The Silvermaster Spy Ring
Overview by Brendon O’Connell
Watch the video: The Silvermaster Spy Ring – by Brendon O’Connell
Archived on December 9, 2018 from https://spartacus-educational.com/Nathan_Silvermaster.htm
Nathan Silvermaster was born into a Jewish family in Odessa, Russia, in 1898. His family emigrated to the United States in 1914. He studied economics at the University of Washington. He then moved to the University of California. (1)
A committed Marxist, the title of his Ph.D. was Lenin’s Economic Thought Prior to the October Revolution. After 1920 Silvermaster was an active member of Communist Party of the United States (CPUS). However, he showed no interest in returning to his country of birth after the successful Russian Revolution and in 1926 he became a naturalized American citizen. (2) He married Elena Witte (the granddaughter of Count Sergei Witte) in 1930.
In 1934 Nathan Silvermaster met Earl Browder during an industrial dispute in San Francisco. Released KGB archives show that the previous year Gaik Ovakimyan of the NKVD had recruited Browder as a Soviet agent (codename RULEVOY). According to a memorandum sent by Vsevolod Merkulov to Joseph Stalin: “Starting in 1933 and into 1945, Browder rendered the NKGB… and the GRU… help, recommending to our representatives in the U.S. Communist Party for agent work. At Browder’s recommendation, eighteen people were drawn to agent work for the NKGB and… people for GRU. In addition, through the Central Committee’s functionaries controlling illegal groups.” (3)
Browder worked closely with Jacob Golos. He introduced Golos to members of the Communist Party of the United States who were willing to be Soviet agents. It is believed that this is when Nathan Silvermaster became a Soviet agent. Allen Weinstein, the author of The Hunted Wood: Soviet Espionage in America (1999) has argued: “It was through Browder that Silvermaster was introduced to Golos and the Soviets’ East Coast intelligence network. Silvermaster’s wife, Helen, a distant relative of the famous czarist Prime Minister Count Witte, shared her husband’s enthusiasm for assisting the NKVD.” (4) A friend remarked that she had “an indefinable air of quality in her tone of voice and in the way she held her head” that betrayed her aristocratic origins. (5)
In 1935 Nathan Silvermaster went to Washington to work for the Federal Resettlement Administration, a division of the Agriculture Department charged with helping migrant farmworkers. He now became one of the leading advocates of the New Deal. (6) He also began working closely with the NKVD and was given the codename (Pel). Nathan and Helen Silvermaster shared their home with William Ludwig Ullmann, who worked at the Treasury Department. He was also a Soviet spy who worked closely with other figures in the Department, including Harry Dexter White and Harold Glasser.
At first, Jacob Golos was the main contact of the Silvermaster group but his failing health meant that he used Elizabeth Bentley to collect information from the house. Helen was highly suspicious of Bentley and she told Golos that she was convinced that she was an undercover agent for the FBI. Golos told her that she was being ridiculous and that she had no choice but to work with her. The Silvermasters reluctantly accepted Bentley as their new contact.
Kathryn S. Olmsted, the author of Red Spy Queen (2002), points out: “Every two weeks, Elizabeth would travel to Washington to pick up documents from the Silvermasters, collect their Party dues, and deliver Communist literature. Soon the flow of documents grew so large that Ullmann, an amateur photographer, set up a darkroom in their basement. Elizabeth usually collected at least two or three rolls of microfilmed secret documents, and one time received as many as forty. She would stuff all the film and documents into a knitting bag or other innocent feminine accessory, then take it back to New York on the train.” (7) Moscow complained that around half of the photographed documents received in the summer of 1944 were unreadable and suggested that Ullmann received more training. However, Pavel Fitin, who was responsible for analyzing the material, described it as very important data.
Elizabeth Bentley became aware that Ullmann was having an affair with his host’s wife.” (8) When Iskhak Akhmerov also discovered what was happening he cabled Moscow: “Surely these unhealthy relations between them cannot help but influence their behavior and work with us negatively.” (9) Akhmerov also reported that other members of the group had become aware of this ménage à trois and that it was undermining his relationship with the rest of the group. However, Ullmann continued to provide important information.
Silvermaster became a key figure in Soviet espionage. He became even more important after Germany’s invasion of the Soviet Union in June 1941 (Operation Barbarossa). Silvermaster was able to provide documents from the United States military attaché’s office in London concerning recent data on the German armed forces. He also turned over information on U.S. military-industrial plans and on the views held by leading American policymakers concerning developments on the Soviet-German front.
