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Full text of "Scope of Soviet activity in the United States. Hearing before the Subcommittee to Investigate the Administration of the Internal Security Act and Other Internal Security Laws of the Committee on the Judiciary, United States Senate, Eighty-fourth Congress, second session[-Eighty-fifth Congress, first session] .."

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SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

(Miklos Szabo, Hungarian Informer) 



HEARING 

' •■■■■■ BEFORE THE 

SUBCOMMITTEE TO INVESTIGATE THE 

ADMINISTEATION OF THE INTEENAL SECURITV 

ACT AND OTHER INTERNAL SECURITY LAWS 

OF THE 

COMMITTEE ON THE JUDICIMY 
UNITED STATES SENATE 

EIGHTY-FIFTH CONGRESS 

FIRST SESSION 
ON 

SCOPE OF SOVIET ACTIVITY IN THE 
UNITED STATES 



SEPTEMBER 24, 1957 



PART 83 



Printed for the use of the Committee on the Judiciary 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
93215 WASHINGTON : 1958 



Boston Public Library 
Superintendent of Documents 

MAR 1 1 1958 

COMMITTEE ON THE JUDICIARY 

JAMES O. EASTLAND, Mississippi, Chairman 

ESTES KEFAUVER, Tennessee ALEXANDER WILEY, Wisconsin 

CLIN D. JOHNSTON, South Carolina WILLIAM LANGER, North Dakota 

THOMAS C. HENNINGS, Jr., Missouri WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utah 

JOSEPH C. O'MAHONEY, Wyoming EVERETT McEINLEY DIRKSEN, Illinois 

MATTHEW M. NEELY, West Virginia JOHN MARSHALL BUTLER, Maryland 

SAM J. ERVIN, Jr., North Carolina ROMAN L. HRUSKA, Nebraska 



Subcommittee To Investigate the Administration op the Internal Security 
Act and Other Internal Security Laws 

JAMES O. EASTLAND, Mississippi, Chairman 

OLIN D. JOHNSTON, South Carolina WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utah 

SAM J. ERVIN, Jr., North Carolina JOHN MARSHALL BUTLER, Maryland 

MATTHEW M. NEELY, West Virginia ROMAN L. HRUSKA, Nebraska 

Robert Morris, Chief Counsel 

J. Q. SouRWiNE, Associate Counsel 

Benjamin Mandel, Director of Research 

n 



CONTENTS 



Testimony of — Pag» 

Szeredas, Eugene . 4662 

Varga, Msgr. Bela 4648 

in 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 



TUESDAY, SEPTEMBER 24, 1957 

United States Senate, 
Subcommittee To Investigate the 
Administration of the Internal Security Act 

AND Other Internal Security Laws 
OF THE Committee on the Judiciary, 

Washington, D. G. 

The subcommittee met, pursuant to call, at 2 : 15 p. m., in room 457, 
Senate Office Building, Senator Olin D. Johnston (South Carolina) 
presiding. 

Also present: Robert Morris, chief counsel; Benjamin Mandel, in- 
vestigator ; and Frank W. Schroeder, chief investigator. 

Senator Johnston. The subcommittee will come to order. 

Mr. Morris. Senator Johnston, the first witness this morning is 
Monsignor Varga, but before beginning with Monsignor Varga — 
Monsignor, will you be seated ? 

This is Monsignor Bela Varga, Senator Johnston. 

Will you be seated, Monsignor? We have a few things we would 
like to put into the record before beginning your testimony. 

Senator Johnston. I have here a pamphlet entitled "Hungary 
Under Soviet Rule : A Survey of Developments Since the Report of the 
U. N. Special Committee," prepared by the American Friendsof the 
Captive Nations, and the Assembly of Captive European Nations in 
association with the Hungarian Freedom Fighters Federation, the 
Hungarian National Council, the National Representation of Free 
Hungary. 

I notice this is signed by the editorial committee, A. A. Berle, Jr., 
Leo Cherne, Clare Boothe Luce, and Reinhold Niebuhr. 

I order that this be made an appendix to our record. 

Also a two-volume report here of the United Nations on Hungary. 
The subject here is Report of the Special Committee on the Problem 
of Hungary, A/3592. 

And also The Continuing Challenge of the Hungarian Situation to 
the Rule of Law : Supplement to the Report of the International Com- 
mission of Jurists, published in June 1957 ; together with the report 
itself, published in April 1957. 

I order that those be made a part of the appendix to the record. 

(The documents referred to will be found in appendix I, p. 83, 
of Scope of Soviet Activity in the United States.) 

Mr. Morris. Senator, the subject of the hearing today is a situation 
of which the staff of the subcommittee has taken cognizance in the last 
2 weeks in connection with a series of hearings over which you, Sena- 
tor Johnston, presided, on the general effect of the Hungarian revolu- 
tion on the world Communist movement. 

4647 



4648 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Subsequent to that particular epochal event, we have taken cog- 
nizance of many things which have been happening in and about the 
whole situation. 

Among other things, Senator, that revolution, exposing as it did 
Soviet tyranny, revealed the Soviet organization to such an extent 
that we have reason to believe that there have been some defections in 
our own Communist Party here in the United States. 

People who were Communists were appalled at the Soviet savagery 
at that particular time. 

In addition. Senator, we have been surveying the security surround- 
ing some of the refugee organizations, and the defection of a man 
known as Miklos Szabo has raised some problems of security, Senator, 
which I think the Senate should know in connection with its delibera- 
tions on these and kindred legislative problems. 

In trying to arrive at all the facts, Senator Johnston, we have 
talked to Msgr. Bela Varga, who certainly is a competent witness, and 
who has had a distinguished record in Hungary and out of Hungary 
fighting for the cause of freedom, and he is, in addition, in possession 
of certain facts and is qualified to give testimony today on that par- 
ticular subject, Senator, and he has agreed to come down from New 
York to open up this general subject for the subcommittee. 

Senator Johnston. Will you please raise your right hand and be 
sworn ? 

Do you swear the evidence that you will give before this subcommit- 
tee will be the truth, the whole truth, and nothing but the truth, so 
help you God ? 

Monsignor Varga. I do. 

Senator Johnston. Have a seat. 

You may proceed as you see fit. I see you have papers before you 
there. You can use them. 

TESTIMONY OF MSGR. BELA VARGA 

Mr. Morris. Would you give your full name and address to the 
stenographic reporter. 

Monsignor Varga. My name is Msgr. Bela Varga, Roman Catholic 
prelate and the last elected speaker in the Hungarian Parliament, 1945, 
1946, and 1947, and in the emigration, the President of the Hungarian 
National Council. 

Mr. Morris. And you formerly were an official in the Hungarian 
Government, were you not, Monsignor Varga ? You formerly were 
an official in the Hungarian Government ? 

Monsignor Varga. After the war, in 1945, it was a free election in 
Hungary, I became, I was member, acting president of Smallholder 
Party, and my party got 60 percent of absolute majority in the Par- 
liament, and I became the President of the Parliament. 

The Parliament was a one-chamber Parliament. We didn't have 
Senate or Congress, but we had just one chamber and I became the 
President of this parliamentary body and the Vice President of the 
Kepublic. 

Senator Johnston. How many people were you the President over? 
I mean the people that you represented. 

Monsignor Varga. Sixty percent of the Hungarian population, it 
means 6 million people. 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4649 

Senator Johnston. Six million. 

Monsignor Varga. Nine million, more than 9 millions were tlie 
Hungarians ; and 60 percent, around 6 million. 

Senator Johnston. Do you recall what the vote was ? 

Monsignor Varga. The vote — we got 57 percent of the popular vote, 
my party, and 60 percent of the seats of the Parliament. 

Senator Johnston. How many individual votes were cast? 

Monsignor Varga. We had about 400 deputies in the Parliament, 
and every deputy should have had 12,000 voters, but you know, I don't 
know how many voted. It was a very great percentage of the voters. 
I think about 90 percent of the population voted in this election. 

Senator Johnston. Ninety percent ? 

Monsignor Varga. Ninety percent. 

Senator Johnston. Of the qualified voters ? 

Monsignor Varga. Qualified. It was a real democratic election 
after the war in Hungary, secret ballot. 

Senator Johnston. That was a good percentage. That is what I 
wanted to bring out, just how many were participating in this 
election, 

Mr. Morris. Monsignor, that was the last free election in Hungary ? 

Monsignor Varga. There were only three elections after the war in 
Hungary, secret elections, the next one and only free election behind 
the Iron Curtain, because it was the first election in this country behind 
the Iron Curtain. When the Russians realized that the people are 
against the Russians and Communists, they did not permit other free 
elections in this other countries. 

Mr. Morris. And you came out of Hungary, did you not, shortly 
thereafter ? You left Hungary, did you not ? 

IVfonsignor Varga. I left Hungary because the Russians wanted to 
imprison me, and my friends, we discussed the problem, what is the 
better, to remain in Hungary to be imprisoned and deported by the 
Russians to Siberia, or to escape and to continue the fight against 
communism. 

And we decided, and I have fulfilled the decision of my friends and 
even of my church, too, and I escaped first to Vienna and, with the 
help of my American friends and other nationalities, I came through 
over the Russian Zone and I came to Salzburg, and from Salzburg to 
Switzerland, and from Switzerland I came to America. 

Mr. Morris. "What do you do? You are head of the National 
Hungarian Federation? 

Monsignor Varga. We lost, I lost personally everything in my life 
what was nice and good for me, I lost my country, but I didn't lose 
the aim of my life, to fight against the evil, and I met the evil on the 
earth, and this evil is the communism. And I continued to work on the 
purpose of my life, to fight against communism, and I came to America 
because I know, I realize, I saw, I heard from the mouth of Marshal 
Voroshilov and the other leaders, that they want to destroy America, 
and I came to America, which is the leader of the free people, of the 
freedom of the world, and I offer my little strength, little ability to 
work against the evil, against communism. 

Mr. Morris. You say you heard from Marshal who ? 

Monsignor Varga. Marshal Voroshilov, was the head of the control 
commission after the war in Hungary, and naturally in my position 



4650 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

as the Vice President of the Republic and President of the Parliament, 
I was invited by him and he invited me, and I heard — the Russians are 
good drinkers, and the Russians spoke very openly that they will 
destroy America. 

The indoctrination of the army was perfectly anti-American. The 
Russian soldiers ate American bread and they used American ammuni- 
tion, but they were perfectly indoctrinated against America. 

And even Marshal Voroshilov spoke very openly. He spoke to me 
very openly that, "Don't believe in America. America is in our hands. 
America is infiltrated," he told me in 1945. 

Mr. Morris. In connection with the National Hungarian Federa- 
tion, you can carry on this work ? 

Monsignor Varga. Yes. When I came to America, we organized 
immediately former legislators of the Hungarian Parliament. We 
organized this Hungarian National Council, which means 80 members, 
former legislators, former membei-s of the Parliament, and I was the 
highest ranking man among them, as the President of the Parliament 
and Vice President of the Republic, and I, on the basis of the last free 
election in Hungary, I had to take over the presidency of this body, 
which is Hungarian National Council. 

Mr. Morris. Now, Monsignor, when did you first meet or know 
about the Hungarian, Miklos Szabo, S-z-a-b-o, M-i-k4-o-s? The last 
name is Szabo. 

Monsignor Varga. I met this Miklos Szabo twice in my life, once in 
Hungary, and it was, I think it was in 1946, in the spring of 1946. 

One night — I had my home in a village, Balton Boglar, and one 
night somebody knocked at the door and knocked at the windows in 
the night, and I asked, "Who is here ?" And he told me, "I am Miklos 
Szabo, friend of Bela Kovacs," Bela Kovacs. 

Mr. Morris. That is spelled K-o-v-a-c-s ? 

Monsignor Varga. K-o-v-a-c-s, Bela Kovacs, who was the repre- 
sentative of the Hungarian fight against communism. Later he was 
deported to Siberia. He was general secretary of the Smallholder 
Party, and a very intimate, good friend of mine. 

And he came, this Miklos Szabo, in the name of Bela Kovacs, 
and he told, '"I am coming just from the outside, from Austria, and 
I am hungry, and I would like to rest in your home." 

And I thought, naturally, because he used the name of my friend, 
Bela Kovacs, and in this time, you know, we were persecuted by the 
Russian armies, many Hungarians, and I opened the door and I of- 
fered my little home and kitchen, and he ate something. 

And after that, I told, "You can remain here, you can live here, 
hidden, until Bela Kovacs will come, and he will speak with you." 

But he didn't remain in this night, you know. He left the house. 

And after that, I called Bela Kovacs immediately, the next day, 
and Bela Kovacs was A'^ery, very angry, very furious, even, and he 
told, why — just may I repeat? I beg ^''our pardon, Senator John- 
ston — that he told, I would like to translate, "Why didn't you kick 
him out, because he is the most dangerous man. You don't know that 
he, they are smuggling, they smuggled some old rifles into the house 
of the Smallholder Party, and after that the Communists came, the 
Communist police came, and they wanted to prove that we are prepar- 
ing a revolution against the democracy." 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4651 

After I spoke with Bela Kovacs and Bela Kovacs told me, "Don't 
touch this man ; he is a dangerous, suspicious man." It was in 1946, 
more than 10 years ago. 

Now, I met him, we had a meeting in Vienna, the new Hungarian 
leaders of the revolution, Anna Kethly, Mayor Kovago, General 
Kiraly, some other leaders of the old refugees, and he called me eveiy 
day in Vienna, and he offered his car and he told, "I know that you 
love your country and your native village, which is not far from the 
border. Why don't you come with me 'i I have a car, and you can 
have binoculai-s and you can see even your village, which is not far 
from the Iron Curtain." 

It makes a terrible, deep impression, and I remember that this man, 
I didn't see him, once he visited me, and he tried to convince me that 
he was very, very strong, and he wanted to, not intimidate me, in- 
fluence me that I have to go with him because he will show me some 
beautiful things at the border. 

Now, at the meeting of the Hungarian leaders in Vienna, at the 
table I mentioned that this Szabo is offering, and I cannot be free 
from him, every day calling me and telephoning, and he wanted, 
offering always his car, and he wants to take me to the Hungarian- 
Austrian border. 

Mr, Morris. What month was this, Monsignor Varga ? 

Monsignor Varga, It was in June of this year. 

Mr. Morris. June of 1957? 

Monsignor Varga, 1957, 

And General Kiraly, who knows these people better than I, because 
lie was in Vienna sometimes, and for a month after his arrival, he 
told, "Don't touch this man" before the others who were at the table, 
"because he is security risk," 

It was in June in this year. 

Mr, Morris, So General Kiraly, K-i-r-a-1-y, warned you that he 
was a security risk ? 

Monsignor Varga. Yes, he warned me, and he should testify to 
that, that he told me in June that this man is a security risk. 

I didn't ask him why, because it was enough for me, I had old 
suspicion against him, and now an expert as General Kiraly just told 
me and strengthened my old suspicions, I didn't want to speak with 
him. 

But one day he came and visited me and wanted to convince me 
again, "Come with me and we will go to the border and we will see 
the border," but naturally I refused. 

Mr. Morris. How do you interpret now, in the light of subsequent 
events, how do you interpret his importuning you as he did at that 
time to go to the border ? 

Monsignor Varga. You know, it is a little difficult to interpret 
around my own personalities, but General Kiraly told in New York 
now, when he left, he went back to Hungary, "I told you if you 
would have gone with him by car, by his car, you would be now not 
here in New York but in Budapest." 

He wanted to kidnap me, it is not a question. 

Mr. Morris. So you think, then that Szabo was trying to kidnap 
you? 

93215— 58— pt. 83 2 



4652 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Monsignor Varga. I am perfectly sure; and even Kiraly, who is the 
expert, he gave me this explanation. 

Mr. Morris. All right. 

What position did Szabo have at that time? What position did 
he occupy ? Did he have an official title among some refugee groups '? 

Monsignor Vaega. He had — may I read this statement, benator 
Johnston ? 

Senator Johnston". You may proceed any way you want to, but 
we want an answer to the question. You can tell us what position 
he had. 

Monsignor Varga. Because he had many positions, you know. I 
was suspicious always against this man. He arrived in 1955, 2 years 
ago, in Vienna. How did he arrive, nobody knew that, and even the 
arrival, the escape, was suspicious in this time. And naturally, I 
didn't want to approach, and I didn't. I told to my friends, "Don't 
help, and be very careful." 

He had, as I heard in Vienna, he was the official representative of 
the Strassburg Revolutionary Council in Vienna. 

Mr. Morris. What was the Strassburg Revolutionary Council in 
Vienna ? 

Monsignor Varga. It was organized, he was one of the founders of 
this, this Szabo, and he had m his hands the tickets to travel to 
Strassburg. This was organized by people who arrived, escaped after 
the revolution from Hungary. 

The leading personalities were Anna Kethly, Social Democrat. 
She is president of the Hungarian Social Democratic Party in Hun- 
gary. And Mayor Kovago, who was general secretary, elected gen- 
eral secretary, in the revolution, of the Smallholder Party. And 
General Kiraly, who was a general of the Hungarian Army during 
the Communist regime. These three leading personalities and some 
former legislators who participated in the revolution and some other 
revolutionary people, they organized vv^ith the help, as we will see, 
in this case, with the help of some European organizations, the 
Strassburg Revolutionary Council. 

Mr. Morris. And he was the representative in Vienna ? 

Monsignor Varga. He was one of the organizers of the council, of 
the meeting in Strassburg, and he was the official representative of 
this organization in Vienna. 

Mr. Morris. All right. 

Monsignor Varga. Envoy of this organization. 

Mr. Morris. In addition, he had a title, did he not, of secretary 
of the Hungarian Culture and Rplief League? 

Monsignor Varga. Yes. It was an organization, as I heard when I 
was in Vienna, it was an organization to help the refugees, organized 
by this Szabo and some other Hungarians. Some of them redefected, 
went back to Hungary, living always together in the home of this 
Szabo, and some Austrian and other charitable organizations, and 
he was the head of this organization, and it was very important, this 
position, because he was able to visit the refugee camps everywhere, 
this Szabo. 

Mr. Morris. .\nd as we have learned, he went back to Budapest 
and back to the Communists, did he not ? 

Monsignor Varga. He interviewed everybody in the camps as a 
Hungarian ; lie helped them with little — as the head of this charitable 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4653 

organization. And, now, he interviewed all of them, who the most 
important leaders of the Hungarian revolution were, and how did 
they fight in the revolution, and with whom did they fight. 

He had now the names of all the participants in the Hungarian 
revolution, even who were not discovered by the Communist regime 
in Hungary, and he went back and he took these documents with him. 

Mr. Morris. You wanted to read — I will ask you some questions 
about that, but you said you wanted to read this statement. 

Monsi^ior Varga. It is a universal statement, because I am in 
a very difficult situation, and I would want to write something as 
a head of the Hungarian National Council, and I would be very 
grateful if I can read, because I meditated over all of the words 
and I don't want to accuse anybody without documents. 

Mr. Morris. By all means, Monsignor, proceed. 

Monsignor Varga. Thank you. 

Senator Johnston, one of the principal aims of the Communists 
is to deprive the exiles and especially the Hungarians of the active 
sympathy of the free world. They use the well-known methods 
of dialectical materialism to polarize both the emigration and the 
free world. Some years ago, the so-called redefection campaign was 
based on the same plans and principles, and might have been suc- 
cessful without the competent and efficient intervention of your sub- 
committee. 

Toda;^, the Communists' aim is to prevent the unification of the 
Hungarian political emigration and to weaken its strength and its con- 
fidence. Whether Miklos Szabo was an implanted agent, or became 
only later a traitor, he certainly has taken much valuable information 
and important documents back to Hungary. This constitutes obvi- 
ously a serious and dangerous attack against the free world. 

For 10 years no political figure has redefected to Hungary from 
the free world. The first such case, that of Miklos Szabo, creates 
therefore serious dangers for the United States of America, for the 
Hungarian resistance at home, and for the Hungarian exiles abroad. 

It cannot be a mere hazard that Miklos Szabo has redefected just at 
a time when the U. N. General Assembly met to discuss the Special 
Committe's Keport on Hungary, 2 days before that. 

Every si^ indicates that Szabo's redefection was well timed by its 
organizers in order to raise suspicion against political exiles. It is 
a basic Communist tactic to shatter the West's trust in political exiles 
and to touch off thereby the exiles' despair. 

Also in Hungary is the Szabo case apt to destroy the people's faith 
in their political exiles. If the Hungarian people lose their hope that 
the exiles will fight for their liberation, they will plunge into apathy 
because one of the principal sources of the resistance at home is the 
belief placed in the political and moral integrity of the emigration. 
Thus, the Szabo case and similar cases could gradually annihilate the 
spiritual contact between the people and the exiles, which is a Com- 
munist goal also. 

In Hungarian exile circles, the Szabo case already begins to drive a 
wedge between friends. It is touching off distrust and making re- 
proaches to those who had frequent contacts with Szabo. Thus, the 
Szabo case is becoming a dividing factor just at a time when the inter- 
national situation would require closest cooperation between emigre 
groups. 



4654 SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 

All these phenomena clearly demonstrate that the redefection of 
Miklos Szabo had been well prepared and very cleverly timed by the 
Hungarian political police. 

Finally, I express my profomid gratitude to the Senate Internal 
Security Subcommittee for its investigation. I am putting all my 
faith in its thoroughness and objectivity. It is a sad duty but a 
common interest to unveil the network of Communist infiltrators and 
to establish responsibilities if those exist. 

We consider ourselves as allies of the United States in the fight 
against communism. We regard this alliance and fight as the main 
goal of our life. Therefore, I consider it, Senator Johnston, as my 
duty to be entirely at your disposal. 

Thank you. 

Mr. Morris. Monsignor, I wonder if you could tell us, with as much 
detail as possible, what records Szabo took with him when he went 
back to Budapest. 

Before I ask you that, based on all that you have told us about 
Szabo, about your knowledge of him in 1946 when he smuggled guns 
into the offices of the Smallholder Party 

Monsignor Varga. Yes; he smuggled weapons, you know. And 
later, after some days, Communist police came and they discovered 
the weapons, these old weapons, you know, absolutely nothing, but 
we were accused by the Russians, because we didn't have peace in this 
time and nobody had a right to have weapons in the house, that we 
are preparing, the Smallholder Party was preparing, a revolution 
against the Russian Army and against the Hungarian democracy. 

Mr. Morris. Is it your estimate of him, Monsignor, that he was 
secretly working with the Communists all along, or is it your estima- 
tion that he was disillusioned after he came to Vienna ? 

Monsignor Varga. I am sorry. 

Mr. Morris. Is it your estimate, Monsignor Varga 

JNIonsignor Varga. Yes. 

Mr. Morris (continuing). That this man was secretly working with 
the Communists all along, or is it your estimate that he was a genuine 
escapee who became disillusioned and went back to Budapest ? 

Monsignor Varga. Speaking — I have a very deep and well-based 
suspicion that he worked from the very beginning with the Hungarian 
secret police, even when he was in prison. He told that he was in 
prison. I would like to prove, and to explain, but all of the prisoners 
who were in prison knew each other, speaking about each other, but 
nobody saw him in prison. 

And now it is my suspicion that he worked together [with the 
police]. But even if he didn't work together, he became later a traitor 
to his country. 

Mr. Morris. Another witness, Senator Johnston, who will testify 
after Monsignor Varza, has told us in executive session that he had 
seen Szabo's car at the Hungarian Legation in Vienna; in other words, 
the Communist government legation in Vienna ; he had seen this man's 
car goiiig up there at the time he was holding his position as secretary 
of the Hungarian Culture and Relief League. 

Now, what records did he take with him, Monsignor ? 

Monsignor Varga. He had two big dossiers with him. One was the 
documents of the Revolutionary Council of Strassburg. 

Mr. Morris. He had all the records ? 



SCOPE OP SOVIET ACTIVITY IN THE UNITED STATES 4655 

Monsignor Varga. All the records, you know. After the revolu- 
tion — you know, the Hungarian revolution was a miraculous revolu- 
tion, and the whole world honored the revolutionary people when they 
came to the free world, and they were greeted and everybody wanted 
to help them, even in Europe, you know, the small countries were in 
ecstacy to help these honest Hungarian people. 

And all the documents, naturally, were in the hands of the Strass- 
burg revolutionary people who prepared this revolution, this Strass- 
burg Council. 

Mr. Morris. "What were those records ? 

Monsignor Varga. He was one of the founders, and he got and he 
had all of the documents, who helped the Hungarian refugees, how 
the European countries, European organizations, even American or- 
ganizations, helped the Hungarian revolutionary people, how did they 
help even the Strassburg Council, and how did, perhaps, somebody 
help the Hungarian revolution in Hungary, 

He had a big dossier, as it was proved and documented and investi- 
gated by my friends and by some other, I am sure, by the police of 
Vienna. 

Mr. Morris. The disclosure of those names, Monsignor, to the Hun- 
garian secret police back in Budapest at this time, as I presume he is 
doing, will mean executions by the thousands; will it not? 

Monsignor Varga. You know, he had other documents, you know, 
and he visited all of the refugee camps, and he interviewed all of the 
leaders of the revolution, and these honest leaders of the revolution, 
mostly sometimes simple people, sometimes even leading persons, told 
all the stories, who were fighting ; in this ecstacy, you know, even in 
the ecstasy of the revolution, everybody was happy to speak. 

And this man was visiting all of the camps and collected all of the 
material, all the names, now, and he had a big dossier, another big 
suitcase. He asked the oAvner oi' the house where he lived for two suit- 
cases, and one suitcase was big, full with these names which were col- 
lected, and stories which were collected in the camps before the revolu- 
tion, in the revolution and after the revolution. 

This is the terribly shocking thing now in Hungary, In Hungary 
now, everybody is frightened, even I am frightened for my friends. 

Senator Johxston. Were the refugees not suspicious of him having 
this free right to come into the camp ? 

Monsignor Varga. You know, he had a very nice position. He 
introduced himself as the representative in the revolution, he told 
that "I am the representative of the revolutionary council." He men- 
tioned the names of Anna Kethly and the other names, and naturally 
everybody was confident of him, and some other organizations, and 
he was named the secretary of the Smallholder Party in Vienna. He 
had many titles. 

And some very few were suspicious, but mostly, 98 percent were 
not suspicious, and they told all of the stories. 

Mr. Morris. This could lead to thousands of executions, could it 
not? 

Monsignor Varga. Sure. You know, even hidden people who were 
wounded in the revolution, and they were, in the revolution, as we 
knew that hundreds and thousands of the wounded people were hidden 
by the Hungarian patriots, and later the Communist police investi- 
gated that, who were they. And now if they will know that somebody 



4656 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

was wounded in the revolution, and the police couldn't discover until 
now because the whole country is just one against the Communist 
regime now, too, and if they will prove that he was wounded, he will 
be imprisoned, he will be investigated, and perhaps some will be 
executed. 

Mr. Morris. Did the refugees speak openly to this man ? 

Monsignor Varga. I didn't see that, but I heard that he visited the 
camps, you know, and the refugees were very happy to speak with 
some Hungarian who was for 2 years in Vienna and who helped them 
because he had some organization which helped the Hungarian refu- 
gees. 

Mr. Morris. Senator Johnston, in connection with this testimony we 
have been trying to get the original source on a special dispatch to the 
New York Times out of Vienna on September 12 which reads as 
follows, Senator, it supplements the testimony of Monsignor Varga : 

Hungarian emigre organizations in Vienna are greatly disturbed by the un- 
explained disappearance of Miklos Szabo, a member of the Revolutionary Coun- 
cil in Strassburg, who has been missing from his Vienna apartment since Satur- 
day. He wrote several of his political friends here that, by the time they re- 
ceived the letters, he would be in Budapest. Apparently he took with him all 
the secret files and card indexes from the local oflSce of the revolutionary council. 
He was its chief delegate to Austria. 

Also missing from his apartment are the names of all Hungarian witnesses 
heard by the United Nations Commission. The list had been kept secret. He 
was one of the chief witnesses himself. 

Monsignor Varga, do you know anything about this witness list of 
the people who appeared before the UN commission ? 

Monsignor Varga. I didn't know. I read the report of this five- 
member committee, and I knew that they were — they secretly listened 
and got audience before the committee. 

Mr. Morris. Was there any assurance given to the people who ap- 
peared before that committee that their names would not be turned 
over to the Communists ? 

Monsignor Varga. Yes. Security assured them they will not be 
published. 

Mr. Morris. Now, with his taking that list back with him to Hun- 
gary, it will jeopardize the relatives of all the people involved, will it 
not? 

Monsignor Varga. If in Hungary they will know who testified be- 
fore the United Nations subcommittee, naturally they will be perse- 
cuted and they will be imprisoned. 

Mr. Morris. The relatives of the people who testified ? 

Monsignor Varga. The relatives of them. 

Mr. Morris. Senator, you will recall that our own procedure was, 
when witnesses testified here, we gave them false names and put masks 
on them at the time. Many people thought at that time maybe it 
was an unnecessary precaution, but I think as times goes on, Senator, 
we shall find we are very happy to have done that. 

Monsignor Varga. Yes, it was a very, very wise fact that you 
covered them, because we knew and we know now how frightened are 
some Hungarians about this case. 

Mr. Morris. Senator, there were 111 witnesses. 111 witnesses who 
testified before the United Nations in connection with the report that 
has since been submitted. 111. 



SCOPE OF SOVIET ACTIVITY IN THE TTNITED STATES 4657 

Monsignor Varga, do you know whether or not this man worked 
with our intelligence agencies ? 

Monsignor Varga. I don't know that. You know, I cannot tell any- 
thing about that. If you will ask your authorities, they will give the 
answer. 

I know that just as the founder and the organizer of this Revolu- 
tionary Council of Strassburg, he had many opportunities to infiltrate 
our friends and our organizations in Europe and to meet them, because 
we know some American gentlemen were participating in the meeting 
of the Strassburg Revolutionary Council, and naturally many French 
authorities were there. | 

Mr. Morris. Was there any one witness that you can think of, par- 
ticularly someone who actually worked side by side with this man, who 
was on the side of the free world, naturally, whom the subcommittee 
could call to get specific and concrete details of this man's activities ? 

Monsignor Varga. One Hungarian who is certainly the martyr 
and the hero of the whole Hungarian nation, tortured by Nazis and 
imprisoned by the Communists, and the very good organizer against 
communism, the name is Ferenc Vidovics, in Vienna, V-i-d-o-v-i-c-s. 

Mr. Morris. And his first name? 

Monsignor Varga. Ferenc. 

Mr. Morris. F-e-r-e-n-c? 

Monsignor Varga. Yes. 

Mr. Morris. And you say he can tell us in great detail about this 
particular man ? 

Monsignor Varga. He knows everything, and he was poisoned even 
by this man, and with the help of this man, by the Hungarian secret 
police in Vienna. He was very sick in tfie hospital, and he, the doctors 
can prove that he was poisoned, and he was very near to death. And 
this man forged against him. 

He is without question, for every Hungarian, the greatest hero. 
I honor him as the greatest and purest man of this age, of Hungary, 
after the First World War, and even during the Nazi regime, and he 
forged documents — or I don't know. 

Mr. Morris. Wlio forged the documents ? 

Monsignor Varga. He was not able to come to America. 

Mr. Morris. Wlio forged the documents ? 

Monsignor Varga. This Szabo. 

Mr. Morris. Szabo forged documents against Vidovics ? 

Monsignor Varga. Vidovics can testif jr how this Szabo did persecute 
him, and the Hungarian police connected with some other organiza- 
tions, perhaps some American men, who Jielped this Szabo to persecute 
Vidovics and not to permit him to come to America. 

Senator Johnston. So you think it would be advisable to probably 
have him as a witness ? I 

Monsignor Varga. Yes, I am sure, Senator Johnston, that he is 
the key witness, and he is the head witness in the whole tragic Hun- 
garian case. 

Senator Johnston. I will request, then, that the subcommittee sub- 
pena him and have him here to testify. 

Mr. Morris. Yes, sir. 

Senator Johnston. Yes. 



4658 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. I will be in touch on that with the Attorney General 
today. 

Could you tell us, Monsignor Varga, about more details? I want 
to say what the subcommittee is mostly interested in, if you could 

tell us 

Monsignor Vaega. It is, you know, the very big material, the whole 
thing, this man, about the activity of this man, and how the Hungarian 
refugees everywhere and how even the European, the governments, 
are shocked by this man. 

I got from Vienna two letters, two copies of these letters of this 
man. He wrote these letters to his friend or perhaps to some other 
man, and these letters prove now every much that this man began to 
work against Hungary and against the freedom of the free world, and 
how did he begin to operate against, with Communists, against the 
democracies. 

It is a very interesting letter. I am sorry it is in Hungarian lan- 
guage. I will translate, and I will send it to the subcommittee, and 
you can read how he will give some names and how did he begin to 
work against the free world, telling why did I escape, why did I 
leave, why did I go back to Hungary ? Because I would like to work 
for freedom. This Russian peace propaganda. 

Immediately in this letter of his, which is 

Mr. Morris. This is a letter, Monsignor 

Monsignor Varga. This is a goodby letter of Szabo to Mr. Paraczky 
in Vienna, P-a-r-a-c-z-k-y. 
Mr. Morris. What is his first name ? 
Monsignor Varga. Stephen Paraczky. 
Mr. Morris. So Szabo wrote to Paraczky on what date ? 
Monsignor Varga. He wrote this letter, and it is a very interesting 
letter to study even the Communist propaganda and to study Com- 
munist infiltration. 

This letter is a document, how he began to work. Wlien he left the 
free world, he began to work immediately, according to his goodby 
letter, among the Hungarian refugees, attacking — as I told in my 
statement, how important it is to keep the hope of our people in 
Hungary. And if the refugees, for instance myself, I will lose the 
hope and I will lose my courage to fight against communism, our peo- 
ple in Hungary will lose the hope and courage and they will sicken 
to apathy; and the Communists, it will be very easy work for the 
Communists, for the Russians to liquidate everything in Hungary 
and the other countries behind the Iron Curtain. 

And this letter is a very important fact in this work, because he 
wrote that the refugees are just working for money of America, and 
as a witness, you know, he will tell to eveiybody in Hungary, and 
this letter will be read in copies by many Hungarians, and I am 
sure that the Communists will propagate this letter. 

Because it was written, this letter, I am perfectly sure, it was writ- 
ten, not by Miklos Szabo, but it was written by the Hungarian secret 
police, because it is an example of how can you infiltrate to people, 
and how can you destroy the hope and the strength of the resistance 
of the spirit and of the heart. 

And now, he began immediately in this letter the Russian peace 
propaganda, "I will work for the peace." Peace, peace, always it is 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4659 

the Russians, and he began it, the third one, he began to preach very 
much Czechoslovakia. 

As you know. Senator Jolinston, the Hungarians are very deeply 
connected with the Polish people. The Poles influence the Hungari- 
ans, and the Hungarians were inspired in the revolution — the Hun- 
garian revolution began in Poland, but it was stopped. 

The Hungarians took over the revolution, and they continued the 
revolution, and they are old friends, for years, old friends, loving 
each other, these two people. 
I Now, it is to the interest of the Russians to destroy in the Himgarian 
people the friendship for the Poles. And, now, I don't want to hurt 
any in Czechoslovakia, because it is, I know, many and mostly and a 
very high percentage of Czechoslovakia is anti-Communist. But the 
Czechoslovak Communist Party, as we know, in the Government is a 
Stalinist government. And this man, for Hungarians to the Hun- 
garians, began immediately to praise that we have to follow, not 
Poland, we have to follow not even the other countries, but we have to 
follow as our example Czechoslovakia. 

These three documents are in this letter, and the Communist police, 
the Communist infiltration, Russian infiltration, naturally began to 
work immediately by this goodbye letter of this Miklos Szabo, of this 
traitor. 

Mr. Morris. Monsignor, will you give us a translation of those 
letters? 

Monsignor Varga. I will send a copy of this, and I will translate 
it. 
! Mr. Morris. A translation of it. 

Monsignor Varga. Translation. 

Mr. Morris. And, Senator Johnston, may that go into the record 
when received from Monsignor Varga, at this place in the record ? 

Senator Johnston. Wlien we receive that translation, that will 
become a part of the record at this place. 

Monsignor Varga. Thank you. 

(The document referred to had not been received at the time this 
publication was sent to the printers.) 

Mr. Morris. Is there anything else, Monsignor Varga, you can 
tell us? 

Monsignor Varga. Now, everybody knew that this man had a car 
in Vienna. To have a car in Europe, not as here in America — to 
have a car here in America it means it is necessary for work, but in 
Europe the car is some luxury, and this man had a car, and he proves 
in the other letter that he was very poor, and he discussed himself al- 
ways as a poor man. "I don't have clothes, I don't have money," 
and he is complaining in this letter, the other letter to some man, 
Sandor Kiss, who is general secretary of this revolutionary council 
in New York, and he complains that, "I was very poor," and telling 
that "I left because nobody helped me." 

And the other letter may I translate, and I will send this letter, 
too, because it is his letter, the letter of this Szabo. 

Senator Johnston. Yes. 
: Mr. Morris. "WHiere did this man get his money, do you know? He 
did have money, you say. 



4660 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Monsigiior Varga. He had to have money, because it is sure, it is 
proved, and everybody knew, it is just public opinion, that he was the 
man who gave the money to many people w^ho went to Strassburg to 
organize the Strassburg Council in this year, January and February, 
and who were traveling, they got money always from this man. 

And this man had a car, and he got money from the Strassburg 
Council, too. He was paid as the representative of this revolutionary 
council, as it is proved in this letter which w^as sent to Sandor Kiss. 

He got money, and it is proved how much money he got from New 
York, from this Strassburg Kevolutionary Council. And as I heard, 
you know^, he was a very careful — even poor Vidovics, who is a very 
honest man, wrote me a letter that — 

He asked me and he even helped me, he has helped me because I don't have 
money. It is a very great suspicion. 

I worked in the Polish underground, helping the Polish under- 
ground during the war, and I knew that the Russians sent always 
spies to Poland and Hungary, just very poor men. It was a Eussian 
custom. And I feel, it is just a feeling, that he proved always that, 
"I am very poor, I am very poor, I am very poor," repeating always, 
and everybody knew he had money. It was that he was a spy, a well 
educated spy, who disguised and who covered the real thing that he 
had money, because he was able to help many refugees, as we know, 
and he helped to organize the revolutionary council in Strassburg. 

Senator Johnston. Did he have any job or any source of income 
that you knew about ? 

Monsignor Varga. No. Only, which I knew, he was the head of 
this mentioned committee in Vienna for the help of the refugees, and 
he was, as in this letter it is clear, he was an employee of the Strass- 
burg Revolutionary Council as representative, and he got $150 for a 
month in Vienna from this revolutionary council in New York. 

I know just these two. But in Vienna when I was in Vienna, I 
heard many things which made the impression, the well-based im- 
pression, that he had money from other sources, as I heard, and I am 
sure that other witnesses will tell that he got money from other 
sources, too, 

I know some sources, but I could not prove them. 

Mr. Morris. Anything else, Monsignor, you can tell us about this 
case? 

Senator Johnston. You say you know of other sources but you 
cannot prove them. What do you mean by that ? 

Monsignor Varga. I heard, I got a letter from Vidovics 

Senator Johnston. We want to know what you heard, too, so maybe 
we can connect it up somewhere else, 

Monsignor Varga. I got a letter, for instance, from Vidovics, and 
in this letter Vidovics wrote me that he got money from a gentleman 
in Vienna ; and if Vidovics will be here, he will tell all of the stories, 
as an eye witness, and about the whole material in Vienna. 

Mr. Morris. I do not understand that, Monsignor, He got money 
from whom ? Vidovics said he got money from whom ? 

Monsignor Varga. I have a letter from Vidovics, Mr. Vidovics, yes- 
terday, and he wrote that he cheated Vidovics even, and he cheated 
another man, and the name is Mr. Faust, F-a-u-s-t, and Vidovics 



SCOPE OF SOVIET ACTIVITY EN THE UNITED STATES 4661 

knows about that, as he wrote me in the letter. He can testify to all 
of these things, you know. 

Mr. Morris. Does it mean he was getting money from Commimist 
sources ; is that the effect of it ? 

Monsignor Varga. I am sure, in the last time, you know, I am per- 
fectly sure that he was a traitor, and as a traitor he got money from 
the Kussians and from the Communists. It is not a question. He 
had money, and he worked with the Kussian and Hungarian Commu- 
nist money, because he is a traitor. And even if he was planted later 
among the Hungarian refugees, in this case, too, he was planted not 
just in the last day, he was planted months and months before. 

Mr. Morris. But it is your testimony. Doctor, if we call Mr. Vido- 
vics and other witnesses, we will learn precisely the source of the 
money ? 

Monsignor Varga. Yes ; I am sure you will hear about the sources, 
financial sources, of this man. 

Mr. Morris. Is there anything else, Monsignor ? 

Monsignor Varga. Senator Johnston, may I tell that in, some 
months ago, in the redefection campaign, your committee saved the 
Hungarian, the honesty of the Hungarian refugees, and we Hun- 
garians are very grateful to this committee that in this time the sub- 
committee, your subcommittee, saved our honesty and saved our work 
together with the Americans, and I am very grateful in the name of 
all Hungarians, in Hungary at home and in the world abroad of the 
country, that you now, I am sure, you will save again our ^ood name, 
because we have just one purpose: To work with America for the 
freedom of the world. 

Thank you very much. 

Senator Johnson. Thank you. 

Mr. Morris. Thank you. 

Senator, I have one more witness available here today, and that is 
Mr. Szeredas. I don't think it will take very long. 

Senator Johnston. Will you raise your right hand and be sworn? 

Do you swear the evidence you will ^ive before this committee to be 
the truth, the whole truth, and nothing but the truth, so help you 
God? 

Mr. Szeredas. Yes. 

Mr. Morris. You do not speak English, do you ? 

Mr. Szeredas. I do not. 
^ Mr. Morris. I notice among the spectators, Dr. Kerekes, the dis- 
tinguished professor from Georgetown University. 

Dr. Kerekes, will you help us in this particular situation ? We have 
a witness here who cannot speak English. 

Dr. Kerekes. Yes, sir. 

Mr. Morris. You wouldn't mind taking the interpreter's oath, 
Doctor ? 

Senator Johnson. Doctor, you swear to this committee that you 
will interpret, to the best of your ability, whatever the witness testifies 
on this stand ? 

Dr. Kerekes. I do. 

Mr. Morris. Will you give your name and address to the reporter ? 

Dr. Kerekes. Tiber Kerekes, 3715 Reservoir Road, Washington, 

'JL/. kj. 



4662 SCX)BE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. And you are a professor at Georgetown University ? 
Dr. Kerekes. Georgetown University, yes. 

TESTIMONY OF EUGENE SZEREDAS, THUOUGH AN INTERPRETER, 

DR. TIBOR KEREKES 

Mr. Morris. Mr. Szeredas, what is your full name ? 

Mr. Szeredas (in English). Eugene. 

Mr. Morris. Eugene Szeredas ? 

Mr. Szeredas (in English). Yes. 

Mr. Morris. That is spelled S-z-e-r-e-d-a-s ? 

Mr. Szeredas (in English). Yes. 

Mr. Morris. You were one of the Freedom Fighters ? 

Mr. Szeredas (in English). Yes; and vice president of the Hun- 
garian Revolutionary National Council. 

Mr. Morris. And you are vice president of the Hungarian Revolu- 
tionary Council ? 

Mr. Szeredas (in English) . Yes. 

Mr. Morris. And when did you come to the United States ? 

Mr. Szeredas (in English). December. 

(The following answers of Mr. Szeredas were given through the 
interpreter:) 

Mr. Szeredas. December 28, 1956. 

Mr. Morris. Will you tell us generally what the Hungarian Revo- 
lutionary Council was or is ? 

Mr. Szeredas. It started at the height of the revolution back between 
October 23 and November 4. It was led by a man by the name of 
Dudas, D-u-d-a-s, Joseph, who, as I said before, was its leader or head, 
who since stood trial and he was hanged by the Kadar regime. 

Mr. Morris. The Hungarians hanged the leader of the council, 
Dudas ? 

Mr. Szeredas (in English). Yes. 

Mr. Morris. And you were its vice president ? 

Mr. Szeredas (in English) . Yes. 

Mr. Morris. In connection with — did you ever know Szabo in Hun- 
gary itself ? 

Mr. Szeredas (in English). No. In Hungary ; no. In Vienna. 

Mr. Morris. You knew him in Vienna ? 

Mr. Szeredas (in English). Yes. 

Mr. Morris. All right. 

Now tell us what you know about Szabo. 

(The following answers of Mr. Szeredas were given through the 
interpreter : ) 

Mr. Szeredas. I met him in Vienna in the so-called Rothschild Hos- 
pital where I was staying myself, and Szabo came to that hospital, 
invited me to meet with him in a coffeehouse in order to give him 
information upon settling the Hungarian Revolutionary Committee. 

Mr. Morris. In order to take from you, Szabo wanted to receive 
from you 

Mr. Szeredas. Yes ; asking me for information concerning the activ- 
ities of this committee. 

In the company of Szabo there was a photographer and two news- 
paper people who participated in the revolution itself, but from Vienna 
have returned to Budapest while the revolution was still on. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4663 

Mr. Morris. In other words, see if I understand this : With Szabo 
at that time wlien you met him in the coffeehouse were two newspaper- 
men and a photographer who have since returned back to Budapest ? 

Mr. SzEREDAS (in English). No, sir. 

(The following answers of Mr. Szeredas were given through the 
interpreter:) 

Mr. Szeredas. I just wanted to present a side picture concerning 
the activities of Szaljo. 

The story is as follows : After the first meeting, I had 2 more or 2 
additional meetings with Mr. Szabo in the company of the reporters 
and of the photographer. I learned that after the meeting with him, 
these people, the photographer, the reporters, and Szabo, went to the 
Hungarian Legation in Vienna, and I learned also then later that the 
photographer and the newspaper reporters returned to Hungary. 

Mr. Morris. What kind of information did they extract from you 
at that time ? 

Mr. Szeredas. I am sorry that I believed in Szabo's honesty, and 
consequently I divulged my own participation in that revolution, as 
well as the participation of Dudas and all my close associates who 
were active in the revolution itself. 

Mr. Morris. Was that prior to the execution of Dudas ? 

Mr. Szeredas. I believe that at least part of the information which 
I have given Szabo was used in the trial of Dudas, against Dudas. 

Mr. Morris. In other words, this meeting with Szabo and your- 
self was prior to the execution of Dudas ? 

Mr. Szeredas. Yes. 

Mr. Morris. What kind of questions were they asking you, Mr. 
Szeredas? 

Mr. Szeredas. First he wanted to get from me the information con- 
cerning the names and addresses of those who participated in the revo- 
lution but remained in Hungary. The explanation for his question 
was that he would like to aid those people in their escape to the, 
respectively, to Austria, so that was the first question asked by Szabo 
of me. 

Senator Johnston. Did you find that any of the names that you 
gave to him, that he did aid them in the future or after that ? 

Mr. Morris. Did he aid any of these people ? 

Senator Johnston. Did he aid any of them ? 

Mr. Szeredas. Actually, no people were helped by him immediately. 
He explained to me that the aid and help for these people will come 
later, but he suggested to me that I should move out of the Eothschild 
Hospital where I was staying, and that Szabo would give me money 
to establish for myself regular private apartment, and asking that 
I should then collect all the data concerning the revolution and pre- 
pare, so to speak, a report on the revolution, with facts, because 
Szabo told me that he intends to write a story or a history of the 
revolution. 

So, in other words, he offered me money, offered me an apartment, 
if I will give him the facts and data of the revolution in writing. 

Mr. Morris. Did you give him names, Mr. Szeredas, of people who 
helped ? 

Mr. Szeredas. At my second conversation with Mr. Szabo, I received 
from him the name and address of another Hungarian refugee who 



4664 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

had nothing to do with the revolt itself. He was an escapee or refugee 
of the previous period, by the name of Dessilo, D-e-s-s-i-1-o, first name 
Darroczy, D-a-r-r-o-c-z-y. 

I went there to Darroczy Dessilo, who in turn made it possible for 
me to receive an apartment in a pension, in kind of a roominghouse, on 
Dorothy Street in Vienna, and in that apartment I was furnished with 
a typewriter, and the request was that I should now produce the data 
on the revolution. 

Mr. Morris. Did you do that ? 

Mr. SzEREDAS. I started to work, but during one of my walks I ob- 
served that Szabo and those two reporters to whom I previously 
referred, went into the Hungarian Legation, so I became suspicious 
and stopped the continuation of the work or the writing. 

I was then waiting there in front of the Hungarian Legation as 
much as I observed that blue Russian automobile, which I had seen 
previously in use by Szabo, and waited and saw that Szabo came out 
from the Legation with these two reporters, and tiiey went into the 
automobile and drove off. 

And in consequence, or from that spot, I immediately went to that 
Mr. Darroczy — Dessilo Darroczy — who secured for me the new apart- 
ment, and asked him how come that Szabo uses a Communist automo- 
bile and that he goes back and forth in the Hungarian Legation. 

Darroczy's answer to me to this question, "How come that Szabo 
goes back and forth in the Hungarian Legation?" was that accord- 
ing to his knowledge ; namely, to Darroczy's knowledge, there are still 
revolutionary representatives in the Hungarian Legation who had not 
been removed from there yet, and consequently he establishes his 
friendly revolutionary relationships with those people. 

Mr. Morris. If that were the case, he would be exposing them, would 
he not, by driving up in his own automobile and walking into the Lega- 
tion ? If tliat were the case, he would be exposing his contact ; would 
he not ? 

Mr. SzEREDAS. During the revolution, several automobiles were 
brought out from Hungary, and this blue automobile which was used 
by Szabo was one of those. In consequence, that did not arouse any 
sort of particular suspicion, because it was one of the several automo- 
biles which were brouglit out from the revolution. But after, about 
the end of November or the second part of November, that automobile 
went back to Hungary, and was not seen any more in Vienna. 

Mr. Morris. Do you know where this man is now who gave you the 
typewriter and the apartment in which to supply names to Szabo ? 

Mr. SzEREDAs. According to my knowledge, he is in Vienna. 

As soon as this incident happened ; namely, that I confronted Dor- 
roczy with a question, I was told that I should clear out from my 
apartment, that they did not pay it any more. In fact, they withdrew 
from me my meal tickets which I had received from them, and also they 
took away the typewriter. 

Mr. Morris. They took away your meal tickets and typewriter ? 

Mr. SzEREDAS. Meal tickets, typewriter, and discontinued the pay- 
ing for the apartment or the room. 

Mr. Morris. Is there anything else, Mr. Szeredas, you can tell us 
about this man ? 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4665 

Mr. SzEREDAS. I had, at the time of the third meeting, general con- 
versation with Szabo, and at the time I informed Szabo that I had 
my permit to leave for the United States. And then Szabo told me 
that if I wish to establish myself in the United States, the person 
whom I should see and to whom I should present myself and who is 
going to aid me is Ferenc, F-e-r-e-n-c, Nagy, N-a-g-y. 

Because of this incident itself, and because I had my suspicions 
aroused, when I arrived at the United States I failed, however, to 
present myself to Ferenc Nagy, and I have not met with him. 

Otlierwise, I know nothing about the activities of Szabo. 

Senator Johnston. Any other questions ? 

Mr. Morris. Is there anything else you can tell us about this, Mr. 
Szeredas ? 

Mr. SzEREDAs (in English). No. 

Senator Johnston. We certainly appreciate your coming here to- 
day and giving us this information. 

I think it shows one thing that certainly appears to us here : that 
they have been, and they are carrying out the Communist movement, 
there are certain cruel acts of espionage among the Hungarian 
escapees when you see what has taken place and what takes place 
when someone comes into your own ranks and tries to tell you falsely 
what they are doing, and I think we have got to watch that very 
closely. 

Mr. Morris. Senator, I submit it represents probably a great 
tragedy for many Hungarians back in Budapest. The cruelty of the 
thing is apparent. 

Senator Johnston. That is apparent. 

I think the testimony has proven to me in particular, and I happen 
to be the only member of the committee here, and I think the attor- 
neys who are here on this subcommittee will also agree, that this 
matter should be looked into further, and we hope to continue the 
hearings in the very near future. 

Mr. Morris. Thank you. Senator. 

( Wliereupon, at 3 : 30 p. m., the subcommittee recessed, subject to 
call.) 



!r 



INDEX 



Note. — The Senate Internal Security Subcommittee attaches no significance 
to the mere fact of the appearance of the name of an individual or an organiza- 
tion in this index. 

A 

Page 

American Friends of the Captive Nations 4647 

Assembly of Captive European Nations 4G47 

Attorney General 46.58 

Austria 4650 

B 

Berle. A. A., Jr 4647 

Budapest 4651, 4652, 4654^656, 4662, 4663, 4665 

C 

Cherue. Leo 4647 

Communist(s) 4647, 4649, 4650, 4652^658, 4661, 4665 

Communist Party 4648 

Czechoslovak 4659 

Continuing Challenge of the Hungarian Situation to the Rule of Law: 
Supplement to the Report of the International Commission of Jurists, 

The 4647 

Czechoslovakia 4659 

D 

Dessilo, Darroczy 4664 

Dudas, Joseph 4662, 4663 

F 

Faust, Mr 4660 

First World War 4657 

H 

Hungarian(s) 4649, 4659, 4661 

Hungarian Army 4652 

Hungarian Culture and Relief League 4652, 4654 

Hungarian Freedom Fighters Federation 4647, 4662 

Hungarian Legation in Vienna 4654, 4663, 4664 

Hungarian National Council 4647, 4648, 4650, 4653, 4662 

Hungarian Parliament 4648, 4649 

Hungarian Social Demorcatic Party in Hungary 4652 

Hungary 4648-^653, 4655^658, 4660, 4661, 4663, 4664 

Hungary Under Soviet Rule : A survey of developments since the report 

of the U. N. Special Committee pamphlet 4647 



International Commission of Jurists, report of the 4647 

Iron Curtain 4649, 4651, 4658 

J 
Johnston, Senator Olin D 4647 

I 



n ESTDEX 

K 

Past 

Kadar regime 4662 

Kerekes, Tibor : 

3715 Reservoir Road, Wasliington, D. C 4661 

Professor at Georgetown University 4661 

Interpreter for Eugene Szeredas 4662 

Kethly, Anna 4651, 4652, 4655 

Kiraly, General 4651, 4652 

Kiss, Sandor 4659, 4660 

Kovacs, Bela 4650, 4651 

Kovago, Mayor 4651, 4652 

L 
Luce, Clare Booth 4647 

M 

Mandel, Benjamin 4647 

Morris, Robert 4647 

N 

Nagy, Ferenc 4665 

National Hungarian Federation 4649, 4650 

National Representation of Free Hungary 4647 

Nazi regime 4657 

New York 4648, 4651, 4659, 4660 

New York Times 4656 

Niebuhr, Reinhold 4647 

P 

Paraczky, Stephen 4658 

Poland 4659,4660 

Poles 4659 

R 
Revolutionary Council in Strassburg. (See Strassburg Revolutionary 
Council.) 

Rothschild Hospital in Vienna 4662, 4663 

Russian (s) 4649, 4650, 4658-4661 

Russian Army 4654 

S 

Salzburg 4649 

Schroeder, Frank W 4647 

Siberia 4650 

Smallholder Party in Vienna 4648, 4650, 4652, 4654, 4655 

Soviet 4648 

Special Committee on the Problem of Hungary, A/3592, Report of the__ 4647, 4653 
Strassburg 4652, 4654 

Strassburg Revolutionary Council 4652, 4654-4657, 4660 

Switzerland 4649 

Szabo, Miklos 4648, 4650-4654, 4656-4659, 4662, 4663, 4665 

Szeredas, Eugene 4661 

Testimony of 4662-4665 

Interpreted by Dr. Tibor Kerekes 4662 

One of Hungarian Fi-eedom Fighters 4662 

Vice president of Hungarian Revolutionary National Council 4662 

Came to United States in December 1956 4662 

U 

United Nations 4647 

United Nations Commission 4656 

United Nations General Assembly 4653 

United States 4648 



INDEX in 

V 

Page 

Varga. Msgr. Bela 4647 

Testimony of 4648-4662 

Koman Catholic prelate 4648 

Speaker iu Hungarian Parliament 4648 

President of Hungarian National Council 4648 

Vidovics, Ferenc 4657, 4660, 4661 

Vienna 4649-4652, 4654-4660, 4662 

Voroshilov, Marshal 4649, 4650 

O 



^SITOHY 



,-'>5l—-tJ»^-J 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

(Anonymous Foreign Capital) 



HEARING 

vii. BEFORE THE-, ;.fjjj 

SUBCOMMITTEE TO INVESTIGATE THE 

ADMINISTRATION OP'THE INTERNAL SECURITY 

ACT AND OTHER INTERNAL SECURITY LAWS 

OF THE 

COMMITTEE ON THE JUDICIMY 

UNITED STATES SENATE 

EIGHTY-FIFTH CONGRESS 

FIRST SESSION 

ON 

SCOPE OF SOVIET ACTIVITY IN THE 
UNITED STATES 



OCTOBER 1, 1957 



PART 84 



Printed for the use of the Committee on the Judiciary 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
93215 WASHINGTON : 1958 



Boston Public Library 
Superintendent of Documents 

MAR 1 1 1958 

COMMITTEE ON THE JUDICIARY 

JAMES O. EASTLAND, Mississippi, Chairman 

ESTES KEFAUVER, Tennessee ALEXANDER WILEY, Wisconsin 

CLIN D. JOHNSTON, South Carolina WILLIAM LANGER, North Dakota 

THOMAS C. HENNINGS, Jr., Missouri WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utah 

JOSEPH C. O'MAHONEY, Wyoming EVERETT McKINLEY DIRKSEN, Illinois 

MATTHEW M. NEELY, West Virginia JOHN MARSHALL BUTLER, Maryland 

SAM J. ERVIN, Jr., North Carolina ROMAN L. HRUSKA, Nebraska 



Subcommittee To Investigate the Administration of the Internal Security 
Act and Other Internal Security Laws 

JAMES 0. EASTLAND, Mississippi, Chairman 
OLIN D. JOHNSTON, South Carolina WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utah 

SAM J. ERVIN, Jr., North Carolina JOHN MARSHALL BUTLER, Maryland 

MATTHEW M. NEELY, West Virginia ROMAN L. HRUSKA, Nebraska 

Robert Morris, Chief Counsel 

J. G. SoURWiNE, Associate Counsel 

Benjamin Mandel, Director of Research 

II 



CONTENTS 

Testimony of — . „^„ 

DuVal, Pierre ^^i 

Lefkowitz, Louis J '*"*^' 

HI 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 



TUESDAY, OCTOBEB 1, 1957 

United States Senate, 
Subcommittee To Investigate the 
Administration of the Internal Security Act 
AND Other Internal Security Laws 
OF the Committee on the Judiciary, 

New York, N. Y. 

The subcommittee met, pursuant to call, at 10:40 a. m., in room 
36, United States Courthouse, Foley Square, New York City, Senator 
Olin D. Johnston (South Carolina) presiding. 

Also present: Robert Morris, chief counsel; Benjamin Mandel, in- 
vestigator ; Roy Garcia, consultant. 

Senator Johnston. I call to order the subcommittee known as the 
Internal Security Subcommittee of the Judiciary Committee of the 
Senate. We will now proceed. 

This meeting is, of course, to look into the matter of millions and 
billions of dollars coming into the United States through Switzer- 
land. We do not say that these funds are coming from Russia or 
are tainted with Russian activities, but we want to look into the matter 
to protect our American interests and our security in America and be 
sure that that is not taking place. Our attorney, Mr. Robert Morris, 
will now take over. 

Mr. Morris. Senator Johnston, the first witness appearing in public 
session this morning will be the attorney general of the State of New 
York, the Honorable Louis J. Lefkowitz. Mr. Lefkowitz has gone 
into some aspects of the particular matter that you have set forth, and 
is prepared to testify in a limited way today in connection with our 
present inquiry. Senator. 

