dep. and
blacklisted. I reassured him by saying that no one in the USA knew that I was
a Communist and that there was no possibility of his being exposed.

ig calmed down somewhat and almost agreed to have future meetings.
Since his lunch break was coming to an end, we agreed to continue our conversation the following day, sort out the details of future meetings, and determine which questions were of interest to us. After that, our first meeting was
over. When I arrived at the boarding house where `Nord' was waiting for me, I
told him the results of my conversation with ig. We carefully discussed all the
details of the conversation in question (having taken my car to a park in Virginia for that purpose) and concluded that ig's misgivings were sincere, he was
not a stooge, and further meetings with him could be arranged. The next day
at our meeting, ig again tried to back out of collaboration, saying that it was
unlikely he could give us anything interesting. In the end, though, he yielded
to my arguments, and we agreed to meet roughly once every z weeks. I regularly traveled to Washington from NY to meet with ig, either in his car (we
drove outside the city), or in his home, since he was sick several times....

When Tukhachevsky, Yagoda, and others were put on trial in Moscow, 19
became extremely anxious. By that time I had already made it clear to him
that he was dealing with Soviet intelligence, and this thought appealed to him.
With the commencement of the trials, however, ig began flatly refusing to
work with us, saying that if the head of Soviet intelligence had turned out to
be a spy, then his own exposure was inevitable.... As I recall, it took an incredible amount of effort to convince ig not to break with us. I brought all my
eloquence to bear in order to prove to ig that the Soviet intelligence service
with which we were affiliated was not the intelligence service that had been headed by Yagoda, and that only three people knew of his cooperation with us,
all of whom were still alive and well, working, etc."

Borodin assured Duggan that none of the KGB officers who knew of his
assistance to Soviet intelligence had become traitors. 53

KGB New York station reports in 1936 show that by September Duggan was providing copies of documents or originals to be filmed and returned. But Bazarov observed, "`Unfortunately, the materials provided
by 19 [Duggan] are, I believe, of very little interest to us. And for all his
good intentions, he is unable to obtain any others for now."' However,
Grigory Grafpen, a Moscow Center officer, looked through Duggan's material and told Abram Slutsky, chief of foreign intelligence: "`Nord
[Bazarov] managed for the first time to receive authentic State Department materials from "19" [Duggan] regarding the following matters:
Anglo-Argentine trade negotiations and a draft treaty on trade relations
between America and Argentina, and so forth. Even though these doc-s
do not cover matters of great urgency for the USSR, I nonetheless think
it would be useful to process and publish them in a collected format."'
Slutsky accepted Grafpen's suggestion, and told the New York station:
"`The materials sent from "19" [Duggan] have been put together as a
compendium and sent to the directive echelon [Soviet high leadership].
You should continue to receive materials from him elucidating the politics of your country and oth. countries of Lat. America. Simultaneous
with this, the task for developing "19" should be an expansion of his opportunities outside his division in the Surrogate [State Department] and
giving a precise overview of the work of all points in the Surrogate, both
inside the country and outside it., '154

New State Department security measures complicated KGB hopes
that Duggan would smuggle out copies of telegrams slated for destruction. (Duggan's reports indicated that William Bullitt, ardently anti-Soviet
by this time, was the leading advocate of increased State Department security.) The new plan required that cables would not be disposed of in the
division using them (thus allowing Duggan to steal them) but would be
tracked and picked up once a week by the Division of Communications
and Records and destroyed centrally. In December Duggan reported he
had attempted to get around the new regulations about cables by transcribing a number of telegrams but became careless and left five of them
inside a telephone book in his desk one day, only to find later that the
book had been replaced with a new edition for 1937. He was unable to
locate his copy in a big pile of discards, leading Moscow Center to urge suspension of contact with him until it became clear that he was not
under suspicion."