Silvermaster reported on a discussion that took place between Navy Secretary Frank Knox and Treasury Secretary Henry Morgenthau, Jr. in July, 1941. This information convinced the NKVD that Morgenthau sympathized with the invaded country. Silvermaster was also able to get a copy of a confidential report written by Harry Hopkins about the invasion. It is believed that this came from another Roosevelt adviser, Lauchlin Currie, who was also a member of Silvermaster’s network. (10)
After the Japanese attack on Pearl Harbor in December 1941, the Soviet Union became an official American ally in the war effort. American policymakers were wary of the Soviets and kept many secrets from them. Silvermaster was told in April 1942: “We are interested in the (U.S.) government’s plans for the country’s foreign and domestic policy, all machinations, backstage negotiations, intrigues, all that is done before this or that decision of the government becomes known to everybody… The task is to penetrate into those places where policy is born and developed, where discussions and debates take place, where policy is completed.” (11)
Vassily Zarubin, the NKVD station chief told Silvermaster that the information that Harry Dexter White could provide was of great importance. He also wanted Silvermaster to discover details of meetings that took place between President Franklin D. Roosevelt and Winston Churchill. In one cable, Zarubin asked: “What questions did Churchill discuss with Roosevelt… What are the divergences between the English and Americans on the main matters of the war?” Zarubin was also very interested in any discussions on opening-up a second front in Europe. (12)
Nathan Silvermaster informed Jacob Golos at a meeting on 26th March, 1942, that the House of Un-American Activities Committee had listed him among a hundred government officials suspected of being secret members of the Communist Party of the United States. An investigation by the Civil Service Commission could not confirm Silvermaster’s Communist associations nor could an Office of Naval Intelligence inquiry. Lauchlin Currie used his position as special adviser on economic affairs to President Franklin D. Roosevelt, to help quash the inquiry. (13)
Vassily Zarubin reported in October 1943: “Recently (Silvermaster) told us that (Currie) made every effort to liquidate his case: when (Silvermaster’s) case was given for examination to the committee (White House security personnel) attached to Captain (the President), (Currie) managed to persuade the majority of members of the committee to favor repealing this investigation… He believes that the investigation will be stopped.” (14)
With the help of influential friends, Silvermaster was able to get a job with the War Production Board (WPB). Established by the Roosevelt government, the WPB directed conversion of industries from peacetime work to war needs, allocated scarce materials, established priorities in the distribution of materials and services, and prohibited nonessential production.” Silvermaster was now in a good position to provide the Soviets with detailed reports on arms production.
On 15th March, 1944, Iskhak Akhmerov arranged a meeting with Silvermaster. He reported to Moscow five days later that Silvermaster was “a man sincerely devoted to the party and the Soviet Union… politically literate, knows Marxism, a deeply Russian man… known in Washington as a progressive liberal… and understands perfectly that he knows for us.” In December 1944, it was reported that Silvermaster “has sent us a 50-page Top Secret War Production Board report… on arms production in the U.S.” (15)
On 7th November, 1945, the Soviet agent, Elizabeth Bentley, met with Don Jardine, FBI agent based in New York City. On that first day she talked for eight hours and gave a thirty-one-page statement. She gave a long list of Soviet spies that included Nathan Silvermaster, Victor Perlo, Harry Dexter White, Nathan Silvermaster, Abraham George Silverman, Nathan Witt, Marion Bachrach, Julian Wadleigh, William Remington, Harold Glasser, Charles Kramer, Duncan Chaplin Lee, Joseph Katz, William Ludwig Ullmann, Henry Hill Collins, Frank Coe, Mary Price, Cedric Belfrage and Lauchlin Currie. The following day J. Edgar Hoover, sent a message to Harry S. Truman confirming that an espionage ring was operating in the United States government. (16) Some of these people, including White, Currie, Bachrach, Witt and Wadleigh, were named by Whittaker Chambers in 1939. (17)
There is no doubt that the FBI was taking her information very seriously. As G. Edward White (article has been scrubbed), has pointed out: “Among her networks were two in the Washington area: one centered in the War Production Board, the other in the Treasury Department. The networks included two of the most highly placed Soviet agents in the government, Harry Dexter White in Treasury and Laughlin Currie, an administrative assistant in the White House.” (18) Amy W. Knight, the author of How the Cold War Began: The Ignor Gouzenko Affair and the Hunt for Soviet Spies (2005) has suggested that it had added significance because it followed the defection of Ignor Gouzenko. (19)
On 30th July 1948, Elizabeth Bentley appeared before the House of Un-American Activities Committee. Over the next two days she gave the names of several Soviet spies including Nathan Silvermaster, William Ludwig Ullmann, Donald Niven Wheeler, William Remington, Mary Price, Victor Perlo, Harry Dexter White, Duncan Chaplin Lee, Abraham George Silverman, Nathan Witt, Marion Bachrach, Julian Wadleigh, Harold Glasser, Henry Hill Collins, Frank Coe, Charles Kramer and Lauchlin Currie. Silvermaster, Ullmann, Perlo, Kramer and Silverman took the Fifth Amendment and refused to answer most of the HUAC’s questions. (20)
Nathan Silvermaster before the House of Un-American Activities Committee.