Senator Johnston. We understand that, and we want to be care- 
ful what we do here because we do not want to do anything that might 
jeopardize at any time then any matters that might be pending in the 
court. 

You may proceed. 

Mr. Morris. Will you stand to be sworn, Mr. Lefkowitz? 

Senator Johnston. Do you swear that the evidence you give before 
this Subcommittee of the Judiciary Committee of the Senate will be 
the truth, the whole truth, and nothing but the truth, so help you God ? 

Mr. Lefkowitz. I do. 

Mr. Morris. Formally, will you give your name and address to the 
reporter, General Lefkowitz. 

4667 



4668 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

TESTIMONY OF LOUIS J. LEFKOWITZ, ATTORNEY GENERAL, 

STATE OF NEW YORK 

Mr. Lefkowitz. Louis J. Lefkowitz, 390 Western Avenue, New 
York, N. Y. 

Mr. Morris. And you are the attorney general of the State of New 
Y^ork, are you not ? 

Mr. Lefkowitz. I am, sir. 

Mr. Morris. I believe. General Lefkowitz, that we have reviewed 
in staff sessions with you the general nature of the inquiry that the sub- 
committee is undertaking, 

Mr. Lefkowitz. Y^ou have, with my staff. 

Mr. Morris. And what we are trying to do is to determine whether 
or not the existing situation is such that it could possibly warrant new 
legislation in the forthcoming session of the United States Senate. 
Now, could you tell us General Lefkowitz, the nature of the pro- 
ceeding commenced by the attorney general's office regarding certain 
Swiss banks in Geneva ? 

Mr. Lefkowitz. On April 23 of this year, my office proceeded in 
the supreme court. New Y^ork County, under the State securities 
frauds law, which we commonly refer to as the Martin Act. We 
obtained a court order requiring two Swiss firms to appear in court 
on Jmie 14, 1957, and produce their records concerning the transac- 
tions mentioned in the attorney general's affidavit. 

Mr. Morris. What are the Swiss banks specifically charged with? 

Mr. Lefkowitz. The affidavit submitted by my office in court relates 
that the chief subject of the order of inquiry was a Swiss firm located 
in Geneva; namely, the S. A. DePlacements Mobiliers. 

Mr. Morris. May I spell that for the stenographic reporter? Is 
that S. A. D-e-P-1-a-c-e-m-e-n-t-s M-o-b-i-l-i-e-r-s ? 

Mr. Lefkowitz. That's correct. Which, in international circles, 
is usually referred to as "Placemobile.'' We set forth in our papers 
that this firm was directly implicated in fraudulent practices which 
caused the investing public the loss of many millions of dollars by 
the purchase of Green Bay Mining & Exploration, Ltd., securities, 
an Edmonton, Alberta, corporation. 

Senator Johnstox. Where is that located ? 

Mr. Lefkowitz. In Canada. 

Senator Johnston. Proceed. 

Mr. Lefkowitz. Moreover, our affidavits set forth that this Place- 
mobile firm was operated, at least to the extent of 50 percent, for 
persons residing behind the Iron Curtain. The affidavit also stated 
that another Swiss bank named in tlie court papers held this 50 
percent of the securities of Placemobile. Subsequent to these court 
papers having been filed, representatives of my office examined a 
principal officer of the second Swiss bank under oath in Montreal, 
Canada. According to that official's testimony, this 50 percent of 
the stock of Placemobile was held by the Swiss bank of Ferrier 
LullinetCie. 

Mr. Morris. Will you spell that ? 

Mr. Lefkowitz. F-e-r-r-i-e-r L-u-1-l-i-n e-t C-i-e. In a numbered 
account, being No. 3490. This numbered account was opened for 
Charles Robert Stahl, a person who has been permanently barred from 
the securities business in this State on his consent. Mr. Stahl thus 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4669 

held, in his own name, under a numbered account at Ferrier Lullin et 
Cie., 50 percent of the shares of Placemobile. 

Mr. Morris. Have you been able to ascertain what Placemobile 
did with the moneys it obtained from the sale of the Canabuild units ? 

Mr. Lefkowitz. Well, we have definite proof, in the form of affi- 
davits, that persons in New York State bought securities from that 
Swiss bank or its agencies. If you want me to specifically answer 
your question, I don't think we are in a position to answer that, Mr. 
Morris. 

Mr. Morris. Did DePlacements Mobiliers actually sell securities to 
persons in New York ? 

Mr. Lefkoavitz. They did. We have definite proof, as I said a 
moment ago. in the form of affidavits, that persons in New York State 
bought securities from tliat Swiss bank or its agencies. It should also 
be pointed out at this time that Canabuild, Ltd., an Edmonton, Can- 
ada, fund, sold units throughout the world, including New York, 
through the utilization of Placemobile as the issuer and chief distribu- 
tor of such units. We have received correspondence subsequent to 
the publicity attending our court proceeding from persons in other 
States who purchased the shares of Canabuild. The prospectus of 
Canabuild makes it clear that the Swiss bank is issuing and offering 
the units. Though Placemobile acted as a dealer in securities in New 
York State, and apparently in other States also, that bank never quali- 
fied as a dealer in securities in New York State or, to our knowledge, 
elsewhere in this country. 

Mr. Morris, in answer to your question, did we ever find what Place- 
mobile did with the moneys it obtained from the sale of the Cana- 
build units, we have never ascertained that information. 

Mr. Morris. Is there an inquiry underway to so ascertain? 

Mr. Lefkowitz. There is an inquiry in that regard as well as other 
places, but we haven't been able to reach the tangible evidence as to 
just what was done with the moneys. 

Mr. Morris. How were investments made by the Canabuild, Ltd., 
fund? 

Mr. Lefkowitz. Investments were made in leading Canadian, 
American, British, and Dutch corporations in such a manner that, 
within a short 2-year period, almost $2 million worth of securities of 
major corporations were purchased by the fund with moneys obtained 
from the sale of its units. 

Mr. Morris. Wliat was the technique used by the interest behind 
the Iron Curtain? And this is something that we are particularly 
interested in. General Lefkowitz. 

Mr. Lefkowitz. I will give you the benefit of whatever our investi- 
gation shows and what we have already recorded in papers. In 
answer to your specific question, we ascertained that, in the year 1955, 
on the official records of Placemobile in Switzerland, it was indicated 
that Placemobile was owned to the extent of 50 percent in the form of 
bearer shares held and voted by Ferrier Lullin et Cie., a bank with 
an international reputation. 

By the device of Stahl, whose name I mentioned before, placing 
this 60 percent interest, representing 500 shares of stock, in a num- 
bered account at a leading Swiss bank, there was disguised from the 
world the true ownership of Placemobile. This 50 percent interest 



4670 SCOPE OF SOVIET ACTIVITY IN" THE UNITED STATES 

which Stahl controlled in a numbered account with Ferrier Lullin 
et Cie. represented ownership in Placemobile by persons residing 
behind the Iron Curtain. On several occasions prior to instituting 
the action which I have described before, members of my staff asked 
Stahl's attorneys for details concerning the stock ownership. The 
only answer forthcoming was that the stock was owned by persons 
behind the Iron Curtain whose names could not be divulged. 

Mr. Morris. So that it will be clear to the subcommittee, General 
Lefkowitz, may I just linger on that for a short time? The 500 
shares of stock was held in a numbered account ? 

Mr. Lefkowitz. That is correct. 

Mr. Morris. Were those 500 shares owned by Ferrier Lullin et Cie. ? 

Mr. Lefkowitz. This numbered account was in the bank whose 
name I mentioned, no name in the account, just a numbered account. 

Mr. Morris. That is a numbered account. On a numbered account 
you cannot possibly obtain the identity of the people? 

Mr. Lefkowitz. No ; but we understand that the bank itself voted 
the shares of stock at stockholders' meetings on one occasion. 

Mr. Morris. What bank so voted ? 

_Mr. Lefkowitz. Ferrier Lullin et Cie., and that is a Swiss bank 
with a large international reputation. In fairness, this bank dis- 
closed to us that they believed, when they so voted the stock, they were 
acting on behalf of and for Stahl, whose name I mentioned. 

Mr. Morris. And actually they were acting on behalf of persons the 
identity of whom they could not ascertain ? 

Mr. Lefkowitz. I think they insisted that they believed they were 
acting for Stahl. That is a fair statement. That is their statement. 
I have no reason otherwise to indicate anything else except the state- 
ment they made to our office. 

Mr. Morris. Senator, that is an example, type of an example that 
we have been looking for in connection with this present inquiry. 
Here you have the almost classic device of people who belong behind 
the Iron Curtain using one of these numbered accounts in order to 
establish an anon^'mous position so they can effectively penetrate the 
economy of another government. 

Senator Johnston. You are running into the same thing that the 
committee has run into on several occasions because of the Swiss banks 
using numbers instead of names. Under their law, when we go to 
try to find out whose money it is that has been deposited to that num- 
bered account, they will not tell us and according to the Swiss laws 
they cannot do so, they say. I think you found that to be true. 

Mr. Lefkowitz, We have found that out. 

Mr. Morris. General Lefkowitz, how did these acts by the Swiss 
bank constitute fraud on the State of New York public, if that is the 
case? 

Mr. Lefkowitz. Placemobile was charged with conspiring to com- 
mit fraudulent practices involving the distribution of Green Bay Min- 
ing & Exploration, Ltd., stock, which caused a great loss to American 
investors. In addition, it is our opinion that, by concealing from the 
American public that Green Bay had large deposits of money in a 
Swiss firm, Placemobile, which was being operated for the benefit 
of persons behind the Iron Curtain, Placemobile committed a fraudu- 
lent concealment in violation of our State law. It was our feeling that 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4671 

even if these interests were innocent and not Communist-dominated, 
any interest behind the Iron Curtain is so subject to government control 
that Communist governments could easily deceive the persons acting 
in Switzerland for the benefit of the Iron Curtain residents into fol- 
lowing false instructions. 

I am sure that the peril of such a situation is obvious to anyone upon 
careful examination. Moreover, I wish to emphasize that Placemobile 
was trustee for the Canabuild, Ltd., fund, which fund was, for a few 
years, consistently purchasing rather large amounts of securities in 
American, Canadian, and Dutch firms. 

While only a few New Yorkers purchased units in Canabuild, my 
office thought it important to examine thoroughly the officials of 
Placemobile to determine this aspect of their operation. 

Mr. Morris. What is the present status of your action against Stahl 
and Placemobile? 

Mr. Lefkowitz. On March 7, 1957, Charles Eobert Stahl appeared 
at the American consul's office in Rio de Janeiro and consented to a 
judgment permanently barring him from the securities business in 
the State of New York. He did so at a time when there vras out- 
standing against him an order requiring his presence for examina- 
tion before the Supreme Court of New^ York County. Stahl never 
appeared before the supreme court to answer questions or explain his 
conduct, but chose to remain in Rio de Janeiro, where .he was re- 
siding at the time. Subsequent to our charges against Placemobile, 
which included a charge that the bank was practically bankrupt, 
we received an official communication from the office of Des Faillites, 
that is a bankruptcy office of the Republic and Canton of Geneva, 
stating that, by a court judgment dated May 1-1, 1957, a Swiss court 
had adjudged Placemobile to be bankrupt and has placed its affairs 
in the hands of officially appointed administrators. 

Subsequently we were in touch with these administrators and they 
have been cooperative in providing us with certain information con- 
cerning this firm. On August 5, 1957, the Supreme Court of New 
York County permanently barred S. A. DePlacements Mobiliers 
from ever again engaging in the securities business in New York 
State. 

This judgment was consented to by the Swiss officials in charge 
of administering the affairs of Placemobile subsequent to its bank- 
ruptcy. 

Mr. Morris. Have jou been in consultation 

Mr. Lefkowitz. I just want to finish this. 

Mr. Morris. Oh, I'm sorry. 

Mr. Lefkowitz, The firm of Ferrier Lullin et Cie, as I previously 
stated, compiled witli the purpose of the original court order by 
sending a representative for interrogation as to the affairs of that firm 
in connection with the 500 shares of Placemobile stock held by it for 
Charles Robert Stahl. 

Mr, Morris. Have you been in consultation with Swiss authorities 
in connection with all of this ? 

j\Ir. Lefkowitz, Yes. My office has. During the course of our in- 
vestigation, we have received cooperation of the Court of First In- 
stance of Geneva and from the Attorney General of Geneva. 

Mr. ^Iorris. Who are the persons and what are the firms behind 
the Iron Curtain for whom Stahl made investments ? 

93215— 58— pt. 84 2 



4672 SCOPE OF SOVIET ACTivrrY m the united states 

Mr. Lefkowitz. Our investigation thus far has not disclosed the 
identiiv of the persons behind the Iron Curtain. I will say, however, 
that the methods used to effectuate these investments disclose a cham 
of transfers of many thousands of dollars throughout the world to 
cover up I believe the true nature of the transactions. 

Mr. I^loRRis. Are the interests behind the Iron Curtain Communist 
interests ? 

I>Ir. Lefkowitz, I do not know. 

Mr. INIoRRis. There is a certain presumption through there that sets 
in, does it not ? 

Mr. Lefkowitz. I frankly can't even make such a statement that 
there is a presumption, but we do know they are in countries that 
are considered Iron Curtain countries, but I do not know whether 
in fact the persons involved are actually Communists. 

Senator Johnston. The only thing you do know, that it is coming 
from behind the Iron Curtain ? 

Mr. Lefkowitz. Yes. 

Senator Johnston. And you do know that behind the Iron Curtain, 
that those countries are controlled and dominated by Russia? 

]\Ir. Lefkowitz. I think that is a fact about which none of us will 
quarrel, the last part of your statement, and I answer "yes" to the 
first part of your question. 

Mr. Morris. General Lefkowitz, is this the first time that your office 
has moved against a business located in a foreigTi country ? 

Mr. Lefkowitz. No, it is quite customary for my office to seek 
injunctive relief in New York courts against securities firms operat- 
ing fraudulently from other countries, principally Canada. We have 
recently commenced an action and in fact obtained an injunction 
against the firm of Stahl, Miles & Co., Ltd., of Edmonton, Alberta, 
which is also involved in our investigation. 

Mr. Morris. What was the name of that company ? 

Mr. Lefkowitz. Stahl, Miles & Co., Ltd., of Edmonton, Alberta, 
which, of course, is in Canada. 

Mr. Morris. And the Stahl of that firm is the Stahl about whom 
vre have been speaking ? 

Mr. Lefkowitz. That is correct. 

Mr. Morris. How large a staff do you have to police the securities 
business in the entire State of New York, General Lefkowitz ? 

Mr. Lefkowitz. There are eight attorneys on my staff, and several 
investigators and they are charged with this tremendous responsibil- 
ity of policing the entire securities business in the State of New York. 
You can well understand how limited our operations must be for 
that ])urpose. However, I want to give praise to my office and I 
think they have been very effective and the men who are prijicipally 
charged with that duty have been very effective in the several months 
that I have had the privilege and pleasure to occupy the office of 
attorney general in this State. 

I might say that, during that period of time since January, we have 
obtained 145 injunctions permanently enjoining persons and firms 
from engaging in the securities business in this State. 

Senator Johnston. You would also say tliat, in the TTnited States, 
New York is more or less the heartbeat of all financial interests which 
come out from New York ? 



SCOPE OF SOVIET ACTIVITY EN THE UNITED STATES 4673 

Mr. Lefkowitz. Yes, it is the financial capital of the world and 
we have this tremendous population as well and I think every one will 
concede it is the financial capital, financial focus for the entire world. 

Senator Johnston. That's the reason you have to watch it so closely. 

Mr. Lefkowitz. That's correct. 

Mr. Morris. General Lefkowitz, on behalf of the subcommittee I 
would like to express our appreciation for the cooperation that you 
have been giving to the staff of the subcommittee during the past few 
months and we are apologetic for the fact that your appearance here 
has been twice postponed because of the press of Senate business in 
Washington. 

Mr. Lefkowitz. That's all right, I appreciate you have had a very 
busy session and I was glad to comply with any adjournments you 
requested. 

Senator Johnston. Mr. Attorney General, I also want to add that 
we certainly appreciate you coming before us here this morning and 
giving us this information, and we also apologize for having been so 
rushed down there with not only these kinds of matters but various 
and sundry other matters that we had to postpone the time to come 
up here to meet with you, and we hope you will forgive us for the 
delay. 

Mr. Lefkowitz. That is perfectly all right, and I am glad my office 
and myself were in a position to cooperate. 

(Whereupon, at 11 a. m., the committee proceeded into executive 
session. ) 

Senator Johnston. The committee will come to order. 

Mr. Morris. Mr. DuVal, would you stand for the open hearing to 
be sworn, please ? 

Senator Johnston. Raise your right hand. Do you swear the evi- 
dence that you give before this subcommittee of the Judiciary Com- 
mittee to be the truth, the whole truth, and nothing but the truth, so 
help you God ? 

Mr. DuVal. I do. 

Senator Johnston. Just have a seat. 

Mr. Morris. Senator, this morning, in connection with the testi- 
mony of Attorney General Lefkowitz, as you know, we took executive- 
session testimony as to specific instances of how anonymous sources, 
using the device of the Swiss trust, can make money in the United 
States markets, while the United States Government is not able to 
determine the identity of the beneficiaries of these particular trans- 
actions. 

The witness, Mr. Pierre DuVal, I think. Senator, should be able to 
give us in the public record as he did in the executive record some 
insight into liow this is done. Will you give your name and address 
to the reporter ? 

TESTIMONY OF PIERRE DiiVAL 

Mr. DuVal. Pierre DuVal. 

Mr. JNIorris. And where do you reside, Mr. DuVal ? 

Mr. DuVal. In Forest Hills. 

Mr. Morris. And what is your business or profession ? 

Mr. DuVal. I am an investment counselor. 

Mr. Morris. You are an investment counselor ? 



4674 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. DuVal. Yes. 

Mr. Morris. I wonder if you would tell the committee the general 
nature of the work that you do as an investment counselor ? 

Mr. DuVal. Well, part of it was publishing a stock-market letter 
and advising clients which securities to buy and sell. 

Mr. Morris. And you have also been the editor and the i^ublisher 
of a newsletter, DuVal 's Consensus, have you not ? 

Mr. DuVal. Yes. 

Mr. Morris. Would you tell us when that newsletter was first estab- 
lished? 

Mr. DuVal. October 1947. 

Mr. Morris. And were you the complete owner of that newsletter ? 

Mr. DuVal. Yes. 

Mr, Morris. And when did it discontinue its publication ? 

Mr. DuVal. In the spring of 1957. 

Mr. Morris. Did it go out of business then or did someone else take 
it over ? 

Mr. DuVal. It was taken over by another firm. 

Mr. Morris. And you have been the editor of that particular news- 
letter from 1947 to 1957 ? 

Mr. DuVal. Essentially, yes. I mean I had assistants but I headed 
the organization. 

Mr. Morris. What is the circulation of that newsletter ? 

Mr. DuVal. It varied from a few thousand to as many as in excess 
of 20,000. 

Mr. Morris. And was it an influential publication, influential with 
respect to stock market transactions ? 

Mr. DuVal. I would say as influential as most stock market letters. 

Mr. Morris. And you, from time to time, in connection with that 
newsletter, did recommend that certain stocks be purchased? 

Mr. DuVal. Yes. 

Mr. Morris. Have you been at the same time a representative of any 
Swiss trust? 

Mr. DuVal. Yes. 

Mr. Morris. Will you tell us what Swiss trust or trusts you repre- 
sented while you were editor of DuVal's Consensus ? 

Mr. DuVal. La van Trust Co. 

Mr. Morris. That is L-a-v-a-n ? 

Mr. DuVal. That's correct. 

Mr. Morris. What is the Lavan Trust ? 

Mr. DuVal. I don't exactly know if I can answer that. I would de- 
scribe it, I assume, as an investment trust, to the best of my knowledge. 

Mr. Morris. And where is its principal place of business? 

Mr. DuVal. Zurich, Switzerland. 

Mr. Morris. In Zurich, Switzerland? 

Mr. DuVal. Yes. 

Mr. Morris. And what has been your connection with Lavan Trust? 

Mr. DuVal. I was hired by the president of Lavan Trust to give 
him investment counsel on American and Canadian securities. 

Mr. Morris. You were retained by him at what rate, what rate of 
compensation? 

Mr. DuVal. I would rather not have it go in the record. I dis- 
closed it to you in private session but I prefer not disclosing it for 
the public record. I mean if it will serve any purpose but I don't 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4675 

think it will. Don't you know what I mean ? That is sort of a private 
thing. 

Senator Johnston. Wlio is president of that trust ? 

Mr. DuVal. Dr. Paul Hagenbach. 

Mr. Morris. Would you tell us if you have any proprietary interest 
of any kind in that trust ? 

Mr. DuVal. No, I do not. 

Mr. Morris. And the only compensation you get from association 
with that trust is 

Mr. DuVal. A flat fee from Dr. Hagenbach. 

Mr. Morris. Is that fee which you are at this point reluctant to 
tell the committee in open session ? 

jNIr. DuVal. May I qualify it ? I have already informed the com- 
mittee privately of the amount. The Securities and Exchange Com- 
mission have a copy of my agreement with Dr. Hagenbach and they 
know of the amount, but I would prefer to keep it — I prefer to limit 
it there if it please the committee. 

Senator Johnston. You mean you have no money invested in that 
trust at all yourself ? 

Mr. DuVal. No, I do not. 

Mr. Morris. Have you also been associated with the Union Bank 
of Switzerland ? 

Mr. DuVal. Indirectly, acting for Dr. — let's put it this way: in- 
directly, acting upon instructions of Dr. Hagenbach. 

Mr. Morris. Will you tell us what you mean by that, Mr. Du- 
Val? 

Mr. DuVal. I initiated purchases and sales of securities for the 
Union Bank. 

Mr. Morris. And is the work you do in that connection related 
to the service you render to Lavan Trust ? 

Mr. DuVal. To Dr. Hagenbach, I would say. 

Mr. Morris. Dr. Hagenbach is head of the Lavan Trust ? 

Mr. DuVal. That is correct. 

Mr. Morris. Wliich pays you an annual retainer, sir? 

Mr. DuVal. No, Lavan does not pay me. Dr. Hagenbach pays 
me. 

Mr. Morris. But you are therefore not the representative of the 
Lavan Trust ? 

Mr. DuVal. Yes, I do have a limited power of attorney for Lavan 
Trust, 

Mr. Morris. But that under the general overall fee that is paid you 
by Dr. Hagenbach ? 

Mr. DuVal. Yes. 

Mr. Morris. And, under that general retainer with Dr. Hagen- 
bach, you also do work for the Union Bank of Switzerland ? 

Mr. DuVal. I did for a period of time but no more. 

Mr. Morris. In that connection, let us take a concrete case and we 
will go on from there, Mr. DuVal. Can you recall that on August 
23, 1955, you opened an accomit with McDonnell & Co. for the Union 
Bank of Switzerland ? 

Mr. DuVal. I would like to answer that this way. That I initiated 
the opening of an account for the Union Bank, but I assumed that 
the bank officially opened it themselves or at least confirmed the open- 
ing of it. 



4676 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. What is McDonnell & Co. ? 

Mr. Du Val. It is a New York stock brokerage house. 

Mr. Morris. And who owned the stock of tliat brokerage company 
at that time ; do you know ? 

Mr. DuVal. I don't know. 

Mr. Morris. Early in September did you instruct McDonnell & 
Co. to buy in shares of Cuneo Press at the market price which was 
then approximately 9% ? 

Mr. DdVal. Yes. 

Mr. Morris. And do you know how many shares of stock were 
purchased at that time for the Union Bank of Switzerland by Mc- 
Donnell «& Co. ? 

Mi-.DuVal. I believe 4,000. 

Mr. Morris. Had you made recommendations such as that before 
for the Union Bank of Switzerland and Lavan Trust '? 

Mr.DuVAL. Yes. 

Mr. Morris. Shortly thereafter, in fact 1 or 2 days later, did you 
not recommend in DuVal's Consensus the acquisition of the stock of 
Cuneo Press ? 

Mr. DuVal. I believe the recommendation was almost simultane- 
ous. I don't recall the dates, but I think that the Union Bank pur- 
chase was made on a Friday and we had sent telegrams to our tele- 
graphic subscribers on the same day and the bulletin was sent out 
the following Monday to the mail subscribers. 

Mr. Morris. Your bulletin went out on the following Monday ? 

Mr. DuVal. Yes. 

Mr. Morris. That would be the 14th ? 

Mr. DuVal. I don't remember the dates. 

Mr, Morris. The 12th is a Monday; is that right? Friday is the 
9th and Monday is the 12th ? 

Mr. DuVal. That would be correct. 

Mr. Morris. May I just go through, for your information, the vol- 
ume on this particular stock during those days? September 6, with 
the stock selling at 9%, the volume was 900 shares. On September 
7, the high for the day was 9, the volume was 400 shares. On Sep- 
tember 8, the high was 9%, the volume 500 shares. 

A relatively inactive stock. On September 9, the day that you in- 
structed McDonnell & Co. to begin buying stock for the Union Bank 
of Switzerland, the stock went to 10% and the volume reached 6,300 
shares. On the following Monday the stock — that is the day of your 
DuVal Consensus — was 11^/4 at 7,300 shares. 

September 13, the day after your letter came out, the volume went 
up to 30,000 shares. The stock was then selling at 121/^. A day 
later it went to 87,900 shares, and the price was 141/9, so, in other 
words, 2 days after your DuVal's Consensus came out," the stock had 
o-one to 87,900, and the price had increased 514 points from September 
7, which was almost double in value. 

Meanwhile, while the stock was going up, were you selling stock for 
the Union Bank of Switzerland ? 

Mr. DuVal. I believe, as I recall, that I instructed McDonnell to 
sell this stock when the adverse news broke on the ticker tape. 

jMr. ]\Iorris. "What was the adverse news ? 

Mr. DuVal. Wlien Cuneo Press, an official of Cuneo Press, chal- 
lenged the earnings prediction published in my bulletin. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4677 

Mr. Morris. And they said that the true vahie of the company 
didn't warrant the strong recommendation that you had made in 
your newsletter, is that right ? 

Mr. DuVal. Essentially words to that effect. 

Mr. INIoRRis. And did they further say they knew of no reason why 
the stock should go up except for the strong recommendation given to 
it by your newsletter ? 

Mr. Du Val. I believe that they said words to that effect ; yes. 

Mr. Morris. You say you had the Union Bank of Switzerland sell 
its stock before or after that newsletter came out, before the announce- 
ment from the Cuneo Press came out ? 

Mr. DuVal. Right after it came out. 

Mr. Morris. It wasn't before ? 

Mr. DuVal. No ; I don't think so. 

Mr. Morris. How much did the Union Bank of Switzerland make 
on that transaction? 

Mr. DuVal. I don't recall. I think that the sales were made some- 
where around about $12 or $13 if my memory serves me correctly, so 
that they probably made an average of maybe $3 a share after com- 
missions and taxes. 

Mr. Morris. Our information, Mr. DuVal, is that on September 15 
when the stock was selling at 141/2 and 42,000 shares were sold, that 
on that date you instructed McDonnell & Co. to sell 4,000 shares of the 
Union Bank of Switzerland stock. The announcement from Dow 
Jones tape carried the statement of the secretary of the Cuneo Press 
on September 16 ; was our information incorrect ? 

Mr. DuVal. I don't know. 

Mr, Morris. Can you verify that at this time, Mr. Garcia? 

Mr. Garcia. At this exact moment, no, but that information is cor- 
rect. 

Mr. Morris. It is readily verifial)le. Senator, our staff examination 
indicates that the instruction to McDonnell from Mr. DuVal to sell 
the 4,000 sliares was on September 15, and actually the Dow Jones tape 
carried the statement of the secretary of the Cuneo Press on Septem- 
ber 16. Actually after the announcement was made, the stock went 
down 2% points that day and shortly thereafter went right back to 9, 
its original figure, but meanwhile. Senator, the stock had gone up 5 
points and quite a few people must have lost a great deal of money. 

Can you tell us who in the Union Bank of Switzerland made the 
money that we have just brought forth on this transaction, Mr. Du- 
Val? 

Mr. DuVal. We have no way of knowing. 

Mr. INIoRRis. You were the representative for that bank; were you 
not, Mr. DuVal? 

Mr. DuVal. Not for the bank. As I said before, I represented 

Mr. Morris. I'm sorry, Mr. Hagenbach, 

Mr, DuVal. Dr. Hagenbach. 

Senator Johnston. That being covered up like it is by numbers, 
and it going to the Swiss bank, when it came to paying the income 
tax they did not pay any on that to the United States, isn't that true? 

]Mr. DuVal. I would not Iniow. 

Senator Johnston. You would not know ? 

Mr. DuVal. No. 



4678 SCOPE OF SOVIET ACTIVITY m THE UNITED STATES 

Senator Johnston. In other words, it is over there in Switzerland 
and it is covered up. You don't think they would return that for 
taxes when nobody knew who it was and certainly it coming from 
Switzerland you wouldn't think they would pay any income tax, 
would you ? 

Mr. DuVal. Any foreign transactions in the United States that 
are taxable, taxes are usually withheld by the American agency, 
whether it be a bank or brokerage house remitting the money to a 
foreign entity, unless, of course 

Senator Johnston. Not income tax. 

Mr. DuVal. I say miless legally they are exempt from taxation, 
and I believe that our income-tax laws are reciprocal in that respect 
with other governments. If the other government does not impose 
an income tax on capital gains, then our Government respects that 
law and also does not impose it. 

Senator Johnston. Now then, regarding these Americans that 
lost in this transaction ; when they would go to pay their income tax, 
that would be deductible item for them, isn't that true ? 

Mr. DuVal. That would be true. 

Senator Johnston. So the United States Government is catching 
it in both ways, losing the taxes on the profits and then having to 
drop down on the amount of taxes that it gets when they lose when 
some transaction like this takes place; isn't that true? 

Mr. DuVal. I would say "yes." 

Mr. Morris. Mr. DuVal, have you represented, have you bought 
stock of any other corporation for the Union Bank of Switzerland, 
for Lavan and for Dr. Hagenbach in the same way as you purchased 
stock as you have described today in the Cuneo Press ? 

Mr. DuVal. Yes. 

Mr. Morris. Would you tell us what other stocks have you so 
purchased ? 

Mr. DuVal. Amerada. 

Mr. Morris. Would you spell that, please ? 

Mr. DuVal. A-m-e-r-a-d-a Petroleum Corp., Caterpillar Tractor, 
Corning Glass, Halliburton Oil, Honolulu Oil, Minneapolis Honey- 
w-ell, Minnesota Mining & Manufacturing, Parke-Davis, Sperry Rand, 
St. Regis, Westinghouse. That's about all that I can recall at the 
moment. 

Mr. Morris. Great Sweetgrass? 

Mr. DuVal. No; not Great Sweetgrass. 

Mr. Morris. Sapphire Petroleum? 

Mr. DuVal. No. 

Mr. Morris, And at each time, at approximately the same time was 
there a recommendation in your DuVal's Consensus that the stock 
was a good stock to purchase? 

Mr. DuVal. No. All of these stocks we had included in our so- 
called growth stockletter. We felt that they are growth companies 
and had recommended them to our subscribers prior, well, some of 
them prior, some of them simultaneously as they were purchased, but 
we kept a supervised portfolio on those stocks with comments from 
time to time as news developed. 

Mr. Morris. In other words, as you were purchasing these stocks, 
true in your representative capacity for these anonymous people rep- 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4679 

resented by the Union Bank of Switzerland, you were at the same 
time plugging their stock in your DuVal's Consensus ? 

Mr. DuVal. Yes. 

Mr. Morris. Don't you think that the mere plugging of the stock 
in your DuVal's Consensus had the effect of driving the market up ? 

Mr. DuVal. Not necessarily. Frequently when we recommended 
a stock, it would even go down and not up. Many factors entered 
into it. 

Mr. Morris. In the case of the Cuneo Press stock, the combination 
of forces was almost irresistible. One, you are putting out a request 
to buy stock, to buy up stock the day before the recommendation. 

In other words, an order of 4,000 shares of stock in a market that 
is currently five, six, seven, or eight hundred a day is going to make 
the stock scarce, is it not ? 

Mr. DuVal. May I answer that in these words? I think there 
were several factors that were responsible for the action of that stock, 
and I would say that of all the stocks that we have recommended and 
bought or just recommended, that that was the only stock that acted 
in that fashion, and the reason for it as I can reconstruct in my mind 
now, and the figures there of volume seem to indicate, is there 
must have been two leaks, one, when we delivered the telegrams over 
to Western Union Friday, which was probably done either during 
the morning or about midday, before the stock market closed. Some- 
one at Western Union obviously must have tipped somebody else off 
for that volume to jump up that much in that day, because our news- 
letter had not been released. Or perliaps someone in our organiza- 
tion, having seen the editorial content of the letter on Friday, because 
it is run on Friday partially and finished on Monday, could have 
tipped somebody off. The third factor is the cable coming from 
Switzerland to McDonnell for the Union Bank to purchase 4,000 
shares. 

I think that someone there must have tipped somebody off, and the 
fact that Union Bank was going to take such a heavy position in a 
slowly moving stock, combined with the fact that we were sending 
telegrams to all of our subscribers, thousands of telegrams to tele- 
graphic subscribers recommending this stock. 

Mr. Morris. May I just break in? On that day, September 9, 
which is the day we are talking about, the volume was 6,300 shares. 

Mr. DuVal. That is the first day it went up. 

Mr. Morris. Now, there were 4,000 shares purchased by the Union 
Bank of Switzerland. 

Mr. DuVal. I don't know if all 4,000 were purchased on that day. 

Mr. Morris. On that day 3,400 shares were bought by McDonnell & 
Co., care of the Union Bank and 1,700 were bought by two Canadian 
brokers. 

Did you recommend to Canadian brokers that they buy that stock ? 

Mr, DuVal. No, I did not. Excuse me 

Mr. Morris. One of them has indicated that he had been in touch 
with you before his purchase. 

Mr. DuVal. He may have been one of our telegraphic subscribers. 
If he was, then naturally we would have. I would have no way of 
knowing that. 

Mr. Morris. So that accounts for virtually the whole margin cer- 
tainly over the market of September 6th which was 900 shares ? 



4680 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. DuVal. That could, and the other big factor I believe in this 
situation is that the floating supply of that stock was very small. The 
capitalization, I think, was only a few hundred thousand shares. 

Mr, Morris. But isn't there in the evil of the thing, Mr. DuVal, that 
here you have a stock that is in short supply. If an abnormal pur- 
chase, 3,400 shares by you or through you together with some shares 
by persons to whom you made recommendations to buy the stock, that 
will dry up all the stock. Now then, when your news letter came 
through on Monday, the whole thing just soared because there was 
a shortage of stock at the same time. 

Mr. DuVal. That is one of the contributing reasons that I discon- 
tinued that function for the Union Bank. 

Senator Johnston. Isn't that one of the main reasons why you ad- 
vised them to buy this stock, knowing that at the time there was very 
small stock on the market and you had them buy this, knowing what 
effect it would have on the market, isn't that true ? 

Mr. DuVal. No. The reason that I advised them 

Senator Johnston. You knew that it would have that effect, did 
you not '^ 

Mr. DuVal. No. 

Senator Johnston. You certainly have that much 

Mr. DuVal. No, I had no way of knowing. Now looking back in 
retrospect, I can see what the contributing factors were, because we 
had entered other orders and nothing like that happened. 

Senator Johnston. When you put this in your bulletin and sent 
it out to all your subscribers and also then advised them to make this 
large purchase and two of your main clients, both of them hopped 
in and bought, wouldn't that be enough to let you know that it would 
make the market hop up — 

Mr. DuVal. Not— 

Senator Johnston. When there are so few stocks on sale — 

Mr. DuVal. Not necessarily because 

Senator Johnston (continuing) . In the open market ? 

Mr. DuVal (continuing). There was another instance I recall, in 
the case of Ultrasonic Corp. I believe that I also recommended that 
the bank purchase a large block, I think it was also about 3,000 or 
4,000 shares, and we also recommended that stock quite highly at about 
the same time, and actually the stock went down in i)rice, and that 
was also a stock in very short supply. 

Senator Johnston. What did you do in regard to that? Did you 
sell immediately ? Didn't you sell immediatelv ? 

Mr. DuVal. We held that for^— 

Senator Johnston. For how long ? 

Mr. DuVal. A while. I wouldn't remember. Possibly a matter 
of months maybe. 

Mr. Morris. Mv. DuVal, in connection with our inquiry into these 
matters, would you have objection to signing a waiver authorizing 
the subcommittee to go into any accounts of yours that may be held 
anonymously in Switzerland? Do you have any objection to that? 

Mr. DuVal. No. 

Mr. Morris. We have a waiver here, and with this waiver you know' 
we can make inquiries that we couldn't if we didn't have your waiver. 

Mr. DuVal. You mean accounts of mine in Switzerland ? 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4681 

Mr. Morris. Yes. 

Mr. DuVal. Oh, yes, sure, definitely. 

Senator Johnston. Or any connection that you have with any trust 
funds ? 

Mr. DuVal. Or any connections ; yes. 

Senator Johnston. From what has been brought out here today, it is 
necessary for our committee, as I see it, to go further and deeper into 
this matter in order to i^rotect the people of the United States and the 
taxpayers of the United States in regard to these matters, and also to 
protect the stockholders in the various corporations in the United 
States, and also I think it would be necessary probably for us to pass 
certain legislation that would protect us in this field and would further 
protect the citizens of the United States against the unfair use of the 
activities of the market in the United States with money from the for- 
eign fields coming in competition with people here who have to pay 
taxes on any profits that they might make. 

Mr. Morris. Senator, for today, the rest of the day, we have some 
executive session testimony which we can take immediately, and then 
with respect to tomorrow, we have the following problem to be scruti- 
nized by the committee. Very often insurance companies as well as 
the Veterans' Administration are posed with a problem when money 
is due under an insurance policy under the contractual terms of an 
insurance policy, and the beneficiary is behind the Iron Curtain. 

Now they have found, it has been their experience, that this money, 
if given to the representatives of the governments here in the United 
States who turn up with the power of attorney for the beneficiaries 
living behind the Iron Curtain, the money does not reach the bene- 
ficiaries. In fact the people have told us in executive session, the 
insurance companies have told us in executive session that the bene- 
ficiaries frequently plead with the insurance companies not to send 
them the money because they are going to get into trouble if it is 
sent to them. 

Now, because of recent developments, the Government policy has 
been, with respect to Veterans' Administration payments and other 
payments on the part of Government agencies, to withhold payments 
to beneficiaries because there is a strong presumption that the money 
will not reach the beneficiaries if the beneficiary is in an Iron Curtain 
country. 

There have been some interesting developments on that. Senator, 
and we have taken executive session testimony and information from 
representatives of some of the insurance companies, and they are pre- 
pared to testify tomorrow on this subject. Senator, if you will sit for 
that. 

The insurance companies are the Equitable, the Prudential, the 
Metropolitan, and the Guardian Life, and then we have one insurance 
company in Boston, Senator, where a similar situation exists. That, 
Senator, is all the public business that I have prepared for this morn- 
ing. We have two more witnesses to be heard in executive session. 

Senator Johnston, We will adjourn this open session and go into 
executive session. 

(Whereupon, at 12 : 10 p. m., the hearing was adjourned, to recon- 
vene at 9 : 45 a. m., Wednesday, October 2, 1957.) 



INDEX 



j,^-OTE., — The Senate Internal Security Subcommittee attaches no significance to 
the mere fact of the appearance of the name of an individual or an organization 
in this index. 

A 

Page 

Amerada Petroleum Corp 4678 

American consul's office (Rio de Janeiro) 4671 

American investors 4670 

Attornev General of Geneva 4671 

Attorney general, State of New York 4667,4668,4672 

Attorney general's affidavit 4668 

B 

Bearer shares 4669 

Boston 4681 

British corporations 4669 

C 

Canabuild, Ltd. (Edmonton, Canada) 4669,4671 

Canada 4688, 4669, 4671. 4672 

Canton 4671 

Caterpillar tractor 4678 

Communist 4672 

Communist-dominated 4671 

Corning Glass 4678 

Court of First Instance of Geneva 4671 

Court judgment 4671 

Cuneo Press 4676-^679 

D 

Des Faillites (bankruptcy office) 4671 

Dow Jones tape 4677 

Dutch corporations 4669, 4671 

DuYal, Pierre: 

Testimony of 4673-4681 

Address — Forest Hills 467?. 

Investment counselor 4673 

Editor and publisher of DuVal's Consensus 4674 

Represented Lavan Trust Co 4674 

DuVal's Consensus 4674, 4676, 4678, 4679 

E 

Edmonton, Alberta, Canada 4668, 4669, 4672 

Equitable 4681 

F 

Ferrier Lullin et Cie (Swiss bank) 4668^671 

Foley Square, New York City 4667 

Forest Hills 4673 

G 

Garcia, Rov 4667 

Geneva 4668,4671 

I 



n INDEX 

Page 

Great Sweetgrass 4678 

Green Bay Mining & Exploration, Ltd. of Edmonton, Alberta, Canada— 4668, 4670 
Guardian Life 4681 

H 

Hagenbach, Dr. Paul 4675,4677,4678 

President of Lavan Trust Co 4675 

Halliburton Oil 4678 

Honolulu Oil 4678 

I 

Iron Curtain 466S-4672, 4681 

Insurance companies 4681 

J 
Johnston, Senator Olin D 4667 

L 

Lavan Trust Co 4674-4678 

Investment Trust Co. of Zurich, Switzerland 4674 

Dr. Paul Hasenbach, president 4675, 4677, 4678 

Lefliowitz, Hon. Louis J. : 

Testimony of 4667-4673 

Attorney General of State of New York 4667 

390 Western Avenue, New York, N. Y 4668 

M 

Mandel, Benjamin 4667 

Martin Act (State securities fraud law) 4668 

McDonnell 4676, 4677, 4679 

McDonnell & Co. (New York stock brokerage house) 4675-4677, 4679 

Metropolitan 4681 

Minneapolis-Honeywell 4678 

Minnesota Mining & Manufacturing 4678 

Montreal. Canada 4668 

Morris, Robert 4667 

N 

New York, State of 4667-4672 

Numbered account 4668, 4669, 4670 

P 

Parke-Davis 4678 

"Placemobile" (S. A. DePlacements Mobiliers) 4668-4671 

Power of attorney 4681 

Power of attorney, limited 4675 

Prudential 4681 

R 

Rio de Janeiro 4671 

Russia 4672 

S 

S. A. DePlacements Mobiliers (referred to in international circles as 

"Placemobile") 4668-4671 

St. Regis 4678 

Sappliire Petroleum 4678 

Securities and Exchange Commission 4675 

South Carolina 4667 

Si>errv-Rand 4678 

Stahl, Charles Robert 4668-1671 

Stahl, Miles & Co., Ltd. (Edmonton, Alberta, Canada) 4672 

State securities frauds law 4668 

Stock market letter 4674 

Supreme Court, New York County 4668, 4671 



INDEX ill 

Page 

Swiss bank 4668-4670, 4677 

Swiss bauks in Geneva 4668 

Swiss court 4671 

Swiss trust 4673, 4674 

Switzerland 4667, 4669, 4671, 4674, 4675-4678, 4680 

T 
Trust funds 4681 

U 

Ultrasonic Corp 4680 

Union Bank of Switzerland 4675-4680 

V 

Veterans' Administration 4681 

W 

Western Union 4679 

Westinghouse 4678 

Z 
Zurich, Switzerland 4674 

o 



^>ji I v^rv • 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

(Attempts To Seize Insurance Benefits) 



HEARING 

'BEFORE THE t. .•:; 

SUBCOMMITTEE 'TO' INVESTMATE THE 

ADMISISTEATION OFifHE KfTEENAL SECUEITY 

ACT AND OTHER ISTEENAL SECUEITY LAWS 

OF a?HE 

COMMITTEE ON THE JUDICIAilY 

UmTED STATES SENATE 

EIGHTY-FIFTH CONGRESS 

FIRST SESSION 

ON 

SCOPE OF SOVIET ACTIVITY IN THE 
UNITED STATES 



OCTOBER 2, 1957 



PART 85 



Printed for the use of the Committee on the Judiciarj- 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
9321 f. WASHINGTON : 1958 



Boston Public Library 
Superintendent of Documents 

MAR 1 1 1958 



COMMITTEE ON THE JUDICIARY 

JAMES O. EASTLAND, Mississippi, Chairman 

ESTES KEFAUVBR, Tennessee ALEXANDER WILEY, Wisconsin 

OLIN D. JOHNSTON, Soutli Carolina WILLIAM LANGER, North Dakota 

THOMAS C. HENNINGS, JK., Missouri WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, L'tah 

JOSEPH C. O'MAHONEY, Wyoming EVERETT McKINLBY DIRKSEN, Illinois 

MATTHEW M. NEELY, West Virginia JOHN MARSHALL BUTLER, Maryland 

SAM J. ERVIN, JE., North Carolina ROMAN L. HRUSKA, Nebraska 



Subcommittee To Investigate the Administkation of the Internal Security 
Act and Other Internal Security Laws 

JAMES O. EASTLAND, Mississippi, Chairman 
OLIN D. JOHNSTON, South Carolina WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utah 

SAM J. ERVIN, Jr., North Carolina JOHN MARSHALL BUTLER, Maryland 

MATTHEW M. NEELY, West Virginia ROMAN L. HRUSKA, Nebraska 

Robert Morris, Chief Counsel 

J. G. SounwiNE, Associate Counsel 

Benjamin Mandel, Director of Research 

u 



CONTENTS 



Testimony of— ' ^^^® 

Andolsek. Charles F 4750 

Bohne, Edward J 4750 

Dowiing, J. Edwin 4747 

Drobnyk. Wendell J 4753 

' Leece, William A 4753 

Reidy, Daniel J 4709 

Walsh, John 4709 

III 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 



WEDNESDAY, OCTOBER 2, 1957 

United States Senate, 
Subcommittee To Investigate the 
Administration of the Internal Security Act 

and Other Internal Security Laws, of the 

Committee on the Judiciary, 

New York, N, Y. 

The subcommittee met, pursuant to call, at 10 a. m., in room 36, 
United States Court House, Foley Square, New York City, Senator 
Olin D. Johnston (South Carolina) presiding. 

Also present: Kobert Morris, chief counsel; Benjamin Mandel, 
director of research; and Roy Garcia, consultant. 

Senator Johnston. The committee will come to order. 

I notice that one of our witnesses, Mr. A. L. Pomeran, sent a note 
in that he is sick and will be unable to attend. We will want to take 
note of that and probably have him in at a later date. 

Mr. Morris. Very well. Senator. 

Senator Johnston, the hearing this morning concerns itself with the 
situation that has from time to time posed a problem to the United 
States Government. Apparently some years ago the Soviet Union 
was able to attract money from the United States through beneficiaries 
of life insurance policies, from estates, and other devices. 

I would like to offer in that connection a rather old article by D. H. 
Dubrowsky. The articles are dated in 1940, there are three of them, 
and they are entitled "How Stalin Steals Our Money." I would like 
this to go into the hearings as background for the session this morn- 
ing. Senator. 

Senator Johnston. These articles shall become a part of the record 
and be used as background and as we see fit during the hearings. 

(The articles referred to were marked "Exhibit No. 514" and read 
as follows:) 

Exhibit No. 514 

[Colliers magazine, April 20, 1940] 

How Stalin Steals Oub Money ^ 

(By D. H. Dubrowsky as told to Denver Lindley) 

For most of my life I have been a Bolshevik agent. I was born in Russia 
and began my revolutionary activities at the age of 15 when I joined the 
Social-Democratic Labor Party. Twice before I was 20 I had to flee to this 
country to escape the Czarist police. 



^ This is the story of gold for Moscow, told by the man who started it flowing. Dr. 
Dubrowsky was born in Russia, became a revolutionist in his youth. He was a friend 
of Lenin, Trotsky, and other Communist leaders. For 14 years he was head of the Soviet 
Red Cross in tliis country. He has handled hundreds of millions of dollars in cash and 
supplies intended by American citizens for the relief of suffering in Russia. Here he 
shows you how the Soviet Government continues to squeeze millions of dollars a year 
in American money out of our citizens. 

4683 



4684 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Although I became an American citizen in 1916, I kept up my interest in 
Russian affairs. In 1921 I was appointed director of the Soviet Red Cross in 
this country, a post I held for 14 years. 

I have known all the Soviet leaders — Lenin, Trotsky, Stalin, Kamenev, 
Zinoviev, Bukhariu, Rykov, and many others. Today, if there were a Com- 
munist uprising in this country I would fight against it — with cobblestones 
against machineguns if necessary. 

My break with the party came long before Stalin made friends with Hitler 
and invaded Finland. It came when I realized that Stalinism had become a 
gigantic racket, a systematic way of exploiting the very people the Russian 
revolution had been designed to help. 

It amuses me today to hear or read about "Moscow gold," money supposedly 
flowing from the Kremlin into this country for the purpose of carrying out 
subversive plans. Once there was truth in this picture. I know, for I was 
one of the men who arranged for the transmission of money and jewels from 
Russia to New York. But today the stream flows the other way. 

The rulers of the Kremlin have found a way of extending their powers of 
expropriation beyond the borders of the U. S. S. R. The amount of money they 
have succeeded in extracting from this country — from the American public 
and State and Federal Governments — runs into hundreds of millions of dollars. 

This process is going on right now. 

I shall show you how it works, for I was instrumental in devising its ways 
and means. My intention was to relieve the Russian famine ; the Stalin govern- 
ment turned my system into a racket. 

Let me begin with an actual case, one of the first indications I had of the 
direction Stalin's policy was taking. 

As head of the Soviet Red Cross in this country, I had persuaded the United 
States Veterans Bureau that they could safely pay the sums due to Russian 
beneficiaries of American soldiers. This was in 1926. No payments had been 
made to citizens of the U. S. S. R. before that time principally because the 
Bureau feared the money would be confiscated. I, however, induced the Soviet 
Government to pass decrees exempting all money received by beneficiaries of 
American soldiers from confiscation and taxation. I was put in charge of 
adjudicating the cases, and the Bureau began to make payments. 

Almost immediately there began to be signs that something was wrong. 
One of the first cases I investigated was that of Movsha-Khaim Goldstein. 

Goldstein was a native of Gomel Province, in what is now the White Russia 
Soviet Socialist Republic. He lived in the town of Rechitsa and was a tailor 
by trade. Before the war his sou emigrated to this country where he changed 
his name to Louis Gold. He did well and became the mainstay of his family 
in Russia. When the war came he was drafted into the United States Army 
and was killed in action. Meanwhile, as a result of the Bolshevik revolution, 
his father's tumbledown house in Rechitsa had been confiscated as capitalistic 
property and the old man had been forced to wander about with his daughter 
and her family, relying on the charity of neighbors for a place to stay. 

A REAL FORTUNE FOR A PEASANT 

Goldstein began to petition the American Relief Administration for the bene- 
fits due him in 1922. At that time the ARA was combating the famine in 
Russia. But his appeal was denied, since there was no American consul in 
Russia to authenticate his claims. When his case finally reached me, I dis- 
covered that his monthly insurance benefits had accumulated in 12 years to 
the sum of $8,000. 

This would have meant untold riches to a citizen of the poverty-stricken 
town of Rechitsa. But Goldstein never got the money. 

The check was cleared through the State Bank of the Soviet Union and 
went to the local branch, where its receipt was reported to the Government 
authorities. Goldstein was called into the bank of Gomel, the provincial capital, 
and induced to sign away his $S,000 to the credit of the State Bank, receiving 
in return his confiscated house. 

When news of this transaction reached me I lodged a vigorous protest with 
the central committee of the Red Cross in Moscow, demanding a thorough in- 
vestigation. Word came back that Goldstein was quite happy to have his old 
house back again for himself and his daughter's family and that he had bought 
it voluntarily, not under duress, for $8,000. This explanation did not satisfy me, 
for I knew that in Rechitsa a whole block of such houses would hardly be worth 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4685 

$8 000 My suspicions were further aroused by notification that Goldstein's 
address had been changed. I iuvestigated and found that shortly after the 
old man had moved into the house with his daughter and grandchildren the house 
had again been confiscated and all of them had been evicted. 

This reduced the old man to such a state of desperation that he risked death 
by writing directly to Washington. The Veterans' Bureau sent an indignant In- 
quiry to me. , ,. . . ^ . 4.. 

I cabled at length to my superiors in Moscow, demanding an instant investi- 
gation and the return of Goldstein's house. I explained that unless this was 
done all work on the veterans' cases would stop. 

The cablegram produced results. A telegraphic reply from Moscow informed 
me that a Government commission had already left for Rechitsa to investigate. 
A second communication reported that the commission had found that the 
house had actually been confiscated, had placed the local authorities on trial, and 
had returned the house to Goldstein. I transmitted all these official reports to 
the Veterans' Bureau in Washington. 

Several months latei- I received a letter from the old tailor that showed me 
that the assurances of my superiors in Moscow had been brazen lies. His house 
had not been returned to him ; he and his daughter and her children had been 
allowed to occupy only one room in it. Nevertheless, the old man was grateful 
and thanked me warmly for doing so much for him. 

I was sick at heart about the case, but I felt there was nothing more I could 
do without endangering Goldstein still further, and I was relieved that he was 
satisfied with the compromise. 

But his story doesn't stop there. Every month the Treasurer of the United 
States was sending him $57.50 war-risk insurance plus $20 compensation. Pres- 
ently despairing letters began reaching me from Goldstein, pleading with me to 
devise a way by which he could get some good out of the checks. Changing them 
into rubles at the official rates of exchange was as good as giving them away. 
At that rate his total monthly allowance of $79.50 had a purchasing power 
of less than $4, and he could not live on that. At the same time he was not 
allowed to keep the checks without cashing them into worthless rubles. 

Between the years 1930 and 1935 the United States Treasury had transferred 
to his credit $14,000. Whatever excuses Soviet apologists may offer, the grim 
fact is that during all of this period and at the end of it Goldstein was living 
in desperate poverty. Documents in the Veterans' Bureau and in my own files 
definitely establish the fact. In 1935 I left the Soviet service. I do not know 
whether Goldstein was allowed to continue in occupancy of the one room in 
the house that had once been his. 

The money, of course, went directly into the coffers of the Soviet Government. 
Taken alone, the case seems pathetic and trivial. But the sums involved in all the 
veterans' cases are not trivial. There were 56,000 Russians in the United States 
Army during the war. Most of them had relatives in Russia. The payments 
accruing on a $10,000 war-risk insurance policy aggregate $13,800 each. With 
adjusted compensation, the estate of each deceased veteran swells to $18,000. It 
is the settled policy of the Stalin government to see that as much of this money 
as possible shall go directly from the United States Treasury into the State 
Bank of the U. S. S. R. and stay there. The nominal beneficiaries never get their 
hands on it. 

Although this division of veterans' benefits is a particularly crass example 
of Soviet methods, it is by no means the only source of income, nor is it the 
largest. The following lists of sums annually siphoned out of this country is, 
I know from personal experience, extremely conservative. These are figures 
I am sure of. The total may well be much higher. 

The parcel business $10, 000, 000 

Propaganda films 10, 000, 000 

Publications 2, 000, 000 

Worthless advertising (Inreklama) 1,000,000 

American estates 2, 000, 000 

Industrial insurance 500, 000 

Life-insurance confiscations 500, 000 

War-risk insurance (Veterans' Bureau) 2,000,000 

Intourist (including the ransom racket) 1,000,000 

Total 29, 000, 000 



4686 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Before I go on to explain the working of these rackets, I shall tell you how T 
came to occupy a position of importance in the Soviet system. 

EVOLUTION OF A EEVOLtTTIONAKY 

My interest in Social-Democratic ideas began when I was in high school 
and by the time I went to the University of Kiev I was a full-blown revolutionary. 
Just before the uprising of 1905 I went to the Baltic provinces on party business. 
When that abortive revolution was crushed, I escaped on a freighter bound for 
England. 

My arrival in Hull made an impression on me that I shall never forget. As 
I got off the boat I saw a hansom cab standing at a street corner. It had stopped 
directly under a gaslight, and the cabby, perched on the roof, was reading a news- 
paper. "That," I said to myself, "is what it means to live in a civilized nation. 
Even the cab drivers know how to read." 

I shipped as a sailor on a boat bound for Boston, and arrived with nothing in 
the world but my revolutionary enthusiasm and the .$5 I had received as pay for 
the trip. Russian friends aided me and I finally got a job as a latheworker in a 
metal-fixtures plant in New York. My salary was $3 a week and, since I had a 
room in Brooklyn, carfare took a considerable part of that. After I had worked 
for several weeks I made a calculation and discovered that the net proceeds of a 
day's work amounted to 32 cents. I could not see that at this rate I was bringing 
the revolution appreciably nearer, and so I started back to Russia, working my 
way on a cattle boat. 

I arrived in Warsaw on August 1, 1906, the day that .Stolypin declared martial 
law, better known as Stolypin's necktie, because the invariable penalty was 
hanging. Life had become very hazardous for revolutionaries. Court-martial 
and hanging were the order of the day. I made my way back to the University 
of Kiev, and in December was arrested, together with Bill Chatov, the IWW 
leader who was later to become the head of the Petrograd Cheka and the builder 
of the Turksib railway. 

HEAKT AND SOTJL FOE RUSSIA 

Luck was with me, and my only punishment was exile to Ekaterinoslav in 
South Russia. There I found plenty to do carrying on propaganda work among 
the soldiers and Cossacks of the garrison. After the dissolution of the Duma in 
•Tune 1907, however, the Government cracked down on all agitators, and I had 
to run for my life. As a matter of fact, I was able to escape only because I was 
tipped off that the building in which I was living was surrounded. 

I left immediately and finally made my way back to this country. This was 
in the summer of 1907. I was not to return to Russia again until 1920. 

Meanwhile, I had been in close touch with Communists in this country — Mar- 
tens, Weinstein, Nuerteva, Hourwich, Alexander Trachtenberg, Hartmann, John 
Reed, Louis Fraina (now known as Lewis Corey), Gruzenberg (who became 
famous as Michael Borodin), and others. When word came that our impossible 
dream was an accomplished fact, that Lenin and Trotsky had captured the 
Russian state, I abandoned all thought of a personal career and devoted myself 
heart and soul to the revolutionary cause. 

We, the men I have named and myself, formed a committee to keep in contact 
with the revolutionary government and to help in any way we could. This was 
not easy, for the nations at once blockaded Russia and threw a cordon sanitaire 
around her to prevent the spread of the Communist infection. 

It was part of my job to devise ways of communication. This I did by start- 
ing a system of couriers among sailors from any American port bound for 
Sweden. In Stockholm, Vorovsky had established underground communications 
with Petrograd. My system was very simple. I kept on hand a stock of shoes 
of all sizes. The sailors would report to me and exchange their old shoes for 
new ones. In the soles and heels of the old shoes I would find money — usually 
in Swedish notes of a thousand kronor each — and instructions. The money was 
for purposes of organization and propaganda. 

One day a sailor named Peterson arrived bringing with him, in the sole of 
his shoe, the appointment of Martens as plenipotentiary representative of 
the Soviet Government in the United States. Martens and I rented offices at 
110 West 40th Street, in New York. This was the first, and never recognized, 
Soviet Embassy in America. My post was that of second secretary. 

In 1920 it became necessary for some member of the Embassy to go to Mos- 
cow. There were two tasks involved. The first was to purchase in Europe and 



SCOPE OF SOVIET ACTIVITY P, TT/jl UNITED STATES 4687 

smuggle into Russia $50,000 worth of s- >pli' for the Red Army. The second 
was to explain in Moscow what was ha'' yening to the unrecognized Soviet 
Embassy in the United States. The 7-usk .ommittee had raided our offices and 
was trying to have Martens, and as ma\y of his staff as were not American 
citizens, deported (as was afterward done) . 