Unlike the KGB's first State Department source, David Salmon, Laurence Duggan was not a mercenary. In 1937 Bazarov, illegal station chief,
told Moscow Center:

"You ask if it isn't time to start paying him. It is almost certain that he will refuse any money, and even likely that he will view the offer of money as an insult. A few months ago, Granite [Borodin] wanted to bring "ig" [Duggan] a
gift on his birthday. He bought a lovely crocodile skin handbag monogrammed
with "ig's" initials. The latter categorically refused to accept the gift, declaring
that he is working for the common idea, and indicated that he is not helping us
out of any material incentive. This incident is characteristic of "ig." If at any
point in the future "ig" is in need of money, we'll use the moment and offer
him friendly assistance. Granite characterizes "ig" as a straightforward, candid, and brave man. "ig" is interested in Marxist literature and the development of the USSR .-56

Duggan himself, however, felt he was on shaky ground in the State
Department in early 1937. The post of undersecretary of state, the department's second ranking position, fell vacant; Duggan feared that Sumner Welles would leave the department if he did not get the job, and without Welles's protection, Duggan's own position would become untenable.
Welles, however, prevailed over other contenders and got the job. And
Duggan was soon a beneficiary. The sizable Mexican Division was added
to his Latin American Division, and in April he became chief of the enlarged "Division of the American Republics." Duggan's enhanced position
increased his ability to provide material of interest to Moscow. He immediately delivered a memorandum from the State Department's Office
of Arms and Munitions Control to the KGB. The office, headed by Joseph
C. Green, regulated export of military goods from the United States.
Moscow Center was pleased, telling the New York station: "`We can certify that the work with `19' [Duggan] has been successful. The materials
that were sent regarding `Hammer's' [the USSR's] military-naval supply
orders in Angora [United States] are current. Is there hope of receiving
them in the future? It is very important."' Duggan's liaison, Norman
Borodin, provided a detailed report on obtaining the material:

"`1g' [Duggan] again asserts that receiving the folder (which you now have)
from Green did not arouse suspicion of any kind from anyone.... According
to him, everything went off without a hitch. He has for a long time and with
some frequency been talking to Green, with whom he is quite close, about the policies of the USA vis-a-vis the export of weapons. `1g' gets a lot of inquiries
from South American countries about these issues, and naturally, he must be
well-informed in these matters.

The approach to the folder began a while ago, when Green himself told ig
about Soviet military-naval supply orders amounting to 2oo,ooo,ooo dollars.
... The South American countries have also been trying to purchase militarynaval weapons here, and as a result ig maintained contact with Green, who
from time to time informed him how licensing talks were progressing...... 1g"
thinks that attempting to receive other, similar folders today, with German,
Japanese, and British or Italian supply orders, would be tantamount to `playing
with fire.' He will get a better sense in the future, but for now, in his opinion,
Green should be left alone. We approved of his point of view completely but
expressed hope that in the future, circumstances would allow for other folders
to be received as well." (He provided a document about weapons purchases in
Mexico for government forces in Spain and about preparations for a fascist uprising in Mexico. They requested materials about Trotsky.)57

By mid-August 1937, Duggan's earlier qualms appeared to have
abated, and Iskhak Akhmerov confidently reported: ""19" [Duggan] now
receives every telegram coming to the SD [State Department]. He
agreed to pass them on to us. `At first we will receive them once every two
weeks, and later we will try to intensify and make more frequent the reception of these telegrams."' Several of the reports Duggan provided to
the KGB are extracted or listed in Vassiliev's notebooks. Some dealt with
interdepartmental gossip; others bore on U.S. government responses to
military export requests and secret instructions given to President Roosevelt's special envoys to Europe. Duggan also reported on internal State
Department discussions on shifting ambassadorial assignments and provided such memos as "Recent trends in German competition with United
States export trade in the other American republics" (forwarded to Stalin,
Molotov, and Kliment Voroshilov); Moscow Embassy charge d'affaires
Loy Henderson's report on Sam Carp, Molotov's brother-in-law and head
of an export firm based in the United States (forwarded to Stalin and
Molotov); and a "Memorandum on Italian fascist and German Nazi activity in the American Republics" prepared by Duggan's own division
(passed on to Stalin, Molotov, and Voroshilov).58