Silvermaster was never prosecuted and according to Allen Weinstein, the author of The Hunted Wood: Soviet Espionage in America (1999) that Silvermaster and “his faithful housemate, William Ludwig Ullmann, had become by 1951 prosperous home builders on the New Jersey shore.” (21) Later, he lived in Loveladies, Long Beach Island, where he was an executive in a construction, land developing and dredging company. (22)
The Silvermaster group was a major Soviet espionage organization that operated within the United States Government during World War II. It was investigated by the FBI spanning the years 1945 through 1959. Nathan Gregory Silvermaster was the leader of the spy ring which consisted of 27 principal KGB operatives gathering information from at least six Federal agencies. The group operated primarily in the Department of the Treasury but also had contacts in the Army Air Force and in the White House. Sixty-one of the Venona cables concern the activities of the Silvermaster spy ring.
In 1942 the Silvermaster Group delivered 59 rolls of film to their handler. In 1943, it was 211 rolls, 600 in 1944, and 1895 in 1945.
In November 1945 Elizabeth Bentley, the courier from group based in Washington, D.C. to KGB headquarters in New York defected to the FBI. The KGB had removed Bentley from overseeing at least 80 members of the CPUSA Underground Apparatus in 1944. Realizing she knew too much, was no longer of use to the KGB, and her life was in danger, she told her story to the FBI in a deposition.
The FBI knew of 5 Soviet agents throughout the war, Bentley added at least another 80, some of which were still employed in the US government at that time. Her story at first was incredible and embarrassing to the FBI, but her allegations soon were borne out by information already in Bureau files. By December, no fewer than 227 FBI agents were involved in the case.
The suspects were surveilled throughout much of 1946 in hopes of learning more about the organization and building a prosecutable case. Meanwhile, other information came from Igor Guzenko, a Soviet code clerk who defected in Canada, and the Army Signals Intelligence Service which began secretly reading KGB communications with Moscow.
By December 1946 leaks began to develop, copies of an FBI memorandum entitled “Underground Soviet Espionage Organization (NKVD) in Agencies of the United States Government”  had been disseminated to several government departments and agencies, including the White House, and some were unaccounted for. In late December, a Justice Department prosecutor in the Criminal Division requested of a New York Special Agent in Charge (SAC) field investigator a copy of the Bentley deposition. The SAC telephoned FBI headquarters in Washington to request a copy of the signed affidavit in the presence of the prosecutor sitting at his desk. In a stinging rebuke to the field investigator, FBI Agent Edward Tamm noted in a memo to Director J. Edgar Hoover that the Bureau had gone to great lengths to protect the identity of the informant who was codenamed “Gregory” in the files, and the call in the presence of the attorney was an “an atrocious exhibition of a complete lack of judgment.” 
A copy of the Bentley deposition was furnished to the Criminal Division and they then pressed for a personal interview with Bentley to evaluate her ability to testify. Tamm wrote to the Director how he informed the prosecutors that “the Bureau was apprehensive for the life of informant since the informant would probably be killed if [her] identity were inadvertently disclosed” 
An Executive Conference was formed consisting of the prosecutors from the Department of Justice Criminal Division and FBI field investigators to discuss the Silvermaster subjects and how to proceed with prosecution. The United Press began running stories on the case with information coming directly out of the Conference meeting. In a hand written note in the margin of a memo from January 23, 1947, Hoover writes, “in view of all the ‘gabbing’ done by the Dept to the Press there is little which can be expected from any action now.”  The conference concluded with a request of the Attorney General that the FBI recommend which of several possible courses of action be taken. Hoover, in a somber tone, responds, “I am of the opinion…it will be impossible to continue the investigation on an intelligence basis….the subjects…are now all very security conscious…as a result of this premature and ill-advised publicity, the Bureau’s key informant …refuses to continue to cooperate with the Bureau. It is needless to point out that without the cooperation of this informant a real coverage of this case is impossible….any attempt to interrogate them, either by Bureau agents or before a grand jury, would produce nothing. Obviously, this situation leaves only the third alternative; that is, that the Department furnish to the employing departments the basic data concerning the activities of the individual subjects as a possible means of concluding the case. It is assumed, of course, that the employing departments will take administrative action against the subjects who are employed in these departments.” 