I was the only member of the staff who could undertake the mission. Ham- 
mer, the Embassy's financial adviser, was a prisoner in Sing Sing. The com- 
mercial attache, Heller, after the raid on the Embassy, had developed a diplo- 
matic illness that took him to Miami. Hartmann knew no Russian. The others, 
unlike me, were without American passports and once out of the country pre- 
sumably would not be allowed to return. And so the job was mine. 

The principal difficulty was to find some country that would let me pass 
through into Russia. Theoretically none of them would do it — Russia at that 
time was cut off from the rest of the world — but I decided that if I could get 
into Estonia I would be able to find some way of crossing the Russian border. 

But getting a visa for Estonia proved almost impossible. I tried in London, 
Copenhagen, Berlin, and Stockholm, but without success. In Copenhagen I had 
several long talks with Maxim Litvinov, whom I used to meet late at night at a 
cafe. We discussed the business of the Embassy, and I remember asking him 
whether I should help the wives and children of the Bolsheviks who had returned 
to Russia rejoin their husbands and fathers. He strongly advised against it. 
"Most of the men have new wives in Russia," he said. "Leave them alone." 

It was on Litvinov's advice that I went to Berlin, for, he said, the best way to 
get into Estonia was to go as fast as possible away from it. But I got no visa 
there and so I went to Stockholm and still no visa. I found there was a boat 
leaving for Helsinki and took it on the chance that something might be accom- 
plished in Finland. 

The trip across the Baltic was very fine, with a magnificent display of 
northern lights over the Aaland Islands. I carefully avoided all Russian- 
speaking passengers on the steamer and made the acquaintance of a counselor 
from the Japanese Embassy in Paris. He was a viscount sent to investigate the 
railroads of northern Europe. 

A VISA AT LAST 

We stayed at the same hotel in Helsinki that night, and I went in his com- 
pany to the Finnish Foreign Ministry and obtained an exit visa. That helped 
me with the Estonian legation in Finland the next day. There I explained that 
I was a tourist desiring to see the medieval town of Reval. The auspices must 
have been good, for I got my visa for Estonia. 

But for some time after I arrived there it seemed I was no nearer Russia than 
I had been in New York. Krassin had helped me smuggle the medical supplies 
from London to Reval. Now I had to get them into Russia. The Estonian For- 
eign Office was adamant, and it finally became clear to me that I should have to 
get myself and my supplies smuggled across the border. This in itself was not 
easy, for the entire length of the border was guarded by electrified barbed wire. 

Finally, with the aid of the Soviet Embassy, a plan was worked out. One 
cold spring night I supervised the loading of my supplies onto a car in the rail- 
road yards of Reval. This car was to go on to a small junction some miles 
away. 

Unfortunately I could not go in the car myself. Two secretaries of the Soviet 
Embassy drove me to the railroad junction in an open automobile. We arrived 
before either train. It had begun to rain, and we waited in a steady downpour 
all through the night. Just at dawn the German train finally pulled in. It 
consisted of 18 or 20 boxcars, all sealed shut. In each of them were from 40 to 
50 Russian prisoners of war sick with typhoid. The epidemic had broken out 
in the prison camp in Germany and the prisoners were shipped home wholesale. 

There was no time to waste. Before the train had stopped moving, the men 
from the Embassy were hurrying me toward the tracks. They broke open the 
doors of one of the cars and pushed me inside. The doors were immediately 
closed and sealed again on the outside. I was crowded in darkness among 40 
sick and dying men. Plank bunks had been placed into the cars in tiers. On 
these we crouched or lay, unable to stand up, almost unable to breathe, without 
food or water, surrounded by dreadful misery and filth. 

The trip from Reval to Jamburg is 120 versts — about SO miles. It took us 3 
days. During that time none of us could even once stand up. 



4688 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

In Jamburg the Cheka (Soviet secret police) had been notified by telegraph 
that I was in one of the cars. They found me. They also found that eight of 
the men in my car had died. What hai)pened to the survivors I do not know. I 
felt barely alive myself and was hurried off to a Red Cross car to be deloused 
and to recuperate. 

When I was able to travel again I was put in charge of a young Red Army 
soldier with instructions that I was to be delivered to Zinoviev iu I'etrograd. 
This was not long after Yudeiiitch's attack on that city and the country through 
which we traveled was horribly wrecked and full of graves. In Petro.'^rad itself 
we found barricades, and grass growing in the streets. 

]My escort took me to the Smolny Institute, where we were received by Zorin. 
At that time he was secretary of the northern commune and one of the most 
powerful officials in the country. But that was not enough for the Red Army 
boy. He had been told to get a receipt for me from Zino\ lev, and no one else 
would do. Zinoviev was in the country and. due to a fiat tire, could not get 
back that night. Zorin put us both up at the Hotel Astoria. The young soldier, 
still taking no chances, slept on the floor at the edge of my bed. 

Next day Zinoviev was back in his office, and the soldier got his receipt. 

OBGANIZATION TO ACT AS SCREEN 

From Petrograd I went to Moscow and reported at the Foreign Office. I dis- 
covered that my smuggling in of medical supplies was regarded as something 
of an exploit by Kauieuev, Chicherin, and other Soviet leaders. When I explained 
to them the situation of our Embassy in the United States, they told me to re- 
sign from it and establish an All-Russian Public Committee in America. This was 
to be a charitable, nonpolitical organization and as such safe from interference 
by the Department of Justice. It was also to act as a screen for my duties, which 
were those of representing the commissariat of nationalities, whose head at that 
time was Josef Stalin. In case the Martens Embassy was deported, I would still 
be there as a political link with the Kremlin. 

This All-Russian Public Committee was the predecessor of the Soviet Red Cross 
in the United States. On its behalf I appealed to Russians all over this country 
to aid their kinsmen who were suffering from the aftermath of the revolution 
and the civil war. 

The condition of these people was dreadful. Scapegoats of Czarist oppression 
before the revolution of 1917, they became the victims of various temi)orary 
governments throughout the civil war. The citizens of Kiev, for examjile. saw 
their city change hands no less than 17 times between 1918 and 1920. Entire 
regions were devastated by cannonades, street fighting, pillage, and mass ban- 
ditry. Hundreds of thousands were murdered in cold blood. Millions were left 
homeless and destitute. Over a thousand towns and villages were completely 
destroyed. 

Many of these unfortunate siirvlvors had relatives in the United States among 
the 5 million immigrants of Russian nationality. The response to my appeal, 
tlierefore, was far more generous than I or anyone else had foreseen, and I soon 
found myself chartering steamers for the shipments of food, clothes, and medi- 
cines through the blockade. Each individual relief iiackage was taxed by Martens 
(until he was finally deported) in oider to supi)ort the Embassy. The donors had 
to pay cash for the i)rivilege of sending gifts to Russia. 

In April 1921 came an imperative simmions to refurn to Moscow. On the way 
I had two unpleasant shocks. The first came iu Stockholm. I had asked Am- 
bassador Kerzhentsev to forward my documents to Moscow by diplomatic pouch. 
Among them was a sealed letter entrusted to me by the Chekist Peterson, who 
had been assigned to me by Martens before his deportation. Kerzhent.se v in- 
sisted on examining all my documents before transmitting them. He then dis- 
covered Peterson's sealed letter, which I was expected to deliver in person to 
Marcel Rosenberg (head of the Anglo-American department of the Soviet For- 
eign Office and one of the Cheka's secret agents there), and was a denunciation 
of me as a counterrevolutionist. Kerzhentsev was decent enough to let me 
read it. 

The .second shock came in Rerlin. where I met Lomonossnv. at thit time 
Dzierzhinsky's purchasing agent of locomotives in Europe. He told me that 
Dzierzhinsky was planning to have me shot as soon as I entered the country. 
Dzierzhinsky at that time was commi-ssar of railways as well as head of the 
Cheka. He was furious at me, so Lomonossov said, for overtaxing the Soviet 
railroads with commodities from the United States. 



SCOPE OF SOVIET ACTIVITY EN" THE UNITED STATES 4689 

THE MOGILEVSKT SYSTEM 

Krassin was also in Berlin, and I appealed to him for advice. He admitted 
that 1 iiiislit be shot, hut thought it was best for uie to take tlie chance. It was 
in uo cheerful frame of mind that 1 crossed the border, exi)ectiug the worst. 

I found it all the more pleasant, therefore, to be hailed as a miracle worker at 
the Krendiu and made much of on all sides. Dzierzhinsky took no action 
against me, and the letter of denunciation was turned over to Mogilevski, who 
put it away in his tiles — for possible future reference. 

Mogilevsky was a prominent member of the Cheka, with a long and grisly rec- 
ord as an executioner. His very name has a cheerless sound in Russian ears : 
"mogila" means a grave. But he was always pleasant to me. Ordinarily a 
taciturn man, he would occasionally, when we were drinking vodka together, 
become talkative. I remember his saying once that he could make a man 
eagerly confess anything at all. "A man is not a horse," he said. "After we 
have worked over him for a while, he will agree to anything you ask him in ex- 
change for the greatest boon he can think of, the privilege of being shot." 

Mogilevsky himself met a violent death. He got into an airplane piloted 
by a man whose father he had executed. There are no records of that trip, 
but neither one survived It. 

In Moscow I learned the reason for my urgent summons. Kamenev, who 
was the Vice Premier under Lenin, told me that the country was facing a wide- 
spread and serious famine. The people, of course, knew nothing about it, for 
there was no way for them to know anything except what the Government 
chose to tell them. Only the inner circle were in possession of the facts and 
they realized the situation was very grave. Kamenev told me to rush back to 
this country and begin organizing relief work. The name of the organization 
was to be changed to the Russian Red Cross in America. Thus it would be a 
branch of a respectable and internationally recognized institution and could not 
be accused of being Soviet controlled. I supposed at that time that some distin- 
guished scientist would be ai>pointed to serve at least as nominal head. But 
when I got to my office in New York on August 14, 1921, a cable was waiting for 
me there appointing me plenipotentiary representative of the Soviet Red Cross 
for the United States, Canada, and all Lntln American countries. 

The first thing I did was to dismiss the Chekist Peterson, who had denounced 
me. I then opened up a suite of offices in the building that had housed the 
Martens embassy and prepared to devote myself to Red Cross work and famine 
relief. Captain Paxton Hibben joined my staff as secretary of the Soviet Red 
Cross. With the aid of Walter Liggett, who subsequently was murdered in 
Minneapolis by Communist agents, I organized the American Committee for 
Russian Famine Relief and I set up organizations in Canada and Mexico. 

The work went on so efficiently that soon the Russian railroads were more 
overtaxed than before, and once more Dzierzhinsky was threatening to have 
me shot. This time the threat disturbed me less and I kept on. 

During all this time I had been treated by the American Red Cross as the head 
of a bona fide sister organization. Their cooperation was friendly, courteous, 
and unstinting. From time to time they sent me correspondence about unsettled 
claims for insurance on the part of Russian relatives of former American war 
veterans. Similar letters reached me through the Moscow offices of my organ- 
ization and directly from destitute orphans, widows, and parents. 

THE SOVIET OBLIGES 

It was in 1926 that I realized that here was a new service I could render the 
Soviet Union. Russia was in desperate need of foreign exchange ; the bene- 
ficiaries were in dire straits; the Veterans' Bureau was willing, but unable, to 
settle the claims. It would be highly desirable from everyone's point of view 
if we could find a solution. 

One difficulty was the impossibility of legally identifying the claimants in 
Soviet Russia. The act of Congress authorizing i)ayments required the sig- 
nature of the American consul stationed in the country where the claim was 
made. For 15 years prior to the recognition of the U. S. S. R. (in November 
193.3) there were, of course, no American consuls in the Soviet Union. But 
even if proper identification had been possible, the Bureau was reluctant to 
make payments for fear the Soviet fJovernment would confiscate the money. 

I discussed the situation with American Red Cross official.s — Judge John 
Barton Payne, Col. Ernest P. Bicknell, and Ernest J. Swift. They were sym- 



4690 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

pathetically responsive. I then decided to put the matter squarely up to the 
Veterans' Bureau. 

I traveled to Washington with Boris Evseyevitch Skvirsky, vrho had suc- 
ceeded Martens as unofficial Ambassador in 1922, and as such was in charge 
of the Soviet Information Bureau. AVhen I broached my plan to him, he decided 
it was wholly fantastic. Only a person politically naive and unschooled in Marx- 
ism could believe it would work. Economic determinism, he said, held the 
answer to my request, and the answer was no. Why should the United States, 
an avowed foe of bolshevism, concern itself with the welfare of Soviet citizens 
simply because they were the beneficiaries of American soldiers? And why 
should a capitalist government, so opposed to the Soviet Government as to 
refuse to recognize its existence, aid that Government by placing at its disposal 
millions of dollars? 

From the Bolshevik point of view, Skvirsky's logic was irrefutable. Never- 
theless, I told him that I didn't think this Government would concern itself 
with the politics or nationality of the beneficiaries ; it would make due payment 
provided it had guaranties that the money M'ould reach its proper destination. 

All the way down to Washington Skvirsky laughed at my innocence, saying 
that I was simply making an ass of myself. He indulgently promised, however, 
that he would help me get adequate guaranties from the Soviet Government. 

Armed with that promise, I went to the Veterans' Bureau, where I soon found 
out that my judgment had been right. In high spirits, I went back to Skvirsky, 
and together we succeeded in persuading the Soviet authorities to meet the 
guaranties demanded by the Veterans' Bureau. These included a decree of the 
Central Executive Committee signed by President Kalinin and a letter from 
Assistant Commissar of Finance Frumldn, exempting from inheritance taxes 
and all other taxes all moneys derived from insurance or compensation of vet- 
erans of the American Army. 

Since my verbal assurances were reinforced by these statutory guaranties, the 
Bureau declared itself ready to go ahead. I reorganized my Red Cross oflice in 
New York to take care of this new job, and we got off to a flying start. I was 
proud of the fact that, in spite of the absence of diplomatic relations between 
the two countries, it was possible to carry on this task. 

TIME TO INVESTIGATE 

But soon after we began to adjudicate cases, strange communications began 
to reach me from Soviet beneficiaries. They ran all the way from polite in- 
quiries about remittances gone astray to downright charges of embezzlement. 
I began to investigate. 

My responsibility extended not only to the indigent and suffering beneficiaries 
in Russia, for whom the money was intended, and to the Veterans' Bureau, to 
which I had given my personal assurances, but to the American Red Cross as 
well. What I found as my investigation proceeded I shall show in detail in 
subsequent articles. It is a record of broken promises, confiscation, and extor- 
tion on the part of the Soviet Government. It is part of the record that forced 
me, in 1935, to break with the Soviet Government, to whose interests I had 
devoted the best part of my life. 

[Colliers, May 4, 1940] 

How Stalin Steals Our Money (Continued) 

The United States Treasury paid out each year about $2 million to the Rus- 
sian beneficiaries of American soldiers while I was head of the Soviet Red 
Cross. And it continues to pay. Only a trivial fraction of this money ever 
reaches its destination. The one real beneficiary is the Stalin government. 

Many thousand veterans' cases passed through my hands, and at first I 
thought the reason the beneficiaries were cheated lay in Soviet redtape and 
ofiicial stupidity. Gradually it dawned on me that this was a settled Government 
policy — a deliberate fraud perpetrated upon helpless citizens of Russia and upon 
the Government of the United States. 

The principal ways in which the money is diverted are these : Conversion into 
rubles at an artificial rate of exchange (with varying rates, this has amounted 
to confiscation of from 70 to 95 percent; at present it is about 90 percent) ; 
outright confiscation ; enforced signing over of checks to the state bank, and the 
forgery of signatures. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4691 

Soviet apologists like to say, "Perhaps there once were abuses ; but all that 
has been changed." The situation has changed from time to time, but the 
purpose of the Soviet Government has remained the same. And the result has 
been the same: The Government gets the money, and the beneficiaries are left 
no better off than before — sometimes much worse off, as I shall show. 

There are three distinct phases in the affairs of the Russian beneficiaries of 
American soldiers: The period before 1931 when there was nothing for them 
to do with their checks except cash them into rubles ; the period from 1931 to 1935 
when, in theory at least, they could use part of their money at the Torgsin stores 
(these were stores established, as the Russian names suggests, for "trade with 
foreigners"; they accepted nothing but foreign exchange); and the present 
period in which, with the end of the Torgsins, there is once more nothing to 
do but cash the checks into rubles. Even hoarding the checks is impossible; 
unless the recipients cash them promptly, agents of the OGPU drop in to inquire 
why they haven't. And no one wins an argument with the OGPU. 

To show you what this enforced conversion into rubles at the oflacial rate of 
exchange amounts to, I shall give you the present prices of a few common com- 
moditie's. Bread, when there's enough of it, can be bought for as little as 2 14 
rubles a pound— that is, 50 cents— often it is higher. Eggs cost from 20 to 25 
cents apiece. The lowest figure for butter is $2 a pound. Milk is 50 cents a 
quart. Cottage cheese is $2.50 a pound; coffee $7 a pound; tea $5 a pound. 
Light woolen cloth for dresses costs $25 a yard. Shoes range from $50 to $200 
a pair. 

The ruble is given the fictitious value of 20 cents. In purchasing power, as 
measured by world prices, it is worth slightly less than 2 cents. And so, out 
of a $30 dependency compensation check cashed by the beneficiary at the state 
bank, $3 in purchasing power goes to the beneficiary, and $27 in sound American 
currency goes to the Soviet Government. Often the Government is not content 
with this cut and takes it all. 

MONEY THAT MEANT DISASTER 

The official view of the Soviet authorities is that its ruble exchange is a per- 
fectly legitimate monetary operation and not a violation of its pledge not to 
confiscate or tax any part of the veterans' benefits. The Veterans Bureau 
had required this pledge before any benefits were paid. In the first article 
of this series I explained how I helped to obtain it. 

One of the things that neither I nor the Veterans' Bureau could possibly 
foresee was that the receipt of these benefits would be regarded by the Soviet 
Government as transforming the beneficiaries into kulaks — rich peasants — 
thus automatically making them enemies of the state and subjecting all their 
property to confiscation. 

How often this happened I have no way of telling for I was able to investi- 
gate only a few cases at first hand, and the Soviet law making it treason to cast 
aspersions on the Government did not encourage full reports either from the 
sufferers or their friends. But in the case of Andrian Pavlov Matveyuk I re- 
ceived, almost by accident, the account of an eyewitness. 

The American veteran in this case, Matveyuk's son, whose name, thanks to 
whim of the United States immigration officers, was Jacob Maturk (XC-102-907) 
died in action in France. His beneficiaries were his father and mother, living 
in the village of Mikhirinetz. The first complaint, dated October 26, 1931, came 
through the mails and was called to my attention by the Veterans' Bureau 
and the Washington office of the Jewish Welfare Board, although neither the 
veteran nor his beneficiaries were Jews. 

In this letter Matveyuk, who was then 70 years old, said that the OGPU 
had taken away from him 2 Veterans' Bureau checks — 1 for $1,667.50, made 
out in his name, and the other for $883, made out in his wife's name — as well as 
770 rubles, which he had obtained by cashing previous remittances from the 
United States Veterans' Bureau at the rate of 1 ruble 94 kopeks per dollar, 
and which he had saved up to buy himself a pair of boots. (Incidentally, these 
boots were to have cost him about .$400, the normal price for boots in those 
days, when they could be obtained at all.) 

The possession of so much money made kulaks of these harmless old people 
in the eyes of the Soviet law. And so their shack and strip of property were 
confiscated, as well as their money. They became pariahs in their native village. 
They managed to hide 2 small checks — one for $15 and the other for $11 — but 
they did not dare present them anywhere even for exchange into practically 



4692 SCOPE OP SOVIET ACTIVITY IN THE UNITED STATES 

worthless rubles. Subsequent checks which they received were also hoarded, 
and the OGPU, discovering' fi'ora time to time that the Mutveyuks had not cashed 
any checks at the local branch of the state baui<, would raid whatever bai-n 
the homeless old people happened to be living in at the moment and take the 
checks away from them. 

Since Matveyuk was illiterate— all his letters were written by friends at his 
dictation — and could endorse a check only with a cross, the OGPU made the 
endorsement itself, certified to its correctness, as provided by the Soviet statutes, 
and cashed his checks. Meanwhile, the two old peasants subsisted through 
the surreptitious charity of neighbors, for any aid given to an OGPU suspect 
is looked upon as treason to the state. 

In June 1932, another letter reached me, which concluded with the words: 
"We have nothing to live on, since we are without a crust of bread and without 
a kopek of money." The following spring Andrew Yarmoluk, a resident of New 
York who had been born in the same village as the Matveyuks and had returned 
there to see his aged mother, brought me a final letter. From it and from 
Yarmoluk I learned in detail what had been happening to the old peasants. 
After that there was no word, 

we're still paying 

Considering the advanced age of the beneficiary and the fact that his house 
and land were confiscated even before the famine that was deliberately brought 
on by the Soviet Government in this part of the Ukraine in 19.32-33, I have every 
reason to assume that he and his wife are no longer living. As kulaks they were 
subject to liquidation, and everything points to the conclusion tliat that is what 
happened to them. I have no doubt that these two old people were among the 
millions of Ukrainian peasants who either starved to death in the richest grain- 
producing region of Russia or were driven north to hew lumber and perish in 
one of the sub-Arctic concentration camps. The Soviet authorities maintained 
a stubborn silence about their fate and continued to collect their benefits, month 
by month, from the Veterans' Bureau. So far as my records show, they are 
still doing it. 

In the case of Andrew Romanchuk (XC-2,109), the beneficiary's wife and 
daughter were exiled to Siberia as kulaks and entirely deprived of their benefits. 
This matter was called to my attention by the deceased veteran's son-in-law in 
Chicago. Another case of a beneficiary being converted into a kulak was Iirought 
to my attention by a cousin of Veteran Xenofon Ivanov (XC-4(),471). The vet- 
eran's widowed mother had exchanged a check for $5,341.45, which represented 
accumulated insurance benefits, at tlie Soviet State Bank for 10,300 rubles. She 
thus yielded about nine-tenths of the actual value to the Soviet Government and 
kept approximately $600 in purchasing power for her share. Rut when these 
thousands of rubles were found in her home, their possession automatically con- 
verted her into a kulak. The rubles were taken away from her, her monthly in- 
surance checks for $40 were kept from her, and she was classified as a social 
and political outcast. 

The Veteran Maurice August Stein (XC-304,620) was born in the Ukrainian 
market town of Mogilev-Podolsk. His father and mother. Wolf and Beyla Ster- 
enstein, made a meager living there as small traders. Some years before the 
war, Maurice came to the United States and settled in Oklahoma. He changed 
his name to Stein and became an American. Plans were made to bring his 
family to this country. Meanwhile he sent them regular remittances. 

In 1917 Maurice became a soldier in the United States Army. That same 
year the Bolsheviks captured the government of Russia. 

Maurice contracted tuberculosis while fighting in France. His brother, Boi-is, 
was killed while fighting in a Red partisan detachment in the Russian civil war. 
Marauding bands were sweeping over the Ukraine, burning, pillaging, and raping. 
In 1919 Maurice's sister, Rosa, a girl of 17, escaped the soldiers of Hetman Simon 
Petlura by fleeing across the Dniester River into Bessarabia. With her as guard 
and protector went her 12-year-old brother, .Toshua. 

These two children made their way to Bucharest. Rnmania, and there located 
the consul of the defunct czarist government of Russia. He pi'o\ ided them with 
identification cards which made it possible for them to remain in Rumania until 
they could locate their American brotlier. They dreamed of being able to join 
him in this country. Finally they got in touch with him at the United States 
Veterans' Hospital No. 55 in Fort Bayard, N. Mex. Three years later they had 
saved up enough between them, principally from Maurice's pension, for their 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4693 

trip to Araericn. They arrived in New York in February 1923, and at once 
todk a tr.iiu for El I'aso, Tex., where they were met by JMaurice. 

Rdsa and Joshua ohaufied their names to Rose and Jack Stein and made a 
home for their brother in El Paso, where he stayed, receiving home treatment 
from the Veterans' Bureau. Meanwhile, there remained in Mogilev-Podolsk the 
Stein's aged parents, together with three other children. Once more plans were 
made to bring the whole family together in this country, but they were never 
carried out. 

Jack Stein became a house painter and moved to Oklahoma City. Rose mar- 
ried, and Maurice returned to the veterans' hospital where, in August 1923, he 
died. His entire estate, consisting of insurance compensation and pension al- 
lowances, was willed to his father in Mogilev-Podolsk. The checks, after ar- 
rangements had been made with the Veterans' Bureau, went regularly to Wolf 
Sterenstein, and the major portion of them was as regularly confiscated by the 
Soviet authorities through payment in rubles. 

Ten years after Maurice's death. Rose died in El Paso, and Jack moved to 
Brooklvn, where he still carries on his profession as a painter. 

In July 1934, the father, '\^^olf Sterenstein, dieil of food poisoning, and the 
mother and children moved to Kharkov. I was handling this case, but no notice 
was sent me of Sterensteln's death. As in so many other instances, the Soviet 
authorities deliberately withheld information in order that the checks should con- 
tinue. In September I I'emitted $1,397.51 of Maurice Stein's estate, to be divided 
equally between his father and mother. If I had known of the father's death, 
I should have divided the money, according to law, between the mother and 
children. 

The mother longed to see her son. Jack, before she died, and he wanted to re- 
turn to Russia to see her. His portion of the money I had sent would have made 
the trip possible, but the Soviet authorities refused to return a cent of it on the 
grounds that no funds are allowed to leave the country. The fact that the Soviet 
Government, including the state bank and the Red Cross, had obtained the money 
fraudulently made no difference. 

Ja( k then volunteered to spend every kopeck of his share of the estate in the 
Soviet Union. Word came back that this would not be possible inasmuch as 
Jack was an enemy of the state and could not be granted an entrance visa. 
"Why was he an enemy of the State? Because in 1919, as a boy of 12, he had 
fled" from the bandit-ridden Ukraine. This automatically made him a White 
Guard and an enemy for life of the Soviet Union. His share of the estate was 
forfeit. 

I protested so vigorously at this barefaced thievery that the Soviet authori- 
ties finally agreed to acknowledge Jack's right to his share of the estate. But he 
never got it. First the Soviet authorities arbitrarily scaled down his portion 
from 25 to 10 percent. Jack was willing, under protest, to accept even that — 
a total of .$139.70 — since, as he explained to me, "my trade is fast asleep for 
the last few months." But be was then informed that he would not be paid 
in cash ; they would give him Soviet bonds. These he refused as worthless. 
And so he got nothing. 

The final touch of irony came when his mother requested that the personal 
property of her dead son IMaurice be sent to her. Upon application to the 
Soviet authorities in Moscow, Jack was told that the Government had no objec- 
tion provided he paid Soviet customs duty on his brother's personal belong- 
ings in dollars at the official rate of 1.11 rubles to the dollar, the valuation to be 
made, of course, by Soviet officials. 

Although the Soviet Union denied an entrance visa to Jack Stein, two of whose 
brothers had died fighting in the Red Army, it was eager to welcome home 
even dangerous lunatics, provided it could get control of their money. I was 
twice practically ordered to secure the release of homicidal maniacs from the 
asylums to which they had been committed in order that their accumulated 
benefits — both were American veterans, and the money in one case amounted to 
$12,000 — might be sent back to Russia with them. In both instances I found 
reasons for refusing. 

PROOF OF FORGERY 

I should like to cite briefly one case of forgery in which I caught my Soviet 
colleagues redhanded. The incident aro.se in connection with the case of Vet- 
eran Albert Gus ( XC-183.S78). The beneficiary, being illiterate, signed his 
receipts and endorsed his checks with a cross. That signature was certified by 
local Soviet oflicials as correct and legal, and was accompanied, as required by 



4694 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

the Veterans' Bureau, by a legal certification of the beneficiary's illiteracy. 
Several months later, it became necessary for this man to sign certain addi- 
tional documents I had forwarded to him. They were duly returned — with the 
beneficiary's name signed in full. Even more surprising, the signature was 
clearly the work of an accomplished penman. 

I returned the documents to the Red Cross in Moscow, politely pointing out 
there seemed to be a mistake. In reply, I received from Moscow a new docu- 
ment, stating that in the interim the beneficiary had become literate, and authen- 
ticating the new signature. I wrote back that such educational progress would 
be viewed with skepticism in America. Once again the documents were returned 
to me, this time signed with a cross and duly certified as heretofore. That was 
the end of the incident. 

Considering the enterprise of the Soviet secret police, one can never be 
sure whether any signature on a Soviet-authenticated document is genuine, or 
whether any given beneficiary is actually among the living. I strongly sus- 
pect that a considerable percentage of benefits are paid in the names of bene- 
ficiaries actually long since dead. The Veterans' Bureau, having no oflUcial 
notice of their death, naturally continue to send monthly remittances, and the 
Soviet Government collects them in toto. 

One of the guaranties I had secured from the Soviet authorities expressly 
exempted veterans' checks from collection charges. 

"Collection charges," however, became common practice. Thus, the mother 
of Veteran Sergei Pavliuk complained to the United States State Department 
that when she presented a check for $419.03 for exchange into rubles, the Soviet 
State Bank deducted $104 as charges for collection. 

MES. PA^'LIUK EECONSIDEES 

I wrote to Moscow requesting that this flagrant violation of official Soviet 
guaranties be rectified. After 6 months of correspondence, the Veterans' Bureau 
received the following statement from the original complainant : 

"In the end of 1930, I sent you a complaint to the effect that the state bank 
deducted in its favor 134 rubles 40 kopecks when paying me out sums of 
money. Regarding the facts of my application to you, I request you to con- 
sider it as canceled, as it was sent by me by mistake, rather by my not know- 
ing that the bank deducted this amount not in its own favor, but in payment of 
expenses of legalization of documents by the Red Cross, which amount I actu- 
ally did have to pay to the Red Cross. This was not known to me, and later 
upon receipt of explanations from the Shepetovka Comnuttee of the Red Cross, 
I was convinced of the correctness of the deduction of these sums, and therefore 
do not have any claims. Which I sign, (signed) A. Pavliuk. July 16, 1931." 

To anyone with experience in these matters, it is perfectly clear that this 
letter was dictated, if not actually written, by the OGPU to whitewash a viola- 
tion of their own laws and regulations by the state bank. 

When I set out to help the Veterans' Bureau find the rightful heirs and bene- 
ficiaries of American veterans in Soviet Russia, I was motivated primarily by 
humanitarian considerations. It's true I had the secondary motive of desiring 
to supply the Soviet state with foreign exchange — but only on a legitimate 
basis. Moreover, I believed the Soviet Government intended to live up to its 
promise. This belief was founded on two considerations: (1) however amoral 
the Bolshevik attitude toward a bourgeois state might be, the Bolsheviks were 
first of all champions of the oppressed and disinherited — and the beneficiaries 
were almost without exception members of this class; (2) the Soviet state 
was eager to gain American recognition and was therefore on its best behavior, 
endeavoring to impress American officials with its trustworthiness. 

But during the time I was in office a quiet revolution took place within the 
Soviet Union. It profoundly altered the nature of the Soviet state. From the 
foremost champion of the exploited, the Soviet state has been transformed 
into the most egregious exploiter of its own workers. What began as a step 
toward socialism turned into the most ruthless system of state peonage. By 
comparison, feudalism in its darkest aspects was an ideal social state. 

This change was brought home to me by the thousands of veterans' cases that 
passed through my hands. My indignation was mixed with fear for my own 
safety. I had resigned from the party in 192.j. the year after Lenin's death, but 
I had been allowed to retain my post as head of the Soviet Red Cross in America 
because of the services I could render the Soviet Union. There were increasing 
indications, however, that I was not trusted. As early as 1928 I had assigned 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4695 

to me, ostensibly as my assistant, a Dr. Mark Shieftel, who turned out to be an 
agent of the OGPU. 

In addition to lieeping an eye on my doings, Dr. Sheftel engaged in lively 
espionage activities, and finally found this country too hot to stay in. I obtained 
a promise from Moscow that his successor would be a trained Red Cross man 
who would be of some use to me. 

This successor was named Jacob Sterngluss. He had earned his appointment, 
as I later discovered, by being chief OGPU agent in Afghanistan. Among his 
disabilities for his present job was a total ignorance of English. As a matter of 
routine, he opened and read my mail. This didn't especially surprise me, but 
when I discovered that he was also tampering with the United States mail, 1 
became alarmed. As responsible head of the organization, I could be held account- 
able for his acts. A prolonged visit to Leavenworth loomed before me as au 
unpleasant possibility. I decided to have a showdown. 

I cabled Moscow urgently for permission to report there in person. A crisp 
reply informed me that my request was categorically denied. Two weeks later 
another cablegram arrived granting me permission to come. Sterngluss who, 
of course, had read both cables, was dumbfounded. "I can tell you this," he 
said finally, "you will never see Yenukidze." Yeuukidze was president of all the 
Soviet Red Cross societies and thus my chief in office. 

I wasted no time in argument, but caught the first boat for England and from 
there sailed to Leningrad. My wife was already in Moscow, staying with close 
friends of ours who had visited us frequently when they were in this country on 
official business. 

EMBAKEASSING GUEST 

On my arrival, I discovered that there were other friends in Moscow eager to 
repay the hospitality we had extended to thpm in America and so, to the incon- 
venience of all concerned, we moved from time to time, visiting different friends 
in turn. It was thus that we found ourselves guests at the home of General 
Khalepsky. His apartment was in a modern building put up for high-ranking 
armv officers and their wives and it was the last word in efficiency — except that 
quite often the gadgets didn't work. Usually there was no hot water and some- 
times there was no water at all. 

On one of these occasions, when we were all suffering from drought (you 
couldn't borrow water from your neighbors, for they had none ; when the water 
goes off in Moscow, it goes off everywhere) the cook suggested that we might 
get Marshal Tukhachevsky, who occupied the apartment above us, to do something 
about it. We sent up our maid, but she returned with the report that the marshal 
was still in bed. A half hour later I went up, wondering whether he would 
remember me from our meeting almost 15 years before. He did, treating me 
very cordially and chatting about the dark days of 1920. (They had been glo- 
rious days for him; he was the hero of the nation, a second Napoleon at 28.) 
He called up the Kremlin, and in short order we had water. That was the last 
time I saw the marshal. In 19.37 he was shot as a spy and saboteur — and with 
him died the best brains of the Russian Army. 

But I get ahead of my story. I had been warned by my friends that it would 
be dangerous for me to return to Russia, and I wished to take reasonable precau- 
tions against a prearranged accident. My first move was to call at the foreign 
office. While I was there I took the opportunity of telephoning to Ambassador 
Bullitt's office. I had provided myself with a pretext in advance. Lincoln Col- 
cord had given me a book to be delivered to Mr. Bullitt. It turned out that the 
Ambassador was not in Moscow, but I had made my point. The American 
Embassy knew where I was, and the Soviet Foreign Office, and of course the 
OGPU, knew that the Embassy knew. 

My appearance at the Red Cross office produced consternation. What was I 
doing in Moscow? Didn't I know that my request to leave New York had been 
denied? I patiently explained that I had received permission — and produced a 
photograph of the cable to prove it. Further excitement ensued, during which 
I discovered that I had only got there through a blunder on the part of the 
Moscow cable office — a Government service, of course. The message authorizing 
me to come had been filed first, but had not been sent ; later it had been decided 
to replace me in New York, and the message forbidding me to leave had been 
filed. The second message got off with only a day or two of delay, but the first 
was held up for over 2 weeks. I, of course, got them in that order. 

When I taxed the executive secretary with putting an OGPU man in my office, 
he readily admitted the fact, but said it was out of his hands. What business 

93215— 58— pt. 85 2 



4696 SCOPE OP SOVIET ACTIVITY IN THE "UNITED STATES 

was it of mine, anyway? he asked. I replied that unless he were removed I 
would resign. He told me not to bother ; I had already been replaced. "You 
complained too much," he said. 

My connection with the Soviet Red Cross might have ended then and there, 
if it hadn't been that Zhdanov (who is now boss of Leningrad and is regarded 
as Stalin's probable successor) persuaded me to retain my post for 6 months 
in order to break in the new man. I agreed to do this only on condition that 
Sterngluss be recalled. Zhdanov promised that he would be. (This promise, 
by the way, was carried out. When I got back to New York I found Sterngluss 
in the hospital suffering from a wholly imaginary appendicitis in order to avoid 
returning to Moscow to face the music. ) 

bakovsky's reward 

While I was in Moscow, a conference of the League of Red Cross Societies 
was in session at Tokyo. Russia had been a member of the International Red 
Cross for years but had never before been admitted to the league. She gained 
the much-coveted invitation this time because her delegation to the Interna ti(mal 
Red Cross convention was headed by Dr. Christian Rakovsky. I had had a 
hand in that. 

The way it had come about was this. While I was still in New York, the 
Red Cross authorities in Moscow had written me, urging me to do what I could 
to get Russia admitted to the league. I replied that Judge John Barton Payne, 
who was president of the league, had a high regard for Rakovsky, and if he were 
made head of the delegation I thought it likely that Russia would be invited to 
the league conference. I knew that Rakovsky, who in Lenin's time had been 
Premier of the Ukrainian Republic and had served as Soviet Ambassador to 
France and Great Britain, was in political exile in Siberia. 

Rakovsky was recalled from exile, dusted off and sent to Tokyo. I solemnly 
hoped that once out of the country he would stay out. But his wife had not 
been allowed to accompany him. He returned to Russia in time to be caught 
In the purges which followed the assassination of Kirov in December 1934. In 
1938 he was sentenced to life imprisonment for being an agent of the Japanese 
Government. 

This gives you some insight into the validity of the charges brought by the 
Soviet Government. If Rakovsky was a Japanese agent, then Judge Payne 
and I, who got the idea of sending him to Japan, are also in the pay of Japan. 

After I returned to New York and wound up my work for the Soviet Red 
Cross, I wrote to General Hines, director of the Veterans' Bureau, explaining 
the situation. Part of the letter said : 

"As I am no longer connected with the Russian Red Cross, a fact which I wish 
to call to your attention, I am no longer in a position to bear any responsibility 
for the conduct of veterans' cases by the Russian Red Cross. These cases are 
now entrusted to a Soviet official whose loyalty is necessarily pledged to the 
Russian Communist Party of which he is a member and to the Soviet Govern- 
ment of which he is a citizen. In these circumstances, the beneficiaries of 
American funds are left without adequate protection and guardianship." 

A JOB FOB THE VETEBANS' BUREAU 

That is a problem that still disturbs me. Nearly 25 percent of the United 
States budget goes to the veterans. A considerable portion of that helps to 
support the Soviet Government instead of going to the Soviet beneficiaries 
of American veterans. Something should be done to safeguard these people. 
It is high time that they received protection from the trickery of their own 
Government and that the money of American taxpayers stopped being used 
for the snpport of another government. 

I suggest that the Veterans' Administration, or the American Red Cross, or 
the United States State Department establish its own agency in the Soviet 
Union to supervise payments to Soviet beneficiaries. These American repre- 
sentatives will be obliged to make certain in each ca.se that the veterans' 
beneficiaries do not merely receive the checks mailed to them but procure actual 
benefits in terms of commodities. Otherwise the very purpose of such representa- 
tion would be defeated. 

The American representative will have no easy time. He will find that the 
veterans' beneficiaries are scattered throughout the length and breath of the 
Soviet Union, over one-sixth the surface of the earth. He will have to have 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4697 

a large enough staff so that he can send agents to visit beneficiaries in subarctic 
concentration camps, in Siberia and perhaps in Kamchatlia. But if the purpose 
of the Veterans' Administration is not merely to get rid of money in any old 
way, it must either make sure the money it sends out I'eaches its destination, or 
it must stop maliing payments altogether, thus at least saving the taxpayers' 

money. 

[Colliers. May 11, 1940] 

How Stalin Steals Our Money (Continued) 

One day in 1928 an inquiry reached my Red Cross offices in New York from 
the Central Committee of the Red Cross in Moscow. It was about an ingenious 
scheme designed to turn the Red Cross into a kind of murder trust. 

The plan was simple and quite logical. We were to arrange for the emigration 
to the United States of thousands of Soviet workmen. Once they were over here, 
we were to see that they secured employment in the most hazardous occupations 
we could find — after insuring them heavily with private companies. Inevitably 
there would be a large number of accidents. The resulting insurance plus the 
benefits accruing under the workmen's compensation acts would furnish a hand- 
some bit of foreign exchange for the Soviet Government. 

This money would be pure profit. It would, in fact, never leave this country. 
The workmen's heirs, if they received anything at all, would be paid by the 
Stalin government in printing-press rubles. The dollars would stay here to be 
used as the Government saw fit. 

One interesting feature of the plan was that it had been thought up in my 
ofiices without my knowing anything about it. It was the brainchild of Dr. 
Mark Sheftel, nominally my assistant but actually an agent of the OGPU, as I 
later discovered. Since the OGPU is the secret supergovernment of Soviet 
Russia, Dr. Sheftel owed his allegiance to it and not to his superiors in ofiice. 
He reported his plan directly to Moscow, where it was approved and referred to 
me for execution. 

Objections on humanitarian grounds would have been laughed out of court 
as "petty bourgeois sentimentality." Fortunately I was able to quote the United 
States Immigration Act and quota law — and the plan died. 

The desperate need for foreign exchange, which had inspired Sheftel's scheme, 
was a result of the first 5-year plan. With the crushing of Trotsky, Zinoviev, 
and Kamenev in 1927, the focus of attention in Moscow had shifted from world 
revolution to socialist construction at home. Under Stalin's ruthless direction 
an insanely ambitious program of industrialization was undertaken, with no 
thought of the cost. By comparison the loss of life in building St. Petersburg 
on the marshes of the Neva River under Peter the Great sinks into insignificance. 
Millions of Russian lives were exacted by Stalin in payment for the execution 
of the first 5-year plan ; millions of miserable peasants were starved to death 
for the promise of an industrial paradise. 

To carry out the plan it was absolutely necessary to purchase capital goods 
abroad. But the Soviet printing-press rubles were completely worthless in the 
markets of the world ; they would purchase exactly nothing at all. And there 
were no bankers anywhere — much to Stalin's surprise — who were willing to 
finance the undertaking. The only way the Boksheviks could get what they 
wanted was by obtaining foreign exchange. To do this they dumped soap and 
butter abroad and let their own people go unwashed and undernourished. They 
dumped millions of tons of wheat and let their grain producers, by the millions, 
starve to death. 

My own contribution to the Soviet foreign exchange funds through the ad- 
judication of the cases of American veterans with relatives in Russia has been 
described in earlier articles. In the course of that work I had run across 
thousands of estates of Russians who, although they had not served in the 
United States Army, had died here, leaving heirs in Russia. When any of these 
estates had been settled, the inheritances had been held in trust by the court. 

I at once saw in them another source of foreign exchange for the Soviet Gov- 
eruiiient. 

It's worth noting that the whole principle of inheritance is expressly denied 
by the Bolsheviks. The Soviet decree of April 27, 1918, says: "Inheritance, 
whether by law or by will, is abolished." However, when the chance presented 
itself of laying hands on property outside the borders of the Soviet state, they 
obligingly altered their principles and, with them, the law. It was a useful 
thing to do, for it immediately extended their powers of confiscation beyond 



4698 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Russia itself to all the thousands of places where Russians lived throughout 
the world. As soon as the money thus obtained reaches Soviet jurisdiction, 
the basic law of the abolition of private property is immediately invoked and 
the money is confiscated. What the change in Soviet policy amounts to is 
the temporary recognition of private property for the sole purpose of con- 
fiscating it. 

That this would be the Soviet attitude I had no way of knowing when I 
first proposed that the Red Cross help in salvaging the residuary estates of 
Russian nationals in the United States and the benefits due Soviet citizens 
from industrial-insurance compensations. My motives were the same as those 
that had impelled me to take up the veterans' cases, a desire to help the bene- 
ficiaries and at the same time to provide a legitimate source of foreign exchange 
for the Soviet Government. 

After initial skepticism, the authorities in Moscow agreed to let me try my 
plan. I went to Col. Ernest P. Bicknell, vice chairman of the American Red 
Cross in charge of foreign operations, and explained the situation to him. 
Colonel Bicknell saw in my proposal another opportunity to help destitute people 
and promised to put me in touch with the attorney of any Red Cross chapter in 
America. That meant that henceforth the Soviet Red Cross would have at its 
disposal the willing assistance of over 3,000 Red Cross chapters throughout the 
length and breadth of the United States. With such help I could not fail in my 
plan, 

A CONSTANT DEMAND FOK TRACTORS 

Shortly after this work began I spent a weekend at the house of Max Rabinoff, 
the American impresario. Saul Bron, then chairman of the board of the Amtorg 
Trading Corp., was also there. Bron had heard of the rapid progress I was 
making with the new money-raising enterprise. He knew, he said, about my 
phenomenal success with the veterans' cases and he wanted to pin me down 
to a promise that I would raise $15 million out of the settlement of civilian es- 
tates during the current year. He needed that much additional cash to pay 
for tractors, machinery, and other capital goods. 

There was, and still is, a constant demand for tractors in Russia. The need 
is legitimate enough, but it is greatly increased by the constant destruction of 
tractors at the hands of the peasants. When a tractor stops running, the peas- 
ant's first move is to kick it. If this fails to produce results, he seizes the first 
heavy object that comes to hand and begins beating it. After the tractor has 
been hopelessly disabled, it stands in the field indefinitely, for the peasant has 
no way of hauling it off. Russian peasants are still puzzled at the refusal of 
tractors to respond to treatment that works so well with horses. 

Amtorg was always in need of cash. American manufacturers were reluctant 
to deal with the Soviet Government, and when they did it was usually on very 
stiff terms. I know personally about one contract for tractors that called for a 
first payment in cash that exactly equaled the usual purchase price of the ma- 
chines. The additional deferred payment came to as much again. These Am- 
torg acceptances were then disposed of for whatever they would bring. They 
sold in the money markets of the world at a discount of from 30 to 60 percent and 
many a fortune has been made by men who bought them, realizing that Soviet 
credit was vital to the success of the 5-year plan and therefore the acceptances 
would be duly paid, (The ultimate payment was always made, of course, at the 
expense of the peasant. ) 

WITH THE HELP OF THE BED CROSS 

Naturally Bron was interested in the settlement of estates. Once the courts 
had released the money, all that was required to put it at his disposal was a 
bookkeeping transaction in New York. I told him that I had rounded up several 
million dollars' worth of estates in the first few months, but I had no way of 
telling how many would be definitely settled during that year. He thought I 
was hedging and began to give me advice about how the business could be speeded 
up. 

Reduced to plain English, his counsel was that I should buy the press and bribe 
the authorities. I told him that this was America and such methods would not 
work. This seemed to amuse him. He was, he said, familiar with the workings 
of capitalistic countries. Money could accomplish anything, and in view of the 
millions we stood to gain it was silly to haggle over a few thousands. Every man 
had his price. He knew. He had been in France. The press there could be 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4699 

bought ; officials could be bribed. America was also a capitalistic country. And 
so all I iiad to do was get to work. I ended by inviting him to go and try to buy 
one of the New York papers or to bribe Colonel Bicknell. 

Dr. Sheftel was present at this interview, and I have no doubt that his re- 
port to his superiors in the OGPU scored another black mark against me as a 
counterrevolutionary. It is dangerous to insist upon facts when orthodox Marx- 
ists declare tliey should be otherwise. Such insistence is looked upon as dis- 
loyalty. (It's an interesting fact that the people who hold this point of view 
go right on insisting that Marxism is scientific.) 

Of course I ran into difficulties in handling civilian estates and industrial com- 
pensation cases. There were hard-boiled skeptics who remained unimpressed by 
the recommendations of the Red Cross and the example of the Veterans' Bureau. 
They refused to entrust money to the Soviet State Bank. I was impatient with 
them at the time. Now I feel I should make public acknowledgment of the sound- 
ness of their instincts. 

One of the most obdurate of these skeptics was Judge Henry Horner, later 
Governor of Illinois. In spite of the ironclad guaranties my attorneys offered 
him and in spite of the fact that I was represented by Donald Richberg, as able 
and persuasive an advocate as any in the United States, he refused to let the 
money leave the United States. 

But the great majority of American .judges, public administrators, surrogates 
and industrial compensation commissioners fell in line. That should not be 
held against them. They acted on the perfectly reasonable assumption that 
the edicts and decrees of a sovereign state constitute an adequate guaranty. It 
doesn't occur easily to anyone in a civilized country that a state may be bent upon 
cheating its own citizens. 

The procedure I worked out was this: As the inquiries and claims came in, 
I would investigate to determine the proper jurisdiction. Then with the aid of 
the attorney of the local chapter of the Red Cross I would proceed to the ad- 
judication of the case. I would instruct the attorney about the Soviet bene- 
ficiary's interests and ask him to discuss the case with the judge. Then I would 
provide the proper Soviet documents to substantiate the claim. These I assumed 
in every case to be genuine, although now I know that this was not always so. 
Usually the case was adjudged in our favor. To offset difficulties I engaged the 
ablest attorneys I could secure. 

THE STKANGEST CASE OF ALL 

Before long I was swamped with work. Thousands of cases, some of them pend- 
ing for as much as 12 years, were unearthed by my organization and hustled 
through the courts. The stream of dollars began to flow, presumably for the 
claimants in Russia, actually for the State Bank of the Soviet Government. 

Here is a typical compensation case : Afanasii Bartosik, a truck driver, was 
killed while at work in Milwaukee. He lived at 311-313 East Water Street 
in that city. He had a daughter in the Soviet Union. My attorneys argued the 
case and overcame all objections. A check was drawn in the name of the bene- 
ficiary and I, as attorney-in-fact, deposited it to my account and transmitted the 
money to the central committee of the Red Cross in Moscow. Only 5 percent, 
as I learned afterward, was paid to the beneficiary ; 95 percent went to swell 
the foreign-exchange fund of the Soviet Government. Nevertheless, a receipt 
for the full amount in dollars came back signed by the beneficiary, and this I 
forwarded to the Wisconsin Industrial Board. 

Sometimes the very documents substantiating the claims, I later found out, 
were forged by the Soviet authorities. 

One of the first cases I handled involved, as one of the beneficiaries of the will, 
Nadezhda Konstantinovna Krupskaya, Lenin's widow. The bequest was made 
by a Russian immigrant whose name had originally been Kneerin, later changed 
to Kay in this country. He had become a prosperous businessman, but his 
sympathies remained with the Bolshevik cause. 

The amount of the bequest was not very great, and the money, in any event, 
would have meant nothing to Krupskaya. She had abandoned wealth and social 
position in her youth in order to become a social worker and had been one all 
her life. But it is interesting to note that the Stalin government, with perfect 
impartiality, cheated her, too, out of the money justly due her. 

Stalin's own treatment of Krupskaya was even more outrageous. He thrust 
her unceremoniously into the shadows of the Kremlin where she was, to all 
intents and purposes, a prisoner. Nevertheless, until her death last year, a hope 



4700 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

lingered on among her friends and admirers tliat she might some day be the 
instrument for reforming the present Soviet Government. 

There is a story, possibly apocryphal, that shortly after the death of Lenin 
when Krupskaya opposed some of Stalin's high-handed policies he sent word to 
her, saying: "Tell the old hag to shut up or I'll appoint a new widow for Lenin." 

Another case that passed through my hands was the estate of Leopold Auer, 
the great violin teacher, who died in the United States, leaving a fortune of about 
$20,000. His heirs were two daughters in Moscow and a grandson in this country, 
Mischa Auer. The latter, of course, got his full share; the daughters received 
a negligible fraction, and the Soviet Government took the lion's share of their 
inheritance. 

The strangest of all the inheritance cases referred to me by the Red Cross 
in INIoscow was that of the alleged heirs of Haym Salomon. This claim amounted 
to $600 million. And it was to be filed against the United States Government. 

The fact that it was made at all proves the Moscow authorities had swung 
around from doubting that the United States would have anything to do with 
Soviet citizens to the belief that it would do anything that was asked and believe 
any fabrication that was presented to it. 

Not that Haym Salomon was a fabrication. He existed all right, as I learned 
when I looked into the matter. A native of Lissa, Poland, he came to New York 
in 1772 when he was in his early thirties. Before that he had wandered through 
Europe, picking up a working knowledge of 10 languages and a good deal of busi- 
ness experience. In New Tork he opened a brokerage ofBce and at once i)egan to 
make money. In September 1776, during the British occupation of New York, 
he was arrested because of his Whig sympathies. 

Next he turned up as interpreter on the staff of the Hessian General Heister, 
actively engaged in persuading Hessian soldiers to desei't. He was again ar- 
rested, paroled, married the daughter of a rich New York banker and immediately 
got into trouble for a third time. He was charged with participation in an 
anti-British plot and condemned to death. He managed to escape by bribing 
his guards and went to Philadelphia, where he became a dealer in bills of ex- 
change and other securities. Later he became the paymaster for the French 
forces in America. 

It was during this time and later that he contributed large sums to the cause 
of the American Revolution. In the accounts of Robert Morris, American Super- 
intendent of Finance, Haym Salomon is mentioned 75 times. James Madison 
wrote of him in 1782 : 

"The kindness of our little friend in Front Street near the coffeehouse, is a 
fund that will keep me from extremities, but I never resort to it without great 
mortification, as he obstinately rejects all recompense * * *." 

Salomon's heirs, however, were not so obstinately generous in attitude. Ten 
times within the last hundred years, their claims have been considered by the 
United States Congress. But no award was ever made. 

what's to be done about it? 

It was this claim that the Soviet Government had unearthed and decided to 
push. They provided me with a great packet of marriage licenses, birth certifi- 
cates and family trees designed to prove that a family in Odessa were the true 
heirs of Haym Salomon. Although I looked into the matter thoroughly I was 
never able to discover that any of Salomon's descendants had ever returned to 
Poland or to Russia. I have no reason to believe that the documents were any- 
thing but an elaborate forgery by the masterminds and accomplished penmen 
of the OGPU. 

These documents were accompanied by a letter from the IMoscow headquarters 
of the Red Cross urging me to hurry, liecause the Russian claimants were in 
"dire need." Dire need, presumably, of $600 million. I was instructed to spare 
no expense on trips to Washington and to present the case to Congress as vigor- 
ously as possible. After I discovered that the American heirs had given up all 
hope of recovering the money, I decided to forget the whole business — which I 
successfully did, despite periodic reminders from Moscow, 

COUNTERFEITED UNITED STATES CURKENCT 

To anyone familiar with the strain of Dostoevskian madness that infects the 
schemes of the OGPU there can be no doubt that there was a double purpose in 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4701 

presenting this claim. First they hoped and expected to get the money for the use 
of the Soviet Government and, secondly, they believed that a raid on the United 
States Treasury to the tune of more than half a billion dollars would strain 
the r.overnmenVs credit and hasten its economic collapse. They tried 2 or 3 
other grandiose plans with equally little success. 

These attempts belong in the same category with the ambitious scheme of 
printing counterfeit United States currency, in which the Soviet authorities 
successfully indulged for a time. I hasten to add that I had no part in this, 
but I knew" about it. Some of the facts have been made public in the proceedings 
of the Dies conuuittee. This plan included the establishment of a banking house 
in Berlin — Sass & Martini — and connections with the underworld in Chicago to 
help in passing the currency. When the FBI got wind of these operations and 
closed ill, a young idealist by the name of Valentine Burtan took the rap. He is 
now serving a 15-year sentence in Lewisburg Penitentiary and, no doubt for 
adequate reasons, is saying nothing about his associates and superiors. 

Although these two schemes went awry, the Soviet Government continues 
inconspicuously to draw, year in year out, a handsome income from the people 
and Government of the United States. For instance, I have before me now a 
list of upward of 1,000 estates pending at this moment. Some of the amounts 
are small, but the average is about $3,500. There you have a total of between 
3 and 4 million dollars in a single list. And that leaves out of account the oc- 
casional large estates, such as Prince Matchabelli's, which ran to over $100,000, 
and on which the Soviet Government is still trying to lay its hands. 

The industrial-insurance cases net the Stalin government another half million 
a year at least. 

What's to be done about it? 

A good solution was found recently by Surrogate G. A. Wingate of Brooklyn. 
In settling the estate of Hyman Landau, Judge Wingate ruled that the legacy 
should not be paid to Landau's daughter, Frieda H. Gomelskaya of Sverdlovsk, 
U. S. S. R., on the ground that: "It is a matter of common knowledge that 
private ownership of property has been abolished in the Soviet Union. So far 
as Russian nationals are concerned, such confiscation by and for the use of the 
Soviet Government would be of the fund in its entirety. * * * it would be used 
by the agencies of the Soviet Government in this country to attempt to under- 
mine our institutions and to sabotage our industries." 

This principle was extended by Surrogate Foley of New York in settling 
the estate of Michel Bold, whose heir is his father, living in Odessa. Judge 
Foley ruled that ; "* * * it has been proved by the evidence that the father 
of the decedent as his sole next to kin would not have the 'benefit or use or 
control' of the moneys if they were transmitted to him." 

He went on to say : "It is not intended that a foreign government, of which 
the beneficiary is a national, should be the object of the testator's bounty, nor 
that the right to succeed to the property of a New York decedent should be 
diverted from the statutory next to kin to a foreign power * * *. 

"In the pending proceeding the moneys due the father of the decedent are di- 
rected to be deposited with the city treasurer to await adequate and satisfac- 
tory proof that the beneficiary will be paid his share in the fair equivalent of 
American dollars without confiscatory reduction or outright expropriation." 

The phrase "adequate and satisfactory proof" is important. Receipts signed 
by an heir mean nothing. Any Soviet citizen will sign anything the OGPU asks 
him to sign. If he doesn't he will find himself in a concentration camp, and the 
document will bear his signature anyway. 

I sincerely hope that other States will lose no time in following the precedent 
set by New York. 

Another lucrative source of income to the Soviet Government from this and 
other countries is the ransom racket. The minimum sum for which an emi- 
grant from Russia can get a relative out of the country is about $1,000. The 
sum goes up with the emigrant's ability to pay. The charge is fixed at as high 
a figure as can possibly be squeezed out. And this amount is very carefully 
estimated by foreign agents of the OGPU. 

The records of the case I am about to cite are in my files. I shall not give 
the woman's name, for the daughter whom she tried to ransom is still in Rus- 
sia. We will call her Mrs. S. 

During the civil war in Russia, Mr. S. was killed and his wife became sepa- 
rated from their 2-year-old daughter. Mrs. S., after a series of adventures, 
found her way to New York where she got work as a scrubwoman. By this time 
she had found out where her daughter was and began sending regular remit- 



4702 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

tances for her support. Meanwhile she was saving up money for the daughter's 
fare plus the $250 exit passport fee. This she finally deposited with Intourist. 
After months of waiting she was told that her request had been rejected because 
her daughter was too young to travel. The $250, minus 10 percent, was returned 
to her. 

Mrs. S. bided her time. When her daughter had reached the age or 15, she once 
more deposited $250. Again there were months of waiting, and again the money 
was returned, minus 10 percent. She was iuforme?d that, inasmuch as her 
daughter was of bourgeois extraction, the passport fee would be $500. Mrs. S. 
saved the additional money and deposited it together with a new application. 
After the usual delay and the inevitable deduction of 10 percent, the money was 
returned and the application denied on the grounds that the applicant had not 
shown satisfactory evidence of being able to pay for her daughter's journey to 
the Russian border. 

Mrs. S. went on saving and presently was able to resubmit the application 
together with $500 plus the amount demanded by Intourist for her daughter's 
transportation to the Russian border. The story was repeated : mouths of de- 
lay, deduction of 10 percent of the total, denial of application. 

On her next attempt Mrs. S. deposited an addition to the $500, an amount 
sufficient to pay her daughter's expenses all the way to New York. There was 
another delay of months, another deduction of 10 jiercent, another refusal — 
this time on the grounds that the OGPU were not satisfied as to her daughter's 
political reliability. 

This toying with human misery is a deliberate part of the Stalin government's 
campaign to raise foreign exchange. It is constantly being carried on. 

By comparison, Inreklama's racket, which nets about a million dollars a year, 
is a harmless and amusing shakedown. It consists of demanding that foreign 
companies that sell to the Soviet Government shall buy advertising space in 
Soviet periodicals. The preposterousness of this procedure can be seen when 
it is realized that the purchases are of capital good.s and metals. No private 
ciitzen of Soviet Russia could possibly buy any of these things. Conceivably, 
however, his enjoyment of his daily paper, when he sees one, is enhanced by the 
presence of the ads. 

The amount of advertising demanded in any given year is calculated with 
mathematical precision at 5 percent of the total foreign purchases. 

In the field of publications and propaganda films, which together show an 
annual profit of some $12 million, the Soviet Government has found an in- 
genious way of making propaganda not only pay for itself but contribute hand- 
somely to the support of the regime. 

The next largest source of revenue is the parcel business. In it the Stalin 
government has found another device for applying thumbscrews to human 
misery for its own profit. I shall explain its methods in the next article. 

[Colliers, May 18, 1940] 
How Stalin Steals Our Money (Continued) 

In 1920 Moscow was slowly starving. I arrived there in the spring, after 
breaking through the blockade with medical supplies for the Red army, and 
was given one of the best suites in the Hotel Savoy. But even for a privileged 
guest life was miserable. 

The pavements of the city were still torn with the signs of street fighting, 
and an hour's walking in ordinary shoes such as mine would send me back to 
the hotel crippled and longing for hot water to soak my feet in. But water 
of any sort was hard to get. Since my rooms were above the third floor, it 
had to be carried up by the porter. 

The only thing of which there was real abundance was bedbugs. Sound sleep 
was out of the question. After a night of tossing and scratching, I would jump 
out of bed and pour water over myself from head to foot to drown the pests. 

These were incidental annoyances. The real problem was food, for, as I have 
said, Moscow was starving. My breakfast consisted of a thin slice of black 
bread, half straw and half unbakable dough, and a tea substitute without sugar. 

For dinner a kind of watery porridge was served — made apparently of chicken 
feed. Or, by way of variety, we would be given frozen potatoes boiled into 
an unappetizing, soft, gray mass. There were no fats. Salt was worth its 
weight in gold. 

The citizens of Moscow were sustained in these hardships by the hope of great 
things abroad. Russia was still at war. The main Red army under Tukhaohev- 



SCOPE OF SOVIET ACTIVrTY IN" THE UNITED STATES 4703 

sky was marching on Warsaw from the northeast. The cavalry under Budenny, 
with Stalin and Voroshilov as commissars, was supposedly executing a flank 
movement from the southeast. From day to day Moscow was expecting news 
of the fall of Warsaw, the thrust of communism into Western Europe, the 
spread of world revolution and the end of slow starvation. 

But nothing came of these hopes. Stalin, as is generally believed by those 
who followed the operations, purposely delayed the approach of the cavalry — 
out of jealousy for Tukhachevsky. (It was Tukhachevsky's report of this ma- 
neuver that earned him Stalin's undying hatred and led, when the time was 
ripe, to Tukhachevsky's execution.) The French general, Weygand, seizing 
this unexpected opportunity and exploiting it brilliantly, turned the Russian 
attack into a rout. And the pall of despair fell over starving Moscow. 

ONLY FOOD HAD VALUE 

In this atmosphere of brooding helplessness there were still a few bright 
spots. They were the concerts, the opera and the theaters. Men and women, 
weak from hunger and despair, could still find forgetfulness at the Bolshoi 
Theater, listening to the exquisite music of Tchaikovsky, or in watching the 
magnificent acting at the Moscow Art Theater. 

Money was worthless in those days, and so the singers and actors were paid in 
food. I shall never forget my first sight of Feodor Chaliapin's dressing room 
at the Moscow Academy of Music. I had heard him sing and was taken back- 
stage by Lydia Kopeikina, an assistant to Anatol Lunacharsky in the Com- 
missariat of Education. 

In one corner of the dressing room stood a sack of flour and beside it a sack 
of potatoes. On the dressing table were a mound of butter, a bag of sugar and 
even a small bag marked "salt." The highest paid artist of the Russian stage, 
who used to receive thousands of rubles for each appearance, was now being 
paid in the greatest available weight and variety of produce. 

He was in good spirits after the performance and appeared to be pleased when 
I told him that his voice seemed even finer than when I had heard it 15 years 
before at the Metropolitan Opera in New York. Presently he began to talk 
about his youth in Nizhnii Novgorod, the town on the Volga that now bears the 
name of Russia's greatest modern writer, Maxim Gorky. When they were boys 
Gorky and Chaliapin had tramped all over Russia together. With appreciative 
chuckles he told me how, when they arrived in Kazan, they both applied for 
jobs in a choir. Gorky was hired, but Chaliapin was turned down because he had 
no voice. 

ONE AVENUE OF ESCAPE 

Then with a sigh (and when Chaliapin sighed it was just as well to hold 
onto your chair to keep from being blown out of it) he said that he supposed 
he would never escape from this misery around him and see the outside world 
again. I tried to reassure him, but he shook his head in despair. 

It was then that I had a brain wave — for the Soviet Government to send 
Chaliapin as an ambassador of good will to the United States. I mentioned it to 
him immediately. But he was doubtful. 

"The Government will never let me out," he said. "The people need me here. 
They forget their empty stomachs as long as the performance lasts. The Govern- 
ment needs me to keep up the morale. I used to be just a singer, but now I per- 
form a public function of political importance. I am a serf of the state." 

And he was right. When I broached the subject to Lunacharsky, he said, "It's 
out of the question. We can't possibly spare him. And besides, he hates it here ; 
if we let him out, he'll never come back." 

But the idea stuck in my mind. When I was summoned back to Moscow the 
following year, I put it up to Lunacharsky's superior, the then all-powerful Leo 
Kamenev. Kamenev had just told me about the famine that threatened Russia 
and had instructed me to lay the groundwork in this country for relief. I sug- 
gested that a Chaliapin concert tour through the United States would be a great 
help in winning us American good will. He saw my point at once and agreed. 
When I warned him that Lunacharsky was opposed to it on the grounds that 
Chaliapin would not return, he remarked smilingly, "That can be arranged. 
We'll keep his family as hostages. He'll come back." 

That was the beginning of the tours, not only of Chaliapin, but of other Russian 
artists as well and of the Moscow Art Theater. It became my duty to collect 10 
percent of their profits or salaries for the Soviet Government. This task was 



4704 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

often very difficult, for despite the acclaim of critics, the Russian players often 
had trouble meeting expenses. In April 1924, the assistant to Stanislavsky in 
the Moscow Art Theater wrote to me from Chicago : 

'•* * * -^jQ you not be kind enough to tell Moscow of our dire financial straits 
* * * All the "old people' headed by K. S. Stanislavsky have not received any 
salary at all for 4 weeks already and will receive none for 4 more weeks — that is, 
until the end of the American tour. Moreover, on top of the remaining debts, 
we have no money for the return trip to Moscow * * * in Moscow they think that 
it is easy to earn in this country hundreds, thousands, tens of thousands of dollars. 
But you know that it is not so. Perhaps what you tell the committee about it 
will be more convincing than our letters." 

The artists were required to pay this 10 percent not in rubles, but in money 
of the country in which they were playing. Failure to pay the tax when due was 
penalized at the rate of 2 percent a day. Over and above that hung the threat 
of the severest punishment next to death — confiscation of the artist's living place 
in Moscow. This was seldom more than a single room, but to return and find it 
gone meant that the artist would become a homeless wanderer in a city where 
thousands of people have no place of residence and for years on end move about 
subleasing a corner of a room whenever they can find one. 

Sympathizing with these artists, I made it possible for as many of them as 
possible to prolong their stay in this country while they were casting about for 
opportunities in the American theater. As a result, many of them were able to 
escape from serfdom to the Soviet Government and remain permanently in this 
country. Among these were Maria Ouspen.skaya, Leo Bulgakova and his wife 
Barbara Bulgakova, Ivan Vasilyevich Lazarev, and Akim Tamiroff, to mention 
only a few. It was easier to help artists at that time, for until the advent of the 
first 5-year plan, the attitude of the Soviet authorities was comparatively liberal. 
It became rigid during the early thirties, and after 1935 wantonly brutal. 

As for Chaliapin, he needed no help from me, once he got out of Russia. His 
tour was a spectacular success. On the strength of it he not only managed to 
avoid paying the 10 percent tax, but actually succeeded, when he returned to 
Moscow, in winning the confidence of the Soviet authorities, including Kamenev, 
and so got his family out of the country. After that he was completely beyond 
their control and never returned to Russia. 

NO KOOII FOE ART 

When the Moscow Art Theater Musical Studio came to this country in 1926 for 
a highly successful tour, a number of the artists wanted to remain here. I 
helped them as much as I could. The two leading singers, Olga Baklauova and 
Ivan Velikauov, found engagements on Broadway. One of the conductors, Kon- 
stantin Shvedov, went to Hollywood, and the other, Vladimir Bakaleinkov, became 
assistant conductor of the Cincinnati Symphony. 

Bakaleinikov's experiences in Moscow, as I heard them from his own lips, 
clearly show why even those artists who loved Russia deeply found it impossible 
to live there and were happy to escape at any cost. 

Bakaleinikov had been a member of Prince Oldenburgsky's famous quartet and 
a musical director of the Moscow Opera. Yet this gifted musician was obliged to 
practice his viola and piano and write his compositions in subzero temperature 
with frost-stiffened fingers. He was crowded out of his apartment into a single 
.room, which had to serve as bedroom, bathroom, kitchen, and studio combined. 
In the other rooms of what had once been his apartment were crowded 40 adults 
with attendant children, dogs, and cats. 

On top of the discomfort, noise, and stench came the attentions of the chair- 
man of the house committee. He would appear from time to time with a ruler, 
and measure the space occupied by Bakaleinikov's piano. He had decided he 
would move it out and put a new tenant in its place. In fact, he got as far as 
bringing up the prospective tenant and his wife to discuss arrangement of furni- 
ture once the piano was out of the way. 

Fortunately Bakaleinikov had powerful friends who saved his piano for him 
when things became critical. The house chairman, however, foiled in his attempt 
to get rid of that sinful symbol of bourgeois luxury, got even with Bakaleinikov 
by assigning him more often than anyone else to the job of snow clearing. No 
matter if for weeks afterward he could not practice on his piano or viola with 
his frostbitten hands ; at least he could conduct an orchestra. 

When I visited him and his wife, a talented singer and actress in her own 
right, at their home in Cincinnati, Bakaleinikov showed me that he had a room 



SCOPE OP SOVIET ACTIVITY IN THE UNITED STATES 4705 

devoted solely to his grand piano. "Do you know," be said, pointing out the 
window where the snow was beginning to fall, "at times I feel almost homesick 
for the visits of that house committee chairman." 

This flight of artists from the homeland (there was, of course, only a com- 
paratively small number who were able to get away) was the worst possible 
advertisement for the proletarian paradise, and it is not surprising that the 
Soviet Government quickly put a stop to it. 

My personal interest was involved because I have all my life loved the theater 
and opera, and many of the performers were my good friends. The larger 
problem, however, and my particular job for as long as I was head of the Soviet 
Red Cross in America, was the relief of those sufferers in Russia who could not 
get out. 

Want is the normal state of affairs for the vast majority of Soviet citizens, 
even in those times when starvation is not stalking the land. I was able to 
help by the transmission of money, food, and clothes, paid for either by public 
collection, as in the time of the famine, or supplied privately by friends and 
relatives. 

THE PAKCEL RACKET 

Out of the parcel business, which I started, the present rulers of Russia have 
made one of their most profitable rackets. 

My own enterprise in sending parcels, after flourishing for a while, was 
stopped, partly, it must be admitted, because the senders took advantage of the 
system to smuggle in contraband of all sorts, including drugs. At the same 
time I had started the telegraphic transmission of money from individuals here 
who had relatives in Russia. This was in 1920, and all might have gone well if 
the rate of exchange proposed by by Krassin, who was then Foreign Trade 
Commissar — a rate of 1,500 rubles to the dollar — had been adopted. But Lit- 
vinov, an inveterate enemy of Krassin, insisted that the rate should be only 250 
rubles to the dollar. This killed the enterprise. 

In 1924, however, Sokolnikov "stabilized" the ruble, exchanging 1 million of 
the old for 1 ruble of the new issue, and it became possible again to send money 
to Russia. The new arrangements were made by Amtorg ofiicials and by repre- 
sentatives of the Soviet State Bank. For 5 years thereafter, from 1924 through 
1929, dollars flowed in a steady stream in the form of money orders from Russian 
immigrants in the United States to their relatives in Russia. A conservative 
estimate would place the total at between 75 and 100 million dollars, or an average 
of between 15 and 20 million annually. 

Suddenly, in 1930, the flood of foreign exchange began to shrink until it became 
a mere dribble. The Soviet bankers wanted to know why. 

I remember participating in a number of discussions on the subject with 
various Soviet experts, in particular with Baryshnikov, the chairman of the 
Soviet Bank of Foreign Trade and a director of the Soviet State Bank, during 
his visits to New York. The trouble with these discussions was that we always 
skirted around the subject, shunning the central problem like the plague. Never- 
theless, our conclusions were sound, for each of us knew the hidden and unmen- 
tionable truth — the real reason for the termination of the flood of foreign ex- 
change. Word had reached the senders of remittances in America that the 
dollars they were sending to their relatives were being "sweated" out of the 
latter by agents of the OGPU. 

THE OGPU ON THE JOB 

The sweatbox system of which they had heard — parilka is the Russian name 
for it — is not a pleasant thing to comtemplate. It came about as a result of the 
difference between the arbitrary official rate of exchange of the ruble and its 
real value measured in purchasing power. The recipients of remittances from 
abroad had been demanding payment in dollars. For a time they got it, but 
with the advent of the 5-year plan in 1928 the practice was stopped. Those who 
had been receiving money informed the senders, who thenceforth, instead of 
transmitting through the banks, would send batches of saved-up dollars with 
friends who went as tourists or specialists to the Soviet Union. The Govern- 
ment was thus deprived of many million dollars in badly needed foreign exchange. 

It was the OGPU that came to the rescue. (WheneA'er anything goes wrong 
with any Soviet institution, the OGPU is invariably called in by the Political 
Bureau to clean up the trouble.) Their agents went to the banks and got the 
names and addresses of all citizens who had ever received remittances from 



4706 SCOPE OF SOVIET ACTIVITY IN THE IINTTED STATES 

abroad. Presently these citizens received notice to appear at a given time at the 
local OGPU office. Such invitations are never declined. 

The citizen would appear, and the conversation would follow stereotyped 
lines. The official would speak of the glory of building socialism and the 
Government's need of foreign exchange. His caller would reply by expressing 
bis devotion to the cause, his willingness to lay down his life for it. The OGPU 
official would then politely suggest that it would be simpler for him just to 
exchange his dollars for rubles at the official rate. The citizen would swear 
that he would gladly do this — if he had the dollars or, for that matter, any 
foreign exchange. 

The conversation would then get down to cases. On the basis of the record, 
so many dollars were transmitted, so many were exchanged, then the transmis- 
sion stopped. If the amount exchanged was less than the amount transmitted, 
the OGPU would demand the immediate exchange of the balance. If not, the 
OGPU would inquire how much additional money had been sent privately. The 
invariable answer would be that no foreign exchange had been transmitted 
except through banks. To such replies — to any replies pleading no more foreign 
exchange — the OGPU had a stock answer : "Think the matter over, citizen. 
Talk it over with your family." 

All this was preliminary. The real pressure was applied the same night. At 
an hour or two past midnight the citizen would be dragged out of bed by OGPU 
agents and hustled off, half asleep and numb with terror, to headquarters. 
There the questioning would be begun in earnest. The next stage was the 
sweatbox. 

This was a room with boarded-up windows, so crowded with human beings, 
with men and women of all ages and classes, that none of them could sit or lie 
or move about, but all had to stand, pressed against one another, day after day, 
crying, protesting, hating one another, hating themselves. No food, no water, 
no conveniences of any kind. No consideration for the sick — except the added 
hatred of their neighbors. This was the parilka, a fiendish device for forcing 
human beings to furnish one another's torment. Squeezed together like cattle 
in a boxcar, they stood there trying to remember where they had hidden their 
foreign exchange. 

THE INQUISITION BELT 

In many instances persons arrested on the suspicion of having foreign ex- 
change or other valuables — gold, jewelry, and the like — did not have anything to 
give up. They were never believed, for the OGPU prides itself on never arrest- 
ing anyone who is not guilty as charged. Furthermore, those arrested would 
always be questioned about the culpability of friends and relatives. Many 
wildly accused others in the desperate hope of buying their own release. And 
so the net of incriminations spread. 

After several days in the parilka, the victims would be taken out separately 
to run a gantlet called the belt. This was a device borrowed from American 
mass-production methods. The suspect would be marched or dragged by guards 
before an investigator, who would question him or her either politely or brutally. 
The moment one investigator was through, the suspect would be dragged before 
another. This was kept up without interruption night and day. Investigators 
changed, guards changed ; the suspect continued to move along the belt. 

When the suspect fainted, he was revived and the inquisition continued. The 
methods of revival varied ; sometimes the victim was merely doused with water ; 
sometimes he was subjected to incredible indignities and brutalities. 

If the suspect would not surrender his valuables, or could not because he had 
none, this process — alternating between the sweatbox and the belt — continued 
until he died. 

It was rumors of this system leaking out of Russia that put an end to the 
transmission of foreign exchange. And it was then that Baryshnikov and 
others turned to me for suggestions. 

Just before this time the Soviet Government had established the Torgsin 
stores — Torg-s-in is an abbreviation of Torgovlya s inostrantsami, which means 
trade with foreigners. At them only foreign exchange was accepted ; rubles 
wei-e as valueless there as they are in the United States. It was natural that 
I should suggest to Baryshnikov that the privilege of buying at those stores be 
extended to Soviet citizens who possessed foreign exchange or other valuables. 

He looked at me for a moment without saying a word. Then he glanced 
around to make sure we were alone. "You know," he said, "you are not the 
first one to make the suggestion. I myself broached the subject at a meeting of 



SCOPE OF SOVIET ACTIVITY IN THEI UNITED STATES 4707 

the Central Committee in Moscow." He lit his cigar and waved out the match. 
'•Do you know what happened? I was almost thrown out of the party." 

"But why? It would bring in more foreign exchange at less expense than 
other methods that have been tried." 

"That's true enough, and I, as a banker, thought it was a good idea. But 
you forget the wider aspects. Ever since 1917 we have been trying to extermi- 
nate certain undesirable elements — the bourgeois and petty bourgeois. These 
are just the people who have or may receive foreign exchange and gold. The 
party considers it more important to let them starve to death as encouragement 
to our workers abroad than to garner a few millions in foreign exchange. No 
union cards for them, no jobs, no ration cards— and certainly no Torgsin orders. 
Let them starve." 

But a few months later the Kremlin took a slight turn to the right. It was 
decided that foreign exchange was more important after all. Authorization was 
granted for its transmission through the Torgsins to all comers, and the stores 
were allowed to accept it or other valuables from Soviet citizens as well as for- 
eigners. Thereafter anyone who argued against this policy was branded as a 
"right-left double-dealing deviator." 

The Torgsin stores opened toward the end of 1930. Before the enterprise was 
liquidated early in 1936 they had taken in about $200 million. It was one of the 
fairest and most businesslike of the Soviet financial schemes. The prices were 
rather high, but not inordinately so, and the merchandise was good. Many very 
rare items — such as buttons, shoes, butter, oranges, lemons, and the like — 
could be obtained nowhere else or only in very limited quantities. 

But it was this very fact that led to the downfall of the system. Communist 
Party members who regarded themselves as the real rulers of Russia found 
themselves unable to obtain some of the things that could be purchased by the 
"nondescript petty bourgeois riffraff" that had managed to have gold or other 
valuables, including the gold crowns of their teeth, or who had relatives abroad. 
To appease these party members, the stores were liquidated. 

THE END OF THE TORGSINS 

I argued against this move when I was in Moscow in 1934. At a conference 
in the board rooms of the Soviet State Bank, I made it plain that the Russian 
immigrants in America were thoroughly disillusioned with Soviet promises and 
would not revert to sending dollars once the Torgsin stores were closed. I 
pointed out that the Americans we were dealing with were former Russians who 
kept themselves well posted about affairs inside Russia, and therefore knew just 
how valueless the ruble really was. They would simply refuse to send dollars 
over to be cashed into rubles at the official rate. 

In addition I reminded the officials that the Soviet Government had assured 
the United States Veterans' Bureau that beneficiaries could use their benefits at 
the Torgsin stores. 

A year later the abolition of the stores was decreed. But not before a new plan 
for acquiring foreign exchange, or rather the modification of an old one, had 
been devised. This consisted in reviving the business of shipping parcels, with 
excessively high duties on the merchandise to be paid by the shippers in foreign 
exchange. Over and above the duty, exorbitant fees were charged for a license to 
ship, shipping charges, and other service charges. 

It was obvious to me that the Soviet Government was deliberately intent on 
exploiting the needs of its citizens and the sympathies of their relatives in the 
United States in order to replace the $40 million turnover from the Torgsin 
system. This plan was, in part, responsible for my determination to leave the 
Soviet service. I could no longer face my friends in the Veterans' Administra- 
tion, the American Red Cross, and elsewhere in the United States. 

There ia an ironic circumstance in this parcel business. Most of those who 
send parcels were originally petty tradesmen or artisans in Russia, thus being 
classed by Communists as petty bourgeois and enemies of the proletariat. In 
the United States they got jobs in shops and factories ; they are industrial workers, 
strong trade unionists — the very class the Communists court most assiduously. 

By constantly threatening to abandon these relatives to starvation, the Soviet 
Government forces American wage earners to scrimp and save, denying them- 
selves the essentials of life, in order to send parcels at exorbitant rates, paying 
exorbitant duties, to the Soviet Union. It was out of the pockets of these people 



4708 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

that the Soviet Government extracted a large portion of its turnover at the Torg- 
sins ; it is out of their pockets today that it continues to extract 10 to 15 million 
dollars a year. 

PROFITS IN A HURRY 

In an attempt to clear its own skirts, the Soviet Government placed this busi- 
ness in private hands, thus exposing the shippers to further exploitation by 
individual firms. Here are the contents and prices, exclusive of shipping charges, 
of two packages sold today by a company specializing in shipments to the Soviet 
Union : 

Package isl 0.1. Price $6.10 

3 pounds white flour $0. 18 

3 pounds sugar .15 

2 pounds farina .24 

1 pound cocoa . 08 

Value of contents at New York retail prices . 65 

Package No. 2. Price $7.50 

2 pounds white flour $0. 12 

2 pounds sugar .10 

2 pounds butter . . 70 

2 pounds farina .24 

1 pound cocoa .08 

Value of contents at New York retail prices 1. 24 

In addition to all this, there are the regulations with which the whole business 
is hemmed in. For example, no old or used clothes may be sent, and each article 
must be accompanied by a bill of sale from a local department or chainstore. 
Moreover, parcel companies in many instances force their customers to buy direct 
from them by raising all sorts of technical objections to bills of sale issued by the 
stores. In this they are supported by the Soviet authorities, for the simple 
reason that the higher the price the greater the income from duties. Add to 
this the sender's fear of reprisals against his relatives in Russia, and you have 
the perfect setup for a racket. 

In the four articles of this series, I have discussed some of the ways in which 
the Soviet Government siphons money out of the United States. I have not men- 
tioned the sale of bonds (now worthless) nor the occasional financial raids. I 
have left out of count the fact that Russia now controls the eastern provinces 
of Poland, which have provided heavy emigration to this country in the past 
generation, and as a result the scope of her activities has been greatly extended. 

Even without these — counting only the parcel business, the veterans' cases, 
propaganda films and publications, Intourist receipts, worthless advertising, and 
industrial and life insurance — a conservative estimate of the Soviet Government's 
annual revenue from the United States is $29 million. 

Mr. MoERis. Now, Senator, special rep:iilations have pretty much 
solved the particular problem of behind-the-iron-curtain beneficiaries 
of insurance policies, where they have contractual relationships with 
the insurance companies, that they be paid a certain amount of money 
and that Federal regulations provide the nonpayment of these 
moneys — not that the people are not entitled to the money but rather 
because the circumstances in the particular countries were such that 
it would be pretty certain that if the money were paid that it would 
not be given to the beneficiaries themselves but appropriated by the 
Soviet Government. 

In connection with these hearings, I might state we are undertaking 
a survey of the situation existing now to determine whether or not 
there may be some relaxation of this rule that has until recently proved 
rather effective. It may still be effective, Senator, but I think that 
we should have a look at the situation as it now exists with a view 
of determining whether or not any legislation may be necessary or 



SCOPE OF SOVIET ACTIVITT EST THE UNITED STATES 4709 

whether the existing legislation on the books is inadequate or may 
have to be amended. 

I The first witness we have here — we have representatives of four out- 
standing insurance companies of the country and they are all pre- 
pared — we had a staff session with them a few days ago and they are 
prepared to give testimony on the existing situation. 

I suggest, Senator, that the first witnesses be Daniel J. Reidy and 
his attorney, John Walsh. They represent the Guardian Life Insur- 
ance Co. I wonder if these two gentlemen would come forward. 

Senator Johnston. Will you stand up and both be sworn ? 
j Do you swear that the evidence you are to give before this subcom- 
mittee will be the truth, the whole truth, and nothing but the truth, 
so help you God? 

Mr. Reidy. I do. 

Mr. Walsh. I do. 

TESTIMONY OF DANIEL J. REIDY, VICE PKESIDENT AND GEN- 
ERAL COUNSEL OF GUARDIAN LIFE INSURANCE COMPANY OF 
AMERICA; ACCOMPANIED BY JOHN WALSH, COUNSEL FOR THE 
COMPANY 

Mr. Morris. Mr. Reidy, would you give your full name and address 
to the reporter ? 

Mr. Reidy. Daniel J. Reidy, 73 Beacon Hill Road, Ardsley, N. Y. 

Mr. Morris. And what is your position with the Guardian Life In- 
surance Company of America ? 

Mr. Reidy. I am vice president and general counsel. 

Mr. Morris. And have you been working in the Guardian Life In- 
surance Co. in such a way that you are conversant with the problem 
set forth by us today ? 

Mr. Reidy. lam, sir. 

Mr. Morris. And, Mr, Walsh, I wonder if you would identify your- 
self for the record ? 

Mr. Walsh. John Walsh. I am a member of the firm of Watters 
& Donovan. Their offices are at 161 William Street, New York 38, 
N. Y., and we are counsel-attorneys for Guardian Life Insurance 
Company of America in litigation involving the questions now before 
this subcommittee. 

Mr. Morris. And you have from time to time worked on that par- 
ticular problem ? 

Mr. Walsh. Yes ; I have. 

Mr. Morris. Well, Mr. Reidy, I wonder if you would tell the sub- 
committee the present status of tlie situation with respect to insur- 
ance companies having to fulfill their contractual obligations of pay- 
ing to the beneficiaries of life insurance and other insurance policies, 
which beneficiaries are residing behind the iron curtain and there- 
fore subject to Soviet authority? 

Mr. Reidy. Yes. The problem, gentlemen, that has faced the in- 
surance companies is to prevent the proceeds of American life insur- 
ance payable to these beneficiaries residing in the Iron Curtain coun- 
tries from falling into Communist hands, and try to preserve these 
funds so that the true beneficiaries will eventually have the use and 
benefit of the funds. 



4710 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

We have been successful so far, and I think that I can speak for all 
of the life-insurance companies in this country, that since the prob- 
lem was brought to their attention back in 1954 not one company, to 
my knowledge, has paid any proceeds to beneficiaries residing in the 
various Iron Curtain countries. 

Mr. Morris. You say since 1954? 

Mr. Reidy. Since approximately 1954. 

Mr. Morris. May I break in there? ^Yliat was the situation prior 
to 1954? 

Mr. Eeidt. Prior to 1954, why, I would imagine that some of the 
companies — you see, when you get an isolated case you don't think 
too much about it, and when you get a power of attorney or something, 
why, you might just pay under that power of attorney. The power 
of attorney, of course, would usually come from the Iron Curtain 
countries. 

My own company, Guardian, had adopted the policy prior to 1954 
of not recognizing any one of tliese powers of attorney, and of hold- 
ing the money in this country until such time as these unfortunates 
will be able to get it. 

I think we have done that for two reasons. Obviously, I think, we 
have not only a legal, but I think we liave a moral obligation to our 
policyholders, that only the beneficiaries that they have designated 
get these proceeds. Secondly, I think that we have a patriotic duty 
to our country to make sure that no dollars fall into Communist hands 
where those dollars may be used against our Republic. 

Mr. Morris. And, Mr. Reidy, in holding back payment to these 
beneficiaries you do not do that to deny payment to them but to as- 
sure that ultimately they will have these paj^ments; is that right? 

Mr. Reidy. That is correct. We hold the money at interest in the 
company. 

Mr. Morris. I see. Wliat is the situation today? Is there any 
evidence on the horizon that this rather effective regulation is being 
relaxed ? 

Mr. Reidy. I am sorry to say there is. I think. Senator, it is more 
a question of national policy. I would like to quote from Secretary 
Dulles' address here which helped us considerably. This is an ad- 
dress made to the Congress and the people of the United States 
as to what our foreign policy was. 

Senator Johnston. You are reading from his address of what date, 
for the record ? 

Mr. Reidy. January 27, 1953. It is from volume 99, Congressional 
Record, page 703. Secretary Dulles at that time said : 

Now, in our own interest, our enlightened self-interest, we have to pay close 
attention to what is going on in the rest of the world. And the reason for that 
is that we have enemies who are plotting our destruction. These enemies are 
the Russian Communists and their allies in other countries. * * * The threat is 
a deadly serious one. * * * Any American who isn't awake to that fact is like 
a soldier who's asleep at his post. We must be awake, all of us awake, to that 
danger. 

Since that time. Senator, I would like the record to show — and this 
is an expression of my own personal views ; naturally, I cannot express 
the views of all the insurance companies of this country — we have now 
gone to what we call a calculated risk wherein we are recognizing 
national communism, which is supposed to be distinct from this Soviet 



SCOPE OF SOVIET ACTIVITY IN THE UTnTED STATES 4711 

type of communism. Therefore, we find tliat, in the last 6 months, 
I believe, the Polish Communist delegation has come to this country 
and made certain arrangements with us whereby this country has 
granted them certain loans and what not, and, as the result of the con- 
clusion of those negotiations, early this year the Secretary of the 
Treasury removed Poland from the Treasury regulation as one of the 
countries where no United States checks and warrants would be sent, 
on the ground that there was no reasonable assurance that the people 
would receive the moneys and have the use and benefit thereof. 

Mr. Morris. When was Poland taken from this list ? 

Mr. Reidt. The date, I believe, is June 27, 1957. 

Do you have the Federal Register, Mr. Morris ? I can give you the 
date right from that. 

The Federal Register is dated June 12, 1957, page 4134 of the rules 
and regulations. It amends Treasury Department Circular 655 by 
just withdrawing the name of Poland from the list of Commmiist 
countries, the others of which are Albania, Bulgaria, Communist- 
controlled China, Czechoslovakia, Estonia, Hungary, Latvia, Lithu- 
ania, Rumania, Soviet Russia, and the Russian zone of occupation 
of Germany, and the Russian section of occupied Berlin. (See 
appendix L) 

Mr. Morris. Now, what is the procedure whereby the beneficiaries 
from these countries apply for the receipt of money that they are 
entitled to under the terms of an insurance contract? Do the indi- 
viduals themselves get in touch with the insurance company ? 

Mr. Reidy. I can cite three specific examples, if you care for me 
to do so 

Mr. Morris. I wish you would, Mr. Reidy. 

Mr. Reidy (continuing) . Which would give you some concrete comi- 
tries. One case involves Czechoslovakia. We have beneficiaries resid- 
ing in America, and, of course, there was no problem there, and, of 
course, they received their portion of the funds. The other bene- 
ficiaries reside in Czechoslovakia. We did receive word from one of 
those beneficiaries that under no circumstances were we to send any 
money to Czechoslovakia, to please hold it in this country for the 
benefit of her children, and that we have done. 

Mr. Morris. In other words, the beneficiaries asked you not to send 
it over? 

Mr, Reidy. That is correct. Word came to us from the beneficiary in 
one Russian case involving Soviet Russia. We received a printed 
power of attorney from Soviet Russia, printed in English and in 
Russian, with the printed name of a New York attorney who is to act 
as an attorney in fact for these people in Russia. 

I would like to hand up a photostatic copy of such power of attor- 
ney, and call the Senator's attention to the 2 signatures purportedly 
signed by 2 different Russian beneficiaries which, to me — I think it is 
very obvious that whoever signed them, that one person signed both 
of them. 

Mr. Morris. Mr. Reidy has shown this to the staff. Senator, and I 
call your attention to the marked similarity between the two purported 
signatures there. 

That is the power of attornev in the Russian language, is it not, Mr. 
Reidy? " ^ ^ , , 

93215— 58— pt. 85 3 



4712 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Reidy. It is printed in both, in half Eussian, one-half of the 
paper being in English and the other, Russian ; yes, sir. 

Mr. Morris. All right. 

Senator Johnston. I am not a handwriting expert, but I think that 
most anyone can look at this and see it must have been written by the 
same person. 

Mr. Reidy. Yes, sir. We have refused to honor that power of attor- 
ney, and we are still holding those funds, hoping that someday these 
unfortunates will be able to have their use and benefit. 

Mr. MoRKis. What is the most recent litigation on this subject, Mr. 
Reidy ? 

Mr. Reidy. There are two facets to this whole thing 

Mr. Morris. There is an important case involving the Guardian 
Life Insurance Co. recently handed up by Judge Edelstein ? 

Mr. Reidy. Yes, sir. That is the only case, to our knowledge, involv- 
ing a lawsuit where one of the Communist countries is endeavoring, 
allegedly on behalf of their citizens, to secure these funds. That case 
is pending here in the United States District Court for the Southern 
District of New York, Civil No. 95-262. 

Mr. Morris. I wonder if you would, Mr. Reidy— or perhaps you, 
Mr. Walsh, are the more appropriate person to ask on the subject — 
tell us the precise legal significance of that particular holding and 
what implementation there has been to that decision since the time it 
was rendered in March 1957. 

Mr. Walsh. Well, the decision was made 

Mr. Morris. You appeared in that case : did you not ? 

Mr. Walsh. Yes ; I did, Mr. Morris. The decision was made on a 
motion of the plaintiff, through the attorneys originally retained by 
the Polish consul, for summary judgment, and a cross-motion by the 
Guardian Life Insurance Co. for the same relief, for summary judg- 
ment, not seeking a denial or adjudication of any lack of the right of 
the plaintiff to the funds, but seeking the invocation of certain statu- 
tory provisions in New York, for the deposit of funds in the court, 
for tlie benefit of these people. 

Mr. Morris. May I ask you this question: In this particular cause 
you had many plaintiffs ? 

Mr. Walsh. There are 11 plaintiffs named in the caption. 

Mr, INIoRKis. Are they Polish nationals? 

Mr. Walsh. They are Polish nationals. 

Mr. ]\IoRRis. And they instituted this action in the court to collect 
the proceeds of the insurance policy ? 

Mr. Walsh. That is correct. 

Mr. Morris. And the defense of the insurance company was not 
that these people were not entitled to these funds, but, rather, that 
they should be preserved under the existing statutes in New York 
State on behalf of the people because the funds would be simply 
turned over to the Polish Government representatives ? 

Mr. Walsh. That is correct. 

Mr. Morris. And what is the New York statute on that, Mr. 
Walsh? 

Mr. Walsh. Well, there are three statutes on that, Mr. Morris; 
sections 474 and 978 of the Civil Practice Act and section 269 of the 
Surrogate Court Act. Of course, this not being an estate case, the 



SCOPE OF SOVIET ACTIVITY IIST THE lOSriTED STATES 4713 

Surrogate Court Act would not apply. All the statutes, in sub- 
stance, have the same language. 

Mr. Morris. Senator, may I offer for the record sections 474 and 
978 of the Civil Practice Act ? 

Senator Johnston. Yes ; it will be part of the record. 

(The sections referred to were marked "Exhibit Nos. 515 and 
515-A," and read as follows :) 

Exhibit No. 515 
Civil Practice Act 

SECTION 474 

Judgment may be for or against any of the parties 

1. Judgment may be given for or against one or more plaintiffs and for or 
against one or more defendants. It may determine the ultimate rights of the 
parties on the same side, as between themselves, or of a party ivho claims that 
any other party to the action is or may 'be liaUe to him for all or part of a 
claim asserted against him in the action, and it may grant to a defendant any 
affirmative relief to which he is entitled. Where it shall appear that a party is 
entitled to money or other personal property, and he wotdd not have the benefit 
or use or control of such money or other personal property, or where other 
special circumstances make it appear desirable that payment or delivery thereof 
should be withheld, the judgment may direct that such money or other personal 
property be paid into or deposited in court for the benefit of such party, or 
other persons who may thereafter appear to be entitled thereto. Such money 
or other property so paid into or deposited in court shall be paid out or de- 
livered only by the special order of the court. 

2. Where the action is against two or more defendants, and a several judg- 
ment is proper, the court may render judgment or require the plaintiff to take 
judgment against one or more of the defendants ; and direct that the action be 
severed, and proceed against the other as the only defendants therein. 



Exhibit No. 515-A 
Civil Pbactioe Act 

SECTION 978 

Disposition of property in action or proceeding 

Where it is admitted by the pleading or examination of a party, that he has, in 
his possession or under his control, money or other personal property capable of 
delivery, which, being the subject of the action or special proceeding, is held by 
him as trustee for another party, or which belongs or is due to another party, the 
court, in its discretion, may grant an order, upon notice, that it be paid into or 
deposited in court, or delivered to that party, with or without security, subject to 
the further direction of the court. Where it shall appear that a party to a pro- 
ceeding or action has in his possession or under his control money or other 
personal property capable of delivery, which belongs or is due to another party to 
the proceeding or action, and it shall appear that such party would not have the 
benefit or use or control of the money or other property due him, or ivhcre other 
special circumstances make it appear desirable that such payment or delivery 
should be ivithheld, the court, in its discretion, may direct by such order that 
such money or other personal property be paid into or deposited in court for the 
benefit of such party or other persons who may thereafter appear to be entitled 
thereto. Such money or other property so paid or deposited in court shall be 
paid out or delivered only by the special order of the court. 

Mr. Walsh. In substance, as you will note, section 474 and the 
other similar statutes simply provide that when it shall appear that a 
party is entitled to money and that he would not have the benefit or 
use or control of such money, or where other special circumstances 



4714 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

make it appear to be desirable that payment or delivery thereof should 
be withheld, then the judgment may direct that such money or other 
personal property be paid into or deposited in court for the benefit of 
such party or other persons who may thereafter appear to be entitled 
thereto. 

Such money or other property so paid into or deposited in court 
shall be paid out or delivered only by the special order of the court. 
It is obviously a protective provision. 

Those statutes, I might add, were passed in 1939 at a time when we 
were having great difficulty with what might be described as another 
kind of Iron Curtain country — in other words, Nazi Germany. 

All of the decisions of our court are in our motion papers on file in 
the action, all of which, however, pertain to estate matters rather than 
contract matters, and all of those decisions have consistently invoked 
or sustained these statutes and have, where it appeared that a payee of 
money otherwise due resided in one of the then Iron Curtain countries, 
Nazi Germany, or one of the affiliated countries, directed the payment 
of that money into the court under these statutes. 

In a fairly recent case involving a payment to a resident of Hungary, 
the validity of those statutes was challenged and it was taken right up 
to the Court of Appeals. As a matter of fact it was also taken to the 
United States Supreme Court, that is, on a petition for a writ of cer- 
tiorari that was denied. That case was the matter of Braier's Estate 
(305 New York 148) , decided in 1953. Various challenges were made 
in that case to the constitutionality of these statutes, among them that 
it might involve a burden on interstate or foreign commerce by a 
State, and that they are a violation of constitutional rights and so 
fortli. 

The constitutionality of the statutes was upheld and it is interesting 
to note that, in the Braier case, considerable reliance was placed by the 
Court on Treasury regulations which were passed, incidentally, sub- 
sequent to the passage of these statutes. The Treasury regulations 
were enacted, I believe, in 1940, and I am referring to the Treasury 
regulation indicated in Department Circular No. 655 of 1941 which 
provides that these regulations are prescribed and issued under the 
authority of section 5 of Public Law No. 828 approved October 9, 
1940. 

Mr. MoRKis. And they were originally invoked, you say, in the case 
of Nazi Germany ? 

Mr, Walsh. Yes. 

Mr. Morris. And the list of countries in these regulations, is it 
opened up from time to time ? 

Mr. Walsh. That is correct. I think that ]Mr. Reidy gave you a 
list of the countries and in the particular one that I just referred to, 
Poland is among those on the list that you might call recognized Iron 
Curtain countries. 

The Treasury regulation, I might add, applies to United States 
funds, in other words, if there is a question involving the payment of 
national service life-insurance funds, if they are private life-insurance 
funds, there is no question, the Treasury regulation would be appli- 
cable. 

To get back to the matter of Braier, which is a State decision, the 
court of appeals in that case took cognizance of the Treasury regula- 
tions and placed reliance on them m holding in effect that public 



SCOPE OF SOVIET ACTIVITY IN THE' UNITED STATES 4715 

policy required that these funds be deposited in court despite any 
particular or specific inquiry as to what conditions actually were, and 
it mig:ht be interesting to read what the court said on that subject. 
It said: 

That regulation was made, it should be noted, with the benefit of all the 
sources of information concerning conditions in Hungary that are available to 
a department of the Federal Government and not to the surrogate. Nor may 
the finding be limited to Government checks or notes, for a check drawn on 
Government funds would be no less likely to reach a Hungarian payee than would 
a draft on any private "account." 

And in language such as I have just read, the court sustained the 
application of our local State statutes to which I referred, referring in 
passing to the Treasury regulations governing the same subject. 

We came before Judge Dimock, on the motion for summary judg- 
ment, and these statutes and the Treasury Regulations were called to 
his attention. The form of his decision in substance, you might say, 
is a granting of the plaintiff's motion for summary judgment because 
he points out that their entitlement to the money has never been ques- 
tioned, so he grants their motion for summary judgment but he pro- 
vides that under the State statute, which he finds incidentally equally 
applicable under Federal rules in a case pending in Federal court, 
where unless a hearing is demanded within a stated number of days he 
will order the deposit of the funds in court 

Mr. Morris. Was there a hearing demanded in this case ? 

Mr. Walsh. Yes ; a hearing was demanded in this case. 

Mr. Morris. Who, by the way, was attorney for the plaintiff ? 

Mr. Walsh. It was the firm of Wolf, Popper, Ross, Wolf & Jones, 
160 Broadway, New York City. 

Mr, Morris. And of the members of that firm, Paul Ross is the one 
who is particularly the expert on this particular subject ? 

Mr. Walsh. That is correct. I believe that the same firm appeared 
in the matter of Braier. The case went to the court of appeals that I 
just mentioned to you. 

The exact status of the hearing, it is in a sort of suspension. At the 
time Mr. Ross has a motion granted for issuance of letters rogatory to 
take testimony in Poland over our opposition, asking that the hearings 
be held over until after these letters rogatory are issued and in the 
meantime we had attempted to take an appeal from the order for issu- 
ing such letters rogatory. 

Mr. Morris. I wonder if you would, Mr. Walsh, just discuss for a 
minute all the implications surrounding an application for letters 
rogatory. I think it is important for our record. 

Mr. Walsh. Well, as you know, letters rogatory in effect are let- 
ters issued by one sovereign state to another requesting the good offices 
of the court in the foreign sovereign state to summons its nationals 
and take their testimony for use in a case pending in the original or 
first sovereign state. 

IVIr. Morris. And what would be involved in this case ? 

Mr. Walsh. That the United States court would petition, through 
our State Department, for Poland or the Polish Government to sum- 
mons in these beneficiaries and take their testimony on the subject of 
whether or not they in fact desire the prosecution of this action and 
whether or not they would receive the full use and benefit of the 
money. 



4716 SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 

Mr. Morris. And it would seem a little unreal, would it not, in a 
case where you have communism in a country, when that country offi- 
cially calls in people who are beneficiaries of a policy, to ask them if 
they will specihcally pursue a particular matter? 

Mr. Walsh. That is what we argued in opposition to the motion; 
that is, we pointed out that it would be a mere matter of form to call 
in these people and ask them whether this prosecution of this action 
was their will, whether they wanted the money paid to the Polish 
consul because, as we pointed out, the local statutes in Poland would 
make it a crime for them to do otherwise. As a matter of fact, the 
crime is punishable by as much as total confiscation of property and 
even life imprisonment, and we cited the statutes. 

I do not want to appear critical of any court that disagreed with 
us on any point in my testimony here. I think the decision of Judge 
Dimock — it was decided finally in favor of the original motion, we 
had argued the matter of the issuance of letters rogatory — that he 
would have the testimony taken and on the trial of the case before 
any court here on the merits, that court could weigh the value of the 
testimony taken. I think that was the basis of his decision — but, of 
course, we had pointed out, as you have noticed, that such testimony, 
in our opinion, would be useless. 

Mr. Morris. You have made an effort, I don't know whether you 
or Mr. Reidy, have made an effort, specific effort, to determine pre- 
cisely what happens in Poland when a situation like this develops. 
I wonder if Mr. Reidy might interrupt your narrative at this time. 

Mr. Reidy. I would like to comment and develop a little bit of the 
background relating to these powers of attorney. 

In the specific case the amount involved is a little less than $20,000. 

Mr. Morris. In this particular case? 

Mr. Reidy. In this particular case. The decedent was a policy- 
holder of ours in Minnesota who died in Minnesota. Some of the 
beneficiaries resided here and they got their money. 

We thereafter received a letter which had come through from the 
Iron Curtain from some of these other beneficiaries whom, inciden- 
tally, we had written to, sending our claimant's statements, which 
were never returned to us. A letter came through to the adminis- 
trator of the estate who forwarded it on to us from Minnesota. 

In that letter these people specifically requested that the money be 
held here. 

Mr. Morris. In other words, the people don't want you to send the 
money over there. Does all the evidence indicate that, Mr. Reidy? 

Mr. Reidy. Yes, sir. Incidentally, Senator Johnston, the plain- 
tiff's attorney, Mr. Ross, attempted to compel us to produce these 
letters on pretrial hearings and on taking my deposition, but Judge 
Ryan, of this court, after reviewing the letters that we submitted 
him, denied the motion on the ground that it would subject these 
people to oppression if their names were known. 

Senator Johnstox. Would there be any way that people now liv- 
ing in America having, say, relatives in Austria, for them to have 
some agreement with those people in Austria to turn the property 
over to them there and have them receive the benefit of the payments ? 

Mr. Reidy. Senator, you cite Austria. Austria is not a beliind-the- 
Iron- Curtain country. 

Senator Johnston. I am sorry, I meant Hungary. 



SCOPE OF SOVIET ACTIVITY EST THE' UNITED STATES 4717 

]\Ir. Keidy. Hungary is. No; I think that has been pointed out 
by the Massachusetts Judicial Council, where they say there is no 
rule or law that would permit such a thing and also no rule of law 
which would allow any American citizen to claim any property they 
might inherit in these Communist countries. 

Senator Johnston. That is the trouble we are facing right now. I 
have had parties in my office in the last 3 or 4 days complaining that 
they have property in Hungary and that they could not get any ben- 
efit from it. That is the only reason I made that statement, wonder- 
ing if there was any solution we might work out between the parties 
there, say in cases where some families have property, a part in an 
estate, where people have died over there and they cannot get it out 
of there ; so I certainly do not think it would be right to get it out 
from America if we cannot get it from those people over there to 
people over here. It is certainly tied up in that regard right now. I 
know a doctor in America that inherited property in Austria and it 
is still there. 

Mr. Keidy. May I read this ? 

Senator Johnson. Go ahead. I did not mean to interrupt your 
presentation. 

Mr. Reidy. That is all right, Senator. This is a letter, and I will 
omit, with the committee's permission, the names of individuals men- 
tioned here. 

Mr. Morris. Senator, there is every indication that to disclose the 
names of the people communicating would get them into trouble. The 
letter indicates that. 

Mr. Reidy. The laws in Poland are such that, if you have any in- 
heritance, you must report immediately to the Polish foreign-funds 
control and you must do everything in your power to get those 
moneys. (See appendix II.) Of course, the people don't get the 
moneys, they would get the official rate of exchange which was 
recently 4 zlotys to the dollar, where some traveling American tourists 
got 85 zlotys to the dollar, so it is practically confiscation in the last 
couple of months, although I think they relaxed that and have gone 
up to 24 zlotys to the dollar. 

Mr. Morris. May we develop that? In other words, if these peo- 
ple actually did receive the proceeds of the policies, the disparity 
between the actual rate of exchange and the technical rate of exchange 
was such that what they would receive would be just one-twentieth of 
what they were entitled to ? 

Mr. Reidy. Yes, sir ; they would never get American dollars. Amer- 
ican dollars would never leave this country, to the best of my knowl- 
edge, they would be used by the Communist country. 

Mr. Morris. Now, we will not ask you to name any of these people, 
but who represents them, I mean, formally, as far as litigation is 
concerned ? 

Mr. Reidy. Mr. Ross, who has power of attorney with the Polish 
Embassy. The power of attorney was originally to the Polish con- 
sul in Chicago. Our country some years ago closed all Polish offices 
and left only the Embassy in Washington. 

Mr. Morris. And so therefore you are presented with a situation 
whereby beneficiaries have expressed themselves as taking a position 
in opposition to the formal position taken by their counsel, they are 



4718 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

trying to covertly ask you not to send money to the counsel pur- 
portedly representing them ? 

Mr. Reidy. We have some correspondence asking when they are 
going to get the money, but making some comments on this alleged 
power of attorney which we liave refused to honor so far. 

If I may develop one point in relation to this power of attorney 
and show how it developed ? 

Senator Johxstox. Let me ask you this. Under the circumstances 
you feel like you have some responsibility to see that the man you 
owe really receives the money, that is where the question comes up ? 

Mr. Reidy. That is correct ; yes, sir. 

Mr. Morris. You say that you would like to develop that point, 
Mr. Reidy? 

Mr. Reidy. Yes. In this letter, this person writing to the admis- 
trator of this estate said : 

TVe received some weeks ago a letter from the Guardian Life Insurance 
Company of America informing us that those eight persons ^Yill share as bene- 
ficiaries. In that letter there were enclosed nine forms, claimants' statements 
to be filled up and to be certified by the American consul as to their execution, 
but there lie a lot of difficulties in the way. The first step is to get the per- 
mission of the committee for foreign bills of exchange. At any rate, it is a 
long and difficult way. 

Those eight beneficiaries declared, therefore, they would rather 
have tlie money remain where it is, to make use of it in the decline 
of their lives when they will be in want of money, being not strong 
enough to earn their own living. That is in the letter. And the 
letter goes on to ask the company whether we would be good enough 
to hold the money for them. 

Based on that letter, the executor's attorney in North Dakota pre- 
pared a power of attorney and sent it to these Polish beneficiaries 
naming the executor as their attorney in fact so he could sign the 
formal documents requesting we hold the money. That power of 
attorney was never returned. 

Two years after that letter Avhich I just quoted from, which Avas 
written in 1952, we received a letter from the Iron Curtain addressed 
to the company and they referred to the insurance, they referred to 
the fact that the Guardian Life Insurance Company of America had 
sent "for each of us" a form to be filled out and sent back again and 
in this letter this woman said : 

As we wanted the money to remain at the company's — to use it when becoming 
old and weak) and because of the long and difficult way of settling the matter 
by filling forms and striving hard for a lot of permissions — -we decided to 
alistain from filling the forms. Some day in 1953 we received a summons to 
appear in court, all of us. The final result of the whole matter was that we 
signed, each of us, a power of attorney, entitling the * * * consul in the United 
States to take the money being our share to * * * and to let us have it. 

Mr. Morris. That is clearly coercive ; is it not ? 

Mr. Reidy. Tlie power of attorney shows on the face of it. The 
county court at Opole on February 16, 10,5o, at hearing in open court, 
heard the case on motion of the consulate general of the Polish Peoples 
Republic at Chicago — in other words, it is quite apparent that the 
Polish consul in Chicago learned of tliese insurance proceedings and 
then wrote over there and asked these people be brought into court 
and this power was given by the Peoples Republic. 



SCOPE OF SOVIET ACTIVITY IN THE! UNITED STATES 4719 

Now, the Senator of course knows that a power of attorney is sup- 
posed to be voluntary, the voluntary act of people naming someone 
else to act in their place instead. So we refused that power of attor- 
ney and the result was that Mr. Ross' firm was thereafter retained by 
the Polish Embassy in Wasliington and is now allegedly representing 
these people to secure this money for them. Since that time we have 
had several other letters from these people, one of which 

Mr. Morris. You mean these people in Poland ? 

ISIr. Reidy. Yes; wherein they say that several of them revoked 
that old power dated February 16, 1953, that they were advised by 
the Polish officials that perhaps, if they executed a power directly to 
the law firm of Wolf, Popper, Ross, Wolf & Jones, they would have 
more success. Some, of course, have executed such power and others 
have refused and are glad that we are holding the money. 

But I think the case has now gone full circle because here we have 
these people brought into a court in Poland and they say that the net 
result is, "We all signed this power of attorney." And now we are 
having our own district court in New York issue letters rogatorv 
which will go through diplomatic channels, probably right down to 
the same court and they will probably bring some of the same unfor- 
tunates to that court and ask them, "Did you sign this power of 
attorney of your own free and voluntary act?" 

And that is based on Judge Dimock's decision, which I would like 
to hand to the committee. 

Mr. jSIorris. You have a copy ? 

Mr. Reidy. Yes. 

Mr. Morris. I would like to offer at the same time the decision of 
Judge Edelstein against the Guardian Life Insurance Co. 

Senator Johnston. They will become part of the record, both of 
them. 

(The documents referred to were marked "Exhibits Nos. 516 and 
516-A" and read as follows:) 

Exhibit No. 516 

Motion foe Letters Rogatory (Written Interrogatories) Brought by 

Plaintiff 

United States District Court, Southern District op New York 

Civil 95-262 

Jan Danisch, Antoni Danisch, Julia DaniscJi, Anna Schwientek, Gertriid 
Wojtczyk, Emma- Scluveda, Sofia Janta, Jarlwiga Salawa, Maria Stanczyk, 
Luiza Lesch, and Gertruda Urganek, Plaintiffs, against The Guardian Life 
surance Company of America, Defendant 

memorandum 
DiMOCK. E. J. : 

On July 24, 1956, I filed an opinion by which I granted plaintiffs' motion that 
their testimony be taken nnder letters rogatory in Poland. Their testimony 
was to be submitted in opposition to defendant's position that the attorneys 
at present appearing for plaintiffs were doing so without authority. 

Defendant now moves for reargument of the motion on the ground that I 
overlooked the point that to compel plaintiffs to testify in Poland may put them 
in a position of either committing perjury in response to the commands of a 
police state or else submitting to the punishment which awaits those who defy 
those rommands. A new affidavit is submitted in support of the statement that 



4720 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

my earlier decision meant that plaintiffs must choose between perjury and 
prosecution. 

The plight of one who found himself in such a dilemma simply because a rela- 
tive in America had died leaving insurance moneys to which his relatives were 
entitled, would be very appealing. I cannot take it for granted, however, that 
this is the case here. On the face of the record plaintiffs have retained counsel 
to collect for plaintiffs' own account the insurance moneys due them. The pro- 
ceedings at the recent Posnan trials indicate that we cannot accept without very 
strong proof the claim that the administration of justice in Poland is wholly 
a mockery. Unless and until the Executive department of this country with- 
draws its ambassador and consuls from Poland it seems to me presumptous for 
the judiciary to declare that Poland is beyond the bounds of the circle of nations 
within which testimony can be taken in one nation for use in another. 

Nevertheless, just as I am impressed with the harm that might be done by 
refusing to let plaintiffs give their testimony that they themselves have retained 
their ostensible counsel, so I am impressed with the harm that might come to 
the plaintiffs by forcing them to testify if, indeed, their ostensible counsel have 
been retained by and for the benefit of the Polish Government. I would feel 
much happier about the situation if I could effectively direct that the testimony 
be taken before an American consul in Poland but American consuls in Poland 
are not permitted to take testimony for use in American courts. Letters rogatory 
must, however, pass through the hands of an American diplomatic representa- 
tive in Poland so that the identity of the deponents would be called to the atten- 
tion of someone who would at least take note of any reprisals visited upon them 
on account of their testimony. 

Faced with a choice I refuse to set up an iron curtain where none has been 
interposed by Poland. 

The motion is denied. 

/s/ E. J. DiMOCK, 

United States District Judge. 
November 13, 1956. 

United States District Court, Southern District of New York 

Motion fob the Issuance of Letters Rogatory 

Jan Danisch, Antoni Danisch, Julia Danisch, Anna Schwientek, Gertrud 
Wojtcyzk, Emma Schweda, Sofia Janta, Jadwica Salaiva, Maria Stancyzk, 
Luiza Lesch, and Gertruda Urganek, Plaintiffs, against T/te Guardian Life 
Insurance Company of America, Defendant 

opinion 
DiMOCK, D. J. : 

Plaintiffs by their attorneys, Wolf, Popper, Ross, Wolf & Jones move pursuant 
to Rule 28 (b), F. R. C. P. for an order that letters rogatory issue to the appro- 
priate judicial authorities of the Government of Poland, under which there may 
be taken in Poland, the depositions of plaintiffs and agents of the National Bank 
of Poland. 

The question of the authority of these attorneys to bring this action is raised 
by the opposition to the motion. I shall, however, assume that authority for 
the purposes of this motion, as I did for the purposes of another application 
in the case, 18 F. R. D. 77. 

The action purports to be brought on behalf of citizens and residents of 
Poland to recover proceeds of insurance policies and supplementary contracts 
issued by this defendant on the life of one Reverend Theodore A. Kupka, 
who died in the United States. The parties are agreed that these plaintiffs are 
the named beneficiaries under those policies and contracts. Defendant admits 
that it has proceeds which are due to those named beneficiaries but has re- 
sisted recovery in this action on two grounds: (1) the attorneys appearing for 
these plaintiffs have no valid authority to commence this action, and (2) if 
plaintiffs were awarded judgment in this action, there is no assurance that 
l>laintiffs will be permitted to receive the benefits of this judgment in Poland. 
In conjunction with this second defense, defendant requests that it be author- 
ized to deposit in court the sum due plaintiffs to be held until the plaintiffs are 
free to receive the benefit therefrom. Defendant points to the fact that this 



SCOPE OF SOVIET ACTIVITY IN THE IIN'ITED STATES 4721 

practice is provided for in New York by Sections 474 and 978 of the New Yorlc 
Civil Practice Act. 

Letters rogatory are asked for the examination of plaintiffs in Poland so 
that, at the trial, testimony may be offered in support of the authority of these 
attorneys to appear for them. Defendant objects on the ground that any 
such testimony would be without value since plaintiffs are residents of a police 
state which would not permit plaintiffs to testify freely and truthfully. De- 
fendant points to various statutes in force in Poland which, it alleges, make 
it a crime for any citizen of Poland to hinder the collection of any claim in a 
foreign country. 

Defendant does not controvert plaintiffs' allegations that letters rogatory con- 
stitute the only procedure available to obtain plaintiff's testimony. Thus the 
requirement of Rule 28 (b) that letters rogatory may only issue "when neces- 
sary or convenient" is fulfilled. It may well be true that the testimony thereby 
obtained will be of little or no value because it was taken in a police state. 
This is something for the trier of the facts to consider; it does not make the 
testimony inadmissible. See Bator v. Hungarian Commercial Bank, 1st Dept., 
275 App. biv. 826. 