Edward Morgan of the FBI was asked to make an objective analysis of where the case stood from a legal and investigative standpoint. This document, Morgan’s memorandum, sheds much light on what was to follow in the ensuing years. Morgan writes, “there exists a fraternal and intimate social bond” among the group, the subjects are “extraordinarily intelligent, at least they are unusually well educated,” and some of the finest legal talent in the country could be expected to be retained for their defense. Without Venona evidence, Morgan declares “the case is no more than the word of Gregory against that of the several conspirators. The likely result would be an acquittal under very embarrassing circumstances.” Morgan observes, “Coming in after the event as the Bureau did, we are now on the outside looking in, with the rather embarrassing responsibility of having a most serious case of Soviet espionage laid in our laps without a decent opportunity to make it stick. This very circumstance, however, necessitates pursuing more direct methods” and states, “this case is one of Soviet espionage or it is nothing.” Morgan proposes developing one of the “lesser lights” as an informant to corroborate Bentley, but acknowledges the unlikelihood of it occurring. “I doubt if any more can be accomplished of probative value through further investigation apart from the interviews.” Morgan refers to the political problem Bentley laid in their lap 10 years after the fact, “I personally am of the opinion that the Bureau would be subjected to possible criticism as being derelict in its responsibility in this instance if the various subjects were not thoroughly and exhaustively interviewed. The odds are not too good that such interviews would terminate successfully; however, it is quite possible that some of the lesser lights among the subjects would crack during the course of a careful and pointed interview.”
Morgan concludes with the recommendation “That one of the subjects of this case, probably the weakest sister, be contacted with a view to making him an informant…Failing in this respect, that immediately the other subjects be exhaustively interviewed. Since an interview with one would virtually amount to putting all of them on notice, it would seem logical to conduct such interviews as nearly simultaneously as possible….That failing to break any of the subjects, serious consideration be given to exposing this lousy outfit and at least hounding them from the Federal Service. Several possibilities exist in this regard but this would seem to be a bridge to cross when we get to it.”
- Nathan Gregory Silvermaster, Chief Planning Technician, Procurement Division, United States Department of the Treasury; Chief Economist, War Assets Administration; Director of the Labor Division, Farm Security Administration; Board of Economic Warfare; Reconstruction Finance Corporation Department of Commerce
- Helen Silvermaster (wife)
- Schlomer Adler, United States Department of the Treasury
- Norman Chandler Bursler, United States Department of Justice Anti-Trust Division
- Frank Coe, Assistant Director, Division of Monetary Research, Treasury Department; Special Assistant to the United States Ambassador in London; Assistant to the Executive Director, Board of Economic Warfare; Assistant Administrator, Foreign Economic Administration
- Lauchlin Currie, Administrative Assistant to President Roosevelt; Deputy Administrator of Foreign Economic Administration; Special Representative to China
- Bela Gold, Assistant Head of Program Surveys, Bureau of Agricultural Economics, United States Department of Agriculture; Senate Subcommittee on War Mobilization; Office of Economic Programs in Foreign Economic Administration
- Sonia Steinman Gold, Division of Monetary Research U.S. Treasury Department; U.S. House of Representatives Select Committee on Interstate Migration; U.S. Bureau of Employment Security
- Irving Kaplan, Foreign Funds Control and Division of Monetary Research, United States Department of the Treasury Foreign Economic Administration; chief advisor to the Military Government of Germany
- George Silverman, civilian Chief Production Specialist, Material Division, Army Air Force Air Staff, War Department, Pentagon
- William Henry Taylor, Assistant Director of the Middle East Division of Monetary Research, United States Department of Treasury
- William Ullman, delegate to United Nations Charter meeting and Bretton Woods conference; Division of Monetary Research, Department of Treasury; Material and Services Division, Air Corps Headquarters, Pentagon
- Anatole Volkov
- Harry Dexter White, Assistant Secretary of the Treasury; Head of the International Monetary Fund
- FBI Silvermaster file, Ladd to the Director, November 12, 1945, Vol. 8, pg. 3 pdf.
- FBI Silvermaster file, Ladd to the Director, November 12, 1945, Vol. 8, pg. 6 pdf.
- Hoover to Frederick B. Lyon, 24 September 1945, Central Intelligence Agency, Igor Gouzenko file. 5 pages.
- FBI Silvermaster file, Memorandum for the Attorney General, December 20, 1946, Vol. 81, pgs. 55 – 56 pdf. In transmitting a summary of the investigation on Harry Magdoff, Hoover urges the Attorney General to give consideration to the overall facts of the case before making the information available to any other government official. Hoover complains that a summary report prepared for the Secretary of the Treasury had been “lost” and a copy furnished to the White House was found in a desk drawer at the War Assets Administration — the agency Greg Silvermaster had been working in.