Defendant also objects to the issuance of letters rogatory to examine agents 
of the National Bank of Poland. The purpose of the requested examination 
is stated by the plaintiffs' attorneys as follows : 

"In this connection the plaintiffs desire to question the National Bank of 
Poland in Warsaw as to the manner in which the moneys transmitted from the 
United States would be paid over to and receipted for by the Polish beneficiaries 
thereof. Also, to ascertain what taxes or other charges, if any, are deducted 
under the applicable provisions of Polish law. Finally, the degree to which 
Polish citizens have the free right of disposition of the moneys turned over to 
them and the full use and benefit of said moneys." 

Almost all of what is asked is foreign law and there is no statement that the 
representatives of the National Bank of Poland who will testify are lawyers. 
Nevertheless, even if they are not members of the profession, they can perhaps 
qualifv themselves. 2 Wigmore Evidence § 5G4 Pg. 658 (3 ed. 1940) ; Murphy v. 
Bankers Commercial Corp., D. C. S. D. N. Y., Ill F. Sup. 60S. The representa- 
tives' qualifications can be passed upon by the trial court which will have the 
benefit of the witnesses' answers to the interrogatories as to their qualifications 
and any cross interrogatories on the subject. 

Insofar as anything else is wanted from the National Bank it is information 
"as to the manner in which the moneys transmitted from the United States would 
be paid over to and receipted for by the Polish beneficiaries thereof." Implicit 
in the request is the assumption, no doubt valid, that the National Bank of 
Poland would be in complete control of the payment of the fund to the bene- 
ficiaries and their receipt for them. On that subject the testimony would either 
be as to the provisions of law governing the payment and receipt or would be 
in the nature of an agreement by the National Bank as to what it would do. 
To obtain such an agreement expressed in a deposition would be a waste of time. 
Courts have no machinery by which to enforce such an agreement with a wit- 
ness. The interrogatories must, therefore, be limited to the law applicable to 
the proposed transactions. 

Defendant says the plaintiffs' attorneys have been guilty of such laches in 
moving for letters rogatory that the application should be denied. No suggestion 
of prejudice by the delay is made except that, because of the importance of the 
question raised to this and other insurance companies, the action should be 
tried and disposed of at the earliest possible date. Issue was joined on Novem- 
ber 12, 1954, and no note of issue has been filed by either party. Under the 
circumstances I hold that the motion is not barred by laches. 

Motion granted. Interrogatories to representatives of National Bank of 
Poland limited to questions of law. 

Dated : July 23, 1956. 

E. J. DiMOCK. 



4722 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Exhibit No. 516-A 

United States Disteict Couet, Southeen Disteict of New Yoek 

Civil Action 95-262 

Jan Danisch, Antoni Danisch, Julia Danisch, Anna Schwientek, Gertrud 
Wojtcyzk, Emma Schweda, Sofia Janta, Jadwiga Salawa, Maria Stancyzk, 
Luiza Lesch, and Gertrude Urganek, plaintiffs, against The Guardian Life 
Insurance Company of America, Defendant 

MEMOEANDUM 

Edelstein, D. J. : 

In an action on certain policies of insurance and supplementary contracts 
issued by the defendant on the life of a decedent who died in the United States, 
the plaintiff beneficiaries move for summary judgment. The defendant has filed 
a motion labeled as a cross-motion for summary judgment. The defendant has 
admitted the issuance of the policies and supplementary contracts ; it has ad- 
mitted the death of the insured and that it was notified and received proof of 
his death from beneficiaries residing in the United States ; and it has further 
admitted nonpayment to the plaintiffs in this action. Thus, the policies of 
insurance themselves are not in dispute nor is the liability of the defendant to 
the named plaintiffs. 

But the defendant does resist payment to these beneficiaries, who are resi- 
dents and citizens of the Polish People's Republic. It denies the authority of 
the plaintiffs' attorneys to institute this action on their behalf, on the ground 
that no faith or credence can be given to such an authorization as free and vol- 
untary when it originates in a communist police state. And in any event, it is 
alleged, there is not a reasonable assurance or likelihood that the plaintiffs 
would actually receive or have the benefit or use or control of the insurance 
proceeds if the money were to be transmitted to them or to persons purporting 
to represent them. Accordingly, the defendant urges as an alternative to dis- 
missal that, pursuant to sections 474 and 978 of the New York Civil Practice 
Act, it be authorized to deposit the funds in court for the benefit of the persons 
entitled to them, until such time as they can be assured of actual receipt or bene- 
ficial use of he money. 

Both of these issues are raised by the defendant in what purports to be a 
cross-motion for summary judgment. But a summary judgment, under Rule 56, 
deals with the merits and results in a judgment in bar. See 6 Moore's Federal 
Practice (2nd ed.) par. 56.03, page 2025. The defendant does not seek a 
judgment in bar, but a judgment in abatement, without prejudice, on the ground 
that the court has no jurisdiction to proceed because the plaintiffs have, in fact, 
commenced no action against the defendant. Accordingly, the motion will be 
treated as a motion to dismiss under Rule 12, and inasmuch as a threshold 
issue of jurisdiction is presented, it must be considered first. 

It has long been well settled that an appearance by a practicing attorney 
creates a presumption that he has authority to act and the law casts the burden 
of proving the contrary upon the one asserting it. Osborn v. United Sfates 
Bank, 9 Wheat. 738, 829, 830; Hill v. Mendenhall, 21 Wall. 453, 454; Paradise v. 
Vogtlandische Mascliinen-Fahrik et al. (3 Cir.), 99 F. 2d 53, 55; Booth v. 
Fletcher (D. C. Cir.), 101 F. 2d 676, 683; In re Gasser (8 Cir.), 104 F. 2d 537, 
538; In re Pearl Coal Co. (3 Cir.), 115 F. 2d 158, 159; Bowles v. American 
Brewery (4 Cir.), 146 F. 2d 842, 847. In its attempt to meet that burden of 
proof, the defendant sets forth that counsel acting for plaintiffs have no direct 
authority from them. That point is conceded, inasmuch as counsel are proceed- 
ing under the authority of the Polish Consul in Chicago and his successor, to 
whom plaintiffs have purported to give powers of attorney.^ It is argued, 



1 Counsel for plnintiffs produced three documents purportin,? to be powers of attorney. 
One dated May 12, 1053. and another dated May 30, 1953, name the Polish Consul in 
Chicago, Illinois, or his substitute, attorney for plaintiffs to collect the insurance proceeds 
that are the subject of this action. Both of these powers bear signatures purporting to be 
those of the plaintiffs, aflBspd as a part of a court proceeding in which they were sum- 
moned to appear, and "Authenticated" by the American Vice Consul in Warsaw. The 
third document, dated April 6, 1955, and executed and acknowledged on that day by the 
Chief of the Consular Division of the Embassy of the Polish People's Republic, Wash- 
ington, D. C, purports to be a ratification by that official as successor to the Polish 
Consul in Chicago, of the authority of the plaintiffs' counsel to institute and prosecute 
the present action. The summons is dated September 3, 1954. 



SCOPE OF SOVIET ACTIVITY IN' THE IHSmED STATES 4723 

however, that the powers of attorney ought not to be given recognition or effect. 
For, it is asserted, following the death of the insured, the defendant forwarded 
to his beneficiaries in Poland its printed form of "Claimant's Statement." These 
statements were never returned to the defendant. Instead, the defendant re- 
ceived communications from the then Consul of the Polish People's Republic in 
Chicago forwarding the powers of attorney and the protocol or transcript of 
the court proceedings in Poland following which they were executed by the 
plaintiffs. From this it is argued that the primary moving force behind this 
action and the real plaintiff is the communist government of Poland, not the 
named beneficiaries, and the powers of attorney must have been obtained from 
the plaintiffs by a police state mass court proceeding, to which they were 
summoned. 

The defendant's conclusion proceeds from an evaluation of conditions pre- 
vailing under a government in a communist country, an evaluation of which this 
court requires no persuasion. But valid as it may be, the evaluation falls short 
of providing evidence on the specific problem in issue, and only surmise and 
suspicion remain. I can merely repeat Judge Dimock's words in deciding a 
previous motion in this case, 18 F, R. D. 77, 79: "At this time * * * i have 
nothing but suspicion and surmise in support of such a conclusion [that the 
powers of attorney were not voluntarily executed]. The Polish People's Re- 
public is a nation which is recognized by and has diplomatic relations with the 
United States. I cannot question the validity of these documents on the present 
state of the record." Nor is that result altered by the existence of the Treasury 
Regulations ^ pursuant to which United States Government funds will not be 
paid to persons residing in specified foreign countries, because of a lack of 
reasonable assurance that the payees will actually receive such funds or be able 
to negotiate checks or warrants for full value. 

The Polish People's Republic is one of the specified countries ^ and an amend- 
ment * to the regulation provides that powers of attorney for the receipt or 
collection of such funds will not be recognized. The refusal of the United 
States Government to recognize powers of attorney from payees of government 
funds resident in Poland is merely in furtherance of the policy not to transmit 
such funds to Poland, for the reasons stated. The policy might be contravened 
by the recognition of even voluntarily given, valid powers of attorney. Thus 
the regulation itself is not authority for the invalidity of powers of attorney 
given by residents of the Polish People's Republic. The defendant has failed 
to meet the burden of proving the lack of authorization of plaintiffs' counsel. 
Accordingly, the motion to dismiss must be denied. 

With the jurisdictional issue decided in favor of the plaintiffs, they are 
entitled to summary judgment, for there is no defense on the merits. The only 
question remaining is whether that judgment should be conditioned by the 
application of sections 474 and 978 of the New York Civil Practice Act. There 
is no provision in the Federal Rules of Civil Procedure covering the situation, 
but by Rule 83, the District Court may from time to time make and amend rules 
governing its practice not inconsistent with the federal rules. By Civil Rule 13 
of this court, provision is made for the discretionary application of the pro- 
cedure prevailing in the Supreme Court of the State of New York, in a situation 
not covered by the provisions of any statute of the United States or of the 
Federal Rules of Civil Procedure, where there are no parallels or analogies 
furnished by such statutes and rules, and in default of a procedure previously 
prevailing in courts of equity of the United States. See United States v. Certain 
Land etc., 71 F. Supp. 363, 364. This situation would seem to be one where the 
New York procedure might appropriately be applied. 

But the plaintiffs argue that to apply it, by ordering the proceeds of the 
judgment to be deposited in court for the benefit of the plaintiffs, to be paid 
out on the special order of the court when they subsequently are able to show 
that they will have the benefit or use or control of the money, would be in 
violation of the Constitution of the United States. Specifically, it is contended 
that such statutes so applied would impair the obligation of contracts, in 



2 Adopted under the authority of Public Law No. 828, approved October 9, 1940. See 
section 211.3 (a) of Department Circular No. 655, dated March 19, 1941, 31 C. F. R. 
(1949 ed.), 211.3 (a) : 6 F. R. 1534. 

3 Amendment of February 19, 1951, 16 F. R. 1818, and amendment of April 17, 1951, 
16 F. R. 3479, amending 31 C. F. R. (1949 ed.) 211.3 (a). 

♦Amendment of September 24, 1951, 16 F. R. 10017, amending 31 C. F. R. (1949 ed.) 
211.3. 



4724 SCOPE OF SOVIET ACTIVITY IN THE "UlSriTED STATES 

violation of Section 10 or Article 1 ; " would contravene the provision of Section 1 
of the Fourteenth Amendment, that no state shall deprive any person of property 
without due process of law; and would violate the provision of Section 1 of 
the Fourteenth Amendment, that no state shall deny to any person within its 
jurisdiction the equal protection of the laws. 

It is, of course, an axiom of constitutional law that a substantial impairment 
of a means of enforcement is an impairment of the contract obligation. Sturges 
v. Crowninshield, 4 Wheat. 122; McCracken v. Hayward, 2 How. 60S; White v. 
Hart, 13 Wall. 646 ; Edwards v. Kearzey, 96 U. S. 595 ; Bronson v. Kinzie, 1 How. 
311 ; Penniman's Case, 103 U. S. 714, 720. The plaintiffs cite Sliosberg v. Neiv 
York L-ife Ins. Co., 244 N. Y. 482, as authority directly controlling the case at 
bar. An action had been brought in 1925, prior to United States recognition 
of the U. S. S. R., to recover on an insurance policy "expressed to be payable 
in Russian roubles" and "expressed * * * to be performed in whole or in part 
within the territorial confines of the former Russian Empire * * *." An 
application was made, pursuant to section 169-a of the Civil Practice Act (a 
section added by Chapter 232 of the Laws of 1926), to stay the action until the 
expiration of 30 davs next following the recognition de jure of a government 
of Russia by a government of the United States. The New York Court of 
Appeals held the statute to be unconstitutional as depriving parties entitled 
to sue on a contract of a remedy for an indefinite period, that is, until the 
happening of an event which might never happen. 

But the Sliosberg case is, I feel, inapposite. Assuming that a deposit of the 
proceeds of the insurance policies in court should be ordered, there would never- 
theless be no denial of a remedy. Judgment, on the contrary, would have been 
granted the plaintiffs. Nor would there even be a denial or a postponement 
of the right of plaintiffs to possession of the property. For the court would be 
acting on a determination that they would not in any event have the "benefit 
or use or control of the money," and that there were "other special circumstances 
[making] it appear desirable that payment * * * should be withheld * * *," 
relating to the possibilities of the effectuation of the judgment for the benefit of 
the plaintiffs. Cases more closely analagous than the Sliosberg case are those 
involving the distribution of estates (cf. for example. In re Braiefs Estate, 
305 N. Y. 148, and cases cited on page 158; In re Weidberg's Estate, 172 Misc. 
524). True, these cases are distinguishable on the ground that they involve 
decedents' estates, over which the state may exercise the power of controlling 
distribution, rather than contracts, over which the state's power is limited by 
the United States Constitution. Nevertheless, the conclusion stated is equally 
applicable, that the procedure of section 269 of the Surrogate's Court Act (anal- 
ogous to the procedure of sections 474 and 978 of the Civil Practice Act here 
involved), "far from constituting an impairment of [plaintiffs'] legal rights, was 
designed as, and in fact is, a potent protector thereof" (Matter of Weidberg, 
supra, 172 Misc. at p. 531 ; In re Braiers Estate, 305 N. Y. at p. 158) . The plain- 
tiffs would have title to the funds ; they would be set aside for their benefit and 
account, and be theirs for the asking when reasonable assurance could be given 
that they would receive the benefit or use or control of the money, and would, 
in short, enjoy the possession to which they are concededly entitled. Therefore, 
I cannot conclude that applying the challenged sections would have the effect 
of impairing the obligations of contracts. Similarly, inasmuch as there would be 
no impairment of rights at all, there would be no denial of due process or of equal 
protection of the laws. 



-Defendant argues that all the contracts involved in the case were issued subsequent to 
the effective date (June 2, 19.39) of the challenged sections of the Civil Practice Act. One 
of the policies and two of the supplemental contracts in suit do bear subsequent dates. 
However, thev were issued in accordance with settlement options contained in policies 
antedating the enactment of the legislation. They were, accordingly, not new contracts, 
for their terms were fixed when the original policies were made ; they were issued not 
as the result of any new negotiation or aureement. but in discharge of preexisting obliga- 
tions (Aetna Life Ins. Co. v. Dunken, 206 U. S. 389). That the insured was required to 
present new evidence of insurability did not alter the preexisting obligations to insure 
subject to such new evidence, nor did it convert the discharge of those obligations into 

new contracts. „ . , .. ^■, ■, . , j.. , .„ j 

The remaining policv in suit was made after the effective date of the legislation claimed 
to impair the obligation of the contract. But it was a North Dakota contract, not sub.iect 
to the New York law wlien issued. It is argued that inasmuch as the challenged sections 
(lid not operate on the contract until suit was brought in New York, they violate the 
contract clause of the Constitution. In Home Ins. Co. v. Dick. 281 U. S. 397, the Supreme 
Court left open the issue of whether the guaranty of the contract clause relates to the 
date of a statute's effect on contracts or to the date of its enactment. 



SCOPE OF SOVIET ACTIVITY IIST THE UlSriTED STATES 4725 

But the exercise of the court's discretion to order the deposit of the proceeds of 
the insurance policies in court, subject to its further order, depends upon the 
court's conclusion that the plaintiffs would not have the benefit or use or control 
of the money, or that there are other special circumstances making it appear 
desirable that payment should be withheld. The defendant's argument is, essen- 
tially, that the court may take judicial notice of the existence in Poland of a 
communist government employing police-state tactics, precluding the realization 
of any rights by Polish citizens without special leave from the authorities, and 
that the right to receive dollar exchange in the Polish People's Republic is pre- 
cisely the kind of a right which would be preempted and confiscated by the gov- 
ernuient. In substantiation of this position, affidavits are submitted citing foreign 
exchange decrees of the Polish government. It is further argued, with supporting 
affidavits, that even if the plaintiffs were to receive the funds, they would be 
able to realize only a very small portion of them because of the confiscatory rates 
of exchange maintained by the Polish government between their currency and 
the dollar. And finally, the defendant cites the Treasury regulation specifying 
the Polish People's Republic as one of the countries the residents of which may 
not be sent United States government funds, because of a lack of reasonable 
assurance that the payees will actually receive such funds or be able to negotiate 
checks or warrants for full value. 

The general conditions prevailing in a communist country are indeed of such 
common knowledge as to require no proof of their fundamental antithesis to the 
public policy prevailing in our own country. Yet in the absence of proof, it is 
inadvisable for a court to hold, on the basis of judicial notice alone, that the 
general conditions negate the specific likelihood that these plaintiffs would receive 
the proceeds of a judgment. There can, of course, be judicial knowledge of specific 
circumstances sufficient to jvistify a decision, see In re Weidberg's Estate, supra ; 
but as distasteful as the court considers the general conditions in Poland to be, 
he has no judicial knowledge to justify the specific conclusion that these plaintiffs 
would not receive payment. However, the void of judicial knowledge may be 
filled by the Treasury Regulations precluding the payment of United States gov- 
ernment funds to persons residing in the Polish People's Republic, because of 
a finding of a lack of reasonable assurance that the payees will actually receive 
such funds or be able to negotiate checks or warrants for full value. This 
"authoritative conclusion reached by the Treasury Department" was relied upon 
for decision in In re Braier's Estate, supra (305 N. Y. at p. 157). But in that 
case there was no denial that conditions in the foreign country (Hungary) negated 
the likelihood that the legatee would receive her bequest, and no hearing was 
sought on the issue. Here, denial is made, supported by affidavits, and a hearing 
is demanded, although in a roundabout manner ; for it is claimed in answer to 
defendant's cross motion for summary judgment that a genuine issue of material 
fact is presented, requiring a trial. The defendant's cross motion, as indicated, 
cannot be treated as one for summary judgment, and therefore the raising of an 
issue of material fact for trial may be treated as a demand for a hearing on the 
issue of the "defense" that there is not a reasonable assurance that the plaintiffs 
would actually receive or have the benefit or use or control of the insurance 
proceeds, if the funds were to be transmitted to them. 

Accordingly, the plaintiffs' motion for summary judgment will be granted, 
but entry of judgment will be held in abeyance for ten days from the date of this 
memorandum, during which time plaintiffs may apply for a hearing. Failing 
such an application, the defendant's motion pursuant to sections 474 and 978 of 
the Civil Practice Act will be granted, appending to the judgment an order requir- 
ing the deposit of the proceeds of the judgment in court. 

[s] David N. Edelstein, 
United States District Judge. 

Dated : March 13th, 1957. 

Mr. Eeidy. I would like to offer you also this memorandum opinion 
by Judge Eyan in this case wherein he refused to permit these letters 
to be examined by the plaintiff's attorney and his able reasoning 
behind it. 

Mr. Morris. That is important, Senator. 

Senator Johnston. That will be made a part of the record also. 



4726 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

(The document referred to was marked "Exhibit No. 517," and reads 
as follows:) 

Exhibit No. 517 

Motion foe Discoveby and Inspection of Documents in Defendant's 

Possession 

Plaintiff's attorneys have by informal ex parte application bronght to my 
attention the fact that the memorandum decision filed by me on April 20, 1956, 
did not specifically rule on documents, reports, and other material requested in 
items 2 and 3 of the notice of motion. 

Accordingly I amend the memorandum decision so as to include a denial of 
items 2 and 3 for the reasons set forth in that decision. 

Sylvester J. Ryan, U. S. D. J. 

So ordered 5/3/56. 



Memorandum Opinion 

Danisch v. Guardian Life Insurance Company, Southern District of New York, 

Civil 95-262 

Plaintiffs' move for discovery and inspection of certain correspondence which 
allegedly establishes that the attorneys herein are not properly authorized to 
represent plaintiffs and that any money paid to plaintiffs while they continue to 
reside in Poland will be of no benefit to them due to the policies of the present 
Polish Government. Defendant opposes disclosure urging that it may subject the 
writers to severe penalties in Poland. 

The authority of plaintiffs' attorneys is based on powers of attorney executed 
en masse in Poland and designating the Polish Consul in Chicago as attorney in 
fact to collect the proceeds of the policies of insurance in suit. Defendant has 
submitted translations of certain applicable Polish laws pertaining to the collec- 
tion of foreign claims by Polish citizens from which it seems that any com- 
munication between a Polish citizen and this defendant which might tend to 
dispute the validity of the consul's activity in this matter or the authority of him 
and these attorneys to conduct this litigation might constitute an attempt to 
hinder the collection of these claims and if so would be a crime under Polish law. 

Public policy requires that litigants, whether citizens or aliens, be free of 
restraint in the selection and retention of counsel, and courts will not compel 
disclosure of information which might in any way abridge this right to counsel of 
one's choice, and which might tend to "annoy, embarrass, or oppress" Rule 30 (b). 

Disclosure of the correspondence sought might give rise to a charge, even 
though unfounded, that certain Polish residents have violated Polish law and 
the duty of the consul to uphold the laws of his own country may result in a 
conflict with the interests of the individuals from [sic] whom he is acting as 
attorney-in-fact. The attorneys of record in this case were retained by the 
consul and they would be required to submit to him such information as the 
examination of this correspondence might reveal ; they, too, as a result may be 
placed in the position of representing conflicting interests. It seems best that 
this possibility be avoided. Motion denied ; so ordered. 

Sylvester J. Ryan. 

4/20/56. 

Mr, Morris. Have you made any effort — Is it not a fact that you 
have sought out people with experience in Polish justice in connec- 
tion with this problem ? 

Mr. Reidy. Yes, sir. In our petition opposing the letters rogatoiy 
we had an affidavit from a former judge of Poland who had escaped 
from Poland. In his affidavit he stated the conditions relating to al- 
leged justice in Poland. 

In addition to that we have presented, and it is in the record in this 
case, a publication by the International Jurists Commission entitled, 
"Justice Enslaved," "75 pages of that publication referring to the al- 
leged justice of Poland. 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4727 

If I may I would like to point out the affidavit of this former judge 
as to what conditions he experienced in Poland under the Communist 
regime. 

Mr. Morris. ^Vliat is his name? 

Mr. Keidy. I will have it in just a minute. 

It is Joseph Dolina, and his affidavit, a copy of the affidavit was 
filed in the United States District Court for the Southern District of 
New York in Civil Action 95-262. Mr. Dolina at the time — and this 
affidavit was executed on the 8th day of August, 1956 — was residing 
in New York City but he is now residing in Washington, D. C. (See 
appendix III.) 

Mr. Morris. I might state. Senator, we have endeavored to reach 
liim and ask if he would testify here this morning but we learned 
only this morning or late yesterday, was it not, Mr. Garcia, that he 
had in fact moved to Washington and would not be able to testify 
today. Therefore we show that as the best evidence, his affidavit, sub- 
mitted in 1956, was it not? 

Mr. Eeidy. Yes, sir. 

Senator Johxstox. Do you have his address in Washington, D. C. ? 

Mr. Eeidy. I believe we can secure that. We have kept in touch 
with him. 

Senator Johxstox. We would appreciate getting that. 

Mr. Eeidy. I will see that Mr. Morris gets it. 

Mr. Morris. The best evidence that we have is the affidavit dated in 
1956. And I think. Senator, that it would be a good point, having his 
views as late as possible, because if there has been any thaw, if that 
is the right word to use, in the Polish situation, it is something that 
developed in the last year. So I think that, really to understand this 
thing thoroughly, we should have an up-to-date basis. 

]Mr. Eeidy. May I point out some of the comments that he makes 
with regard to Polish justice? I will not go into complete detail be- 
cause I will see that the committee gets a copy of it, but in paragraph 
3 he states : 

I served as Special Court Assessor trying and deciding cases for about three 
months until the Nazi invasion and occupation of Poland. At that time I left 
my Poland post and joined the Polish underground resistance movement. In 
August, 1944, when Poland was again invaded and occupied by Soviet Russia, 
I was arrested. I was imprisoned in various camps and concentration camps 
in Russia until November 1947. when I was released and sent back to Poland. 

In January 1948 I was reappointed by the Minister of Justice of the Commu- 
nist Government of Poland to the same judicial position I held before the Nazi 
invasion in 1939, namely, that of Court Assessor, and continued to function as 
such in the trial and decision of cases and in all the usual judicial functions of 
that office until December of 1948. In January 1949 I made my escape from 
Poland. 

I have been requested to and do make this affidavit in support of a motion for 
reargument on a motion which resulted in the granting of an order for the issu- 
ance of letters rogatory under which I understand interrogatories are to be sent 
to the named plaintiffs in this case in Poland with the aid of the Polish courts 
concerning whether they have freely authorized the bringing of this action for 
the collection through the Polish consul of insurance money due them in this 
country. 

I wish to concur in the assertions made in the papers opposing the letters 
rogatory, both originally and on this motion, that the named plaintiffs will be 
subjected to annoyance, embarrassment, and oppression if they are subjected to 
interrogation on these matters by requisition of this court and through the pro- 
cedures of the Polish courts. The named plaintiffs will have to testify they 

93215— 58— pt. 85 4 



4728 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

wish this money collected throush a Polish consul or they will subject themselves 
to criminal penalties and prosecution. 

In this connection, I wish to point out from my own personal experience that 
a judicial officer of the courts of Poland under the present Communist regime is 
not free to administer justice as he sees it or to protect the interests and prop- 
erty rights of Polish people coming before him. The courts are under Commu- 
nist domination and are mere instruments for carrying out the policy of the 
Communist Government. In my own case, during the year I served as judicial 
oflScer under the Communist regime in Poland, I was subjected to constant inter- 
rogation by the secret police (Security Office). This occurred sometimes 2 or 3 
times a day and sometimes even during the night, and on some of these occa- 
sions they attempted to influence my decisions. Moreover, they wanted me to 
act as an informer for them with respect to matters, among others, which came 
under my judicial cognizance. I know from my acquaintance with my associate 
judicial officers that they were subjected to the same kind of constant government 
pressure. Moreover, as a matter of policy, all judges were frequently summoned 
to conferences at which they were lectured on the policy which should govern 
their judicial determinations. I can, therefore, assure this court that the fact 
that the proposed interrogatories were presented to the named plaintiffs in or 
under the auspices of the Polish courts would be no guaranty whatsoever they 
would be answered freely and truthfully. Just the contrary is the case. This 
is the sad state to which judicial administration has fallen under the regime of 
the Polish People's Republic. 

In this connection. Senator and Mr. Morris, and not to take up the 
time of this committee, these Polish beneficiaries have indicated they 
would not get the money even if we paid it, but they would get parcels 
tlirough an outfit in New York City familiarly known as PKO. 

Mr. Morris. In other words, they would not even get the cash ? 

Mr. Reidy. They tell us they have been told they would get parcels 
and not the cash. In fact, they have asked us if we would not send the 
money through this PKO outfit. We have done some investigation 
of PKO. 

Mr. Morris. How do you spell that ? 

Mr. Reidy. The official name of the corporation is PKO, that is, 
PEAKO Trading Corp., of 25 Broad Street, New York City. 

That is a corporation which was organized in April 1948, in the 
State of Delaware. We have and will give to the committee a copy 
of the incorporation papers. It solicits orders throughout the United 
States for all kinds of goods, merchandise, machinery, clothing, drugs, 
food, and the like for people living in Poland. 

It is an official branch of the Polish National Rank, the bank being- 
called Polska Kasa Opicki. This is the only agency through whom 
people in this country who have relatives living in Poland are able 
to send tltem any goods at all. Were they to try to do it outside of 
the official Polish Communist channel, the duties would be so high and 
so prohibitive that the poor unfortunates would not be able to pick 
up these packages. 

This PKO Trading Corp. operates through the United States 
through little steamship ticket offices and these agencies, you see in 
the various cities, you know, where people would go in to purchase 
foreign exchange in the days before the Communists took over, and 
tlie like. They will order food packages, they will pay in American 
dollars. They can deal directly with PKO by going down to 25 
Broad Street and paying their American dollars there. The orders — 
not goods, no American goods are transmitted — the orders are sent to 
.Pohmd and these people will get some packages eventually. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4729 

PKO maintains 2 bank accounts in this country, 1 of which I 
believe is at the Bankers Trust Co. in Wall Street, New York. The 
other, I don't know where it is, but it should be easily identified. 

Were they to send their money direct to PKO it is my considered 
belief that the dollars would never reach these beneficiaries, that these 
dollars would be deposited in the account of this PKO trading com- 
pany, they would be reported to the Polish National Bank and the 
dollars would be held subject to the orders of the Polish National 
Bank which holds accounts in other banks. (See appendix IV.) 

Mr, jMorris. It is clear, Mr. Keidy, that the people themselves are 
being coerced in signing these powers of attorney ? 

Mr. Reidt. It is clear. 

Mr. Morris. And it is against their will, their demonstrated will that 
the lawsuits are being instigated, by coercion and against their will ? 

Mr. Reidt. I would agree ; yes, sir. 

Mr. Morris. Now I wonder, Mr. Walsh, if you will tell us— I think 
you were telling us the consequences of the last legal decision. I 
wonder whether there is any indication on the part of Paul Ross or 
any other attorney that this thing is about to be pursued more vigor- 
ously on the part of, or professedly on the part of beneficiaries behind 
the Iron Curtain ? 

Mr. Walsh. I think I mentioned that we have appealed from the 
letters rogatory order, and the appeal was dismissed on the ground 
that, as a nonfinal order, it was not appealable, Judge Edelstein having 
in abeyance the question of hearings, the date that would be set for 
hearings, asked by Mr. Ross, he asked us to notify him as soon as we 
liad word from the court of appeals as to whether or not our appeal 
should be entertained, and the appeal w^as dismissed in June and we 
had notified Judge Edelstein and of course Mr. Ross. A day or so 
later, Mr. Ross called my attention to the fact — and I will have to 
confess I did not know at that time, it had just occurred, that the 
Treasury regulation had now been amended and the name of Poland 
had been taken off the regulation and he asked us to consider whether 
or not we would not withdraw our defense in view of that matter. 

Mr. Morris. Would you say that this modification of the Treasury 
ruling promises to open the floodgates to a lot of applications ? 

Mr. Walsh. As far as Poland is concerned, yes, that could well 
be true. 

Mr. Morris. And at the same time, judging from your dealings on 
the spot, there is nothing to indicate there has been any relaxation 
in the practice of coercing these individual beneficiaries to make appli- 
cations through attorneys; is that right? Is there any departure 
from that ? 

Mr. Reidy, I will ask you, is there any relaxation as far as the evi- 
dence of coercion is concerned ? 

Mr. Reidy. Not to our knowledge. 

Mr. Morris. And, Senator, just to show you that this thing goes 
across the board, I spoke to Mr. Paul Ross yesterday and asked if 
he could possibly be in court today because there would be testimony 
concerning this whole subject. He had originally been asked to 
testify earlier in connection with some other testimony before us, 
Senator, and he acknowledged that. I asked him whether he could 
not be here and he said he could not be here and then I asked him. 



4730 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

short of that, would he take a quick look in his files and see how 
many of these cases he was representing. He was not able to make a 
complete search — this was the day before yesterday that we spoke, 
or rather yesterday afternoon but he said that he was able to find 
that their firm represents 52 commercial and mutual cases and 35 
fraternal and benefit cases. 

I asked him then what countries were involved and he said Hun- 
gary, Czechoslovakia, Poland, Rumania, Bulgaria, and Soviet Russia. 
So apparently he is handling all tliese cases across the board with no 
distinction or no refinement made with respect to Poland. 

Senator Johnston. I think it would be well to have him appear 
before us to testify and get the information from him more definitely 
and certainly as to what is taking place. 

Mr. Morris. Now, is there anything else, Mr. Walsh, on the legal 
situation ? 

Mr. Walsh. No ; that is about it. 

Mr. Morris. Do you have anything more, Mr. Reidy ? 

Mr. Reidy. Just one concluding statement which was made by Sur- 
rogate Collins, one of our most distinguished judges in New York, 
particularly applicable to powers of attorney while we were having 
estate cases : 

If this court had available to it any means of supervising the payment of funds 
to nationals of these countries and assuring itself of the beneficiary's ability to 
hold and enjoy it, the issue would be capable of ready solution. In this case 
neither beneficiary has personally made any request for the funds. This cir- 
cumstance does not present any insuperable obstacle, for the court entertains no 
doubt that if a personal request were insisted upon it would normally be pro- 
duced, no matter how painful to the beneficiary such a request might prove. 
We avert to the fact only to emphasize the problem in this type of case, for 
ordinarily a beneficiary who, of his own free act and will, desires transmission 
of such large sums as these, would not lack means of assuring this court that 
he could use, control, and enjoy the money if such were the fact. 

That was In Re Well's Estate (204 N. Y., misc. 975) . 

Mr. Morris. From your observation, Mr. Reidy, has any attorney 
other than Paul Ross represented the Soviet Government in this 
connection ? 

Mr. Reidy. Mr. Charles Recht, whose name appears in the power 
of attorney, in that printed form, has represented these beneficiaries 
on four similar alleged powers of attorney from Soviet Russia for 
a great number of years. 

Senator Johnston. One question right here in regard to Paul Ross, 
according to the records and files and the information you might have, 
has he ever been identified as a Communist ? 

Mr. Morris. Well, Senator, Paul Ross is a well-known attorney in 
New York. In fact, he was confidential secretary to a former mayor 
of New York City, but a witness before the subcommittee who proved 
to be very competent has testified that Paul Ross was a secret mem- 
ber of the Communist Party and was active in Communist circles. 

Yes, Mr. Walsh ; did you have something ? 

Mr. Walsh. You might be interested, with respect to the legal con- 
cepts involved here, in a statement by a court m an early case, the 
matter of Weidberg, which discusses the reasons for the enactment 
of these statutes in New York, and I think you might well want it in 
your record. The matter of Weidberg was reported in 172 Miscel- 
laneous Reports 524. 



SCOPE OF SOVIET ACTIVITY IN THE' UNTTED STATES 4731 

Mr. IMoRRis. Miscellaneous Eeports of New York? 

Mr. Walsh. That is correct. 

Mr. Morris. INIay that go into the record ? 

Senator Johnston. It may became part of the record. 

(The document referred to was marked "Exhibit No. 518," and 

reads as follows:) 

Exhibit No. 518 

In the Matter of the Estate of Isaac "Weidberg, Deceased 

SUEROGATE'S court, kings county, OCTOBER 30, 1939 

Executors and administrators — payment into court for foreign distributees and 
legatees — distributees, German nationals of Jewish race, now resident outside 
Germany, executed power of attorney authorizing payment to German Consul or 
his attorneys — decree entered directing payment to city treasurer — Surr. Ct. Act, 
§ 269, as amd. by Laws of 1939, chap. 343, authorizes such decree, where lega- 
tee or distributee would not have benefit of money or "where other special cir- 
cumstances" warrant withholding — sums due distributees would be subject to 
confiscation in whole or in part if turned over to German Consul — exercise of 
authority under said section with respect to share of infant distributee does not 
conflict with treaty with German government, since infant is now in British 
protectorate — attorneys for Consul not entitled to payment to themselves as 
individuals although specifically named in power of attorney — power of attorney 
confers only such authority as may be permissible under laws of place where 
action is contemplated — attorneys may seek remuneration for services under 
Surr. Ct. Act, § 231-a or § 231-b. 

In a proceeding on an accounting of an administrator involving the distributive 
shares of four German nationals apparently of the Jewish race, two of whom 
are said to be residents of Palestine, one of Belguim, and one of Denmark, a 
decree is entered directing payment to the city treasurer of the net distributive 
shares in question unless some demonstration be made that the sums to which 
the distributees are entitled are capable of payment to the individuals them- 
selves without danger of confiscation or diversion, either in whole or in part, 
despite the claim of the German Consul and his attorneys that the sums should 
be paid to him or them by virtue of a power of attorney executed by the dis- 
tributees appointing the said Consul or his two attorneys as attorneys in fact to 
deal with the interests of the distributees. 

For the purpose of authorizing the deposit of moneys in the Surrogate's Court, 
where payment to a beneficiary or legatee in a foreign country might be circum- 
vented by confiscation in whole or in part, section 269 of the Surrogate's Court 
Act was amended by chapter 343 of the Laws of 1939, authorizing a decree to 
that effect, where it shall appear that a legatee or distributee would not have the 
benefit or use of the money, or where other special circumstances make it appear 
desirable that such payment should be withheld. It is clear that by "special 
circumstances" it was intended to cover cases where payment might be cir- 
cumvented by confiscation ; and it is obvious under the circumstances of this 
case and the attitude of the German government toward its nationals of the 
.Jewish race that the sums due these distributees would be subject to confiscation 
in whole or in part if turned over to the German Consul or his attorneys. 

As to one of the distributees, an infant admitted to be in Palestine, a British 
protectorate, it cannot be successfully contended that the exercise of the authority 
created by said section 269 violates the treaty of the United States with the 
German government, for, in view of the war between Great Britain and Germany, 
it is clearly impossible for the German Consul either to remit to the infant the 
funds belonging to him through the appropriate agencies or to furnish to the 
court any evidence of such remission, as required by the treaty. 

While it seems that one of the adult distributees is in Palestine, another in 
Belgium, and another in Denmark, some or all of them may be dead, and in such 
case it seems improbable that their rightful representatives would be actively 
sought and the funds in question paid to them by representatives of the German 
government. 

The contention of the attorneys for the German Consul, that there is no reason 
why they, as individuals, cannot carry out the obligation which will arise if 
the shares be paid to them, is without merit, for no authority has been accorded 
to them as mere individuals, and payment to them as attorneys for the German 



4732 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Consul General is subject to the same objection as payment to that officer 
directly. 

Furthermore, it is an implied term of every power of attorney that it confers 
on the donee only such authority as may be permissible of exercise under the 
laws of the place in which action thereunder is contemplated, and the law 
of this State, in protection of the rights of a distributee, forbids payment other 
than to him of sums which may be due him, where it is possible that he will not 
receive the benefit thereof. 

The attorneys involved should be permitted a reasonable opportunity to 
seek remuneration for the services which they have performed up to the present 
time, under either section 231-a or section 231-b of the Surrogate's Court Act, 
and for this purpose entry of the decree will be postponed for sixty days. 

Proceeding on accounting of administrator. 

Morris Weinstein, for Hyman Weisberg, as administrator, etc., petitioner. 

Topken & Farley, for the German Consul, attorney in fact for Johanna Weid- 
berg, Thea Weidberg Rothschild, Israel Weidberg, and Johanna Weidberg, as 
guardian of Emanuel Weidberg. 

Miles F. McDonald, special guardian for Emanuel Weidberg, infant distributee. 

WiNGATE, S. The issue here presented is as to whether it is within the 
authority, or is the obligation of this court to direct the payment into court of 
the distributive shares in this estate of four German nationals, apparently 
of Jewish race, or whether the sums in question may, or must, properly be 
paid to the German Consul in New York city or his attorneys. Three of the 
distributees, whose shares are in question, are said to be adults and one an 
infant. Two, including the infant, are now said to be residents of Palestine, 
one of Belgium, and one of Denmark. 

In support of the contention of the German Consul or his attorneys that these 
sums should be paid to him or them, there has been presented a "Power of 
Attorney — Vollmacht" which is printed in English and German in parallel 
columns. This is a stock form of the German consular service with which this 
court has become quite familiar. 

The English version reads in part as follows : "Know all men by these Presents, 
that we Johanna Weidderg, residing at Berlin, N. Templinerstr. 11, Germany 
individually and as legal guardian for her minor child Emanuel Weidberg, Thea 
Weidberg, residing at Berlin, Israel Weidberg, residing at Berlin, do hereby 
make, constitute an appoint the German Consul at the City of New York, or 
his representative or successor in office, William J. Topken and Philip F. Farley, 
attorneys for the German Consulate General, 17 Battery Place, or any one of 
the aforesaid alone, our true and lawful attorney in fact." 

The foregoing matter is wholly printed, with the exception of the portion 
which has been italicized, which is typewritten. The succeeding portions of 
the document, which extends over more than two large printed pages, accords 
the donee the broadest conceivable authority to deal with the interests of the 
donors in the estate of the decedent Isaac Weidberg. It is wholly printed 
except for three typewritten insertions of the name of the decedent. 

The document is undated, but appears to have been acknowledged by Chaja 
Weidberg and Israel Weidberg before the United States Consul in Berlin, Ger- 
many, on October 20, 1938, and by Thea Rothschild "geb Weidberg" (nee Weid- 
berg) on November 25, 1938, before Harold Ebbeson, notary public and public 
prosecutor, known in Sweden as "landefiskal," in and for the district of Stoby, 
Sweden. His authority in this regard is certified by the United States Consul 
at Goteborg, Sweden. 

By chapter 343 of the Laws of 1939, in effect on April twenty-fourth of this 
year, an addition was made to section 269 of the Surrogate's Court Act. This 
reads as follows : "Where it shall appear that a legatee, distributee or beneficiary 
of a trust would not have the benefit or \ise or control of the money or other 
property due liim, or where other special circumstances make it appear desirable 
that such payment should be withheld, the decree may direct that such money 
or other property be paid into the Surrogate's Court for the benefit of such 
legatee, distributee, beneficiary of a trust or such person or persons who may 
thereafter appear to be entitled thereto. Such money or other property so paid 
into court shall be paid out only by the special order of the surrogate or pur- 
suant to the judgment of a court of competent jurisdiction." 

At the time of its enactment, a note, explanatory of its scope and purpose, 
was appended to the bill. This must be considered in any interpretation of its 
effect. (American Historical Soc. v. Olenn, 248 N. Y. 445, 451, 452 ; People v. 



SCOPE OF SOVIET ACTIVITY IN THEi UNITED STATES 4733 

Schtceinler Press, 214 id. 395, 404; Matter of Greenhery, 141 Misc. 874, 882 ; affd., 
23G App. Div. 733 ; affd., 201 N. Y. 474 ; Matter of Cluskey, 169 Misc. 264, 265 ; 
Matter of Pelcijger, 171 id. 1016.) This note reads: "This amendment is pro- 
posed by the Executive Committee of the Surrogates' Association of the State 
of New Yorli. The purpose of the amendment is to authorize the deposit of 
monies or property iu the Surrogate's Court in cases where transmission or 
payment to a beneficiary, legatee, or other person resident in a foreign country 
might be circumvented by confiscation in whole or in part. The amendment 
authorizes tlie impounding of the fund by the Surrogate to await the time when 
payment can be made to the beneficiary for his own benefit, use and control." 

Similar enactments were incorporated into sections 474 and 978 of the Civil 
Practice Act by chapter 672 of the Laws of 1939 and were accompanied by a 
similar note at the time of their consideration and enactment by the Legislature. 

The conditions in certain foreign countries which motivated these enactments 
are matters of common knowledge. Under certain foreign governmental sys- 
tems private ownership of property was and is either wholly or partially pro- 
hibited. In others, assets belonging to individuals, especially when in the form 
of foreign credits, are either seized and wholly appropriated by the authorities 
or are subject to compulsory exchange for local currency at a fraction of their 
intrinsic value. 

As a result of those practices, benefits which an individual decedent had dedi- 
cated to indicated beneficiaries, either by express testamentary instrument or 
by its virtual substitute of a "statutory will" {Matter of Williams, 162 Misc. 
507, .509; affd., 254 App. Div. 741) under the Statute of Distribution, were 
diverted from their intended recipients to the promotion of international banditry 
and the propagation of ideologies which are a complete antithesis of the con- 
ceptions of a vast majority of American citizens and which have now plunged 
the continent of Europe into a second great war. 

The primary object of this legislation was to promote the basic object and 
obligation of courts of decedent devolution to use their utmost endeavors to 
effectuate the express or implied wishes of a decedent respecting the disposal of 
his assets on death. Only subordinate to this purpose was the effort to prevent 
the diversion of assets here located to foreign governments whose conceptions 
of the proprieties were totally at variance with those which form the basis 
of the national existence of this country. 

According to the terms of the statute, payment into court may be directed 
"where other special circumstances make it appear desirable that such payment 
be withheld." The nature of such special circumstances envisaged in the enact- 
ment is clarified in the note which states that it is applicable "in cases where 
transmission or payment to a beneficiary, legatee, or other person resident in a 
foreign country miyht be circumvented by confiscation in whole or in part." 
(Italics not in original.) 

The italicized word "might" is the preterit of the word "may" and is equiva- 
lent to "had power" or "was possible" {Oicen v. Kelly, 6 D. C. 191, 193), or, as 
defined in the Standard Dictionary, "have the physical or moral opportu- 
nity * * * to be contingently possible." 

The question is, therefore, whether it is "contingently possible" that the sums 
due these distributees would be subject to confiscation in whole or in part if 
turned over to the German Consul or his attorneys. 

The answer to this question must be in the affirmative. It will be recalled that 
substantially contemporaneous with the execution of this power of attorney, the 
German government levied a mass fine of $400,000,000 upon all of its nationals 
of Jewish race by reason of the act of a single individual of their race in a 
foreign land. It has frequently and publicly been asserted and not denied, 
that this was a joint and several obligation imposed on all members of the 
race resident iu the so-called Third Reich. According to reliable reports this 
mass fine has not been paid in full up to the present time, and renewed efforts 
for its enforcement have been instituted. In view of these commonly known 
facts, it cannot be asserted that there is not a distinct possibility, whether or not 
these distributees are now alive, that if money belonging to them came into the 
hands of a German official or his representative, it might not be seized for this 
purpose, especially if, as is asserted is the present situation, they have escaped 
from the immediate territorial jurisdiction of the Gestapo and its concentration 
camps. 

The question thereupon arises as to whetlier an exercise by the court of the 
authority accorded by the amendment to section 269 of the Surrogate's Court Act 
would violate the provisions of any controlling law. Necessary for consideration 



4734 SCOPE OF SOVIET ACTIVITY IN THE UN'ITED STATES 

in this connection is the present treaty with Germany which is of especial im- 
portance in connection with the distributive share of the infant, since it is 
admitted that the power of attorney is not effective as to him by reason of the 
fact tliat his mother, who purported to execute it, on his behalf, was not his 
legal, but only his natural guardian and consequently possessed no authority 
to act on his behalf in respect of his property interests. {Foley v. Mutual Life 
Insurance Co., 138 N. Y. 333, 342 ; Matter of Goodchild, 160 Misc. 738, 756, and 
authorities cited.) 

It follows that the only authority of the German Counsel in respect of the 
share of the infant is such as is accorded by the terms of the treaty of the 
United States with his government. The only portion of this treaty which is here 
pertinent is found in article XXV, which reads : "A consular officer of either 
High Contracting Party may in behalf of his nonresident countrymen receipt for 
their distributive shares derived from estates in process of probate * * * 
provided he remit any funds so received through the appropriate agencies of 
his Government to the proper distributees, and provided further that he furnish 
to the authority or agency making distribution through him reasonable evidence 
of such remission." 

In the present case it has been admitted that the infant is now in Palestine, 
which is a British protectorate. The German government is now engaged in 
what the German Chancellor has stated to be "a war to the death" with that of 
Great Britain. It is, therefore, manifestly impossible for the German Consul 
either to remit to the infant the funds belonging to him "through the appropriate 
agencies of his Government" or to furnish to this court any evidence of such 
remission. It follows that there is no obligation under the treaty which in any 
wise conflicts with the application of section 269 of the Surrogate's Court Act, 
so far as the infant is concerned. 

The main argument of the attorneys for the German Consul is, however, 
directed to their right to receive payment of the distributive shares of the adults. 
Their thesis on this phase of the controversy is predicated on the premise that 
they were individually designated as attorneys in fact by the power hereinbefore 
noted, and that there is no reason why they cannot, as individuals, carry out the 
obligation which would arise if the distributive shares were paid to them, of 
transmitting the avails to the adults. 

One diflSculty with the acceptance of this position is the fact that the appointee, 
according to the terms of the instrument, is "the German Consul at the City of 
New York or his representative or successor in oflBce, William J. Topken and 
Philip F. Farley, attorneys for the German Consul General." When read in their 
context, it is obvious that the italicized words are not the mere descriptio per- 
sonarum but are an essential part of the appointment, and that this is of the 
German Consul or his representative or successor or attorneys ; in other words, 
of a representative of the German government in his capacity as such. It must 
follow that, as mere individuals, no authority has been accorded to them, and 
that collection by them other than in their capacities as attorneys for the Ger- 
man Consul General would be unauthorized. 

In view of this fact, there is present in respect of the distributive shares of 
these adults, the same contingent possibility which has heretofore been con- 
sidered, in the evaluation of the rights of the Consul under the treaty, that if 
payment thereof were made to the German Consul or his alter ego, the rightful 
recipients might not receive them. This again makes the terms of section 269 
of the Surrogate's Court Act applicable. 

It is said that one of the adult distributees is in Palestine, another in Belgimn. 
and another in Denmark. No proof of this has, however, been tendered other 
than the formal allegations of the petition which recites the fact only on the 
basis of "so far as can be ascertained with duo diligence." None of them has been 
served other than by publication in the Brooklyn Eagle, which presumably does 
not enjoy an extensive circulation in any of these countries. Conceivably, some 
or all of them may be dead. In a war- torn Europe, the weight of the inference of 
continuance of existence becomes negligible. If such death has actually occurred, 
the chances that their x-ightful representatives would be actively sovight out and 
the funds in question paid to them by representatives of the German govern- 
ment, do not appear bright. 

There is precedent for denying recognition to a power of attorney under cir- 
cumstances not remotely dissimilar to those here present even when this 
resulted in continued liability of one who had paid the agent. The situation 
disclosed in Fretz v. Stover (89 TJ. S. [22 Wall.] 198) was that a resident of 
Pennsylvania had, prior to the outbreak of the Civil War, appointed a Virginia 



SCOPE OF SOVIET ACTIVITY IN' THE UNTTED STATES 4735 

lawyer as his attorney to collect an obligation due from a resident of that State. 
The attorney, after the outbreak of the war, purported to act on this authority. 
The United States Supreme Court, in holding that the obligation was not dis- 
charged, said (at p. 206) : "If he was authorized when he received the bond to 
collect it when due, in bank bills which were current in Virginia at the time, 
this authority was conferred in ignorance of, and without reference to, the 
contingency of war, and in the nature of things was revoked when war broke 
out." 

An inevitable implied term of this, and every other, power of attorney is that 
it confers upon the donee only such authority as may be permissible of exercise 
under the laws of the place in which action thereunder is contemplated. The 
law of the State of New York forbids payment, other than to the individual 
distributee, of sums which may be due him in situations in which there appears 
to be a reasonable possibility that he will not receive the benefit thereof. This 
deprives him of no right, since the money is always available to him and is his 
for the asking at any time that reasonable assurance is forthcoming that he, 
and he alone, will get it. This statute, far from constituting an impairment of his 
rights, was designed as and in fact is, a potent protector thereof. 

The attorney in fact possesses no personal rights whatsoever under the power. 
If the money were paid to him, he would receive it solely as a trustee for his 
principal. So far as concerns any rights to remuneration which he may possess, 
these are predicated solely on the value of the services which he may have per- 
formed in the past, and are not determinable in accordance with the power, 
except to the extent that it may demonstrate that his actions were not those of 
a volunteer. If, therefore, his delegated authority is held to be circumscribed 
by an applicant of section 269 of the Surrogate's Court Act, he is in precisely the 
same position as if his authority for further action had been terminated by the 
death of the donor of the power or some act of revocation of the authority 
previously accorded. 

The attorneys here involved should be permitted a reasonable opportunity to 
seek remuneration for the services which they have performed up to the present 
time. This may be sought pursuant either to the provisions of section 231-a or 
section 231-b of the Surrogate's Court Act. For this purpose, entry of the 
decree will be postponed for sixty days unless they shall stipulate otherwise. 
Upon the expiration of such period, a decree will be entered directing payment 
to the city treasurer of the net distributive shares here in question unless, in 
the interval, some demonstration be made that the sums to which the dis- 
tributees are entitled are capable of payment to the individuals themselves 
without danger of confiscation or diversion, either in whole or in part. 

The court expresses its appreciation of the extremely helpful report of Miles 
F. McDonald, Esq., the special guardian in this proceeding. 

Proceed in conformity herewith. 

Mr. Walsh. The quotation I referred to is this. It says — it was 
in an estate case and talking about section 269 of the Civil Practice 
Act to -which I referred and similar enactments incorporated in sec- 
tions 474 and 978 of the Civil Practice Act, chapter 672, were accom- 
panied by a similar note at the time of their consideration and enact- 
ment by the legislature : 

(The quotation referred to was marked "Exhibit No. 519" and 
reads as follows:) 

Exhibit No. 519 

Stjbrogate's Coubt Act 

SECTION 269 

When money or property may be retained 

Where an admitted debt of the decedent is not yet due, and the creditor will 
not accept present payment, with a rebate of interest; or when a debt not yet 
due has been disputed or rejected ; or where an action is pending between the 
executor or administrator, and a person claiming to be a creditor of the 
decedent ; or where on the judicial settlement of the account of a testamentary 
trustee a controversy respecting the right of a party to share in the fund, or 
other personal property held by the trustee, has not been determined ; the 



4736 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

decree must direet that a sum sufficient to satisfy the claim, or the proportion to 
which it is entitled, together with the probable amount of the interest and 
costs, or that any personal property the right to which is in controversy, be 
retained in the hands of the accounting party ; or be deposited in a safe bank, 
or trust company, subject to the order of the surrogate's court ; or be paid into 
the surrogate's court, for the purpose of being applied to the payment of the 
claim, or to the satisfaction of any judgment when it is due, recovered, or 
settled ; and that so much thereof, as is not needed for that purpose, be after- 
wards distributed according to law. Where it shall appear that a legatee, 
distributee or beneficiary of a trust would not have the benefit or use or control 
of the money or other property due him, or where other special circumstances 
make it appear desirable that such payment should be withheld, the decree 
may direct that such money or other property be paid into the surrogate's 
court for the benefit of such legatee, distributee, beneficiary of a trust or such 
person or persons who may thereafter appear to be entitled thereto. Such 
money or other property so paid into court shall be paid out only by the special 
order of the surrogate's or pursuant to the judgment of a court of competent 
jurisdiction. (Am. L. 1939, ch. 343, in effect April 24) 

Mr. Walsh. That might indicate, while that was a case that dealt 
with a share of estate and the court expressed concern for carrying 
out the wishes of a decedent. I think analogously the same reasoning 
applies to a decedent, a person whose life has been insured and who 
has designated certain beneficiaries. 

Mr. Morris. The court makes a distinction, also the plaintilffs made 
the distinction, that there is an essential difference between the re- 
lationship of a beneficiary of a policy and the person who inherits 
an estate. Under our existing law nobody has the right to receive 
money or therefore to inherit money but on the other hand a person 
has a right to enter into contractual relations. 

Mr. Walsh. Yes. Well, in the motion for summary judgment, 
Mr. Ross raised that question or pointed out that distinction in 
claims where you have a contract involved, and that is what a life- 
insurance policy is, that these statutes may not validly alter that 
contractual right. 

However, Judge Edelstein met that contention and pointed out as 
we did that while these statutes do not impair the obligation of any 
contract, they do not provide the beneficiaries may not have the 
money or be entitled to it, but they are as a matter of fact intended to 
protect and assure the fact that these people will get the money. 

Senator Johnston. In reality, when you entered into the contract 
you intended it will be delivered to them. 

Mr. Walsh. That is correct. 

Senator Johnston. And you only want to carry out that con- 
tractual relationship in such a way to see that they do receive it? 

Mr. Reidy. Yes, sir. 

Mr. Walsh. That point is touched upon by Judge Edelstein by the 
decision. 

Mr. Morris. In conclusion, I would like to offer for the record an 
address by the witness, Mr. Reidy, before the 47th annual meeting of 
the American Life Convention at Chicago on October 5, 1954, entitled 
"Insurance Dollars — Should They Be Sent Behind the Iron Curtain ?" 

Senator Johnston, That may be part of the record. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4737 

(The document referred to was marked "Exhibit No. 520" and reads 

as follows:) 

Exhibit No. 520 

Insurance Dollars — Should They Be Sent Behind the Iron Curtain 

Daniel J. Reidy, General Counsel, Guardian Life Insurance Co. of America, 

New York, N. Y. 

For the past several years, more particularly since World War II, forms of 
Powers of Attorney allegedly executed by beneficiaries residing in "iron curtain" 
countries have been submitted to courts and to life insurance companies in the 
United States. The powers, in broadest language, designate diplomatic or 
consular representatives or American attorneys as attorney in fact to collect 
proceeds due such beneficiaries from estates or from insurance. 

By "iron curtain" countries I mean Albania, Bulgaria, Communist-controlled 
China, Czechoslovakia, Estonia, Hungary, North Korea, Latvia, Lithuania, 
Poland, Rumania, the Union of Soviet Socialist Republics, the Russian occupation 
zone in Germany, Russian zone of East Berlin, and any other unfortunate coun- 
tries that may be gobbled up by the Communists. And the courts will take 
judicial notice that such countries are behind the iron curtain.^ 

To honor such alleged powers by payment of insurance proceeds is a default 
in our obligation to our insureds, renders aid and comfort to our enemies, and 
is against the public policy of the United States. 

Judge Lehman, speaking for the New York Court of Appeals in Russian Rein- 
surance Co. v. Stoddard,' said : 

"In testing a result by standards of commonsense and justice, we may look 
beyond all fictions to the facts behind them." 

The facts behind these specific fictions of alleged powers of attorney are or 
should be well known to all Americans. 

It is a matter of common knowledge to us Americans that residents of iron 
curtain countries live in police states. Their freedom of expression, freedom of 
action, freedom to own or to acquire property, real or personal, have either been 
severely restricted or entirely abolished. The right to dissent or to refuse to 
obey an order of such a police state would be summarily dealt with. 

Assets of individuals, particularly foreign credits, are seized or thoroughly 
diluted or subject to compulsory exchange at a minimal fraction of their real 
value. 

Look behind the fiction of one such alleged power to the facts we have been 
able to secure. The insured, a native-born German but for many years a natural- 
ized American, died in this country. Among the beneficiaries of his insurance 
were relatives living at the time of designation in Germany but at the time of 
death behind the iron curtain. Word came through to us from behind the iron 
curtain regarding completion of the death claim beneficiary forms. In the 
language of one of our beneficiaries, "there lie a lot of difliculties in the way. 
The first step is to get the permission of the Committee for Foreign Bills of 
Exchange. At any rate : it is a long and difficult way." The beneficiary requested 
on behalf of herself and the others to keep the proceeds in this country. There- 
after we received a letter from a consular official in this country inquiring about 
the insurance, the necessary forms to be completed by the beneficiaries, and the 
approximate amount of money due each one : "When we will contact the bene- 
ficiaries, we have to inform them about their interests, as otherwise they may 
not deem it advisable to appear in Court to prove their rights." 

The consul sometime later forwarded to us a large sheaf of documents including 
powers of attorney allegedly executed by each beneficiary appointing the consul 
as their attorney in fact with the broadest conceivable powers. We declined to 
honor these documents. Thereafter we received word from one of the benefi- 
ciaries. She said in part, "As we wanted the money to remain at the Company's 
{ — to use it when becoming old and weak) and because of the long and difficult 
way of settling the matter by filling forms and striving hard for a lot of per- 
missions—we decided to abstain from filling the forms. Someday in 1953 we 
received a summons to appear in court, all of us. The final result of the 
whole matter was that we signed, each of us, a power of attorney, entitling 
the * * * consul in the United States to take the money being our share 
to * * * and to let us have it." 



i/n re Klein, 203 Misc. 762, 123 N. Y. Supp. 2d 866 (Surr. Ct. 1952). 
2 240 N. Y. 149, 164, 147 N. E. 703 (1925). 



4738 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Should we have blindly assumed the alleged power of attorney was the free 
act of the principals without any hint of coercion or duress, or should we, 
as indeed we did, look behind the fiction to the facts? 

Speaking specifically on powers of attorney, the New York Court of Ap- 
peals many years ago said : 

"We should undoubtedly refuse to interfere with the order of the court 
below in any case * * * where there was any ground for suspicion regarding 
the power or the manner of its procurement." ^ 

HOW IMPOKTANT IS THE PEOBLEM ? 

Communism takes no holiday. It makes most effective use of its time, its 
people, and its resources. Certain it is that every dollar it gets its hands on 
is used in a manner to most effectively insure the downfall of this United States. 
And communism has been an avid collector of American dollars for many years. 

Current figures giving some idea of the number of dollars derived from life- 
insurance funds, estates, and other sources that are finding their way into 
Communist hands are unavailable. I do have some old figures involving only 
the Union of Soviet Socialist Republics and involving the moneys that have 
channelled through one New York law office. I quote from a letter addressed 
to the State Department dated June 2, 1943. * Copy of the letter forms part 
of the pleadings in a New York estate case. 

"In this connection, may I point out that the actual transmissions by this 
office on behalf of Soviet heirs in estate matters for the entire United States, 
have been approximately as follows for the past five years : 

"1938 $128,000 

"1939 130,000 

"1940 95,000 

"1941 93,500 

"lf^2 28,641" 

Transmission of funds from legacies, insurance proceeds, bank deposits, and 
litigated matters has been going on since about 1933 through that single source. 
They have indeed been large though it has been stated the total transmissions 
through that one source at no time have exceeded a quarter of a million dollars 
a year. 

On United States government life insurance, listen to this paraphrased extract 
from a translation of a Soviet document : ^ 

"That the Central Executive Committee of the Union of Soviet Socialist Re- 
publics calls attention of the Central Executive Committee to the opportunity of 
receiving by citizens of the U. S. S. R. the insurance sums belonging to former 
soldiers of the American Army. * * * 

"The receipt of these sums — sums which have reached $10,000,000 to $15,- 
000,000 — has at the present time first importance, not only for the citizens who 
are receiving the said sums but also for the whole U. S. S. R. which is interested 
in the receipt of foreign currency within its territories." 

Despite many statements and assurances by Soviet officials that such bene- 
ficiaries would receive such funds without diminution and with the free use and 
control thereof, the facts were overwhelmingly to the contrary and the United 
States government finally refused to permit any more of such insurance pro- 
ceeds to be transmitted to Russia. 

Communist control has spread over many more countries since the end of 
World War II. It is therefore reasonable to believe that millions of dollars of 
private life-insurance proceeds will, unless beneficiary designations are changed 
or payment is refused as contrary to public policy, find their way into com- 
munists' hands to be used against us. 

Have we any assurance or could we be so naive as to assume that funds 
paid by private insurers would fare any better than did the proceeds of United 
States government insurance? 

In my own company, we have had since the termination of World War II 
death claims wherein beneficiaries residing in iron-curtain countries are entitled 
to sums amounting to over thirty-two thousand dollars. 



= Lythgoe v. Smith, 140 N. Y. 442, 446, 35 N. E. 646 (1893). 

* In re Alexandroff'a Estate, 47 N. Y. Supp. 2d 334 (Surr. Ct. 1944), pleadings on file In 
court. 

^ Steno minutes, January 29, 1940, In re Bold'a Estate, 173 Misc. 545, 18 N. Y. Sunn. 2d 
291 (Surr. Ct. 1940). 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4739 
POWERS OP ATTORN ET 

A power of attorney when valid creates an agency between the donor and the 
donee. It creates a relationship resulting from the manifestation of consent by 
one person to another that the other shall act on his behalf and subject to his 
control. It presupposes the willing grant of the power by the donor and where 
the power has been secured by coercion, duress, or threat the power is invalid. 

"An authorization is interpreted as of the time it is acted on, in light of 
the conditions under which it was made and changes in conditions subject 
thereto." ' 

"One of the circumstances to be considered in interpreting the authority is 
the situation of the parties, their relations to each other, and the business in 
which they are engaged." ' 

Such powers, too, are controlled by the laws of the forum where the actions 
are to occur. 

"An inevitable, implied term of a power of attorney is that it confers upon 
the donee only such authority as may be permissible under the laws of the place 
in which action thereunder is contemplated." * 

"The principle is an inevitable sequence of any concept of the sovereignty of 
an independent state." * 

Collateral questions arise concerning the execution, acknowledgment, and 
authentication of the alleged powers. 

The purpose of acknowledging a written instrument and its authentication 
by a public officer is to entitle it to be recorded or to authorize its admission 
into evidence without other proof. 

Section 301, New York Real Property Law, provides before whom acknowl- 
edgments and proofs may be taken in a foreign country. Section 301a says 
such acknowledgment must be accompanied by a certificate to the effect that 
the acknowledgment conforms to the laws of such foreign country. Such cer- 
tificate may be made by : "a consular officer of such foreign country, resident 
in the State of New York, under the seal of his office * * *." 

Where alleged powers of attorney from Latvia ^* and Lithuania had annexed 
to them certificates from a vice consul of the U. S. S. R., resident in New York, 
the powers were not recognized by the courts because the United States has 
never recognized the Soviet regime in those countries or their incorporation 
into the Soviet Union." The same would hold true in relation to Estonia. 

HOW THESE POWERS OF ATTORNEY ARE PROCURED 

I have aleady quoted from a letter received from a beneficiary to the effect 
they were all summoned into court. "* * * The final result of the whole matter 
was that we signed, each of us, a power of attorney * * *." 

Knowledge of death, legacies, insurance proceeds, etc., are secured by the inter- 
ested countries and their representatives from foreign-language papers printed in 
this country, from the mails, from personal inquiry, and other usual sources. 

Let us take Soviet Russia. There is testimony that two-thirds of the powers 
of attorney involving estates in the United States in which Soviet citizens have 
some interest originate in Russia. The balance would logically be initiated by 
the New York law office calling attention of the Soviet official body to the interest 
of one of its citizens. It requests that the usual power of attorney be secured 
and forwarded. Either way the power of attorney is secured by "Iniurcollegia." 
(Association of Lawyers). This outfit, an official organization of the U. S. S. R., 
has been described as being entrusted with the duties of protecting the rights and 
interests of Russian nationals. It has also been described, without contradiction 
of which I am aware, as the Credit Bureau, organized for the purpose of securing 
foreign exchange from outside Russia. It seems to function with efficiency and 
prompt dispatch in securing not only powers of attorney but other documents, or 
statements which may be asked for by the courts of this country. It has been 
known, when the same was required, to produce information showing that a new 
Soviet inheritance law was promulgated by the Presidium of the Supreme Soviet 



" Restatement, Agency, §§ 3.3, 34 (1933). 

' lUd. 

^In re Weidherg's Estate, 15 N. Y. Supp. 2d 252, 259 (Surr. Ct. 1939). 

"/n re Landau's Estate, 16 N. Y. Supp. 2d 3, 7 (Surr. Ct. 1939). 

M Latvia — In re Adler's Estate, 93 N. Y. Supp. 2d 416 (Surr. Ct. 1949). 

" Lithuania — In re Braunstein's Estate, 114 N. Y. Supp. 2d 280 (Surr. Ct. 1952). 



4740 SCOPE OF SOVIET ACTIVITY IN THE UNTITED STATES 

of the U. S. S. R. designed to protect personal-property rights and at the same 
time to strengthen family ties. This law is alleged to have become effective 
March 15, 1945. 

Speaking of alleged povrers of attorney, Surrogate Hazelton, of New York, said 
that sending money out of this country to Hungary would be tantamount to 
putting funds in the grasp of communists. He then continued : 

"To circumvent this, there has been seized upon the clever device of having the 
national of the captive country * * * execute a power of attorney to a national 
of the United States, authorizing the attorney in fact to receive the monies 
inherited by the one behind the iron curtain. Under such circumstances, could 
this court be confident that its order would not be defeated by the funds ulti- 
mately percolating in a roundabout way into the country behind the iron curtain ? 
I am not sufficiently naive to accept the assurances that this could not happen." ^- 

THE ALLEGED TEANSMISSON OF SUCH FUNDS TO SOVIET RUSSIA 

Assume a case in which a power of attorney was successfully used to collect 
moneys due a Soviet national. Testimony revealed that such moneys had been 
deposited in a New York bank to the order of the attorney in fact. The attorney 
in fact then drew a check on this account. Such check was delivered to 
another New York bank with instructions that the funds be transmitted to the 
Vneshtorg Bank (Bank of the Commissariat for Foreign Trade) for the credit 
of Iniurcollegia of Moscow, to whom we have previously referred. A separate 
communication to Iniurcollegia went forth from the office of the attorney in fact 
advising them of such transmission, carefully identifying the fund, the exact 
amount and the exact date of transmission. The attorney in fact also received 
a receipt from the bank acknowledging receipt of such sums. 

The testimony for the New York transmitting bank revealed that the Soviet 
trade bank — Vneshtorg — had an account with such New York bank. No funds 
were actually transmitted — they were simply credited to the account of Vnesh- 
torg. The testimony further showed that the Soviet bank periodically would 
send the New York bank advices to pay American dollars to people in this 
country. 

SHOULD ASSIGNMENTS OE OTHEE DOCUMENTS BE HONORED? 

Assignments or other transfers allegedly made by foreign beneficiaries resid- 
ing in iron curtain countries to residents of the United States should not be 
honored. 

The New York Courts have pointed out that : 

"The devices vised to deprive beneficiaries of the funds were numerous and 
varied in the beginning * * * and they continue to assume ever differing 
forms." " 

They also have said that : 

"(A) newly discovered theory of recovery contrived by an ingenious attorney 
is not newly discovered evidence." " 

So where an alleged assignment was presented the court refused to honor the 
same saying : 

"In cases such as this, by the simple expedient of changing the label the gate 
would be open, and as here, the powers of attorneys previously given would be 
replaced by 'assignments.' The Court will not be blinded by a label or a fixed 
formula of words." ^ 

The Court then quoted the language used by the New York Court of Appeals in 
People V. Jacohy : " 

"We have never so exalted form that in the act of so doing it has been neces- 
sary to put aside reason and substance. Where justice and reasonableness 
pointed the way we have not hesitated to treat a paper, which was of particular 
form, as that which it was in truth and substance." 

Surrogate Collins, a distinguished New York jurist with over twenty-five 
years judicial experience, in December 1953, decided a case involving nationals 
of Czechoslovakia and Hungary. The national of Czechoslovakia was entitled to 
receive over $90,000 after deduction of estate taxes. The national of Hungary's 



"/n re Getream'a Estate, 107 N. Y. Supp. 2(1 225, 226 (Surr. Ct. 1951). 

"/n re Well's Estate, 204 Misc. 975, 126 N. Y. Supp. 2d 441, 445 (Surr. Ct. 1953). 

"/n re Alexandroff's Estate, 47 N. Y. Supp. 2d 3.34. 387 (Surr. Ct. 1944). 

^In re Perlinsky's Estate, 115 N. Y. Supp. 2d 549, 556 (Surr. Ct. 1952). 

" 304 N. Y. 33, 39, 105 N. E. 2d 613. 616. 



SCOPE OF SOVIET ACTIVITY IN' THE' UNITED STATES 4741 

share was over $33,000. The Surrogate, with much exi)erience with such cases, 
refused to allow the moneys to be paid out. He directed they be paid into 
court. He said : 

"If this court had available to it any means of supervising the payment of 
funds to nationals of these countries and assuring itself of the beneficiary's 
ability to hold and enjoy it, the issue would be capable of ready solution. In 
this case neither beneficiary has personally made any request for the funds. 
This circumstance does not present any insuperable obstacle, for the court 
entertains no doubt that if a personal request were insisted upon, it would nor- 
mally be produced no matter how painful to the beneficiary such a request 
might prove. We advert to the fact only to emphasize the problem in this 
type of case, for ordinarily a beneficiary wJio, of his own free act and will, de- 
sires transmission of such large sums as these, would not lack means of assuring 
this court that he could use, control and enjoy the money if such were the 
fact." '• 

This case is a good source for information concerning the confiscatory rates 
of exchange in such countries. 

POWERS OF FOREIGN CONSULAB OFFICIALS 

The powers of foreign consular ofl5cials to act in the United States are derived 
from the terms of the treaties in force between the two countries. His powers in 
general relate to commercial transactions. Such treaties usually have therein a 
provision that a consular oflicer of either High Contracting Party may in behalf 
of his nonresident countrymen receipt for their distributive shares derived from 
estates in process of probate * * * provided he remit any funds so received 
through the appropriate agencies of his government to the proper distributees. 
It does not give him exclusive rights nor could he in the usual case collect in- 
surance proceeds without proper authority from the beneficiary. 

Based on an elfective treaty, the State Department, acting for the President, 
issues to the properly authorized foreign representatives an "Exequatur," a certifi- 
cate under seal which recognizes his official character and authorizes him to fulfill 
his duties. Termination of the treaty ordinarily automatically terminates such 
document. 

Despite information or allegations to the contrary, the United States does not 
have a treaty affecting usual friendly international relations with Russia. 

Diplomatic relations with the Soviet were established by President Roosevelt 
in November 1933. This took place as a result of letters, conversations and agree- 
ments passing between him and President Kalinin of the USSR and the special 
representative of the USSR, Mr. Litvinov. The documents are familiarly known 
as the "Litvinov Agreement." ^* They related to certain contemplated trade agree- 
ments and the rights of American citizens in Russia to freedom of religion, 
freedom of conscience and the right to notify and to thereafter consult with an 
American consul or other representative in event of arrest. 

The later claim that such agreement was in the nature of a treaty affording 
to the Soviet treatment under "the most favored nation clause" was effectively 
squelched by Secretary of State Cordell Hull. In a certificate filed with the New 
York Surrogate's Court," the Secretary of State certified that : 

"There is not any treaty in force between the United States and the Union of 
Soviet Socialist Republics." 

Whatever came of all the pious statements and alleged agreements of the 
Soviet contained in the "Litvinov Agreement?" 

Secretary of State Hull in a letter to the Senate Foreign Relations Committee, 
commenting on a resolution asking the State Department to inform Congress 
whether Russia had lived up to the Litvinov Agreement concluded as follows : 

"On January 31, 193.5, the Department of State issued to the press a statement 
pointing out that 'there seems to be scarcely any reason to doubt that the negotia- 
tions which seemed promising at the start must now be regarded as having come 
to an end.' " ^ 

Assume the termination of a treaty between the United States and an iron 
curtain country. Consular offices are closed ; their embassy takes over. Such 



"/m re Well's Estate, supra, note 1.3. 

M Establishment of Diplomatic Relations with the Union of Soviet Socialist Reinililics, 
i>tate Department, Eastern European Series No. 1, 1933. 
i»/n re Bold's Estate, supra, note 5. 
«' Text of letter. New York Times. February 9, 1940. 



4742 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

embassy official could theoretically, in his official capacity, represent his country- 
men — but only to the extent our laws permit. As a diplomat, our courts have 
no jurisdiction over him. This, plus comity and public policy, should deprive 
him of any standing in our courts. 

The right of foreign governments and citizens thereof to sue in our courts 
depends on comity between the nations.^ Without recognition there can be no 
comity. 

"Comity may be defined as that reciprocal courtesy which one member of a 
family of nations owes to the others. It presupposes friendship. It assumes 
the prevalence of equity and justice. Experience points out the expedience 
of recognizing the legislative, executive, and judicial acts of other powers. We 
do justice that justice may be done in return." - 

The rule of comity itself is subject to a superior consideration — that of public 
policy. Public policy of the nation or of the individual states is fixed either by 
the executive or legislative branches of government. What the public policy 
is may be interpreted by the judicial branch. 

As was said by the United States Supreme Court : 

"It is true, as a general rule, that the lex loci governs and it is also true that 
the intention of the parties to a contract will be sought out and enforced. But 
both these elementary principles are subordinate to and qualified by the doctrine 
that neither by comity nor by the will of the contracting parties can public policy 
of a country be set at naught." ^ 

WHAT IS PUBLIC POLICY ? 

Public policy is a phrase of many, variable meanings. It is not just good or 
sound policy, but in the judicial sense, it means the policy of the state or of the 
nation established for the public good. 

"The sources determinate of public policy are, among others, our federal and 
state constitutions, our public statutes, our judicial decisions, the applicable prin- 
ciples of the common law, the acknowledged prevailing concepts of the federal 
and state governments relating to and affecting the safety, health, morals and 
general welfare of the people for whom government — with us — is factually 
established." -* 

WHAT IS OUE PUBLIC POLICY ON THIS QUESTION ? 

In this instance, involving as it does a matter not only of state but of national 
concern, we should search for the public policy on the national level. We here 
are dealing with a question involving international relations, treaty law and 
comity between nations. 

When we deal as a nation in the field of international relations, we deal not 
as individual states but as the United States of America. Thus the enunciated 
policy of the United States becomes the policy of the individual states and wiU 
be so interpreted by the state courts.^ 

Authoritative statements concerning our foreign policy become the public policy 
of the nation. Federal statutes and regulations based thereon will be interpreted 
by the courts in such manner as to give effect to the policy. 

Secretary of State John Foster Dulles, on January 27, 1953, addressed Con- 
gress and the people of the United States."" In this address, he outlined the for- 
eign policy of the administration. He borrowed from President Eisenhower the 
phrase "enlightened self-interest" stating that would be the guide to the making 
of our foreign policy. He continued : 

"Now in our own interest, our enlightened self-interest, we have to pay close 
attention to what is going on in the rest of the world. And the reason for that 
is that we have enemies who are plotting our destruction. These enemies are 
the Russian Communists and their allies in other countries. * * * The threat is 
a deadly serious one. * * * Any American who isn't awake to that fact is like a 
soldier who's asleep at his post. We must be awake, all of us awake, to that 
danger." 



21 6 Webster's Works 117. 

22 Russinn Socinlist Fed. Sov. Repub. v. Gibrario, 235 N. Y. 255. 257, 139 N. E. 259 (1923). 
" The Kensington. 183 U. S. 263, 260, 22 S. Ct. 102. 104, 46 L. Ed. 190 (1901), 

21 Allan V. Comm. Gas. Inn. Co., 131 N. J. I.. 475, 37 A. 2d 37, 39. 

26 United States v. Pink, 315 U. S. 203, 233, 86 L. Ed. 796, 819 (1941). 

»"• 99 ConfT. Rpc. 703. U. S. Code & Adm. News, S3 Cong., 1st Session, p. 829. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4743 

The laws of the United States "' regulate delivery in foreign countries of 
checks against funds of the United States. It prohibits sending such checks in 
the absence of assurance that the legitimate payee will be able to receive and 
negotiate the check. The law gives the Secretary of the Treasury power to 
determine that in any specific country the postal, transportation, or banking 
facilities in general or the local conditions are such that : "there is not a reason- 
able assurance that the payee will actually receive such check or warrant and be 
able to negotiate the same for full value." 

The Secretary of the Treasury, acting under such authority, has issued regu- 
lations relating to delivery of checks to addresses outside the United States.'* 
Under such regulations, no checks or warrants drawn against funds of the 
United States or any agency or instrumentality thereof is sent from the United 
States to the Communist countries mentioned heretofore. 

By later supplements to such regulations, we now find : 

(d) Powers of attorney for the receipt or collection of checks, or warrants or 
of the proceeds of checks or warrants included within the determination of the 
Secretary of the Treasury set forth in paragraph (a) of this section will not 
be recognized." ^" 

By the statement of the Secretary of State, by the statute enacted by the 
Congress of the United States, and by the duly authorized regulations of the 
Treasury Department, we have set forth in clear, understandable language the 
oflScial policy of the United States. 

Does it not follow, a fortiori, that this policy is even more applicable to private 
funds in the United States? And the courts of this country have so applied the 
policy. 

"We give or deny the effect of law to decrees or acts of a foreign governmental 
establishment in accordance with our own public policy ; we open or close our 
courts to foreign corporations according to our ijublic policy, and in determining 
our public policy in these matters commonsense and justice must be considerations 
of weight." '° 

Applying commonsense and justice, we find a New York Surrogate writing : 

"Concededly Hungary is one of the captive countries behind the Iron Curtain 
whose nationals are subject to those conditions to which the Western world is 
well aware. In view of these conditions, the United States Treasury Department 
has ruled that delivery of checks and drafts to payees within the Russian 'bloc' 
nations will be withheld since one cannot be certain that the payees will receive 
payment (16 Federal Register 1818, amdg. Code of Fed. Reg., title 31, section 211, 
subdivision (a) ). Since Hungary is a member of this block of communist captive 
countries, this court would consider sending money out of this country and into 
Hungary tantamount to putting funds within the grasp of the Communists. 
(Matter of Yee Yoke Ban, 200 Misc. 499. ) " 

And the same result, based on the Treasury Regulations, will follow despite 
the existence of treaties between the United States and some of these countries 
for comity yields to public policy. 

The Supreme Court of the United States in Clark v. Allen " said : 

"* * * the Chief Executive or the Congress may have formulated a national 
policy quite inconsistent with the enforcement of a treaty in whole or in part. 
This was the view stated in Techt v. Hughes, 229 N. Y. 222, 128 N. E. 185, 11 
A. L. R. 166 supra, and we believe it to be the correct one." 

"Where there is confliction between our public policy and comity, our own sense 
of justice and equity as embodied in our public policy must prevail." ^" 

Some years ago, thirty-one in fact, the highest court of New York had this to 
say — language indeed most pertinent to the problem under discussion today : 

"More than once during the past 70 years" (imagine now over 1(X) years) 
"our relations with one or another existing but unrecognized governments have 



" Title .31 U. S. C. A. 12.3. 

™ Treasury Department Circular No. 655, as amended April 17, 1951, 16 Fed. Reg. 3479 : 
"The Secretary of the Treasury hereby determines that postal, transportation, or bank- 
ing facilities in general or local conditions in Albania, Bulgaria, Communist-controlled 
China, Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, Poland, Rumania, the Union 
of Soviet Socialist Republics, the Russian Zone of Occupation of Germany, and the 
Russian Sector of Occupation of Berlin, Germany, are such that there is not a reasonable 
assurance that a payee in those areas will actually receive checks or warrants drawn 
against funds of the United States, or agencies or instrumentalities thereof, and be able 
to negotiate the same for full value." 

^ Supplement No. 9 to Department Circular No. 655 as amended September 24, 19,51. 

30 Runxian Rrinsurance Co. v. Stofldard. supra, note 2. 

«331 U. S. 503. 509, 67 Sup. Ct. 1431, 91 L. Ed. 1633. 1641 (1947) 

32 VladikavkassJnj R. Co. v. N. Y. Trust Co., 263 N. Y. 369. 377. 189 N. E. 456. 

93215 — 58— pt. 85 5 



4744 SCOPE OF SOVIET ACTIVITY IN THE UNiITED STATES 

been of so critical a character that to permit it to recover in our courts funds 
which might strengthen it or which might even be used against our interests 
would be unwise. We should do nothing to thwart the policy which the United 
States has adopted." ^ 

The argument has already been advanced, without success, that the Treasury 
Department regulation must be limited to funds of the United States. Speaking 
to that point, the New York Court of Appeals in 1953 said : 

"That regulation was made, it should be noted, with the benefit of all the 
sources of information concerning conditions in Hungary that are available 
to a department of the federal government and not to the surrogate. Nor may 
the finding be limited to government checks or notes, for a check drawn on gov- 
ernment funds would be no less likely to reach an Hungarian payee than would 
a draft on any private 'account.' " '^ 

The Treasury regulation has also been relied upon to withhold funds due 
residents in Russia,^ Lithuania,^* China,^' and Poland.^' 

The Court of Appeals case mentioned (footnote 34) thereafter was taken to the 
United States Supreme Court on constitutional questions considered by the New 
York court, among which was the argument that : 

"The case has international implications since it involves the transmission of 
private funds into the territory of a government with which the United States 
has diplomatic relations. Furthermore, the issues in this case are governed by 
treaty relations between the United States and another friendly government. 
These include the recognition of the consular rights of the foreign govern- 
ment involved." 

The Supreme Court dismissed the writ for want of a substantial federal 
question.^ 

STATE LAW APPLICABLE TO THE PROBLEM 

Some states, vitally aware of the facts as opposed to the fictions of life behind 
the iron curtain, have adopted statutes relating to the problem. True it is such 
laws, in all but one state, directly relate to decedents' estates. They indicate 
though the public policy of the state. Since our problem is parallel to that 
covered by such laws, they, coupled, of course, with the public policy of the 
United States, can be used as a most reliable barometer of judicial action in in- 
surance cases. 

New York has been the leader. More than fifteen years ago the Executive Com- 
mittee of the Surrogates Association of the State of New York recommended 
and .secured remedial legislation. The purpose of the legislation was to : 

" * * * authorize the deposit of monies or property in the Surrogate's Court 
in cases where transmission or payment to a beneficiary, legatee or other person 
resident in a foreign country might be circumvented by confiscation in whole or 
in part. The amendment authorizes the impounding of the fund by the Surro- 
gate to await the time when payment can be made to the beneficiary for his own 
use and control." *° 

The amendment, effective in 1939, states : 

"Where it shall appear that a legatee, distributee, or beneficiary of a trust 
would not have the benefit or use or control of the money or other property due 
him, or where other special circumstances make it appear desirable that such 
payment l)e withheld, the decree may direct that such money or other property 
be paid into the surrogate's court for the benefit of such legatee, distributee, 
beneficiary or a trust or such person or persons who may thereafter appear to be 
entitled thereto. Such money or other property so paid into court shall be paid 
out only by the special order of the surrogate or pursuant to the judgment of a 
court of competent jurisdiction." " 

At the same time the New York Surrogate's Court Act was thus amended, two 
sections of our Civil Practice Act were also amended and for the same reason. 
The one section had to do with declaratory judgments,*^ the other with the dis- 



"3 Ruxxian Socialist Fed. Sov. Repuh. v. Cihrario, supra, note 22. 
^ hi re liraier's Estate, 305 N. Y. 148. 157, 111 N. E. 2d 424. 428. 
^' Kussia— Matter of Best, 200 Misc. 332, 107 N. Y. Supp. 2cl 224. 
36 Lithuania— Matter of Geffen, 109 Misc. 8.50, 104 N. Y. Supp. 2d 490. 
"China— Matter of Yee Yoke Ban. 200 Misc. 499, 500. 107 N. Y. Supp. 2d 221. 
38 /w re Rysiahieicicz's Will, 114 N. Y. Supp. 2d 504 (Surr. Ct. 1952). See also In re 
Mazurowski, 11(5 N. E. 2d 854 (Mass. 1954). 
30 346 U. S. 802, 98 L. Ed. 34 (1953). 

*" Note appended to hill to amend § 269, Surrogate's Court Act. 
« 8 2R9, N. Y. S. C. A., Am. L. 1939, C. 343, eff. April 24, 1939. 
Ǥ474, N. Y. C. r. A. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4745 

position of property in litigation/^ Tlie amendment in both sections says gen- 
erally that: 

"Where it shall appear that a party is entitled to money or other property and 
he would not have the benefit or control of such money or other property or 
where special circumstances make it appear desirable that payment or delivery 
should be withheld, the court in its discretion may direct that such money 
or other personal property be paid into court for the benefit of such person to 
be later paid out only on order of the court." 

The constitutionality of such statute has been upheld by New York's highest 
court. It is not a taking of property without due process of law ; rather it is a 
safeguarding of such property for its rightful owner. It is not violative of 
existing treaties between the United States and foreign governments, nor does it 
encroach upon federal powers over foreign commerce. All constitutional ques- 
tions were raised under Section 269, Surrogate's Court Act. They were con- 
sidered and rejected. The Supreme Court of the United States thereafter re- 
fused to review such decision.** 

New Jersey in 1940*^ adopted an amendment similar in language to Section 
269 of the New York Surrogate's Court Act. 

Rhode Island in 1951 adopted a similar type statute.** 

California in 1941 adopted a reciprocal statute." This probate law makes the 
rights of aliens residing abroad to take personal property or the proceeds 
thereof depend on the existence of a reciprocal right on the part of a United 
States citizen. The burden of proving such reciprocal right is on the nonresi- 
dent alien. The effect of this statute is to properly bar transmission of monies 
and personal property to iron curtain countries. 

In the Clark case, supra, footnote 31, the contention was advanced that the 
California statute was unconstitutional as an attempt by the state to invade the 
field of foreign relations, a field exclusively reserved by the Constitution to the 
federal government. Such argument was rejected by the Supreme Court. 

Massachusetts in 1951 gave its surrogates, on petition of an interested party 
or in the court's discretion, the right to order proper safeguarding of such funds. 
The surrogate, too, has the right, in order to assist it in establishing foreign 
claimants' identity and their rights and opportunity to receive such funds, to 
require their personal appearance before the court.*' 

Because the memorandum of reasons for passing the Massachusetts statute is 
succinctly stated and also supports my conclusions, I quote from it : 

"Probably every year American citizens domiciled in Massachusetts die leav- 
ing possible heirs either in the Soviet Union or in the satellite countries within 
the Iron Curtain. There is then an effort by the Soviet mission in the country 
to appear in the Probate proceedings, either pursuant to a purported consular 
authorization or pursuant to a Power of Attorney supposedly executed by their 
national. 

"First of all, there is no accredited consular officer for the Soviet Union in the 
United States, no exequatur has been issued by the State Department on behalf 
of the President. Secondly, the execution of a Power of Attorney by the national 
of any of these countries is certainly unsatisfactory legally, politically, or other- 
wise. It is doubtful if any national executing such a power under the direction 
of Soviet authorities can be said to be sui juris. 

"Furthermore, the necessity for establishing beyond any question the identity 
of the national and his relationship to the decedent becomes very clear in the 
usual case. 

"Thirdly, the reciprocal rights enjoyed by citizens of this country are so illusory 
as to require a strict attitude by our courts. The imprisonment of American 
Consuls General, the expropriation of American-owned property, the kidnapping 



Ǥ978, N. Y. C. p. A. 

■" /w re Braier'8 Estate, supra, note .34. 

^ N. J. Laws 1940, C. 148, P. 315, N. J. Stat. Ann. § 3A : 25-10, In re Url's Estate. 
7 N. J. Super. 455, 71 A. 2d 665 (Cty Ct. 1950). app. dism., 5 N. J. 507, 76 A. 2d 249. 

« R. I. Pub. Laws 1951, C. 2744. See also R. I. Hsp. Tr. v. Johnson, 99 A. 2d 12, 19 
(Sup. Ct. 1953). 

«Cal. Laws 1941. C. 895, P. 2473, CaL Probate Code §§259. 259.1, 259.2. Estate of 
Blak. 65 Cal. App. 2d 232, 150 P. 2d 567. Pending final deci.sion of the Supreme Court 
on ciinstitutionality of this statute, it was amended. The original statute, being sus- 
tained, the law was again amended to its original form. 

« Mass. G. L. (Ter. Ed.) C. 206, § 27A, Mass. Laws 1950, C. 265. Petition of Mazurowskl. 
116 N. E. 2d 854 (Supp. Jud. Ct. 1954). 



4746 SCOPE OF SOVIET ACTIVITY IX THE UNITED STATES 

and disappearance of American citizens are but a few of the recent manifestations 
of how little by way of reciprocal rights we do enjoy. 

"Furthermore, it is apparent that the reciprocal rijjht of the citizens of the 
"United States to receive money from estates of Soviet nationals residing in 
Soviet Russia is a highly illusory one when the accumulation of any estate from 
private property in that country is forbidden or reduced to the least possible 
amount." *'' 

Maryland ™ by statute similar to that of New York authorizes the impounding 
of estate proceeds where it appears delivery should not be made because of the 
action of foreign governments affecting such money or property or the full use 
and enjoyment thereof. 

Connecticut ^^ by statute follows the New York law. 

Oregon ^^ has a reciprocal statute but by amendment in 10.51 withholds foreign 
legacies absent proof that the foreign heirs would receive the money or property 
and its use and control without confiscation in whole or in part by the government 
of such foreign counti'y. 

Montana °' will impound the estate proceeds due certain aliens and such aliens 
must claim the same witliin two years thereafter. 

Nevada " also by statute effectively controls its situation. 

Although Michigan, IMissouri, Nebraska. Vermont and Pennsylvania do not 
appear to have statutory law, it is reported that the policy of the courts of such 
states is to protect the rights of the beneficiaries behind the iron curtain.'^'^ 

THE PRACTICAL PROBLEM 

Assuming in the type of case under discussion, an insurance company refuses 
to pay the proceeds of a policy to people claiming under alleged powers of 
attorney. By such action we do not violate the terms of the contract. While 
admitting liability, we are protecting the rights of the true beneficiaries. What 
then is the next step? Should we just allow the proceeds to remain with the 
company? I do not think so. Wc could, of course, wait a reasonable period of 
time to see whether the alleged attorneys-in-fact would start legal proceedings 
in an effort to collect. Based on their recent lack of success in decedents' 
estates, I do not feel we would have many such cases. As a matter of fact, a 
thorough search fails to reveal any such case involving life insurance proceeds 
throughout the United States. 

In this unusual type situation, it is my feeling that where New York com- 
panies admit liability but know the beneficiaries reside behind the iron curtain 
a court, in a declaratory judgment action, would take jurisdiction. An order 
could be expected to issue for service upon the beneficiaries by publication and 
the ca.se successfully concluded by an order to pay the proceeds due into court 
under Section 474 of the Civil Practice Act. 

Were we to be sued by an alleged attorney in fact, we could rely on Section 
978 of the Act for authority to pay tl;e funds into court. 

In states having no specific amendment such as here referred to. it would 
seem reasonable that a similar declaratory judgment action with proper plead- 
ing of the facts. Treasury Regulation #655 as amended, and a good memo- 
randum of law would achieve the same result. 

Abandoned property laws relating to unclaimed insurance funds were not in- 
tended, and in their present form, could not be used to cover this type case. 

The only death case where resort to the abandoned property law could be had 
would be the one where we had knowledge the beneficiaries were residents of 
iron curtain countries, but no claim for the proceeds had ever been made by 
them or by anyone allegedly acting in their behalf. After a seven year lapse, 
such funds could be paid to the state as unclaimed. 

A more practical, direct approach to cover this uniqtie problem may be 
desirable. 



" .Sn Mass. L. Q., 34 (No. 2. May 1950). 

™Md. Code Rnn. Art. 93, § 155 (Fl.ick 1951). 

^' Conn. Gen. Stat. (1051 siipp.) § 1253b. 

f^s Oro. Laws 1937, C. 399, P. 007, Oro. Laws 1951, C. 519, Oro. Rpv. Stat. S 111.070 (1953). 

B^Mont. Lavs 1939, C. 104. § 2, Mont. Rev. Code (1947: Siipp. 1953) §§ 91-418, 91-520, 
521, 1951. 

"Nev. Comp. Laws (1941 supp.) § 9894. 

•'«2.5i So. Calif. Law Review 297 (No. 3. April 1952). I am indebted to tlie State Pepart- 
nient for calline; this article to m.v attention. It contains statutory and case citations. 
But I would disap:r<e with the author on his assertion regarding a change in New York 
policy. Such change was very short and based. I believe, on sp<^cial circumstances. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4747 

I would recommend that the proper bodies in this organization consider the 
advisability of a statute, either in the insurance or other laws of each state, to 
cover the situation. 

It might well be possible, working with the National Association of Insur- 
ance Commissioners, to devise a way whereby, without necessity of court action, 
such insurance proceeds held or owing to beneficiaries by life insurance com- 
panies domiciled in each particular state, where it shall appear that any such 
beneficiary would not have the benefit or use or control of the money due him, 
or where other special circumstances make it appear desirable that such pay- 
ment or delivery should be withheld, payment of such proceeds accompanied by 
a proper petition embodying: all pertinent facts could be made to the treasurer 
or comptroller or other proper state officer. If at a later date, proper proof, 
satisfactory to the state, be presented, the release and payment of such funds 
could be ordered. 

Mr. Morris. I might say that we have representatives, Senator, of 
three other insurance companies. The time is getting short. I might 
say that witnesses have been so fluent and so full of information, 
Senator, I have not been able to apportion their time. 

Senator Johnston. We will be glad to hear them. 

Mr. Morris. Our next witness is Mr. J. Edwin Bowling, represent- 
ing the Metropolitan Life Insurance Co. 

Senator Johnston. Mr. Dowling, will you stand and be sworn ? 

Do you swear that the evidence you will give this subcommittee 
will be the truth, the whole truth, and nothing but the truth, so 
help you God? 

Mr. Do^vLING. I do. 

TESTIMONY OF J. EDWIN DOWLING, ASSOCIATE GENERAL COUNSEL, 
METROPOLITAN LIFE INSURANCE CO. 

Mr. Morris. Mr. Dowling, will you give your full name and address ? 

Mr. Dowling. J. Edwin Dowling, 18 Carry Road, Scarsdale, N. Y. 

Mr. Morris. And what business or profession are you in, Mr. 
Dowling ? 

Mr. Dowling. I am associate general comisel of the Metropolitan 
Life Insurance Co. 

Mr, Morris. And how long have you been associate general counsel 
for Metropolitan, Mr. Dowling? 

Mr. Dowling. Five years. 

Mr. Morris. Now, are you conversant with the problem that the 
subcommittee is discussing this morning? 

Mr. Dowling. Yes, I am. 

Mr. Morris. In connection with the Metropolitan Life Insurance 
Co., are there any cases before you of individuals who are behind the 
Iron Curtain ancl on whose behalf claims have been made or litigation 
instituted ? 

Mr. Dowling. We have no litigation to my knowledge. We have 
pending, oh, approximateley 160 cases where the beneficiaries are 
behind the Iron Curtain. 

Mr. Morris. Metropolitan has 160 cases? 

Mr. Dowling. We have not been in contact with all those bene- 
ficiaries. 

Mr. Morris. Now, how much is involved in these 160 cases? 

Mr. Dowling. Oh, roughly, about $240,000. 

Mr. Morris. Are many of these cases Polish nationals ? 

Mr. Dowling. Yes; the majority are. 

93215 — 58— pt. 85 6 



4748 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. The majority are from Poland? 

Mr. DowLiNG. Well, more from Poland than any other country. 

Mr. Morris. Now, when j^ou say more from Poland than any other 
country, is it a majority of those cases that are from Poland, there 
could be quite a difference because obviously there are 10 or so coun- 
tries involved. 

Mr. DowLiNG. I cannot answer that positively except with respect 
to our group claims. With respect to them, it is about 50 percent. 

Mr. Morris. Respecting this change in the Federal regulation 
exempting Poland from the countries that are to be banned — the 
beneficiaries residing in those countries are not to be given United 
States dollars by the Treasury regulation — are there any changes as 
the result of the modification of that regulation ? 

Mr. DowLiNG. I have not seen any effect from it as yet. 

Mr. Morris. Do you find, Mr. Dowling, with respect to the claim- 
ants in Metropolitan, that these people actually want the money sent 
over there ? 

Mr. Dowling. Oh, we have many indications that they do not. We 
do not receive many letters coming out of the Iron Curtain countries 
saying they do not want the money, but we are hearing from relatives 
in this country who are in communication with them, and we have 
occasional letters that get through where they say they do not. 

Mr. Morris. They say they do not ? 

Mr. Dowling. That is right. 

Senator Johnston. And people went there on a visit and came back 
and told you personally that they did not ? 

Mr. Dowling. No, Senator; they did not. 

Mr. Morris. I do not want you to talk about particular cases, Mr. 
Dowling, but are there any instances — and I do not want particular 
cases where individuals may be identified — can you tell us some of the 
cases that you mentioned here without involving or divulging their 
identity i 

Mr. Dowling. Yes ; I have one case in mind where a person in the 
Iron Curtain country has written to us indicating that he does not 
want the money and asked us to write the local bank, which appar- 
ently was putting pressure on him, and tell them that we could not 
send the money into the country, so that, as the correspondent said, 
"They will leave me in peace." 

Senator Johnston. Do you have a special fund where you put this 
money in, or how do you handle it ? 

Mr. Dowling. No, we do not, Senator. It is just handled as a 
pending claim. 

]Mr. Morris. Does that accumulate interest ? 

Mr. Dowling. Well, it does under our present practice on delayed 
claims, where we delay a claim over 30 days our practice is, not be- 
cause we have any legal obligation, but as a matter of moral obliga- 
tion we add interest. 

Mr. IMoRRis. Are you able to tell us anything, is there anything, Mr. 
Dowling, that you can tell us with particularity about that situation, 
anything further than what has been brought out today by Mr. Eeidy 
and Mr. Walsh? 

Mr. Dowling. Well, it is only this, that these cases are not very 
active except when a power of attorney is entered by somebody. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4749 

Mr. Morris. Has any particular lawyer or lawyers turned up as 
being interested in the beneficiaries ? 

Mr, DowLiNG. Just the two that were mentioned this morning. 

Mr. Morris. Paul Ross and Charles Recht ? 

Mr. DowLiNG. Yes. 

Mr. Morris. He filed powers of attorney ? 

Mr. DowLiNG. Yes. 

Mr. Morris. And do you feel from your understanding of the prob- 
lem that the relaxation on the part of the State Department exempting 
Poland from this list is going to activate these cases? 

Mr. DowLiNG. Well, I am not sure. 

Mr. Morris. You do not know ? 

Mr. DowLiNG. I do not know. It could easily affect our company 
policy, though, because our policy rests principally upon the Treasury 
regulations. Our feeling has been that if the United States Govern- 
ment would not send those dollars into the Iron Curtain countries, and 
they know more about the situation than we do, that is indicative of 
a public policy which we should follow. Now, with Poland removed, 
we are in the state of considering what effect that should have on our 
company policy. 

Mr. Morris. So it really is not a problem with legislation at all 
at this point, Mr. Dowling, it is a question of what countries should 
be on the Treasury list because that is the thing that sets the policy for 
the industry ? 

Mr. Dowling. Well, I cannot speak for the industry. 

Mr. Morris. I should say Metropolitan. 

Mr. Dowling. It has had a profound influence on Metropolitan. 

Mr. Morris. And as far as Metropolitan is concerned, there are 160 
of these cases ? 

Mr. Dowling. Roughly. 

Mr. INIoRRis. Involving roughly $240,000 ? 

Mr. Dowling. That is right. 

Mr. Morris. Thank you. 

Senator Johnston. You are incorporated in New York; are you 
not? 

INIr. Dowling. We are, sir. 

Senator Johnston. You would feel some responsibility then to the 
laws of New York, too ? 

Mr. Dowling. Yes ; we would. 

Senator Johnston. And the main thing you are after is protecting 
the person that you owe money to ? 

Mr. Dowling. That is right. Senator, we feel an obligation to carry 
out the intentions of the fellow that we sold the policy to. 

Senator Johnston. And you would not hesitate a minute turning 
this money over if you knew that person was going to get value 
received ? 

Mr. Dowling. We would be very anxious to do so. 

Senator Johnston. Do you have any further questions ? 

Mr. Morris. No. 

Senator Johnston. We thank you, Mr. Dowling. 

Mr. Morris. Our next witnesses. Senator, are Mr. Andolsek and 
Mr. Bohne of Equitable Life Assurance Society. 

Senator Johnston. Will you stand up and be sworn ? 



4750 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Do you solemnly swear that the evidence you are going to give to 
this subcomimttee will be the truth, the whole truth, and nothing but 
the truth, so help you God ? 

Mr. Andolsek. I do. 

Mr. BoHNE. I do. 

TESTIMONY OP CHAEIES F. ANDOLSEK, HOHOKUS, N. J., ACCOM- 
PANIED BY EDWAED J. BOHNE, BELLE HAKBOE, N. Y., EEPEE- 
SENTING EQUITABLE LIFE ASSUEANCE SOCIETY 

Mr. Morris. Mr. Andolsek, will you give your full name and address 
to the reporter ? 

Mr. Andolsek. Charles F. Andolsek, East Saddle Koad, Hohokus, 
N. J. 

Mr. Morris. And you, Mr. Bohne ? 

Mr. BoHNE. Edward J. Bohne, 214 East 131st Street, Belle Har- 
bor, N. Y. 

Mr. Morris. I wonder if each of you will tell us what your position 
is with the Equitable Life Assurance Society ? 

Mr. Andolsek. We have for the last several years refused to make 
any payments to payees 

Mr. jMorris. Excuse me, before you begin, what position do you 
have in connection with Equitable ? 

Mr. Andolsek. I am sorry. I am the second vice president in 
charge of the claims department of Equitable . 

Mr. Morris. And you, Mr. Bohne? 

Mr. BoHNE. I am superintendent of the claim examiners division 
of the claims department. 

Senator Johnston. You are an attorney, too ? 

Mr. BoHNE. Yes. 

Mr. Morris. Will you proceed, Mr. Andolsek ? 

Mr. Andolsek. We have not made any payments for several years — 
I could not determine precisely the date — to any payee residing 
behind the Iron Curtain. 

Mr. Morris. You say you have not for several years ? 

Mr. Andolsek. Yes. 

Mr. Morris. What was the practice prior to several years ago ? 

Mr. Andolsek. If we were satisfied that we were dealing with the 
right beneficiaries, we occasionally were able to make the payment; 
but I can say, going back to perhaps 1948, that they were very few 
and far between. 

Mr. IMoRRis. How many cases do you have pending now ? 

Mr. Andolsek. Presently there are 96 claims involving $194,000. 
Of tliose 96 claims — I can give you a complete breakdown and put 
it into the record but I think perhaps you are primarily interested in 
Poland — we have 35 of the 96 pending cases involving payees in 
Poland. The amounts involved total $77,000 exclusive of interest. 

Senator Johnston. 'Wliich is over one-third, or a little better than 
one-third ? 

Mr. Andolsek. About that ; yes, sir. 

Mr. Morris. I think, Mr. Andolsek, we are really interested in par- 
ticularities about Poland because it is no longer on the list and if there 
is going to be any relaxation on the part of the State Department, why, 



SCOPE OF SOVIET ACTIVITY IN' THE UNITED STATES 4751 

the subcommittee avouIcI like to know the full extent of it. Can you 
tell us roughly how many insurance companies there are in the United 
States? 

Mr. AxDOLSEK. It is in excess of 400. However, I might add that 
most of these claims arise out of group-insurance policies, where we 
insure large industrial firms. On their rosters of employees there 
are many people who came into this country from these foreign coun- 
tries. I think you will find that the companies that do a large group 
insurance business will tend to have a preponderance. 

Mr. MoKRis. What companies, roughly, are they ? 

Mr. Andolsek. Well, certainly tlie Metropolitan, the Prudential, 
the Equitable, the Travelers, the Hancock, the Aetna. I think those 
are the very big ones. 

Mr. JNIoERis. And so this thing ultimately will run into the millions 
of dollars, will it not ? 

Mr. Andolsek. That is correct. There are over 400 life insurance 
companies in the United States of various sizes. 

Mr. Morris. I think you were about to say something, were you not, 
Mr. Andolsek ? 

Mr. Andolsek. Well, I thought that I could perhaps save the time 
of the committee— I think I know what you are after. 

Mr. Morris. Thank you very much. 

Mr. Andolsek. Of the ninety-six-odd cases that we have, 11 involve 
this power of attorney to which reference has previously been made. 
Six of those cases are being handled by this law firm of Wolf, Popper, 
Eoss, Wolf & Jones. Charles Recht 

Senator Johnston. Mr. Ross appears and represents them mostly, 
does he not ? 

Mr. Andolsek. That is correct. 

Charles Recht was involved in three cases and (name stricken from 
record) appeared in one case. 

Mr. Morris. I think, Mr. Andolsek, that I might suggest that in 
the absence of a pattern leading to some kind of interpretation, that 
you not put the names of any other lawyers in the record ; let us get 
those in executive session. I think it may give rise to some false im- 
pressions. With the other two names, since there is a pattern existing, 
I feel there is something that should be taken into consideration by the 
subcommittee. 

Senator Johnston. The name will be stricken. 

Mr. Andolsek. In the case of Wolf, Popper, Ross, Wolf & Jones in 
addition to the 6 cases where powers of attorney have been filed, there 
are 4 others in which they have requested payment but no power of 
attorney is concerned. 

Mr. Morris. Mr. Andolsek, do you find that individual claimants 
have expressed a desire to you that they either not be contacted nor 
given the money ? 

Mr. Andolsek. We have not had, and understandably so, any real 
direct expression from people behind the Iron Curtain, I think that 
they are afraid to make the expression and such expressions as we 
have gotten have come from relatives in this country.^ 

Mr. Morris. And what are those relatives' expressions ? 

Mr. Andolsek. To the general effect that they do not want the 
money, "Don't send it to them, don't correspond with them, don't get 
them in trouble." 



4752 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. Have you abided by their recommendations ? 

Mr. Andolsek. We have. 

Mr. Morris. And what is your policy on the powers of attorney ? 

Mr. Andolsek. Thus far we have refused to honor them. 

Mr. Morris. And do you feel that this change in policy excluding 
Poland from the list will have an effect on you ? 

Mr. Andolsek. It may be that it will pull the rug from under our 
feet. In that connection, as you know, the Treasury regulation dealt 
only with United States funds and were based on the fact that there 
was no assurance that the beneficiaries would receive the money. 

In connection with recent developments, while it may be that the 
United States Government has a reasonable assurance that their 
funds are going to be paid to beneficiaries, we have not been able to 
determine whether any similar assurance exists with respect to pri- 
vate funds as far as going to beneficiaries. 

Mr. Morris. And it may well be, Mr. Andolsek, that the Govern- 
ment can somehow exact some kind of promises from the Polish Gov- 
ernment and that same power would not be available to you ? 

Mr. Andolsek. That is correct. 

Mr. Morris. And at the same time, when the controlling policy 
here is going to be set by the Government policy, therefore should 
it not be followed by the corporation ? 

Mr. Andolsek. That is correct. I might add, which is my own 
pure opinion, that even if there were assurances that these funds 
would be transmitted to beneficiaries at a fair rate of exchange, I 
think it would be a relatively easy device for the Polish Government 
to simply hold those funds in a special account and then after they 
have gotten the background of funds out of this country, then simply 
issue a decree devaluing the funds or confiscate them and all would 
be lost. 

Senator Johnston. Right along that line, it happens that I am in 
a kind of a two-way capacity in the Judiciary Committee. I am 
chairman also of our Subcommittee on Alien Property and we are 
running into a great many things on this particular line at the present 
time. 

Just to give you an illustration, at the present time a person that 
comes over from Hungary and that has property that has been con- 
fiscated during the war, they can get that property back into the 
United States right now under the rules; but a person that lives in 
Germany cannot get theirs. 

Mr. Andolsek. Yes, sir. 

Mr. Morris. That is under the existing rules. 

Senator Johnston. That is under the existing rules. So it is pos- 
sible that we are going to have to do something in the way of legisla- 
tion to clear up this situation that we find ourselves in. Go ahead. 

Mr. Morris. Now, Mr. Andolsek, was there anything else we cov- 
ered in our staff session on Monday that should go into the record 
today, in view of what has already been covered ? 

Mr. Andolsek. I do not believe so. 

Mr. Morris. Mr. Bohne, is there anything in connection with your 
appearance today, can you add anything, knowing what the prob- 
lem is ? 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4753 

Mr. BoHNE. Nothing, except insofar as litigation goes, we only 
have three cases. Two of them ended up in interpleader actions in 
which no issue was tried, and the other case, a summons and com- 
plaint have been filed and an answer has been filed, but nothing has 
happened. 

Mr. Morris. And all of that included the amendment of the Treas- 
ury regulation ? 

Mr. BoHNE. No. 

This last suit, the one where we filed answer, the other two 

Mr. ]\IoRRis. You were going to tell us, Mr. Bohne, of a very recent 
litigation. 

]Mr. Bohne. This case that came on last week ? 

Mr. Morris. AVill you tell us about that ? 

Mr. Bohne. In the second district court : In that case a claim was 
presented on behalf of an alleo-ed beneficiary in Lithuania, and the 
case came on, and a public administrator of Kings County, in Brook- 
lyn, the southern district, came in and claimed the funds as a public 
administrator, alleging that there were no alleged heirs, that he had 
a special guardian report to that effect supporting his position, and 
he was claiming on the strength of that, and actually — it is in plead- 
ings at the present time. 

The other case is one where there is merely summons and complaint, 
and we filed an answer — that is out in Cleveland, I believe. 

Mr. Morris. Thank you, gentlemen, both of you, very much. 

Senator Johnston. Thank you. 

Mr. JNIorris. Our next witnesses. Senator, are Mr. Drobnyk and 
Mr. Leece, of Prudential. 

Senator Johnston. Will you rise and be sworn ? 

Do you solemnly swear that the evidence you will give this sub- 
committee will be the truth, the whole truth, and nothing but the 
truth, so help you God ? 

Mr. Leece. I do. 

Mr. Drobnyk. I do. 

TESTIMONY OF WENDELL J. DROBNYK, SECOND VICE PRESIDENT 
AND ASSOCIATE COMPTROLLER, PRUDENTIAL LIFE INSURANCE 
CO., ACCOMPANIED BY WILLIAM A. LEECE, ASSISTANT GENERAL 
COUNSEL 

Mr. Morris. Will you give your name, Mr. Drobnyk, to the 
reporter ? 

Mr. Drobnyk. Wendell J. Drobnyk. 

Mr. Morris. And your name, Mr. Leece ? 

Mr. Leece. William A. Leece. 

Mr. Morris. And will you, Mr. Drobnyk and Mr. Leece, tell what 
your positions are within the Prudential Life Insurance Co. ? 

Mr. Drobnyk. I am second vice president and associate comptroller. 

Mr. Morris. And you, Mr. Leece ? 

Mr. Leece. Assistant general counsel. 

Mr. Morris. And are you both conversant with the problem which 
the subcommittee is inquiring about ? 

Mr. Drobnyk. Yes. 



4754 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. MoRKis. The Prudential Life Insurance Co. — that is in Newark, 
N.J.? 

Mr. Drobnyk. Yes, sir. 

Mr. Morris. And is that incorporated in the State of New Jersey ? 

Mr. Drobnyk. Yes, sir ; Newark, N. J. 

Mr. Morris. And to that extent, the problem would be slightly differ- 
ent from the problems faced by the other companies that have been 
represented here ? 

Mr. Drobnyk. It might be. We have not had an opportunity to 
make a complete review of our files, but we did turn up 86 cases in our 
check yesterday, involving a total of over $142,000. 

Now, of these, the largest amount was payable to persons in Russia, 
amounting to $53,000 — 18 cases. In Poland, we had 22 cases in the 
amount of $29,000. Other countries with rather less amounts were 
Czechoslovakia with $20,000, Lithuania witli $12,000, Albania with 
$13,000. 

ISir. ^ioRRis. What has been the practice of the Prudential Life 
Insurance Co. with respect to such claims ? 

Mr. Drobnyk. We have consistently followed the policy of the Gov- 
ernment here for at least 4 years, now ; we have been withholding pay- 
ments to persons where one of the Iron Curtain countries was involved. 
However, with the relaxing of the regulations recently, we have made 
two payments to Poland. 

Mr. Morris. So, in connection with the Prudential, the relaxation of 
the Treasury regulation has already affected you ? 

Mr. Drobnyk. Yes ; it has. 

One payment was rather small, $125, and the other was $3,600. 

Mr. Morris. Now, is there any pattern in the representations of the 
claimants in these cases ? 

Mr. Drobnyk. Well, we have the first law firm that was mentioned 
Wolf, Popper, Ross, Wolf & Jones represent at least three of our 
claimants here. 

Mr. Morris. What nationality were they ? 

Mr. Drobnyk. Ukrainian and Rumanian. Two in Rumania and 
one in the Ukraine. And Charles Recht represented a claimant in 
Russia. 

We have other attorneys, about a dozen or so, that represent — I don't 
know whether they are the same type or not, though. 

Senator Johnston. We would be glad to have those in the confiden- 
tial files, but we do not want for you to call their names now at this 
time. 

Mr. Drobnyk. Yes, sir. 

We have had a number of powers of attorney which, in almost all 
cases, were made out to relatives of the insured, sons, sisters, brothers, 
and so on. We have also had some indication that people in these 
countries did not want the money, and I remember at least one case in 
which we got a letter directly from a claimant saying to f)lease not 
send him any money, that he would not get it. In other cases, we heard 
indirectly through relatives of the claimants in this country, 

Mr. Morris. So you have heard directly and indirectly from these 
people ? 

Mr. Drobnyk. That is correct. 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4755 

Mr. Morris. In connection with the two claims that you have paid, 
have you paid those claims on examination of all the facts or have 
you just let the State Department policy set your policy ? 

Mr. Drobnyk. We have, I believe, let the State Department set our 
policy. 

In these two cases, our law department was satisfied that the requests 
for funds were legitimate, I believe, and we have not denied payment 
because of that. 

Mr, Morris. You do find, as a matter of fact, that this relaxed policy 
on the part of the State Department is in fact breaking down the 
barriers that have been effective against this money going out of the 
United States? 

Mr. Drobntk. That is right. 

We have several more cases in the works now, where request has 
been made as the result of this change in policy. 

Mr. Morris. So the Prudential as well as the Guardian Life In- 
surance Co. — they had also indicated that they feel that the barriers 
were being whittled away ? 

Mr. Drobnyk. That is right. 

Mr. Morris. Is there anything else, Mr. Drobnyk, in view of what 
you have in your records and in view of what you heard this morning, 
and knowing what the problems before the Senate subcommittee are 
that the committee is going to tackle ? 

Mr. Drobnyk. No ; I do not believe there is anything I can add to 
what has been covered already this morning. 

Mr. Morris. And you, Mr. Leece, is there anything you can add? 

Mr. Leece. No, except to say that prior to June of this j^ear, prior 
to the change of the Treasury's position where Poland is concerned, 
^ye had consistently denied payment on Polish claims. Since that 
time, as has been indicated, we have paid them. 

Our policy has been in the past and at the moment is one of following 
the Government in these matters, because we feel it is in their par- 
ticular province, and it is something that we are not too competent 
about, and so that is the position at the moment, that is our position 
that we will follow the Government. 

Mr. Morris. The only companies we have had, the last 3 firms we 
have had, the claims amount to roughly $600,000 with the last 3 com- 
panies. Is there any 1 particular company that you know of among 
the 400 insurance companies throughout the country that might have 
quite a few of these ? 

Mr. Drobnyk. I do not know — I think the other companies would 
relatively have — I mean, in proportion to their size. For example, 
I would say that these 3 or 4 companies here probably represent about 
half, pretty close, of the insurance business in this country. 

Mr. Leece. Particularly the group business in our case, a lot of 
these claims 

Mr. Drobnyk. Thirty of our cases were group cases involving about 
$60,000. 

Mr. Morris. John Hancock is a group insurance company ? 

Mr. Drobnyk. John Hancock and Aetna and Travelers are prob- 
ably the leading group companies not represented here. 

Senator Johnston. How do you satisfy the claim, what kind of a 
receipt do you need from the beneficiary, that you have sent him the 
monev ? 



4756 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Droenyk. In these two cases in -wliicli we made payment, pay- 
ment was made through the First National City Bank and we have 
assurances from the bank that they will make payment to the proper 
party. If these payments have been made, it is so recently that we 
have not received receipts as yet. 

Senator Johnston. Is there any way yon have of having a careful 
check on the fact that these beneficiaries did receive the payment and 
do you get a proper receipt for it ? 

Mr. Drobnyk. Well, that will be part of our normal policy, sir, 
to see that we do get a proper receipt. 

Mr. Morris. If there are no more questions, we thank you, gentle- 
men, for coming. 

Senator Johnston. Thank you for coming before us. 