- FBI Silvermaster file, Underground Espionage Organization (NKVD) in Agencies of the United States Government”, Vol. 23, pgs. 55 – 272, February 21, 1946.
- FBI Silvermaster file, Vol. 83, pgs. 72, 73 pdf.
- FBI Silvermaster file, Tamm to the Director, January 6, 1947, Vol. 83, pg. 56 – 57 pdf.
- FBI Silvermaster file, Tamm to the Director, January 23, 1947, Vol. 93, pgs. 20 -22 pdf.
- FBI Silvermanster file, Memorandum for the Attorney General, January 27, 1947.
FBI Silvermaster file, Morgan to Clegg, January 14, 1947.
Solomon Adler (or Sol Adler) was born in Britain and became a U.S. citizen in 1936, when he obtained employment in the United States Department of the Treasury. Adler also was a Soviet spy who supplied information to the Silvermaster espionage ring.
Adler served in China and shared a house with Chi Ch’ao ting and “China hand” John Service. From China, Adler sent back reports opposing President Franklin Roosevelt‘s gold loan program of $200 million to help the Nationalist Chinese Government stabilize its currency in 1943. Secretary Harry Dexter White and Frank Coe supported this view (to de-stabilize the anti-Communist government of Chiang Kai-Shek). Hyperinflation in China amounted to more than 1000% per year between 1943 and 1945, weakening the standing of the Nationalist government domestically in China. This helped the Communists eventually to come to power in China, delivering hundreds of millions of people into their hands.
Adler is referenced in Venona decrypts #14, 14 January 1945, New York to Moscow. His code name in Soviet intelligence and in the Venona papers is “Sachs”, and directly relates to the delivery of information about China.
By 1950, Adler was the subject of a Loyalty of Government Employee investigation. Adler resigned just prior to a decision by the Civil Service Commission and Treasury Department. Thereafter, Adler returned to Britain, and when his passport expired in three years, he was denaturalized and lost his American citizenship.
CCP Chairman Mao Zedong with Israel Epstein (first left), Anna Louise Strong (third left), Frank Coe (second right), and Solomon Adler (first right).
At some point in the 1950s Adler emigrated to the People’s Republic of China. Adler, Frank Coe, and Sydney Rittenberg worked together in China translating Chairman Mao‘s works into English. He worked for twenty years for the Chinese Communist Party’s Central External Liaison Department, an agency involved in foreign espionage. A photograph shows him with Henshen Chen, a senior Maoist official who had been an intelligence operative in the United States from the late 1930s till 1949. Chen wrote in his memoirs that he used the cover as an editor for the journal Pacific Affairs and worked as a researcher at the Institute of Pacific Relations, and had covert liaisons with the Communist Party of the United States (CPUSA).
Adler died in China on August 4, 1994.
- Solomon Adler: The Chinese Economy (London, Routledge & Paul 1957)
- Joan Robinson, Sol Adler: China: an economic perspective (Foreword by Harold Wilson; London, Fabian International Bureau 1958)
- Sol Adler: A Talk to Comrades of the English Section for the Translation of Volume V of Chairman Mao’s Selected Works (Guānyú “Máo xuǎn” dì-wǔ juǎn fānyì wèntí de bàogào 关于《毛选》第五卷翻译问题的报告; Beijing, Foreign Languages Press 1978).
- FBI Silvermaster file (PDF format pgs. 44-47) pgs. 130-133 in original.
- Allen Weinstein and Alexander Vassiliev, The Haunted Wood: Soviet Espionage in America—the Stalin Era, New York: Random House, (1999). ISBN 0679457240
- Adolf Berle notes “Underground Espionage Agent” (1939), reprinted in the Interlocking Subversion in Government Departments, 6 May 1953, part 6, 329–330.
- John Earl Haynes and Harvey Klehr, Venona: Decoding Soviet Espionage in America, Yale University Press (1999).
- FBI Silvermaster file, Letter from Solomon Adler in China, apparently addressed to V. Frank Coe, Vol. 55, pgs. 14 – 20.
- James Peck: Remembering Sol Adler – an economic advisor to the Chinese government (Monthly Review, December 1994; link to findarticles.com)
- Funeral of Sol Adler (China News Digest, September 7, 1994)
- Foreword to The Translator’s Guide to Chinglish by Joan Pinkham (Beijing, Foreign Language Teaching and Research Press 2000), mentioning Sol Adler