Mr. Morris. Senator, the scheduled business of the hearings we 
had planned covered 3 days. It is complete except that we did not 
have Mr. Max Schwebel testify or A. L. Pomeran, and there is Mr. 
Paul Ross. So, Senator, the unfinished business here is those three 
gentlemen with respect to this particular point of the hearings. 

Senator Johnston. We will want to have those in later. 

Mr. Morris. That is right. 

Senator Johnston. If that is all, we thank you very much. 

(Whereupon, at 11 : 35 a. m., the hearing was adjourned.) 



APPENDIXES 



Appendix I 



Regulations Relating to Delivery of Checks and Warrants to Addresses 
Outside the United States, Its Territories, and Possessions 

1041 Department Circular No. 655, Fiscal Service, Bureau of Accounts 

Treasury Department, 
Office of the Secretary, 
Washington, D. C, March 19, 1941. 

Section 211.1. Authority for regulations. These regulations are prescribed 
and issued under authority of Section 5 of Public No. 828 approved October 9, 
1940, "To restrict or regulate the delivery of checks drawn against funds of the 
United States, or any agency or instrumentality thereof, to addresses outside the 
United States, its Territories, and possessions, and for other purposes." 

Section 211.2. Provisions of Act. Section 1 of the above-mentioned Act pro- 
vides : 

"That hereafter no check or warrant drawn against funds of the United 
States, or any agency or instrumentality thereof, shall be sent from the United 
States (including its Territories and possessions and the Commonwealth of the 
Philippine Islands) for delivery in a foreign country in any case in which the 
Secretary of the Treasury determines that postal, transportation, or banking 
facilities in general, or local conditions in the country to which such check or 
warrant is to be delivered, are such that there is not a reasonable assurance 
that the payee will actually receive such check or warrant and be able to negoti- 
ate the same for full value." 

In Section 2, it is provided that : 

"Any check or warrant, the sending of which is prohibited under the provi- 
sions of section 1, hereof, shall be held by the drawer until the close of the 
calendar quarter next following its date, during which period such check or 
warrant may be released for delivery if the Secretary of the Treasury deter- 
mines that conditions have so changed as to provide a reasonable assurance that 
the payee will actually receive the check or warrant and be able to negotiate it 
for full value. At the end of such quarter, unless the Secretary of the Treasury 
shall otherwise direct, the drawer shall transmit all checks and warrants with- 
held in accordance with the provisions of this Act to the drawee thereof, and 
forward a report stating fully the name and address of the payee ; the date, 
number, and amount of the clieck or warrant ; and the account against which it 
was drawn, to the Bureau of Accounts of the Treasury Department. The 
amounts of such undelivered checks and warrants so transmitted shall there- 
upon be transferred by the drawee from the account of the drawer to a special 
deposit account with the Treasurer of the United States entitled 'Secretary of 
the Treasury, Proceeds of Withheld Foreign Checks,' at which time such checks 
and warrants shall be marked 'Paid into Withheld Foreign Check Accounts.' " 

In Section 3, it is provided that : 

"Payment of the accounts which have been deposited in the special deposit 
account in accordance with section 2 hereof shall be made by checks drawn 
against such special deposit account by the Secretary of the Treasury, only after 
the claimant shall have established his right to the amount of the check or war- 
rant to the satisfaction of the Secretary of the Treasury (or, in the case of claims 
based upon checks representing payments under laws administered by the Vet- 
erans' Administration, to the satisfaction of the Administrator of Veterans' 
Affairs) and the Secretary of the Treasury has determined that there is a reason- 
able assurance that the claimant will actually receive such check in payment of 
his claim and be able to negotiate the same for full value." 

4757 



4758 SCOPE OF SOVIET ACTIVITY EST THE UXITED STATES 

Section 4 provides tliat : 

"Tlie provisions of sections 2 and 3 hereof shall apply to all checks or warrants 
the delivery of which is now being, or may hereafter be, withheld pursuant to 
Executive Order No. 8389 of April 10, 1940, as amended, as well as to all checks 
or warrants the delivery of which is now being withheld pursuant to administra- 
tive action, which administrative action is hereby ratified and confirmed : Pro- 
vided, That any check or warrant the delivery of which has already been with- 
held for more than one quarter prior to the enactment of this act shall be im- 
mediately delivered to the drawee thereof for disposition in accordance with the 
provisions of sections 2 and 3 hereof: Provided further. That nothing in this 
act shall he construed to dispense with the necessity of obtaining a license to 
authorize the delivery and payment of cheeks in payment of claims under section 
3 hereof in those cases where a license is now or hereafter may be required by 
law to authorize such delivery and payment." 

Section 211.3. Withholding of delivery of checks or warrants. 

(a) The Secretary of the Treasury hereby determines that postal, transporta- 
tion, or banking facilities in general or local conditions in Albania, Belgium, 
Bulgaria, Czechoslovakia, Denmark, Estonia, France, Germany, Hungary, Italy 
and the possessions thereof, Latvia, Lithuania, Luxembourg, the Netherlands, 
Norway, Poland, Rumania, the Union of Soviet Socialist Republics and Yugoslavia 
are such that there is not a reasonable assurance that a payee in any of those 
countries will actually receive checks or warrants drawn against funds of the 
United States, or agencies or instrumentalities thereof, and be able to negotiate 
the same for full value. 

(b) A check or warrant intended for delivery in any of the countries named 
in paragraph (a) shall be withheld unless the check or warrant is specifically 
released in accordance with section 2 above quoted. Before a check or warrant 
intended for delivery in one of the countries designated in Executive Order No. 
8389, as amended,^ may be released, it will be necessary for a license authorizing 
the release to be issued pursuant to that Executive Order, as amended. 

(c) Checks or warrants referred to in paragraphs (a) and (b), when withheld 
for the statutory period set forth in sections 2 and 4 above quoted, shall be trans- 
mitted to the drawee in accordance with section 2 above quoted, unless the Secre- 
tary of the Treasury shall otherwise direct. 

( Sees. 211.4, Reports of checks or warrants withheld ; 211.5, Claims for the 
release of withheld checks or warrants ; 211.6, Advices as to nonreceipt or in- 
ability to cash checks abroad, and 211.7, Salaries and wages or goods pur- 
chased by Government abroad, which have no bearing on the problem under 
consideration by the subcommittee, are not reprinted here.) 

Regulations Relating to Delivery of Checks and Warrants to Addresses 
Outside the United States, its Territories and Possessions 

19.51 Department Circular No. 655, Supplement No. 8, Fiscal Service, Bureau 

of Accounts 

Treasury Department, 

Office of the Secretary, 
Washington, D. C, April 17, 1951. 

Section 211.3 (a) of Department Circular No. 655, dated March 19, 1941, 
(31 C. F. R. 211.3 (a)), as amended, is hereby further amended to read as 
follows : 

"The Secretary of the Treasury hereby determines that postal, transportation, 
or banking facilities in general or local conditions in Albania. Bulgaria. Com- 
munist-controlled China, Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, 
Poland, Rumania, the Union of Soviet Socialist Republics, the Russian Zone of 
Occupation of Germany, and the Russian Sector of Occupation of Berlin, Ger- 
many are such that there is not a reasonable assurance that a payee in those 
areas will actually receive checks or warrants drawn against funds of the 
United States, or agencies or instrumentalities thereof, and be able to negotiate 
the same for full valvie." 



^ The foreign countries designated in Executive Order No. 8389, as amended, as of the 
date of these regulations are : Norway, Denmark, the Netherlands, Belgium, Luxembourg, 
France, Latvia, Estonia, Lithuania. Rumania, Bulgaria, and Hungary. It is to be noted 
that under the definition contained in that Executive Order, as amended, such countries are 
deemed to Include territories, dependencies, and possessions thereof. Care should be taken 
to ascertain from time to time whether such Executive Order, as amended, has been further 
amended. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4759 

Except to the extent they have been authorized by appropriate unrevoked 
licenses, or are authorized by specific license issued by the Department of 
Justice, Office of Alien Property, remittances by United States Government 
agencies from any accounts in which a German or Japanse interest existed on or 
before December 31, 1946, will continue to be restricted by Executive Order No. 
83S9, as amended, and rules and regulations issued pursuant thereto, including 
in particular General Ruling llA, as amended. Attention is directed to the 
provisions of Public Law No. 622, 79th Congress, 2d session, which prohibits 
among other things, payments of veterans' benefits to German or Japanese citi- 
zens or subjects residing in Germany or Japan. Attention also is directed to the 
Foreign Assets Control Regulations issued by the Secretary of the Treasury on 
December 17, 1950, pursuant to Executive Order No. 9193, which prohibit trans- 
actions involving payments to nationals of China and North Korea except to 
the extent that they have been authorized by appropriate license. 

E. H. Foley, 
Acting Secretary of the Treasury. 



Regulations Relating to Delivery of Checks and Warrants to Addresses 
Outside the United States, its Territories and Possessions 

1951 Department Circular No. 655, Supplement No. 9, Fiscal Service, Bureau 

of Accounts 

Treasury Department, 
Office of the Secretary, 
Washington, D. C, September 2/f, 1951. 

Section 211.3 of Department Circular No. 655, dated March 19, 1941 (31 
C. F. R. 211.3), as amended, is hereby amended by adding thereto the following 
paragraph : 

'•(d) Powers of attorney for the receipt or collection of checks or warrants or 
of the proceeds of checks or warrants included within the determination of the 
Secretary of the Treasury set forth in paragraph (a) of this section will not be 

recognized." 

John "W. Snyder, 
Secretary of the Treasury. 

Appendix II 

Translation of Pertinent Peovisions of the Laws and Decrees of the Polish 

People's Republic 

I. Law on Foreign Exchange of March 28, 1952 Dziennik Ustaw — Polish Law 
Journal 19.52 Nr. 21 Law #133. 

Article 19. Any transaction with foreign exchange shall be prohibited unless 
based upon a permission issued by the proper authority or otherwise provided 
by law or decrees issued in accordance with the law. 

Article 20. It shall be prohibited to hold, within the Polish territories, foreign 
currency as well as gold and platinum * * * unless permission has been granted 
or provisions of the law or decrees issued in accordance with it declare otherwise. 

Article 21. (1) The natives with respect to foreign exchange shall be obliged 
to register with, and offer for sale to, or deposit any item of foreign exchange, 
prohibited by article 20, in the institutions indicated by a decree of the Minister of 
Finances and in a way provided by this decree. 

(2) For any withdrawal from deposit of foreign exchange permission shall 
be necessary. 

Article 22. ( 1 ) It shall be prohibited to natives with respect to foreign exchange 
to dispose of any item of foreign exchange as well as chattels and real estates held 
abroad, of any right concerning such property abroad and any claim due from 
abroad, upon any legal basis whatsoever, unless otherwise provided by this law or 
by decrees issued in accordance with it. 

(2) The granting of full power to collect or receive property, mentioned in 
the last par., shall also be considered as a disposal. 



4760 SCOPE OF SOVIET ACTIVITY IX THE UlSriTED STATES 

Article 23. Natives, with respect to foreign exchange, shall be obliged to liqui- 
date claims and payments in relations abroad according to principles fixed: 

(1) by the Minister for Foreign Trade in agreement with the Minister of 
Finances within the scope of trade with goods and commercial services con- 
nected with this trade ; 

(2) by the Minister of Finances within the scope of turnover of all other 
commodities — by proper decrees. 

Article 24. (1) Natives, with respect to foreign exchange, shall be obliged — 
within the scope, and according to proceedings established by a decree of the 
Minister of Finances — to register with, and offer for sale to institutions indicated 
by this decree all assets of instruments held abroad, chattels and real estates, 
rights to property held abroad, and all claims from abroad based upon rights of 
any kind, as well as to report the termination of these rights and claims. 

(2) The conditions for sale shall be fixed by a decree of the Minister of Finances. 

II. Decree of the Minister of Finances of April 15, 1952, concerning the 
enforcement of the law on foreign exchange. Dziennik Ustaw — Polish Law 
Journal— of 1952 Nr. 21 Law #137. 

Section 12. (1) Payments toward persons or institutions abroad, as well as 
collections of claims from abroad, upon any legal basis, contractual or any other, 
may be made solely through the Polish National Bank or other authorized banks 
unless another way has been indicated in the conditions of a permission for pay- 
ment. 

Section 13. (2) Claims in money from abroad shall be liquidated within the 
contractual or customary periods, and if no such periods have been fixed, then on 
the day the payment becomes due. 

(3) Liquidation of claims shall mean the collection or the performing of deeds 
necessary for the collection. The duty of liquidation shall not include a duty 
of litigation, administrative proceedings, or execution in order to collect them. 

Section 14. Any foreign currency received upon any legal basis as payment for 
claims from abroad shall be offered for sale to the Polish National Bank or 
another authorized bank without any delay. 

III. Decree of the Minister of Finances of April 15, 1952 concerning regis- 
tration of property held abroad and claims from abroad. 

According to article 24, par. 1, of the law on foreign exchange of March 
28, 1952 * * * 

Section 1. (1) Natives, with respect to foreign exchange, shall be obliged 
to register with the Polish National Bank any property determined in detail in 
Section 2, held by them abroad and acquired against payment or gratuity as 
well as any property abroad under their management or in their use, and any 
money claims from abroad. This duty shall not include properties and claims 
which have been already registered according to the provisions hitherto in 
force. 

Section 2. (1) The duty of registration shall concern : 

1. foreign paper money and savings accounts if the value of the money or 
the account exceeds zl. 100. 
2 * * * 

3. stocks, bonds, securities, and any other instruments carrying interests 
and dividends issued abroad as well as coupons of these instruments ; 

4. due money claims based upon rights coming from : 

(a) * * * 

(b) transactions with goods, services, insurances, compensation and 
recovery, rents, retirement pensions, royalties, copyrights, money credit 
etc. — if the claim, when due, exceeds the amount of zl. 100. from 
each debtor and has not been liquidated within six months from the 
day it had become due. 

5. * * * 

6. * * * 

IV. Law on the Punishment of Violation of Provisions concerning Foreign 
Exchange of March 28, 1952, Dziennik Ustaw— (Polish) Law Journal— of 
1952 No. 21 Law No. 134. 

Article 1. Section 1. Whoever, without or against the conditions of a 

granted permission, makes transactions with instruments of foreign exchange 

shall be punished by imprisonment for a period of two years up to ten years 
and a fine. 

Section 2. If the perpetrator of the crime defined in Section 1 makes trans- 
actions with instruments of foreign exchange to a particularly large extent 
or has made transactions with instruments of foreign exchange his permanent 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4761 

source of iuoome — shall be punished by imprisoumeut for a period of not 
less than five years and a fine, or by imprisonment for life and fine. 

Section 3. * * * 

Section 4. Whenever a person has been sentenced for a crime defined in Sec. 
1 or 2, the court may order the forfeiture of the defendant's property entirely 
or in part. 

Article 3. Section 1. Whoever, without permission, holds within the Polish 
territories any instrument of foreign exchange — shall be punished by imprison- 
ment for a period of one year up to five years. 

Section 2. Whenever the perpetrator of a crime defined in Sec. 1 holds 
instruments of foreign exchange in larger amounts — he shall be punished by 
imprisonment for a period of not less than five years up to ten years and a fine. 

Section 3. * * * 

Article 4. Section 1. Whoever, violating the provisions cone, foreign exchange, 
fails to collect his claims from abroad — shall be punished by imprisonment for 
a period up to two years. 

Article 5. Section 1. AVhoever, violating his obligation defined in the provi- 
sions cone, foreign exchange, fails to register his property or claims enumer- 
ated in Sec. 1 shall be punished by imprisonment for a period up to two years and 

a fine. 

Article 6. Section 1. Whoever, with permission or violating the conditions of 
a permission disposes of any property held abroad or of any claim from abroad — 
shall be punished by imprisonment for a period up to three years and a fine. 

Article 10. Section 1. Whenever a person has been sentenced for a crime 
defined in article 1, 2, 3, the court shall order the forfeiture of all items subject 
CO the crime, no matter whose property they may be. 



Appendix III 
United States District Court, Southern District of New York 

CIVIL action 95-2 62 

Jan Danisch, Antoni Danisch, Julia Dauisch, Anna Schwientek, Gertrud 
Wojcyzk, Emma Schweda, Sofia Janta, Jadwiga Salawa, Maria Stanwcyzk, 
Luiza Lesch, and Gertrude Urganek, plaintiffs, against The Guardian Life 
Insurance Company of America, defendant 

Affidavit 
State of New York, 

County of New York, ss: 

Joseph Dolina, being duly sworn, deposes and says : 

1. I reside at 21 Claremont Avenue, New York City, New York. I am a 
native of Poland. 

2. I graduated with a master's degree in law from the Catholic University in 
Lublin, Poland, in 1935. In 193G in preparation for a judgeship in accordance 
with the usual pi'ocedure in Poland, I became affiliated as an applicant with the 
District Court of Lublin. Under Polish law then applicable, judges were ap- 
pointed from a list of those who had qualified by taking an examination. This 
examination was talven only after graduation from the university with a law 
degree followed by three years' practice in the courts as an applicant. The 
three-year period can be shortened to two years by substitution of other experi- 
ence. In my case, after serving as an applicant for the required two years I 
successfully passed the examination for judicial appointment and in 1939 I 
was appointed Court Assessor under the jurisdiction of the Appellate Court of 
Lublin. Iia the Polish judicial system then existing the office of Court Assessor 
constituted a temporary judgeship with, however, full judicial powers for the 
trial and disposition of cases. After a period of two to three years the Court 
Assessor normally received appointment to a full judgeship, which is for life. 

3. I served as such a Court Assesor trying and deciding cases for about three 
months until the Nazi invasion and occupation of Poland. At that time I left 
my judicial post and joined the Polish underground resistance movement. In 
August 1944, when Poland was again invaded and occupied by Soviet Russia, 
I was arrested. I was imprisoned at various prisons and concentration camps 
in Russia until November 1947, when I was released and sent back to Poland. 



4762 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

In January 1948, I was reappointed by the Minister of Justice of the Com- 
munist Government of Poland to the same judicial post that I liad held before 
the Nazi invasion in 1939, namely, that of Court Assessor, and continued to 
function as such in the trial and decision of cases and in all the usual judicial 
functions of that office until December of 1948. In January 1949, I made my 
escape from Poland. 

4. I have been requested to and do make this affidavit in support of a motion 
for reargument of a motion which resulted in the granting of an order for the 
issuance of letters rogatoiw under which I understand interrogatories are to be 
sent to the named plaintiffs in this case in Poland with the aid of the Polish 
courts concerning whether they have freely authorized the bringing of this 
action for the collection through the Polish Consul of insurance moneys due 
them in this country. 

5. I wish to concur in the assertion made in the papers opposing letters 
rogatory, both originally and on this motion, that the named plaintiffs will be 
subjected to annoyance, embarrassment, and oppression if they are subjected to 
interrogation on these matters by requisition of this Court and through the 
procedures of the Polish courts. The named plaintiffs will have to testify that 
they wish this money collected through the Polish Consul or they will subject 
themselves to criminal penalties and to persecution. 

6. In this connection I wish to point out from my own personal experience 
that a judicial officer of the courts in Poland under the present Couuuunist 
regime is not free to administer justice as he sees it or to protect the interests 
and property rights of Polish people coming before him. The courts are under 
Communist domination and are mere instruments for carrying out the policy of 
the Communist Government. In my own case during the year that I served as 
a judicial officer under the Communist regime in Poland, I was subjected to 
constant interrogation by the secret police (Security Office). This occurred 
sometimes two or three times a day and sometimes even during the night. On 
some of these occasions they attempted to influence my decisions. Moreover, 
they wanted me to act as an informer for them with respect to matters, among 
others, which came under my judicial cognizance. I know from my acquaintance 
with my associate judicial officers that they were subjected to the same kind of 
constant Government pressure. Moreover, as a matter of policy, all judges were 
frequently summoned to conferences at which they were lectured on the policy 
which should govern their judicial determinations. I can, therefore, assure this 
Court that the fact that the proposed interrogatories were presented to the 
named plaintiffs in or under the auspices of Polish courts would be no guarantee 
whatsoever that they would be answered freely and truthfully. Just the con- 
trary is the case. This is the sad state to which judicial administration has 
fallen under the Communist regime of the Polish Peoples' Republic. 

7. The same state of affairs exists with respect to Polish lawyers (advocates). 
They are under the same Government intimidation and where a matter of Gov- 
ernment policy is involved, as here, are not free to represent the best interests of 
their clients. In my opinion, not a single lawyer could be found in Poland today 
who would dare to publicly advise or advocate that the named plaintiffs should 
temporarily leave the insurance moneys involved in this case on deposit in the 
United States and should reject the intervention of the Polish Consul. In fact, 
it has already been made clear to this Court that any such lawyer would thereby 
render himself accessory to violation of the decrees of the present Communist 
Polish Government regarding the collection of foreign moneys. Accordingly, no 
lawyer could be found in Poland today who could represent the Guardian Life 
Insurance Company in the position which it has taken in this case. 

[s] Joseph Dolina. 
Sworn to before me this 8th day of August 1956. 



Appendix III (a) 

Translation 
File No. I Cps. 49-53 

Pkotocol 
Present : 
Presiding : 
Tr. Swietek 

February 16, 1953. 
County Court in Opole, at the hearing in open Court heard the case on mo- 
tion of the Consulate General of the Polish People's Republic at Chicago, dated 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4763 

at Chicago, Illinois, January 15, 1953, Nr. 317/10/53, in tlie matter of benefits 
from insurance of Rev. Teodor A. Kuplia. 
After calling the case appeared : 

1. Jan (John) Danisch, 60 years old, butcher, residing at Bierdzany, Com- 
munity of Turawa, County of Opole, personally. 

2. Autoni Danisch, 56 years old, farmer, residing at Bierdzany, County of 
Opole. 

3. Anna Swietek (Schwientek) maiden name Danisch, 53 years old, house- 
wife, residing at Bierdzany, County of Opole. 

4. Gertruda Wojtczyk (Wojtzyk) maiden name Danisch; 50 years old, house- 
wife, residing at Bierdzany, County of Opole. 

5. Emma Schweda (Szweda) maiden name Danisch, 46 years old, housewife, 
residing at Bierdzany, County of Opole. 

6. Zofia Jauta, maiden name Danisch, 57 years old, housewife, residing at 
Blachow'ka, County of Tarnowskie Gory. 

7. Jadwiga (Hedwig) Salawa, maiden name Lesch, 49 years old, housewife, 
residing at Bierdzany, County of Opole. 

8. Teodor Danish did not appear. Appeared his wife Julia Danisch, maiden 
name Salawa, 36 years old, housewife, residing at Bierdzany, County of Opole, 
and states that her husband Teodor Danisch as a soldier in the German army 
was lost in the last world war and was judicially adjudged as dead. His date 
of death was fixed as May 9, 1945. 

9. August Danisch did not appear. The remaining parties state that August 
Danisch died February 1941 at Bierdzany. 

The appeared were informed about the criminal liability according to Art. 
140 of the Criminal Code for giving false testimony and they, without assurance, 
conformly testify : 

The decedent Teodor Kupka was born at Kadlub Turawski as a son of 
Hieronim Kupka who died at Bierdzany in 1918, and Zofia maiden name Rie- 
mann, who died there also in 1919. His brother and sisters are : 

1. Klara Danisch maiden name Kupka. She died December 21, 1941 at 
Bierdzany, and left surviving her, these children : 

a. Jan ( Johan) Danisz, as above 

b. Zofia Janta, maiden name Danisz 

c. Antoni Danisz 

d. Anna Sweitek maiden name Danisz 

e. Gertruda Woitczyk maiden name Danisz 

f . Emma Szweda maiden name Danisz 

g. Teodor Danisz, who was lost during the War and is adjudged as dead. 
There are no children left by him. The wife is Julia Danisz maiden name 
Salawa as above under 8. 

h. August Danisz, died in February 1941 as a bachelor. He left no 
descendants. 

1. Karol Danisz, died in 1914 as a bachelor and childless, during the 
First World War 

j. Wincenty Danisz died in 1919 as a bachelor and childless, in Bierdzany. 

k. Gerta Danisz died in 1924 as a spinster without issue. 

1. Marta Stasch maiden name Danisz died after returning from Germany 
at Opole in July 19-50, and left her: (1) surviving husband Maks Stasch, 
residing at Opole, street address unknown, and children: (2) Helmut Stasch 
in Germany, address unknown, and (3) Maria Stanczyk maiden name 
Stasch, residing at Wroclaw, Boczna Street, house number not known. 

2. Agnieszka Bieniek, maiden name Kupka, she died in 1918 in the United 
States of North America, without issue, as a widow. 

3. Anna Lesch, maiden name Kupka ; she died at Bierdzany, April 4, 1946 and 
left surviving her : 

a. Pawel Lesch. He died at war in April 1945, leaving surviving him : 

(1) Wife Agnieszka Lesch maiden name Salawa, at Bierdzany 

(2) Son Teodor Lesch, 24 years old residing at Bierdzany 

(3) daughter Anna-Maria (two names) Lesch, 16 years old, residing 
with her mother, and (4) daughter Weronika Lesch, 9 years, residing 
with mother. 

b. Jadwiga Salawa, maiden name Lesch. 

c. Maks Lesch, 47 years old, in the U. S. A. 

d. Gertruda Urbanek, maiden name Lesch, residing at Kuznia, Commun- 
ity of Lasowice, County of Olesno. 

93215 — 58— pt. 85 7 



4764 SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 

e. Luiza Lesch, 38 years old, residing at Bodzanowice, County of Olesno. 

4. Franciszka Orlowska, maiden name Kupka, in the U. S. A. 

The appeared participants testify tliat they do not know anything about the 

existence of any other persons besides those mentioned by them as heirs at law 

of the late Rev. Teodor Kupka, or of any persons who would equally with them 

be entitled to share in the estate of the above-named decedent. 

The Court called on the appeared to present within seven days to this Court, 
copies of the records of births, marriages and the deaths for the purpose of 
proving the relationship of the heirs to the decedent, or to show the falling on 
them the shares due the deceased heirs or beneficiaries, all within seven days, 
under the condition that otherwise, such proofs will be omitted in further pro- 
ceedings, also obliged the appeared to furnish within three days addresses of 
Maks Stasch, husband of Marta, and of their daughter Maria Stanczyk, maiden 
name Stasch, this for purpose of summoning them for the next hearing and also 
signing by them a Power of Attorney for the Consul of the Polish People's Repub- 
lic at Chicago and at this, the Hearing was continued for a term which will be 
made known in writing. Concluded, read, and signed, 
(signed) Danisch Jan II Danisch Antoni. 
(signed) Swietek Anna nee Danisch. 
(signed) Janta Sofia nee Danisch. 
(signed) AA'ojtczyk Gertruda nee Danisch. 
(signed) Schweda Emma nee Danisch. 
( signed ) Salawa Jadwiga nee Lesch. 
(signed) Danisz Julia nee Salawa. 

(signed) Swietek. 
Produce February 20, 1953 Opole, February 16, 1953. 

(signed) Swietek. 
Further proceeding : February 16, 1953. 
Appeared Anna Schweda, personal data as above and states addresses ; 

1. Maks Stasch, Opole, Rolna Street No. 26 

2. Maria Stanczyk, Wroclaw, Boczna Street No. 5-6 

(signed) Emma Schweda. 
(signed) Swietek. 

To produce February 24, 1953. Opole, February 16, 1953. 

(signed) Swietek. 

Appendix IV 

Editoeial Department, 

Polish Daily Zgoda, 
dziennik zwiazkowy, 
Chicago 22, Illinois, October 2, 1956. 
Mrs. Agnes S. Httnt, Esq., 

The Ouardian Life Insurance Co. of America, 

50 Utiio7i Square, New York 3, Neic York. 

Dear Madam : Recently we published a couple of interviews with the people 
who returned from a short visit to Poland. During the recent months, visitors 
to Poland were allowed to receive instead of the official exchange of 4 zlotys to 
one dollar, from 80 to 100 zlotys to one dollar. In the last few weeks this 
rate of exchange was lowered to 50 zlotys to a dollar. The arrangements were 
made this way ; the visitor was buying in any office of "PEKAO," on order for 
any amount of dollars. On arrival in Warsaw he was paid the highest amount 
of exchange of the day, officially in the bank, not on the black market. .So any 
person can send to Poland any amount of money through "PEKAO" and receive 
a much higher amount of zlotys than official exchange. 

You can get in touch with the main office of "I'EKAO," which is located on 
25 Broad Street, New York, New York. This is an American Corporation acting 
as an agent for the Institution of the same name in V\'arsaw. 

In the last couple of weeks two persons returned as visitors from Poland. 
Miss Adele Lagodzinski, President, Polish Women's Alliance, 1309 N. Ashland 
Avenue, Chicago, Illinois, and Mr. W. Lazewski, Editor of Everybody's Daily, 
928 Broadway, Buffalo 12, New York. 
Very truly yours, 

Kaeol Piatkiewicz, 

Editor-in-Chief. 



HSP 

4/14/48 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4765 



Certificate of Incoepokation of Pekao Trading Cokpobation 



First. The name of the corporation is Pekao Trading Corporation. 

Second. Its principal office in the State of Delaware is located at No. 19-21 
Dover Green, City of Dover, County of Kent. The name and address of its 
resident agent is United States Corporation Company, No. 19-21 Dover Green, 
Dover, Delaware. 

Third. The nature of the business, or objects or purposes to be transacted, 
promoted, or carried on are : 

To carry on a trading business in all its branches for the exchange of 
goods and services between the United States of America and any other coun- 
try, nation, or government, or any state, territory, province or other political 
subdivision or any governmental agency, or any private individual, partner- 
ship, corporation, association, or syndicate resident therein, and, without limit- 
ing the generality of the foregoing, to act as merchants, traders, commission 
agents, factors, brokers, or in any other capacity, either as principal or agent, 
in the United States of America and in any and all foreign countries, and to 
import, export, buy, sell, barter, exchange, pledge, make advances upon, or 
otherwise deal in or deal with services, goods, wares, and merchandise of all 
kinds and descriptions, and particularly commodities, products, manufactured 
or partly processed articles, equipment, machinery, raw materials, minerals, 
ores, rubber, iron, steel, and other objects and articles of commerce. 

To act as representative, agent, or employee of any person, contractor, 
manufacturer, distributor, dealer, firm, association, partnership, corporation, 
or government ; to promote, extend, improve, manage, finance, equip, maintain, 
control, and operate, for itself and for others, any business, industry, or com- 
mercial enterprise and industrial or other property or properties of any kind, 
and to advise, aid, or assist therein any manner, and to employ and furnish 
the services of experts to give advice on the organization, promotion, exten- 
sion, improvement, control, or management of any business or commercial 
enterprises, including but not by way of limitation, expert technical advice on 
all matters of finance, development, manufacture, production, marketing, sale, 
and distribution of raw materials, commodities, goods, wares, and merchandise 
of every class and description. 

To manufacture, purchase or otherwise acquire, invest in, own, mortgage, 
pledge, sell, lease, assign, and transfer or otherwise dispose of, trade, deal in, 
and deal with goods, wares, and merchandise and personal property of every 
class and description. 

To acquire, and pay for in cash, stock, or bonds of this corporation or other- 
wise, the goodwill, rights, assets, and property, and to undertake or assume the 
whole or any part of the obligations or liabilities of any person, firm, associa- 
tion, or corporation. 

To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mort- 
gage, or otherwise dispose of letters patent of the United States or any foreign 
country, patent rights, licenses and privileges, inventions, improvements and 
processes, copyrights, trademarks, and trade names, relating to or useful in 
connection with any business of this corporation. 

To acquire by purchase, subscription, or otherwise, and to receive, hold, own, 
guarantee, sell, assign, exchange, transfer, mortgage, pledge, or otherwise dis- 
pose of or deal in and with any of the shares of the capital stock, or any voting 
trust certificates in respect of the shares of capital stock, scrip, warrants, rights, 
bonds, debentures, notes, trust receipts, and other securities, obligations, choses 
in action, and evidences of indebtedness or interest issued or created by any 
corporations, joint stock companies, syndicates, associations, firms, trusts, or 
persons, public or private, or by the government of the United States of America, 
or by any foreign government, or by any state, territory, province, municipality, 
or other political subdivision or by any governmental agency, and as owner 
thereof to possess and exercise all the rights, powers, and privileges of ovv'ner- 
ship, including the right to execute consents and vote thereon, and to do any 
and all acts and things necessary or advisable for the preservation, protection, 
improvement, and enhancement in value thereof. 

To enter into, make, and perform contracts of every kind and description with 
any person, firm, association, corporation, municipality, county, state, body 
politic, or government or colony or dependency thereof. 



4766 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

To borrow or raise moneys for any of tbe purposes of the corporation and, 
from time to time, without limit as to amount to draw, make, accept, endorse, 
execute, and issue promissory notes, drafts, bills of exchange, warrants, bonds, 
debentures, and other negotiable or nonnegotiable instruments and evidences 
of indebtedness, and to secure the payment of any thereof and of the interest 
thereon by mortgage upon or pledge, conveyance, or assignment in trust of the 
whole or any part of the property of the corporation, whether at the time 
owned or thereafter acquired, and to sell, pledge, or otherwise dispose of such 
bonds or other obligations of the corporation for its corporate purposes. 

To buy, sell, or otherwise deal in notes, open accounts, and other similar 
evidences of debt, or to loan money and take notes, open accounts, and other 
similar evidences of debt as collateral security therefor. 

To purchase, hold, sell, and transfer the shares of its own capital stock ; pro- 
vided it shall not use its funds or property for the purchase of its own shares of 
capital stock when such use would cause any impairment of its capital except as 
otherwise permitted by law, and provided further that shares of its own capital 
stock belonging to it shall not be voted upon directly or indirectly. 

To have one or more offices, to carry on all or any of its operations and busi- 
ness and without restriction or limit as to amount to purchase or otherwise 
acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and per- 
sonal property of every class and description in any of the States, Districts, 
Territories, or Colonies of the United States, and in any and all foreign coun- 
tries, subject to the laws of such State, District, Territory, Colony, or Country. 

In general, to carry on any other business in connection with the foregoing, 
and to have and exercise all the powers conferred by the laws of Delaware upon 
corporations formed under the General Corporation Law of the State of Dela- 
ware, and to do any or all of the things hereinbefore set forth to the same extent 
as natural persons might or could do. 

The objects and purposes specified in the foregoing clauses shall, except where 
otherwise expressed, be in nowise limited or restricted by reference to, or in- 
ference from, the terms of any other clause in this certificate of incorporation, 
but the objects and purposes specified in each of the foregoing clauses of this 
article shah be regarded as independent objects and purposes. 

Fourth. The total number of shares of stock which the corporation shall 
have authority to issue is two hundred fifty (250) ; all of which shall be common 
stock without par value, with full voting rights. 

Fifth. The minimum amount of capital with which the corporation will com- 
mence business is one thousand dollars ($1,000.00). 

Sixth. The names and places of residence of the incorporators are as follows : 
Names, residences : 

Bernard S. Rleyer, 298 Lin wood Avenue Cedarhurst, New York 
Harriet R. Merric, 161 Clarkson Avenue, Brooklyn, New York 
Norma Barber, 50 Park Terrace West, New York, New York 

Seventh. The corporation is to have perpetual existence. 

Eighth. The property of the stockholders shall not be subject to the payment 
of corporate debts to any extent whatever. 

Ninth. The election of directors need not be by ballot. 

Tenth. Directors need not be stockholders. 

Eleventh. In furtherance and not in limitation of the powers conferred by 
statute, the board of directors is expressly authorized— 

To make, alter, or repeal the Bylaws of the corporation. 

To authorize and cause to be executed mortgages and liens upon the real 
and personal property of the corporation. 

To set apart out of any of the funds of the corporation available for dividends 
a reserve or reserves for any proper purpose and to abolish any such reserve in 
the manner in which it was created. 

By resolution or resolutions passed by a majority of the whole board, to 
designate one or more committees, each committee to consist of two or more 
of the directors of the corporation, which, to the extent provided in said resolu- 
tion or resolutions or in the Bylaws of the corporation, shall have and may 
exercise the powers of the board of directors in the management of the business 
and affairs of the corporation, and may have power to authorize the seal of the 
corporation to be affixed to all papers which may require it. Such committee 
or committees shall have such name or names as may be stated in the Bylaws 
of the corporation or as may be determined from time to time by resolution 
adopted by the board of directors. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4767 

When and as authorized by the affirmative vote of the holders of a majority 
of the stoclv issued and outstanding having voting power given at a stock- 
holders' meeting duly called for that purpose, or when authorized by the 
written consent of the holders of a majority of the voting stock issued and 
outstanding, to sell, lease or exchange all of the property and assets of the 
corporation, including its good will and its corporate franchises, upon such 
terms and conditions and for such consideration, which may be in whole or in 
part shares of stock in, and/or other securities of, any other corporation or 
corporations, as its board of directors shall deem expedient and for the best 
interests of the corporation. 

Twelfth. Whenever a compromise or arrangement Is proposed between this 
corporation and its creditors or any class of them and/or between this cor- 
poration and its stockholders or any class of them, any court of equitable jiu'is- 
diction within the State of Delaware may, on the application in a summary way 
of this corporation or of any creditor or stockholder thereof, or on the applica- 
tion of any receiver or receivers appointed for this corporation under the pro- 
visions of Section 38S3 of the Revised Code of 1915 of said State, or on the 
application of trustees in dissolution or of any receiver or receivers appointed 
for this corporation under the provisions of Section 43 of the General Corpora- 
tion Law of the State of Delaware, order a meeting of the creditors or class of 
creditors, and/or of the stockholders or class of stockholders of this corpora- 
tion, as the case may be, to be summoned in such manner as the said Court 
directs. If a majority in number representing three-fourths in value of the 
creditors or class of creditors, and/or of the stockholders or class of stockholders 
of this corporation, as the case may be, agree to any compromise or arrange- 
ment and to any reorganization of this corporation as consequence of such com- 
promise or arrangement, the said compromise or arrangement and the said 
reorganization shall, if sanctioned by the Court to which the said application 
has been made, be binding on all the creditors or class of creditors, and/or on all 
the stockholders or class of stockholders, of this corporation, as the case may be, 
and also on this corporation. 

Thirteenth. Meetings of stockholders may be held without the State of Dela- 
ware, if the Bylaws so provide. The books of the corporation may be kept 
(subject to any provision contained the statutes) outside of the State of Dela- 
ware at such place or places as may be from time to time designated by the 
board of directors or by the Bylaws of the corporation. 

Fourteenth. The corporation reserves the right to amend, alter, change or 
repeal any provision contained in this certificate of incorporation, in the manner 
now or hereafter prescribed by statute, and all rights conferred upon stock- 
holders herein are granted subject to this reservation. 

We, the undersigned, being each of the incorporators hereinbefore named for 
the purpose of forming a corporation in pursuance of the General Corporation 
Law of the State of Delaware, do make this certificate, hereby declaring and 
certifying that the facts herein stated are true, and accordingly have hereunto 
set our hands and seals this 13th day of April A. D. 1948. 

Bernakd S. Meger (seal). 
HatvEiett R. MEKrac ( seal) . 
Norma Barber ( seal ) . 



State of New York, 

County of New York, City of New York, ss: 

Be it remembered, That on this 13th day of April A. D. 1948, personally came 
before me, David M. Ferkin. a Notary Public of the aforesaid State, County, and 
City, Bernard S. Meyer, Harriet R. Merric, and Norma Barber, all of the parties 
to the foregoing certificate of incorporation, known to me personally to be such, 
and severally acknowledged the said certificate to be the act and deed of the 
signers respectively and that the facts therein stated are truly set forth. 

Given under my hand and seal of office the day and year aforesaid. 

David M. Ferkin, 
Notary Public, State of New York. 
Qualified in Kings County. Kings Co. Clk's No. 61, Reg. No. 105-F-O. N. Y. 
Co. Clk's No, 92, Reg. No. T9-F-0. Commission expires March 30, 1950. 



4768 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

State of Delawake 

office of secretary of state 

I, John N. McDowell, Secretary of State of the State of Delaware, do hereby 
certify that the above and foregoing is a true and correct copy of Certificate of 
Incorporation of the "Pekao Trading Corporation," as received and filed in this 
office the fourteenth day of April A. D. 1948, at 9 o'clock A. M. 

In Testimony Whereof, I have hereunto set my hand and official seal at Dover 
this tenth day of January in the year of our Lord one thousand nine hundred and 
fifty-six. 

[seal] John N. McDowell, 

Secretary of State. 

M. D. TOMLINSON, 

Ass't Secretary of State. 



I >s^ D E X 



Note. — The Senate Internal Security Subcommittee attaches no significance to 
the mere fact of the appearance of the name of an individual or an organization 
in this index. 

A 

Page 

Aetna Insurance Co 4751,4755 

Albania 4711, 4737, 4754 

All-Russian Public Committee in America 4688 

American Committee for Russian Famine Relief 4689 

American Relief Administration (ARA) 4684 

American Superintendent of Finance 4700 

Amtorg Trading Corp 4698 

Andolsek, Charles F. : 

Testimony of 4750-4753 

East Saddle Road, Hohokus, N. J 4750 

Accompanied by Edward J. Bohne, representing Equitable Life Assur- 
ance Society 4750 

Second vice president in charge of claims department of Equitable 

Life Assurance Society 4750 

Appendix I. Regulations relating to delivery of checks and warrants to 
addresses outside the United States, its Territories, and possessions. 

Treasury Department Circular No. 655, with supplements 8 and 9 4757-4759 

Appendix II. Translation of pertinent provisions of the laws and decrees 

of the Polish People's Republic 4759-4761 

Appendix III. Affidavit of Joseph Dolina re Polish court procedure 4761-4764 

Appendix III (a). Probate proceedings in Polish court 4762-4764 

Appendix IV. Letter to Guardian Life Insurance Co. re rate of exchange 

through PEKAO 4764-4768 

Army, United States 4685,4692,4697 

56,000 Russian in, during war 4685 

Auer, Leopold 4700 

Auer, Mischa 4700 

Austria 4717 

B 

Bakaleinkov, Vladimir 4704 

Baklanova, Olga 4704 

Bankers Trust Co., Wall Street, New York 4729 

Barber, Norma 4766, 4767 

Bartosik, Afanasii 4699 

Bicknell, Col. Ernest P 4689, 4698, 4699 

Bienick, Agnieszka 4763 

Bohne, Edward J., attorney for Equitable Life Assurance Society, 214 

East 131st Street, Belle Harbor, N. Y 4750 

Bold, Michel 4701 

Bonds, sale of 4708 

Borodin, Michael. {See also Gruzenberg) 4686 

Braier's Estate (305 New York 148) 4714, 4715 

Bron, Saul 4698 

Bulgakova, Barbara 4704 

Bulgakova, Leo 4704 

Bulgaria 4711, 4730, 4737 

Bullitt, Ambassador 4695 

Burtan, Valentine 4701 

I 



n INDEX 

c 

Page 

Central Committee in Moscow 4707 

Central Committee of the Red Cross in Moscow 46D7 

Central Executive Committee 4690 

Chaliapin, Feodor 4703 

Chatov, Bill (IWW leader) 4a86 

China 4711, 4737, 4744 

Civil Practice Act (New York) 4712, 4721-4723, 4725, 4733, 4735, 4744, 4746 

Claims for insurance 468!) 

Colcord, Lincoln 4695 

Collection charges 4694 

Collier's magazine 4683 

May 4, 1940 -Jr.OO 

May 11, 1940 mn 

May IS, 1940 4702 

Collins, Surrogate 4730, 4740 

Communist (s) 4710, 4712, 4717, 4727, 4728, 4780, 4762 

Communist Party 4730 

Congress 4710,4743 

Congressional Record 4710 

Constitution of the United States 4723 

Corey, Lewis. (See Louis Fraina.) 

Counterfeited United States currency 4700, 4701 

Couriers, svstem of 4686 

Court of appeals (New York) 4714,4724,4738,4740,4744 

Czecholovakia 4711, 4730, 4737, 4740, 4754 

D 

Danisch, Antoni 4719, 4720, 4722, 4761, 4763 

Danisch, August 4763 

Danisch, Jan 4719, 4720, 4722, 4761, 4763, 4764 

Danisch, Julia 4719, 4720, 4722, 4761, 4763, 4764 

Danisch, Klara 4763 

Danisch, Teodor 4763 

Danisch v. Guardian Life Insurance Co., Southern District of New York, 

Civil 95-262 4726 

Danisz, Gerta 4763 

Danisz, Wincenty 4763 

Dies committee 4701 

Dimock, Judge 4715, 4716, 4719-4721, 4723 

Dolina, Joseph: 

Affidavit of 4727, 4761-4762 

Polish court assessor 4727 

Dowling, J. Edwin : 

Testimony of 4747-4750 

18 Carry Road, Scarsdale, N. Y 4747 

Associate general counsel of the Metropolitan Life Insurance Co 4747 

Drobnyk, Wendell J., second vice president and associate comptroller of 
Prudential Life Insurance Co., accompanied by William A. Leece, assist- 
ant general counsel for Prudential, testimony of 4753—4756 

Dubrowsky, D. H 4683 

Dulles, Secretary John Foster 4710, 4742 

B 

Ebbeson, Harold 4732 

Economic determinism 4690 

Edelstein, David N., United States district judge 4712, 4719, 4725, 4729, 4736 

Eisenhower, President 4742 

Equitable Life Assurance Society 4750,4751 

E.states, civilian 4697-4701 

Residuary 4698 

Estonia 4711,4737 

Everybody's Daily (publication) 4764 

Executive Order No. 8389 4758 



INDEX m 

Page 

"Exequatur" 4741,4745 

Exhibit No. 514. How Stalin Steals Our Money, by D. H. Dubrowsky, as 

told to Denver Lindley (Colliers magazine, April 20, 1940) 4683^708 

Exhibit No. 515. Civil Practice Act, section 474 4713 

Exhibit No. 515-A. Civil Practice Act, section 978 4713 

Exhibit No. 516. Motion for letters rogatory. Civil 95-262, Jan Danisch, 
Anton i Danisch, Julia Danisch, Anna Schwientek, Gertrud Wojtczyk, 
Emma Schweda, Sofia Janta, Jadiviga, Salaiva, Maria Stancsyk, Luiza 
LescJi, and Gertruda XJrganek, Plaintiffs, against The Guardian Life 

Insurance Co. of America, Defendant 4719-4721 

Exhibit No. 516-A. Civil Action 95-262, memorandum of David N. Edelstein, 

United States district judge 4722-4725 

Exhibit No. 517. Motion for discovery and inspection of documents in de- 
fendant's possession and memorandum opinion by Sylvester J. Ryan, 

United States District Judge 4726 

Exhibit No. 518. In the matter of the estate of Isaac Weidberg, de- 
censed 4731-4735 

Exhibit No. 519. Surrogate's Court Act, section 269 4735-4736 

Exhibit No. 520. Address by Mr. Reidy before American Life convention 
at Chicago entitled "Insurance Dollars — Should They Be Sent Behind the 
Iron Curtain?" 4737-4747 

F 

Famine 4692 

Famine relief 4689 

Farley, Philip F 4732, 4734 

FBI 4791 

Federal Register 4711 

Federal Rules of Civil Procedure 4723 

Ferkin, David M., notary public 4767 

Financial raids 4708 

First National City Bank 4756 

Five-year plan 4697, 4698, 4705 

Foley, E. H., Acting Secretary of the Treasury 4759 

Foley, Surrogate 4701 

Foreign exchange 4689, 4694 

Foreign exchange fund 4699 

Foreign Trade Commissar 4705 

Forgery, proof of 4693 

Fraiua, Louis (now known as Lewis Corey) 4686 

Frumkin, Assistant Commissar of Finance 4690 

G 
Garcia, Roy 4683 

Germany 4711, 4737 

Gold 4706, 4707 

Gold, Louis. (See Goldstein, Movsha-Khaim.) 

Goldstein, Movsha-Khain (changed his name to Louis Gold) 4684, 4685 

Gomelskaya, Frieda H 4701 

Gruzenberg (alias Michael Borodin) 4686 

Guardian Life Insurance Company of America 4709, 

4710, 4712, 4718, 4719, 4720, 4722, 4726, 4737, 4755, 4764 
Gus, Veteran Albert 4693 

H 

Hammer 4687 

Hartmann 4686, 4687 

Hazelton, Surrogate 4740 

Hibben, Capt. Paxton 4689 

Hines, General 4696 

Horner, .Judge Henry (Governor of Illinois) 4699 

Hourwich 4686 

How Stalin Steals Our Money 4683 

Hull, Secretary of State 4741 

Hungary 4711, 4714-4717, 4730, 4737, 4740, 4744 

Hunt, Mrs. Agnes S., Esq., with Guardian Life Insurance Company of 

America 4764 



IV INDEX 

1 

Fage 

Immigration Act, United States 4697 

Immigration ofBcers, United States 4691 

Industrial-insurance compensations 4698, 4699, 4701 

Industrial and life insurance 4708 

Inheritance 4697 

"Iniurcollegia" (Association of Lawyers — Moscow) 4739,4740 

Inreklama's racket 4702 

Insurance Dollars — Should They Be Sent Behind the Iron Curtain? 

address by Mr. Reidy before American Life convention at Chicago 4736 

International Jurists Commission 4726 

International Red Cross 4696 

Intourist 4602, 4708 

Iron Curtain countries 4709, 4710, 4714, 4716, 4737, 4748, 4749, 4754 

Ivanov, Veteran Xenofon 4692 

J 

Janta, Sofia 4719, 4720, 4722, 4761, 4763, 4764 

Jewish Welfare Board 4691 

John Hancock Group Insurance Co 4751, 4755 

Johnston, Senator Olin D 4683 

Justice, Department of 4688 

Justice Enslaved, publication by International Jurists Commission 4726 

K 

Kalinin, President 4690 

Kerzhentsev, Ambassador 4688 

Khalepsky, General 4695 

Kneerin later changed to Kay 4699 

Kopeikina, Lydia 4703 

Krassin 4687 

Krupskaya, Nadezhda Konstantinova (Lenin's widow) 4699,4700 

Kupka, Rev. Theodore A 4720, 4763, 4764 

L 
Lagodzinski, Miss Adele 4764 

President, Polish Women's Alliance 4764 

Landau, Hymann 4701 

Latvia 4711,4737 

Lazarev, Ivan Vasilyevich 4704 

Lazewski, Mr. W 4764 

Editor of Everybody's Daily 4764 

League of Red Cross Societies 4696 

Leece, AVilliam A 4753 

Assistant general counsel, Prudential Life Insurance Co 4753 

Lehman, Judge 4737 

Lesch, Luiza 4719, 4720, 4722, 4761, 4764 

Lesch, Maks 4763 

Lesch, Pawel 4763 

Letters rogatory 4715, 4716, 4719^721, 4726, 4727, 4729, 4762 

Liggett, Walter 4689 

Lindley, Denver 4683 

Lithuania 4711, 4737, 4744, 4752, 4754 

Litvinov, Maxim 4687 

"Litvinov Agreement" 4741 

Lusk committee 4687 

M 

Madison, James 4700 

Mandel, Benjamin 4683 

Martens 4686,4670 

Plenipotentiary representative of Soviet Government in United 

States 4686 

Martens Embassy 4688 

Massachusetts Judicial Council 4717 



mDEX V 

Page 

Matchabelli's, Prince 4701 

Maturk, Jacob 4691 

Matveyuk, Andrian Pavlov 4691, 4692 

McDowell, John N 4768 

Medical supplies (smuggling of) 4687,4688,4702 

Merric. Harriet R 4766, 4767 

Metropolitan Life Insurance Co 4747, 4748, 4749, 4751 

Mever, Bernard S 4766, 4767 

Morris, Robert 4683, 4690 

Moscow Academy of Music 4703 

Moscow Art Theater 4703 

Moscow Art Theater Musical Studio 4704 

Moscow gold 4684 

Murder trust 4697 

N 

National Association of Insurance Commissioners 4747 

New York 4711, 4712, 4728, 4746 

Statute 4712 

Nuerteva 4686 

O 

Oldenburgsky, Prince 4704 

Ouspenskaya, Maria 4704 



Parcel business 4702, 4707, 4708 

Parcel racket 4705 

Pavliuk, "Veteran Sergei 4694 

Pavne, Judge John Barton 4689, 4696 

PEAKO Trading Corp. (PKO) 4728,4729,4764,4768 

25 Broad Street, New York City 4728 

Incorporation of 4765-67 

People V. Jacoby 4740 

Peterson, Chekist 4688 

Piatkiewicz, Karol 4764 

Editor-in-chief of Polish Daily Zgoda 4764 

PKO. {See PEAKO Trading Corp.) 

Poland 4711, 4714-4717, 4719, 4720, 

4723, 4725-4729, 4737, 4744, 4748-4750, 4754, 4755, 4761, 4762 

Polish counsul in Chicago 4722, 4726 

Polish Daily Zgoda 4764 

Polish Embassy in Washington 4717,4719 

Polish Law Journal (Dziennik Ustaw) 4760 

Polish National Bank 4720,4721,4729,4760 

Polish Peoples Republic 4718, 4722, 4728, 4725, 4728, 4759, 4762 

Polish Women's Alliance 4764 

Polska Kasa Opicki, branch of Polish National Bank 4728 

Pomeran, A. L 4683, 4756 

Powers of attorney 4710-4712. 4716-4719, 4723, 4726, 4730, 4731, 

4734, 4735, 4737-4740, 4743, 4745, 4746, 4748, 4751, 4752, 4754, 4759 

Presidium of the Supreme Court of the U. S. S. R 4740 

Proof of forgery 4693 

Propaganda films and publications 4708 

Prudential Life Insurance Co 4751,4753,4754, 4755 

Public Law No. 828 4714 

R 
Rabinoff, Max 4698 

Rakovsky, Dr. Christian 4696 

Ransom racket 4701 

Recht, Charles 4730, 4731, 4751, 4754 

Red Cross, American 4689,4696,4698 

Red Cross, Soviet 4683, 4684, 4688-4690, 4693-4700, 4705, 4707 



VI INDEX 

Page 

Reed, John 4686 

Reidy, Daniel J. : 

Testimony of 4709-4747 

73 Beacon Hill Road, Ardsley, N. Y 4709 

Vice president and general counsel of Guardian Life Insurance Com- 
pany of America 4709 

Accompanied by John V/alsh, counsel for comiiany 4709 

Richberg, Donald 4699 

Romauchuk, Andrew 4692 

Rosenberg, Marcel 4688 

Ross, Paul 4715-4717, 4719, 4729, 4730, 4736, 4749, 4751 

Rothschild, Thea Weidberg 4732 

Ruble exchange 4691 

Rumania 4711, 4730, 4737 

Russian beneficiaries of American soldiers 4690, 4691 

Ryan, Judge Sylvester J 4716,4725,4726 

S 

Salawa, Jadwiga 4719, 4720, 4722, 4761, 4763, 4764 

Salomon, Haym 4700 

Sass & Martini 4701 

Schwebel, Max 4756 

Schweda, Emma 4719, 4720, 4722, 4761, 4763, 4764 

Schwientek, Anna 4719, 4720, 4722, 4761 

Sheftel, Dr. Mark 4695, 4697, 4699 

Shepetovka Committee of the Red Cross 4694 

Shipping charges 4708 

Shvedov, Konstantin 4704 

Skvirsky, Boris Evseyevitch 4690 

Snyder, John W. (Secretary of the Treasury) 4759 

Social-Democratic Labor Party 4683 

Soviet Bank of Foreign Trade 4705 

Soviet financial schemes 4707 

Soviet Information Bureau 4690 

Soviet Red Cross — see Red Cross, Soviet 

Stanczyk, Maria 4719, 4720, 4722, 4761 

Stasch. Marta 4763 

State Bank of the Soviet Union 4684, 4685, 4692-4694, 4699, 4705, 4707 

State Department 4694, 4696, 4715, 4738, 4741, 4745, 4749, 4750, 4755 

Secretary of 4743 

Stein, Boris 4692 

Stein, Jack 4693 

Stein, Joshua 4692, 4693 

Stein, Maurice August (veteran) 4692 

Stein, Rosa 4692, 4693 

Stein, Rose 4693 

Sterenstein, Beyla 4692, 4693 

Sterenstein, Wolf 4692, 4693 

Sterngluss, Jacob 4695, 4696 

Sums annually siphoned out of this country 4685 

Supreme Court of the United States 4714,4742,4744,4745 

Surrogates Association of the State of New York, executive committee 

of the 4744 

Surrogate Court Act (New York) ___ 4712, 4713, 4731, 4732, 4734, 4735, 4744, 4745 

Surrogate's court 4731, 4733, 4741 

Sweatbox system (parilka) 4705 4706 

Swietek. Anna 4763, 4764 

Swift, Ernest J 4689 

T 

Tamiroff, Akim 4704 

Tomlinson, M D 4768 

Topken, William J 4732, 4734 

Topken & Farley 4732 

Torgsin orders 4707 

Torgsin stores 4691, 4706, 4707 



INDEX VII 

Page 

Torgsius 4708 

Traclitenberg, Alexander , 4686 

Travelers Insurance Co 4751, 4755 

Treasury, Secretary of the 4711, 4743 

Treasury, United States 4685, 4690, 4743, 4744 

I Treasury, Department Circular 655 re list of Communist countries 4711, 4714 

j Treasury regulations.. 4715, 4723, 4725, 4729, 4743, 4744, 4748, 4749, 4752, 4754 

No. 655 4746, 4757 

Supplement No. 8 4758 

Supplement No. 9 4759 

Tukhaclievsky, Marshal 4695 

U 

United States District Court for the Southern District of New York, 

Civil No 95-262 4712 

Urganek, Gertruda 4719, 4720, 4722, 4761, 4763 

V 

Velikanov, Ivan 4704 

Veterans' Administration 4696, 4697, 4707 

Veterans Bureau, United States 4684, 

4685, 4689, 4690-4694, 4696, 4699, 4707 

Veterans' cases 470S 

Venshtorg Bank (Bank of the Commissariat for Foreign Trade) 4740 

W 

Walsh, John 4709 

Counsel for the Guardian Life Insurance Company of America 4709 

Member of firm of Watters & Donovan 4709 

War-risk insurance 4685 

Watters & Donovan 4709 

Weidberg, Emanuel 4732 

Weidberg, Isaac 4730-4732 

Weidberg, Israel 4732 

Weidberg, Johanna 4732 

Weinstein 4686 

Weinstein, Morris 4732 

iWeisberg, Hyman 4732 

Wingate, Surrogate G. A 4701 

Wisconsin Industrial Board 4699 

Wo.itczyk, Gertruda 4719, 4720, 4722, 4761, 4763, 4764 

Wolf, Popper, Ross, Wolf & Jones 4715, 4719, 4720, 4751, 4754 

Workmen's compensation 4697 

V.'orthless advertising 4708 

Y 

Yarmoluk, Andrew 4692 

Yenukidze, president of all Soviet Red Cross Societies 4695 

Z 

Zhdanov 4696 

Zinoviev 4688 

Zorin 4688 

o 



itWUJi IV-'iN.i 



A^ 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

(Ordeal of a Hungarian Patriot) 



HEARINGS , 

BEFORE THE 

SUBCOMMITTEE TO INVESTIGATE THE 

ADMINISTEATION OF THE INTEENAL SECURITY 

ACT Km OTHER INTERNAL SECURITY LAWS 

OF THE 

COMMITTEE ON THE JUDICIAEY 

UNITED STATES SENATE 

EIGHTY-FIFTH CONGRESS 

FIRST SESSION 

ON 

SCOPE OF SOVIET ACTIVITY IN THE 
UNITED STATES 



OCTOBER 1 AND 16, 1957 



PART 86 



Printed for the use of the Committee on the Judiciary 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
93215 WASHINGTON : 1958 



Boston Public Library 
Superintendent of Documents 

APR 1 - 1958 



COMMITTEE ON THE^JUDICIARY 

JAMES O. EASTLAND, Mississippi, Chairman 

ESTES KEFAUVER, Tennessee ALEXANDER WILEY, Wisconsin 

OLIN D. JOHNSTON, Soutli Carolina WILLIAM LANGER, Nortli Dakota 

THOMAS C. HENNINGS, Jr., Missouri WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utali 

JOSEPH C. O'MAHONEY, Wyoming EVERETT McKINLEY DIRKSEN, Illinois 

MATTHEW M. NEELY, West Virginia JOHN MARSHALL BUTLER, Maryland 

SAM J. ERVIN, Je., North Carolina ROMAN L. HRUSKA, Nebraska 



Subcommittee To Investigate the Administbation of the Inteenal Secueity 
Act and Otheb Inteenal Security Laws 

JAMES O. EASTLAND, Mississippi, Chairman 
OLIN D. JOHNSTON, South Carolina WILLIAM E. JENNER, Indiana 

JOHN L. McCLELLAN, Arkansas ARTHUR V. WATKINS, Utah 

SAM J. ERVIN, Jr., North Carolina JOHN MARSHALL BUTLER, Maryland 

MATTHEW M. NEELY, West Virginia ROMAN L. HRUSKA, Nebraska 

RoBEET Morris, Chief Counsel 

J. G. SouRwiNE, Associate Counsel 

Benjamin Mandel, Director of Research 

n 



CONTENTS 



Testimony of — Page 

Eckhardt, Tibor 4769 

Fabian, Bela 4769 

Khokhlov, Nikolai 4818 

Sieg:rist, Robert R 4798 

Vidovics, Ferenz 4778 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 



TUESDAY, OCTOBER 1, 1957 

United States Senate, 
Subcommittee to Investigate the 
Administration of the Internal Security Act 

AND Other Internal Security Laws, 
of the Committee on the Judiclvry, 

Washington^ D. G. 

The subcommittee met, pursuant to call, at 10 : 40 a. m., in room 36, 
United States Court House, Foley Square, New York City, Senator 
Olin D. Johnston (South Carolina) presiding. 

Also present: Robert Morris, chief counsel; and Benjamin Mahdel, 
research director. 

Mr. Morris. Dr. Fabian, Mr. Eckhardt, would you gentlemen come 
forward ? Will you gentlemen both be sworn ? 

Senator Johnston. Just raise your right hand. Do you swear that 
the evidence you give before this subcommittee of the Judiciary Com- 
mittee of the Senate to be the truth, the whole truth and nothing but 
the truth, so help you God ? 

Mr. Fabian. I swear. 

Mr. Eckhardt. Yes. 

Mr. Morris. Senator, in connection with the testimony that took 
place last week from Msgr. Bela Varga and Mr. Szeredas about the 
abrupt redefection of Mr. Szabo with all the records bearing so many 
important secrets back to Budapest, we have asked both the witnesses 
here today to be present and give some testimony by way of deter- 
mining something further about this disappearance ? 

Senator Johnston. Yes, it was amazing how they got the informa- 
tion, claiming to be friends, and then carried it back to what we con- 
sider an unfriendly government. You may proceed. 

Mr. Morris. Dr. Fabian, what do you know about Mr. Szabo and 
his defection, redefection ? 

TESTIMONY OF BELA FABIAN AND TIBOR ECKHARDT 

Mr. Fabian. I don't know anything personally, because I have never 
seen Mr. Szabo. From what I know, I think the whole case is in very 
close connection with the so-called Vidovics case. 

My letter in the Herald Tribune was published September 1. 

Mr. Morris. I offer that for the record, the letter referred to : Dr. 
Fabian's letter about Mr. Vidovics. 

4769 



4770 SCOPE OF SOVIET ACTIVITT IN THE UNITED STATES 

(The letter above referred to was marked "Exhibit No. 525" and 
reads as follows:) 

Exhibit No. 525 

[Herald Tribune, p. 4, September 1, 1957, sec. 2] 

No Visa 

MYSTEEY SUBEOUNDS CASE OF VIDOVITS (SIC) 

Big Indian, N. Y., August 29, 1957. 
To the New York Herald Tribune: 

After the suppression of the Hungarian revolution, over 33,000 Hungarian 
refugees succeeded in obtaining visas to the United States. Among the less 
fortunate waiting for visas in Vienna and Yugoslavia is a former member of the 
Hungarian Parliament, Ferenc Vidovits. 

This man, originally a high-school teacher, had spent his life valiantly fight- 
ing against the two totalitarian powers, Nazis and Communists. He escaped 
from Hungary last February. Since November the Hungarian underground had 
been hiding him from the Soviet and the Hungarian secret police. 

Because of his opposition to them, the Nazis had attempted to kill him by 
deliberately hitting him with an automobile. They succeeded only in breaking 
his leg, and he still walks with a stick today. In 1945 he was elected to the 
Hungarian Parliament, where he immediately came into conflict with Rakosi, 
and with Laszlo Rajk, who was the Minister of Interior at that time. Both 
waited for the moment to do away with Vidovits. 

In 1946 the Rakosi regime had construed an accusation against another anti- 
Communist deputy, named Vertesi. Vidovits saved Vertesi by smuggling him 
out of Budapest and driving him in his car to the Austrian border. Vidovits, 
therefore, was arrested and sentenced to 8i/^ years in jail for helping Vertesi to 
escape, and also because of the articles he had written against Stalin. He was 
helped by his friends to break out of jail in April 1948, and for 50 days he hid 
out in a village. 

Then Vidovits was betrayed for the 50,000-forint reward set on his head by the 
Government. Because a gun was found on his person, he was arraigned before 
a summary court and the prosecutor demanded the death penalty. He was 
sentenced to 15 years and was given an additional prison term of l^^ years for 
the charge of having conspired to overthrow the Government during the 50 days 
that he had spent in hiding. Because of his escape, he was shackled by a chain 
weighing over 60 pounds. His own weight was reduced to 90 pounds because of 
malnutrition. 

After his escape from Hungary, Vidovits was elected as a member of the execu- 
tive committee of the Hungarian National Council, the representation of the 
silenced Hungarian peoples in the free world. He is also an associate chairman 
of the Federation of Hungarian Freedom Fighters. In spite of this, the Hun- 
garian exile organizations have up to now been unsuccessful in obtaining a visa 
to this country for Ferenc Vidovits. 

The reason ? No one can tell. Perhaps the publication of this letter wiU solve 
the mystery. 

Bela Fabian, 
Member of the Executive Committee, Hungarian National Council. 

Senator Johnston, I would like to inform you for the record that 
I received a call on Friday afternoon from the Immigration Depart- 
ment that they will have Mr. Vidovics here ready to testify in the 
very near future in connection with that. You will remember you 
asked me that, and they have notified us that they will have him 
available. 

Mr. Fabian. I must tell you that the real hero against the Nazis 
and the Communists was Francis Vidovics, who escaped from Hun- 
gary around the end of January 1957, so it means that when he has 
seen that no help is coming, then he came to Vienna and naturally he 
wanted to join us here in the United States. He is a member of the 
executive committee of the Hungarian National Council. He was 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4771 

associate chairman of the Freedom Fighters and he couldn't, and I 
wrote in this letter why he didn't get a visa to the United States; the 
reason : 

No one can tell. Perhaps the publication of this letter will solve the mystery. 

The mystery was solved, because I think the soil was burning under 
the feet of Mr. Szabo and so he went back, because he has seen that 
the mystery will be cleared. 

I must tell you that Mr. Vidovics was poisoned in April and he 
just escaped because he felt that something such as poison was given 
to him. He was invited to Mr. Szabo and to Mr. Szabo's friend Dr. 
Saghi. 

Mr. Morris. Spell that please, Dr. Saghi ? 

Mr. Fabian. Yes; I think he spells his name S-a-g-h-i-, and his first 
name is Zoldan. He was a Soviet-trained medical student who was 
never a doctor but he functioned as a doctor and he had always poison 
with him. Vidovics was poisoned in a Vienna restaurant wliere he 
was called to the telephone during dinner. When he came back he 
started to eat again. After some minutes he felt that something is 
happening to him. He felt that he was poisoned. 

Mr. Morris. How do you know this, Dr. Fabian ? 

Mr. Fabian. I know this. This is not a secret to the whole Hun- 
garian population. He wrote letters about it. 

Mr. Morris. Senator, I think that probably — we appreciate Dr. 
Fabian telling this story, but probably the best evidence will be avail- 
able to the committee when Mr. Vidovics comes here and he can tell 
us about it personally. 

Mr. Fabian. This is most important that he can come here. I 
wanted to tell you that it is very urgent that he comes here, because 
it may be that soon you will not have a witness. Yesterday I got a 
letter from Mr. Vidovics, and he writes in this letter that he is fol- 
lowed everywhere. Wherever he goes, somebody is coming after him. 
He is living with 20 other people in a room, so that I think that it is 
very important 

Senator Johnston. You mean here in the United States ? 

Mr. Fabian. Near Vienna. He is in Vienna, and he will be followed 
everywhere, so it probably means that they want to get rid of him 
because he knows too much. 

Mr. Morris. Dr. Fabian, we have not publicly disclosed, the sub- 
committee has not publicly disclosed the fact that Vidovics is coming 
here. 

Mr. Fabian. Yes ; I know. 

Mr. Morris. Unless something happens to him on the way. We have 
been saying nothing about it. This is a session with only Senator 
Johnston, members of the staff, and Mr. Eckhardt here, but I don't 
know how else it will be known. We think it is the best practice, and 
the reason we are having this testimony now, it is for the public record 
but, at the same time, we don't want it announced that he is on his way 
over here. 

Mr. Fabian. Naturally. 

Senator Johnston. It wouldn't be good for him. 

Mr. Morris. There will be a delayed publication of this testimony 
for that reason. 

Mr. Fabian. Thank you very much. 



4772 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. Is there anything else you can tell us about this whole 
Szabo-Vidovics case ? 

Mr. Fabian. I think that there is a man whose name is the same, 
Zaghi, who is connected in this case, and there are two chauffeurs who 
wanted to take Vidovics back to Hungary and who used to take Mr. 
Szabo to the Hungarian frontier. It would be very important if you 
would have somebody question these two men in Vienna. 

Mr. Morris. You will give us those names ? 

Mr. Fabian. I think one's name is Francis and the other is named 
Banhidy. 

Mr. Morris. Then, to get to Dr. Eckhardt here, what can you add to 
this whole story ? 

Mr. Eckhardt. I can tell you that I organized, when the Hmigarian 
revolution started, an association called First Aid for Hungary. 

Mr. Morris. First Aid for Hungary ? 

Mr. Eckhardt. Yes; it was an American organization. We had 
former President Hoover as our honorary chairman. It was a purely 
American organization to help Hungary. I was president of the or- 
ganization and, as such, I went over to Austria in early spring this 
year. My job was really to — here we collected the money and in Aus- 
tria we were doing whatever we could to help with refugees who were 
coming at that time by droves and sometimes by thousands every day. 
So, the situation was very tense and we tried to get as many people 
to help us as we could get in Vienna. I had a very excellent man, a 
two-star General Lengyel ; Bela is his first name. Bela Lengyel was 
heading our head office in Vienna. We tried to get experienced people 
to help us, volunteers mostly, and wlien the name of Miklos Szabo 
came up because he was recommended — by whom I wouldn't remem- 
ber any more — but when his name came up General Lengj'el imme- 
diately protested: "No; this man we cannot use." I asked him, "Gen- 
eral, why can't we use him?" He said "He is more than suspected of 
being a Hungarian police spy." I asked the general : "^Vliere do you 
know this from?" He said "I am on good terms with the Austrian 
Ministry of the Interior. They are listening in on his telephone con- 
versations and we know that he is maintaining regular telephone con- 
tacts with the Budapest secret police, the political police." 

Mr. Morris. With that knowledge still this man was able to carry 
on the work he was doing ? 

Mr. Eckhardt. Exactly. 

Mr. Morris. For how long ? 

Mr. Eckhardt. He was not in our organization. 

Mr. Morris. How long after this intelligence was imparted to you 
was this man able to carry on? 

Mr. Eckhardt. I reported it in every place. I told the Hungarian 
National Council. I mentioned it to the Free Europe Committee. 

Mr. Morris. When was that? 

Mr. Eckhardt. In March of this year. 

Mr. Morris. So from March to early in September this man was 
able to carry on in the sensitive position he was in? 

Mr. Eckhardt. Exactly. 

Mr. Morris. Learning the secrets of the Hungarian rebellion, the 
Hungarian uprising, the secrets of the Freedom Fighters? 

Mr. Eckhardt. Yes. 

Mr. Morris. And he was able to stay in that position? 



SCOPE OF SOVIET ACTIVITY IN THE' tJNITED STATES 4773 

Mr. EcKHARDT. And I fear handing over a lot of innocent people 
to the secret police in Hungary. 

Mr. Morris. We learned that the other day, Senator Johnston, that 
this man was able to exact secrets from trusting Freedom Fighters, 
and apparently he has taken those secrets back to the Soviet Secret 
Police. 

Mr. EcKHARDT. Now I may give you a few names who know simi- 
larly about these facts. When I came back and fomid out these 
things, I started inquiring, asking the same questions which you 
asked me, how was it possible that this man was 

Senator Johnston. This is going to be made public. Should we 
take those names? 

Mr. Morris. Why don't you give us the names in executive session ? 
This is a public record. 

Senator Johnston. It is liable to drift back in some way and would 
do them a great injury there. 

Mr. EcKHARDT. I'd be glad to cooperate as you wish. 

Senator Johnston. We will be glad to have the names but I don't 
think it ought to go into the public record. 

Mr. Fabian. May I tell you that Miklos Szabo belonged to a secret 
society which was originally a secret Nazi society which was headed 
in Hmigary by the Assistant Secretary of Interior who was hanged 
later, Laszlo Endre, and by another Assistant Secretary of State 
whose name was Laszlo Baky. This secret society, called Magyar 
Kozosseg, Hungarian Community, has a lot of members here in the 
United States, and he belonged to them and he was in connection with 
them always. 

Senator Johnston. That was a Nazi 

Mr. Fabian. This was a former resistance organization and was 
headed by 7 people, among these 7 I know of 2 and those 2 were 
hanged. He belonged to this organization 

Mr. EcKHARDT. Originally. 

Mr. Fabian. Originally and now, and this organization has a lot of 
members here in the United States and everywhere in the whole world 
because they remain friends. 

Senator Johnston. What is the main object of the organization? 

Mr. Fabian. Then? 

Senator Johnston. Then and now ? 

Mr. Fabian. Then it was a resistance organization, as they said, 
based on pure Hungarian blood. There were 3 secret societies in 
Hungary between the 2 World Wars and one of the secret societies was 
this one, but the other 2 secret societies disappeared after the war. 
This secret society, however, is alive everywhere in the whole world, 
and this secret society is trying now to grab the whole power in the 
Hungarian emigration in their hands. 

For the present they say "I'm sorry" but they are continuing as 
they have done. Naturally, I can't give you the proof about it, docu- 
mentary proof, but they have people connected with the Plungarian 
Communist Party. There was a member of the Hungarian Commu- 
nist government who was a very influential friend of Mr. Rakosi, 
whose name is Joseph 

Senator Johnston. So you think they have members here in the 
United States, too ? 



4774 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Fabian". Very influential ones. 

Senator Johnston. And you think probably when the refugees 
come in they are trymg to bring some of them in ? 

Mr. Fabian. Naturally. They went to Washington as I heard, 
and they wanted to bring their friends from Vienna to the United 
States. They have these powerful friends. 

Senator Johnston. And some of their members there are very in- 
fluential ? 

Mr. Fabian. Yes. 

Senator Johnston. And would be in position to, you might say, 
put in a great many that are coming into America at the present time 
as refugees 

Mr. Fabian. Liberals. 

Senator Johnston. Trickling in ? 

Mr. Fabian. Senator, they pretend now to be liberals. You know 
I was the head of the Democratic Party in Hungary. I fought against 
these secret societies in Hungary. I talked steadily about these secret 
societies. You know I am qualified today a conservative, because 
they came disguised to this country as liberals. I have known what 
they are doing and I, who also have powerful connections, couldn't 
do anything about them. 

Senator Johnston. They are coming in as great liberators ? 

Mr. Fabian. They say that they are liberals. For them, I am not 
a liberal, because I fought against them. 

This organization was a Naizi organization. I fought against them 
in the Parliament, and now they come as liberals to this country, be- 
cause they know that, in this country, if they say that they are 
liberals and I am a conservative, they get the bigger support. So 
they come in disguise and they can do almost everything. Mr. Eck- 
hardt mentioned that he was on the Hungarian National Council. 
Mr. Eckhardt mentioned that he got the warning from two-star 
General Lengyel personally, and when he came bacli he warned us. 

Mr. Morris. Warned the Hungarian National Council ? 

Mr. Fabian. Yes. 

Mr. Morris. Of which you are a member ? 

Mr. Fabian. I am a member of the executive committee. 

Mr. Morris. As are you, Mr. Eckhardt. 

Mr. Eckhardt. No ; I am an American citizen. 

Senator Johnston. Would you have any way to estimate — there 
were about 30,000 came in at one time — would you have any way to 
estimate approximately how many probably were Communists ? 

Mr. Fabian. I don't know. Communists ? 

Senator Johnston. Yes. 

Mr. Fabian. Not so many. 

Mr. Morris. It is a matter that we should look into though, is it not ? 

Mr. Fabian. I think so. You do the best service to the United 
States and I can assure you that I am happy that you are investigating. 

Senator Johnston. When we do the best for the United States, at 
the same time we are doing the best for Hungary in the long run, 

Mr. Fabian. Maybe, but you do more good for the United States 
than for us. 

Mr. Eckhardt. May I, Senator, give a little background informa- 
tion which will give you let's say the true aspect of the secret society 



' SCOPE OF SOVIET ACTIVITY EST THE' TnSTITED STATES 4775 

in question. During the Nazi times at first they pretended to be anti- 
German, They were anti-Semitic and anti-German at the same time, 
that is to say they covered up with anti-Semitism their extreme na- 
tionalism and also would eliminate everything which was German. 
So they not only hit the Jews, they also hit the German minorities in 
Hungary for instance. 

Mr. Morris. In other words when the Nazis were in power, they 
were Nazis and were Communists when the Communists were in 
power? 

Mr. EcKHARDT. Exactly. Now when the Communists took over 
they got scared and look for a new disguise. They dropped anti- 
Semitism and became only anti-German and went a long way toward 
the Soviets. Then, later, when they arrived in Austria following the 
downfall of Prime Minister Nagy, which was really caused by them 
because during the day they pretended to go along with the Soviets 
and at night they were again conspiring against them. And here 
comes what right now is important 

Senator Johnston. So it is a great conspiracy going on ? 

Mr. EcKHARDT. All the time, but always in line with whatever 
ideologies are predominant, they want to be on it and in it and at the 
same time conspiring against it. 

Senator Johnston. I have to run. 

Mr. Morris. You have presented the substance. I'm sorry, gentle- 
men, the Senator has a 1 o'clock engagement. 

(Wliereupon at 12 : 55 p. m., the hearing was adjourned.) 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 



WEDNESDAY, OCTOBER 16, 1957 

United States Senate, 
Subcommittee To Investigate the 
Administration of the Internal Security Act 

AND Other Internal Security Laws, 
OF the Committee on the Judiciary, 

Washingto?i, D. G. 

The subcommittee met, pursuant to call, at 10 : 35 a. m., in room 
457, Senate Office Building, Senator Olin D. Johnston (South Caro- 
lina), presiding. 

Also present : Robert Morris, chief counsel ; J. G. Sourwine, associ- 
ate counsel ; Benjamin Mandel, director of research ; Eobert McManus, 
research analyst, and F. W. Schroeder, chief investigator. 

Senator Johnston. The committee will come to order. 

'\Yho is the first witness ? 

Mr. Morris. Senator Jolmston, this morning we have a man from 
Vienna, who arrived last night, Ferenz Vidovics. 

You will recall. Senator, that we had Msgr. Bela Varga testify for 
us in connection with the defection of a man named Szabo. 

This Szabo was a man who apparently had worked himself into a 
very secret position in Vienna where he was able to have access to the 
secrets of the police department as secretary of a refugee relief organi- 
zation. He was able to apprise himself of many of the things that 
were going on. 

Among other things, he learned the identity of the witnesses, all 
the witnesses who testified before the United Nations. That was a 
well-kept secret. The witnesses who testified were assured that, if 
they testified, their identities would not be made known and, therefore, 
their families back in Budapest would not be subject to reprisal. 

We had as a witness after Monsignor Varga, Mr. Szeredas. Mr. 
Szeredas testified that after he came back from Hungary where he 
participated in the uprising, he was approached by Szabo, and Szabo 
asked him to tell him stories, and he began telling him many of the 
secrets. 

One day Szeredas noticed Szabo at the Hungarian Legation in 
Viemia and he realized he was in communication with the Communists 
and turned away from him. 

You will recall. Senator, that when we asked him, Monsignor Varga 
said that a man who knows a great deal about Szabo is a man named 
Ferenz Vidovics, who Monsignor Varga regards as the outstanding 
hero of the Hungarian uprising. 

Monsignor Varga says that if any man can be said to have led the 
Hungarian uprising, it was Mr. Vidovics. He was the man who or- 

4777 



4778 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

ganized successfully in 1946 a campaign against the Communists and 
defeated the Communists in the election that year. 

You will remember, Senator, when we found out that this man was 
the real leader of the uprising, we learned he was not able to get into 
the United States. At the time that we made inquiry, there was a 
bad record on him. 

Senator, you will recall that we sent a letter to the Department of 
Justice asking that he be made available, and when they went to 
Immigration, Immigration said that they had looked into it after 
the inquiry and discovered that there was some derogatory informa- 
tion, but at the time we applied last spring the derogatory informa- 
tion did not hold up ; but the authorities in charge forgot to notify 
the Immigration people about it. When the Department arranged 
for Mr. Vidovics' arrival here, the immigration authorities immedi- 
ately made it possible for Vidovics to be here, and he is going to tell 
us about the role of Mr. Szabo. 

So much for the background. Senator. 

TESTIMONY OF TERENZ VIDOVICS (AS INTERPHETED BY LOUIS E. 
KORNIS, BELA FABIAN, AND MSGR. BEIA VARGA) 

Senator Johnston. Please stand and raise your right hand and be 
sworn. Do you solemnly swear the evidence you give before the 
subcommittee will be the truth, the whole truth, and nothing but the 
truth, so help you God ? 

Mr. KoRNis. May I translate, your Honor ? 

He gave his solemn oath, stating specifically that what I am depos- 
ing is the truth and nothing else but the truth. 

Senator Johnston. You are going to act as interpreter ? 

Mr. KoRNis. Yes, sir. 

Senator Johnston. Do you solemnly swear that you will interro- 
gate the witness with the same interrogations that we have given him 
and give to us his answers to those interrogations to the best of your 
knowledge and understanding of what they are ? 

Mr. KoRNis. I so do swear. 

Mr. Morris. Will jon identify yourself for the record ? 

Mr. KoRNis. Yes, Your Honor, my name is Louis E. Kornis; my 
occupation is that of a translator. As a matter of fact — May I men- 
tion my private connection ? 

Mr. Morris. I don't think it is necessary. I wonder if you would 
identify yourself for the record, Mr. Vidovics. 

Mr. Vidovics. Ferenz Vidovics. 

Mr. KoRNis. F-e-r-e-n-z V-i-d-o-v-i-c-s. Ferenz, in English, 
means Francis. 

Mr. Morris. Where were you born ? 

Mr. KoRNis. He was born in a community called Balaton-Endrez. 

Mr. Morris. All right. Now, will you tell us briefly about your 
education and your early training, very briefly ? 

Mr. KoRNis. He passed the so-called graduation examination at the 
age of 19 at the Jesuit High School, sometimes called the gymnasium, 
located in the city of Kalocsa, which is the seat of a Catholic diocese 
in the southern portion of Hungary. Subsequent or thereafter he 
conipleted a course in theology; also a course in philosophy, at the 
University of Munich, in Germany. 



SCOPE OF SOVIET ACTIVITY IN THE TJNTTED STATES 4779 

Mr. Morris. You were active after the war in politics, were you not ? 

Mr, KoRNis. Ever since the age of 18 he was a member of the Small 
Landholdei*s Political Party, and this also answers the question re- 
garding the date subsequent to the war. 

Mr. Morris. All right. 

What did you do during the war ? 

Mr. KoRNis. He did not perform any military service because, on 
the ground that he was a student of theology, he was exempted from 
the draft. 

Mr. Morris. Did you have any difficulty with the Germany occupy- 
ing authorities ? 

Mr. Kornis. The answer is "Yes." 

May I translate what he just said, gentlemen ? 

On or about March 1944, acting as a secretary of the Hungarian 
Small Landholders Party, he took charge of the available records in 
the headquarters of the party a few hours before the Gestapo or Hun- 
garian police officials called at the headquarters of the party. He 
succeeded to spirit away and actually buried those records. 

The fact that he took charge and actually — well, took charge of 
the records and took them out of the party's headquarters was leaked 
by some minor officials to the German Gestapo and he was under 
persecution on these grounds. 

There was an order of arrest issued by the Hungarian authorities 
and he had to change his actual whereabouts, his residence I mean — 
he had to move from one locality to another in order to escape actual 
arrest. 

In December 1944, which is already prior to the seige of the city 
of Budapest by the Russian Army, his home, located near the city 
of Budapest in the suburbs, a place called Varosliget, was occupied 
by Gestapo officials and his library was seized and used as fire- 
wood. 

It seems that the Gestapo occupied his residence and established 
telephone connection with some fortified place called Ferihegy, and 
it seems to have been an elaborate establishment, because there were 
six telephone wires — — 

Mr. Morris. If I may interrupt, we don't need that much detail; 
just generally what happened. 

Mr. Kornis. Well, he made an effort to destroy that telephone con- 
nection. As a matter of fact he cut the wires three times and he 
was caught on the fourth night attempting to repeat that procedure, 
and it seems that some German Gestapo patrol had tried to run him 
down with his motorcycle and fractured his leg by actually hitting 
him with his vehicle. 

Mr. Morris. Did you spend any time in jail ? 

Mr. Kornis. Approximately 10 years, which includes the time he 
spent in jail or concentration camp under the Nazis. 

Mr. Morris. How long were you in the concentration camp under 
the Nazis ? 

Mr. Kornis. Well, specifically, under the Nazi regime he was 2 
days in — under arrest, out he managed to escape. It seems that the 
10-year period covers the entire 

Mr. Morris. I wonder how long had you been in concentration 
camp under the Germans ? 



4780 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. KoRNis, Two days under the Nazis, and after 2 days he man- 
aged to escape. 

Mr. Morris. After the war he was active in the Small Landholders 
Party, was he not, after the war ? 

Mr. KoRNis. The answer is "Yes," and he was secretary-general of 
the party in charge of organization. 

Mr. Morris. And you were the secretary-general of that party, the 
Small Landholders Party, which scored that great victory in 1946, 
when they defeated the Communists ; is that right ? 

Mr. KoRNis. The answer is "Yes." The date is slightly changed. 
The election was November 4 of 1945. 

Subsequently he was appointed by the Hungarian Government or 
the head of the Government, chief executive officer in Hungary of a 
unit called the county Somogy 

Mr. Morris. Senator, Monsignor Varga, who is the nominal head, 
testified that Mr. Vidovics was the principal cause of the Small Land- 
holders Party victory over the Communists in that election. 

What happened after the election ? 

Mr. KoRNis. At the election of November 4, 1945, he was elected 
member for the constituency in the west Hungarian community called 
Veszprem. He did visit a number of towns in Hungary, holding lec- 
tures, principally against the Communists. 

And Mr. Vidovics adds that he was in the role of sort of a speck 

Mr. Morris. Sort of a what ? 

Mr. KoRNis. Well, sort of a special thorn, a speck in the eyes of 
Rakosi, who was Communist Party boss, specifically because Rakosi 
thought that he was an influence in the education of Mr. Vidovics' 
home county of Somogy, which elected actually 18 members of the 
Small Landholders Party out of a total of 20, and this contributed to 
the fact that Rakosi developed a special animosity to him. 

Mr. Morris. What did the Communists do to you after the 1945 
elections? 

Mr. KoRNis. Well, there were several acts of intimidation and per- 
secution performed. Shall I mention them ? 

Mr. Morris. No ; Mr. Kornis, will you tell him we don't need that 
detail ; it is not part of the hearing; we just need the background. 

Mr. KoRNis. All right. 

Mr. Morris. The Communists put him in jail, didn't they? 

Mr. Kornis. Yes, he was generally declared an enemy of the people. 

He says he was placed in jail in 1946, in the fall of 1946. 

Mr. Morris. And for how long did he remain in jail ? 

Mr. KoRNis. Until — he was in jail or concentration camp until the 
actual outbreak of the October revolution. 

Mr. Morris. And even though he was the secretary-general of the 
Small Landholders Party, which was the party that won in November 
of 1945, which won the election that year, he was shortly thereafter 
incarcerated by the Communists in jail and kept there until the 
uprising ; is that right, Mr. Vidovics ? 

Mr. KoRNis. The answer is "Yes." 

Senator Johnston. Did he have any opportunity to make contacts 
with people on the outside ? 

Mr. KoRNis. The answer is "No." The period of incarceration 
started with 4 years of solitary. 

Mr. Morris. Four years solitary confinement ? 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4781 

Mr. KoRNis. Yes, 4 years of solitary confinement. The rules were 
mitigated thereafter. 

Senator Joiinstox. Did lie maintain or have any contacts in prison 
so as to keep in touch with those people in the same cause who were 
on the outside ? 

Mr. KoRNis. There were only individual, I might say, periods 
when he had opportunity to talk surreptitiously with members of the 
party who were in the same jail as he was. Specifically, he remembers 
two incidents in 1947 and 1956. 

Mr. INIoRRis. Now, I wonder if you would just describe for us 
briefly — I wonder if you would tell us what your role was in the 
Hungarian uprising. 

Mr. KoRNis. Well, on the outbreak of the Hungarian revolution, 
he managed to visit several towns of his county, Somogy, and he 
made a number of speeches, trying to pacify the people and trying 
to induce them not to commit any rash acts of revenge against officials 
of the regime ; of the Communist regime. 

Mr. Morris. Senator, may I proceed to ask questions that may 
possibly be termed leading questions, but which I think would be 
helpful in the interest of time here ? 

Senator Johnston. Yes. Will the witness please answer the ques- 
tions as briefly as possible, and if we want any additional information, 
we will ask for it. 

Mr. Morris. Just the background. 

You were one of the original leaders of the revolution; were you 
not? 

Mr. KoRNis. The answer is "Yes," specifically in his own region. 

Mr. Morris. What region was that ? 

Mr. KoRNis. The county of Somogy in the transdanubian section 
(west of the Danube) of Hungary. 

Mr. Morris. And he was the leader of that ; is that right ? 

Mr. KoRNis. The answer is "Yes." 

Mr. Morris. How long did you stay with this freedom fight ? 

Mr. KoRNis. The answer is, until November 4, 1956. 

Mr. Morris. How long did you stay in Hungary ? 

Mr. KoRNis. Until January 23, 1957. 

Mr. Morris. What did you do between November 4 and January 
23,1957? 

Mr. KoRNis. On November 4 he actually occupied, with the help 
of some Hungarian peasants, a radio-transmitting station in the west 
of Hungary, and following that he made an address on the radio in 
which he appealed to the West for help. He had to flee from one 
village to another, because an arrest order was out, and the Russian 
military was actively trying to locate him and arrest him. 

Mr. Morris. Did the radio station at Budapest appeal to the West 
for assistance ? 

_ Mr. KoRNis. It was not a radio station at Budapest, it was a sta- 
tion at Balaton-Szeedi. It is the name of the village which was 
occupied by the radio station. 

Mr. Morris. You made an appeal to the West for assistance; is 
that right? 

Mr. KoRNis. The answer is "Yes." The appeal was addressed to 
the Western Nations, to the world — well, the rest of Europe, rather. 

93215— 58— pt. 86 2 



4782 SCOPE OF SOVIET ACTIVITY EST THE HNHTED STATES 

Mr. MoREis. Then from November 4 to January 23, when you left 
Hungary, you were there hidino; from the Russians; is that right? 

Mr. KoRNis. The answer is "Yes"; he was fleeing from one village 
to the other, trying to get close to the western border of Hungary. 

Mr. Morris. And then you crossed the border at what time? 

Mr. KoRNis. On January 23, 1957, he actually managed to cross the 
border to Austria. 

Mr. Morris. And since that time you have been trying to get into 
the United States ? 

Mr. KoRNis. The answer is "Yes." 

Mr. Morris. Now, when did you first meet this man Szabo ? 

Mr. KoRNis. In February 1957, it was. 

Mr. Morris. Mr. Szabo's first name is Miklos ? 

Mr. KoRNis. Yes. The answer is "Yes." It is the equivalent of 
Nicholas, if I may add. 

Mr. Morris. And it is spelled S-z-a-b-o ? 

Mr. KoRNis. The answer is "Yes," 

Mr. Morris. You say you first met him in February ? 

Mr. KoRKis. "Yes," he says. 

Mr. Morris. And what was he doing at that time, and what did he 
say to you, and what did you say to him ? 

Mr. KoRNis. The answer to the first question, Mr. Vidovics says 
that Szabo declared to him at the time in February 1957 that he, Szabo, 
was representing the Small Landholders Party, which was under the 
guidance of Mr. Ferenc Nagy. 

Mr. Morris. Let me see if I understand : 

Did Szabo tell you at the time he was representing the Small Land- 
owner Party? 

Mr. KoRNis. The answer is "Yes." 

Mr. Morris. And did he call you ? 

Mr. KoRNis. Yes, he did call him. 

Mr. Morris. Wliat was the purpose of his call ? 

Mr. KoRNis. He asked his assistance to revivify and regenerate 
the Hungarian Landholders Party, as such, on Austrian territory, 
and asked for his active assistance. 

And may I add, the answer was that he was not, Vidovics was not, 
in a state of health that would have made that possible at the time. 

Mr. Morris. But the point is that Szabo came to you and asked if 
you would help him revive the Small Landholders Party and have it 
active on Austrian soil; is that right? Was that his purpose? 

Mr. KoRNis. The answer is "Yes." To regenerate the party- and to 
bring it into active existence, so to say. 

Senator Johnston. Did you agree to help him? 

Mr. KoRNis. The answer was "No"; he refused to be involved in 
political matters. He said all he would assist him on would be for 
charitable purposes. 

Mr. Morris. What else did he — what position did Szabo have at 
that time ? 

Mr. KoRNis. At that time the status of Mr. Szabo was that of the 
delegate of Mr. Ferenc Nagy and Mrs. Anna Kethly. 

Mr. Morris. Their delegate ? 

Mr. KoRNis. Yes. Subsequently he also claimed to represent Mrs. 
Anna Kethly as sort of an assigned — as a representative of the lady. 



SCOPE OF SOVIET ACTIVITY IN THE' UNITED STATES 4783 

Mr. Morris. Well, he was the secretary, was he not, of a Hungarian 
organization in Vienna ? 

Mr. KoRNis. No; he was not the secretary of the organization in 
Vienna. 

Mr. Morris. Of a Hungarian organization in Vienna, not the 
party ; this man was the secretary of a refugee organization ? 

Mr. KoRNis. The answer is that Szabo claimed the status of an 
old — of a sort of a veteran refugee. He created — he contacted various 
Hungarian refugees in the camps, and he had no official status of 
secretary, Mr. Vidovics says. 

Mr. Morris. As secretary of any organization ? 

Mr. KoRNis. Specifically, though, he had an official status. He 
was a secretary general of the so-called Hungarian Culture Party, 
or Hungarian Educational League, perhaps, as translated in English. 

Mr. Morris. Secretary general of this particular organization? 

Mr. KoRNis. Yes. The Hungarian Educational League. The word 
in translation would be something like the Hungarian Culture 
League or Hungarian Educational League, so to say, and he was an 
active — or a member in good standing of the Committee of Strasburg. 

Mr. Morris. What can he tell the subcommittee about the Stras- 
burg Committee? 

Mr. KoRNis. He cannot say much about the Strasburg Committee, 
because, at the time the committee was established, he still was in this 
camp. 

He cannot add much to the above information, except that members 
of the Strasburg Committee maintained contact with Szabo, and some 
of them actually lived in his place or resided at his place. 

Mr. Morris. Does he know whether Szabo took the records of the 
Strasburg conference back with him when he went to Budapest ? 

Mr. KoRNis. He cannot — he does not know. 

Mr. Morris. Now, can you tell us what else Mr. Szabo did in Vienna 
while you were in Vienna ? 

Mr. KoRNis. Mr. Szabo actually tried to infiltrate in a good many 
roles, so to say. He created considerable embarrassment within the 
rank-and-file members, the rank and file of the Hungarian refugees, 
because, on the one hand, he claimed he was representing the Hun- 
garian Small Landholders Party, Mr. Vidovics says, and, on the other 
hand, he also claimed he was representing the Hungarian Social 
Democrat Party, and he also tried to appear as representing the 
Strasburg Conference Committee. 

This incongruity created a lot of embarrassment, because nobody 
knew actually — because nobody knew who Szabo was representing. 

Mr. Morris. Did he have access to any of the secrets of the party ? 

Mr. KoRNis. The answer is no direct contact, only indirect. But 
one specific work he was performing was to collect sundry data in the 
refugee camps, which he did not — which he would get for himself. 

Senator Johnston. Did he visit any of the freedom fighters while 
they were in prison ? 

Mr. KoRNis. May I have that repeated ? 

Senator Johnston. Did he visit any of the freedom workers while 
they were in prison ? 

Mr. KoRNis. He doesn't know anything about it. He doesn't Imow. 
The answer is, he doesn't know. 



4784 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. Now, didn't you tell us in the session we had in my 
office that he had access to everything that was going on in refugee 
organizations? 

Mr. KoRNis. He had actually contacts with the people — I mean, 
he had the opportunity of the camps, because as he took upon — as 
he arrogated the right of engaging in charitable work for the emi- 
grants, he actually had occasion of personal contact, and among the 
activities which Mr. Vidovics says, is that he thinks that he was 
trying to collect data, information regarding Mr. Kiraly, General 
Kiraly. 

Mr. Morris. I am sorry ; I didn't get it. 

Mr. KoRNis. Besides the contact which he had had with the in- 
habitants of the refugee camps, principally based on the grounds that 
he did charitable work, the distribution of money and things, the dis- 
tribution of money and— well, textiles, I suppose — he also did collect 
incriminating data, data which were incriminating, in the opinion of 
Mr. Vidovics, against Mr. Kiraly. 

]Mr. Morris. Let me see if I get this straight — maybe there is a 
basic misunderstanding. 

I asked him before if he had access to any of the secrets of the 
Freedom Party, and he said "No," and apparently he went and visited 
people in the camp ; did he not ? 

Mr. KoRNis. He did, but 

Mr. Morris. Isn't that a direct contact ? 

Mr. KoRNis. May I ask him the same question again ? Yes ; to see 
if there is any misunderstanding of my question on the part of the 
witness. 

Mr. Fabian. Yes ; I think there is a misunderstanding. 

Mr. Morris. Because there is a direct contradiction. 

When I asked if he had direct contact, he said "No"; and then 
he went on and said that he visited people in the camp. Maybe I 
am not making myself clear. 

Mr. KoRNis. I apologize. I tried to translate it verbatim. How- 
ever, there is a contradiction between the two parts, because what Mr. 
Vidovics says actually does establish the fact of the contact. 

Mr. Morris. Yes. Now did he have direct contact with the Freedom 
Party? 

Mr. KoRNis. Yes. The answer is "Yes," on the grounds as indicated. 

Senator Johnston. Well, do you want to change that answer to my 
question of a few minutes ago when I asked if he had any contacts, 
and he said "No" ? 

Mr. Morris. There must be a misunderstanding. 

Mr. Fabian. Yes; there are two misunderstandings. The first mis- 
understanding, Mr. Vidovics did not say that, and moreover, the 
"party" stands for the Social Democratic Party. He said he had a 
document representing Mr. Kadar, he is Prime Minister of Hungary, 
and he had other papers. The party is the Social Democratic Party. 
I will ask him. 

Mr. Vidovics. Yes. 

Mr. Fabian. This was the first misunderstanding, and in the 
second — may I ask him ? I beg your pardon. 

Mr. Morris. Would you care to stand and be sworn by Senator 
Jolinston ? 



SCOPE OF SOVIET ACTIVITT IN THE UNITED STATES 4785 

Mr. Fabian. Yes. 

Senator Johnston. Do you swear that the interpretation that you 
give during this hearing will be the truth, the whole truth, and nothing 
but the truth, so help you God ? 

Mr. Fabian. I do. 

Mr. Morris. And now will you tell us what were some of the things 
that Szabo did? 

Mr. KoRNis. He made contact within the territory of the city of 
Vienna with all charitable organizations. 

As the veteran emigrant, he had ample opportunity to elaborate 
these contacts — I am afraid that is detail again. 

He enjoyed the confidence of the people he was in contact with, the 
refugees, and they trusted him, and besides, he made frequent refer- 
ence to the letters of authority that he carried, which he held from two 
people. The one was Mr. Nagy and the other was Mrs. Kethly. 

Mr. Morris. He had the credentials; and he had others? 

Mr, KoRNis. The answer is "Yes, he did." 

There is an additional remark, that he did manage to create a cer- 
tain amount of embarrassment, because — embarrassment to people in 
general, and also with various official agencies or authorities in Vienna. 

Mr. Morris. All right. 

Now, I wonder if both of you gentlemen would ask Mr. Vidovics 
the following question, and ask him to think before he answers: 

Will you give us in general a summary of the damage that his de- 
fection has caused to the Hungarian refugee movement ? 

Both of you gentlemen ask him. 

Mr. Fabian. The first, moral damage. After he defected, the Him- 
garians did not get from the Austrians in Vienna, they did not — 
well, it handicapped them because there was an uneasiness and 
trouble 



Mr. Kornis. I am trying to interpert 

Mr. Morris. I understand that you are interpreting, but I wonder, 
just before he answers, will you talk to Mr. Vidovics and ask him if he 
will sum up for us some of the damages caused by this defection. 

JNIr. KoRNis. He says that America had sent a lot of help to the 
Hungarian refugees before this defection 

Mr. Morris. Just a minute. Talk to him, both of you, and sum it up. 

Let us take a break for a minute while you do that. 

Mr. Kornis. May I answer that one ? 

Mr. Morris. I wonder if you gentlemen would just give 

Mr. KoRNis. I understand — may I say one thing? I have one gen- 
eral answer, Your Honor. The answer is, moral damage, it created 
a certain animosity on the part of the official agents of Vienna versus 
the refugees, the confidence was undermined, due to the fact that 
Szabo — I mean, due to the role of Szabo. 

Does that answer the question ? 

Senator Johnston. Was Szabo playing both sides ? 

Mr. KoRNis. May I answer that. Senator Johnston ? 

Yes, he did — not with 2, but with 3. The answer is that he acted, 
he claimed to represent the Small Landholders Party, No. 1; also 
the Social Democrats, and also the Strasburg Committee. 

I hope that answers your specific question. 

May I add one subsequent remark of Mr. Vidovics ? 



4786 SCOPE OF SOVIET ACTIVITT EST THE UNITED STATES 

He makes the third point of the damage or the general damage or 
embarrassment that was created in contacts with the authorities, actu- 
ally Szabo's belongings, where he actually belonged, were in doubt, 
and inquiries were sent to Mr. Nagy and to Mrs. Anna Kethly, trying 
to specify the degree of contact — it seems that both Mr. Nagy and 
Mrs. Kethly had confirmed that Szabo was acting as a legitimate 
agent 

Mr. Morris. All of this detail is not necessary. We just want to 
find out what damage was done by Szabo going to Budapest. 

Would you answer that? 

Mr. KoRNis. Mr. Vidovics believes and he is supported in that 
belief by deposition made by another member of the Small Land- 
holders Party, Tamas Pasztor, that he did actually take back records 
to Budapest. 

Mr. Morris. What records did he take back with him ? 

Mr. KoRNis. The U. N. records and the list of individuals. 

This is an important point, if I may say one thing, inasmuch as — 
he stressed the point that he took also the list of the members of URO, 
and as a consequence thereof, the members of URO 

Mr. Fabian. By the U. N., not URO. The U. N. 

Mr. KoRNis. Pardon me. My error. 

Anyhow, these people were supposed to be fleeing from Vienna, 
being afraid to stay there longer. 

Mr, Morris. Well, the kind of material we want and the answers 
we want is what actually did he take with him ? 

Senator Johnson. Did he take the names and addresses, the records 
of the Freedom Fighters ? 

Mr. KoRNis. He believes that they were. 

Mr. Fabian. Not "believes." He said they were. 

Mr. Morris. Leave the word "believes" 

Mr. KoRNis. He says that this is a factual deposition, he did take 
a list of individuals and 

Mr. Fabian. The people there, the leaders who came to visit Mr. 
Szabo 

Mr. KoRNis. And took them back to Budapest. 

Mr. Morris. What did the witness just say? Will you tell us liter- 
ally what he said ? 

Mr. KoRNis. May I ask the witness to repeat it, and I will repeat it 
verbatim. 

Mr. Morris. Please. 

Mr. KoRNis. He says he took with himself the people, U. N. 

Mr. Fabian. U. N. 

Mr. KoRNis. Well, there is a little — the one party says U. N. and the 
other says URO. 

Mr. Fabian. Nobody says URO. He says he took with liimself the 
list of all of the witnesses who were secretly heard by the U. N. inves- 
tigating Committee in Vienna. He got that. 

Mr. KoRNis. All right. 

Mr. Fabian. I beg your pardon, but I must complete — ^let me talk 
with him. 

He took the names of all the people who visited him in Vienna. 

Mr. Morris. As I understand, he took two things : he took the list 
of all the witnesses that testified before the U. N. secretly, and he 



SCOPE OF SOVIET ACTIVITY EST THE XJNTTED STATES 4787 

took with him the information, the names of the people who visited 
him in connection with his work in Vienna. 

Mr. Fabian, Yes. And these people, he said, are fleeing Vienna. 

Mr. Morris. These people were actually in Vienna 

Mr. Fabian. And they were going to Germany, and they were going 
to France, because they were afraid they will be kidnaped by the 
Hungarian secret organization from Vienna. 

He says he took all the letters. 

Mr. Morris. Took all the letters ? 

Mr. Fabian. Which he got. 

Mr. Morris. Wliich he got. 

Mr. Fabian. During his stay in Austria. 

Mr. Morris. Which he got during his stay in Austria. 

Mr. Fabian. Yes. 

The refugees, the emigrants. 

Mr. Morris. He took all of them. 

Mr. Fabian. He took all that back with him. 

Mr. Morris. Did Mr. Vidovics just testify that ? 

Mr. KoRNis. Yes. 

Mr. Morris. Is that right, Dr. Fabian ? 

Mr. Fabian. Right. 

Mr. KoRNis. Yes ; but I missed something, the data as heard before 
were not 



Mr. Morris. He said what ? 

Mr. KoRNis. He specifically, he does so testify, but there was a 
slight — there was a discrepancy between the data indicated before 
the ones now, but this is a verbatim transcript or translation of the 
data as stated by Mr. Vidovics. 

Mr. Fabian. No; you are wrong. There is a very important pro- 
gram that was not, I think, explained perfectly, about what was his 
position in Austria, Szabo's position. 

Mr. Szabo's position, as Mr. Vidovics said, and I think my colleague 
did not understand, Mr. Szabo was the secretary of a Help organi- 
zation. 

May I ask him 

Mr. Morris. Wliat is that— H-e-l-p ? 

Mr. Fabian. Help, yes — of the Austrian Social Democrat Party, 
and he went to all their camps in Austria, the refugee camps, and he 
said, "I am the secretary for the Help organization, and if you want 
to get help, you get help through me." 

Mr. Morris. Did he say that, now ? 

Mr. Fabian. Yes. I ask him again. 

He said that he cannot say verbatim all — but he said in the camps 
that he is connected with the Social Democrat helping organization, 
and if somebody wanted to get help from this distribution and helping 
organization, he was in this situation, to help them. 

Mr. Morris. In other words, "If you want help, come to me and I 
will assist you?" 

Mr. Fabian. Yes. 

Mr. Morris. Did he say that? 

Mr. KoRNis. He said that he has never seen how much money 
Szabo had on him, but if somebody does not have money he cannot 
have luxury cars, a refugee, he must — he had some means, he had 2 
chauffeurs, not J , 



4788 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris. And did he know his telephone bills ran $500 or $600 
a month ? 

Mr. KoRNis. He knows that Szabo's telephone bill was 6,000 schill- 
ings; and once he did not pay his 6,000 schillings and the telephone 
was disconnected. 

Mr. Fabian. He asked who — he asked him with whom Szabo 

Mr. Morris. Wait a minute. 

What is the dollar equivalent of 6,000 schillings ? 

Mr. Fabian. It is something more than $200. 

Mr. Morris. You cannot tell us more precisely the dollar equivalent 
of 6,000 schillings? 

Mr. KoRNis. To give you specifically, it is about $235, according 
to the present rate of exchange, 38 cents 

Mr. Morris. Whom did Szabo talk with on the phone? 

Mr. KoRNis. He says that he spoke with Hungarian — in Hungary, 
with the Hungarian — at first — and then he spoke with some other 
countries, lie doesn't know what, and he was always in connection 
with the helping organizations in Austria. 

He says that he knows from his — Mr. Szabo's — talks with him, 
that Mr. Szabo called every week Budapest city, 4 or 5 times. 

Mr. Morris. He called Budapest 4 or 5 times a week ? 

Mr. KoRNis. A week. The chauffeur, one chauffeur of Mr. Szabo, 
told it to Mr. Vidovics. 

Mr. Morris. Szabo's chauffeur told you he called Budapest 4 or 5 
times a week ? 

Mr. Fabian. Yes. 

Mr. Morris. Senator Johnston, I notice that Monsignor Varga has 
just come into the room. 

I wonder, Monsignor Varga, since you have testified before, if you 
will help us out. We are having difficulty understanding the wit- 
ness, and the two interpreters are trying to work it out. 

I think if you will sit down there, Monsignor Varga, it will help 
a great deal. 

Monsignor Varga. Thank you very much. 

Mr. Morris. Senator, Monsignor Varga has already been sworn. 

Senator Johnston. Yes. 

Mr. Morris. Are there any other aspects of the Szabo case which 
have caused damage to the security of the United States and the 
democratic movement? 

Monsignor Varga. There is, and he knows very well, because by 
his own experience, that Szabo visited the Hungarian refugees, as I 
testified, that he was — that his first purpose and job was to visit the 
camps in Austria, and he knows personally that Szabo always talked 
and told to the refugees that he lost everything: "America will not 
help, America cheated us and we have only this, just to return to our 
country." 

And, naturally, he did terrible damage against America, causing 
them to hate America, and there is a terrible damage against our com- 
mon cause, with Szabo doing that, killing the hopes of the people in 
Hungary, and sapping their resistance in Hungary ; this is the traitor 
who killed the resistance and caused many of those in those Russian 
camps to hate America. 

Mr. Morris. What has Szabo done since he was back in Budapest ? 



SCOPE OF SOVIET ACTIVITY IN THE "UNTTED STATES 4789 

Monsignor Varga. Well, he knows that he had a press conference 
in Budapest, it was televised and reviewed in the press, a press confer- 
ence in Budapest, and he accused many people, and those articles 
appeared in the Hungarian daily newspapers in Budapest. 

Mr. INIoRRis. Do you know whether any of the people that were in- 
volved, that Szabo gave information about, have been executed or 
been subjected to reprisals in Budapest ? 

Monsignor Varga. He knows that he had a big list of these people 
who testifiecl. before the U. N., and he knows that Szabo took back to 
Hungary this list of these witnesses, and the families of these wit- 
nesses are persecuted now in Hungary. 

Mr. ]\IoRRis. Does he know that ? 

Monsignor Varga. He knows ; he had heard. 

Mr. Morris. That relatives of the people who testified are now being 
persecuted in Hungary ; is that right ? 

Monsignor Varga. He knows; certainly. 

Mr. Morris. And they are subject to reprisals ? 

Monsignor Varga. And he knows that the papers of the Communist 
Party mentioned four witnesses in the paper, and then in these papers 
it was told that : "We will bring more names from the witnesses who 
testified." 

Mr. Morris. In other words, the Communist papers are now pub- 
lishing the names of the people who testified before the U. N. ? 

Monsignor Varga. Yes. 

Mr. Morris. And the Communist papers say they will publish more ? 

Monsignor Varga. Yes; and that the witnesses are now escaping 
from Austria and they are leaving the neighboring part of Hungary. 

Mr. Morris. But, unfortunately, the relatives back in Hungary can- 
not escape ; is that right ? 

Monsignor Varga. They cannot leave. 

Mr. Morris. Now, do you know now, in retrospect, whether this man 
was a secret agent all along, or somebody who just defected ? 

Monsignor Varga. He cannot prove documentarily, but he is con- 
vinced that he, when Szabo came in 1955, as a man who knows the 
underground and knows this angle of work, he is certain he came as 
an agent of the Hungarian Communist Party. 

Mr. IMoRRis. He came to Vienna in 1955 ? 

Monsignor Varga. Yes ; he arrived in 1955. He says he was very 
suspicious because he left Vienna with his chauffeur, and went very 
near to the border of Hungary, and he left his chauffeur a little 
farther from the border and he went alone always to the border of 
Hungary, and he was, naturally, very suspicious, and the chauffeur, 
after, told this story to this gentleman who knows. 

Senator Johnston. Wlien did you first become suspicious of his 
activities ? 

Monsignor Varga. In the month of April he became very suspicious. 

Senator Johnston. Month of April, of what year ? 

Monsignor Varga. In this year. 

Mr. Morris. Now, tell us something about the moneys that this man 
spent. What money did he have available ? 

Monsignor Varga. He knows that he got money from America, he 
knows that he got money from this charitable agency, the voluntary 
agencies in Austria, and he mentioned the name of one, the Interna- 



4790 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES' 

tional Rescue Committee; lie mentioned it; he got money from the 
International Rescue Committee — from America — and other agencies, 
because he was connected with these voluntary agencies to help 
refugees. 

Mr. Morris. You say he received money from America; Szabo? 

Monsignor Varga. He certainly got money from America. 

Mr. Morris. Now, do you know of any allies of Szabo, any people 
who may be secretly Communists who may have been working with 
Szabo? 

Monsignor Varga. He mentions two names, his chauffeurs, because 
he has a car and he has a chauffeur 

Mr. Fabian. Two. 

Monsignor Varga. And he mentioned them by name, one is Geza 
Bankupy, and the other is Jollan Chagy, who were members of the 
Communist Party. 

Mr. Morris. Does he know of anyone else, people who worked with 
Szabo, who may be Communists ? 

Monsignor Varga. He does not know with whom he worked secretly 
together, but he knows that he worked together with Mr. Alex 
Hertzolg — Karl Hertzolg, the secretary of the Austrian Social Demo- 
crat Party, or Karl Herzak. 

Mr. KoRNis. It is a German name, probably Herzog. 

Mr. Morris. You don't mean he is a Communist ? 

Monsignor Varga. He cannot say he was a Communist, but officially, 
he is secretary of the Austrian Social Democratic Party, and he worked 
together with Szabo. 

Mr. ]\Iorris. The Social Democrat Party is very much against the 
Communists, so what do you mean when you say that about Herzog ? 
I don't understand. 

Monsignor Varga. He cannot say that he is a Communist ; he can- 
not say he is a Communist, but he worked together very intimately with 
Szabo. 

Mr. Morris. Does he think that there are any Communists among 
the Hungarians who have come to the United States ? 

Monsignor Varga. He heard and he knows and he has knowledge 
that some of them who were Communists came to America. 

He knows that in the camps in Austria were Communists who came 
to America, and even that — he doesn't — he traveled yesterday, he flew, 
and he traveled this night and he is tired, and he cannot state the 
names now, naturally, but he will be glad later to send the names of 
those that came to America. 

Just arrived is a Hungarian journalist from Hungary who thought 
that now the Communist Government of Hungary has sent 500 well- 
educated members of the Communist secret police to the West 

Mr. Morris. I did not get that. "\^'liat was that about a journalist? 

Monsignor Varga. A journalist came now, he escaped from Hun- 
gary, and he knows exactly or certainly that the Communist Govern- 
ment of Hungary sent 500 members of the AVO, well educated mem- 
bers, to the West, and some of them are now working in the camps. 
They are working now in the Austrian camps, he heard from the 
journalist. 

Mr. Morris. Where is this journalist now? 

Monsignor Varga. He is in Vienna. 

Mr. Morris. And he says that there are 500 working in Vienna ? 



SCOPE OF SOVIET ACTIVITY IN THE' TTNITED STATES 4791 

Monsignor Varga. No ; sent to Austria, and sent to the West. 

Mr. Morris. Are all of them in Austria, or have some come to the 
United States and other countries ? 

Monsignor Varga, Two hundred remained in Austria, and the 
others are now in Germany or in France 

Dr. Fabian. Western Germany. 

Monsignor Varga. Western Germany, or in France. The special 
purpose of these people is to interfere in the camps and to convince 
them that they lost everything, and they cannot come to America and, 
"We have only this, to return to Hungary." 

And they have money, these 500, these AVO members of the Hun- 
garian Secret Police and, having money, they are in a sense — well, 
they are buying, they bought alcohol, and these poor refugees in the 
camps became drunk and, naturally, it is the purpose that they fight 
against each other and that they fight against America, and the other 
purpose is 

Mr. Fabian. And against Germany and France. 

Monsignor Varga. Naturally, Germany, and France. 

And it is very important that this AVO — and they are employed to 
find the more important emigrants, those who are known in Hungary, 
in the camps, and the purpose and the duty of the AVO is to kill or 
poison or smear with slanders and to make their work absolutely 
impotent and impossible. 

Senator Johnston. These people that they send out to do this work 
for the Communists, how do they get the money to them for them to 
carry on ? 

Monsignor Varga, He does not know. Honorable Senator, but there 
are very well known ways, you know, that they will get it — the Hun- 
garian Legation in Vienna and — the Russian Legation in Vienna, too. 

Mr. Morris. Now, when was the first time you made an effort to 
come to the United States ? 

Dr. Fabian. In May. 

Mr. Morris. What happened then when he tried to come that time ? 

Monsignor Varga. He tried, and he got out on the 23d of January 
and, naturally, he wanted to come to America, and he was refused in 
May, that he has not any relatives here in America, and he was refused. 

Mr. Morris. Is that the basis for turning them down, that they 
don't have any relatives in America ? 

Monsignor Varga. I don't know — ^many people came that have no 
relatives in America. 

Mr. Morris. Would you ask him who told him that ? 

Monsignor Varga, Wlio was the man who told him — ^Mr. Harben, 
he is an American in the consulate, and he told him, "You have not 
any relatives, you cannot go to America." 

Mr. MoRRis,*^ Mr, Hardin ? 

Monsignor Varga. Harding. 

Mr. KoRNis. Harden. 

Mr. Morris. And did you renew your effort to come to the United 
States? 

Monsignor Varga. Naturally; he repeated his applying, and he 
tried to do everything to come to America. 

Mr. Morris. Wliat happened subsequently ? 



4792 SCOPE OE SOVIET ACTIVITY IN THE UNITED STATES 

Monsignor Varga. He was refused in May, that he has not any 
relatives in America. 

And the second time, Mr. Kline refused him, and he said that he 
was denounced : "And therefore you cannot come." 

Mr. Morris. He had been denounced ? 

Monsigner Varga. Yes. 

Mr. Morris. And Mr. Kline is the American official ? 

Monsignor Varga, Yes. 

Mr. Morris. And he told you you had been denounced; in other 
words, derogatory information had been given about you ? 

Monsignor Varga. He told him, "You are denounced," and he asked, 
naturally: "I would like to defend myself," and he was told he will not 
see the accuser against him, and 

Mr. Morris. Did Szabo know Kline ? 

Monsignor Varga. He does not know that he had any personal con- 
nection with Mr. Kline, but he knows that Szabo's best friend, very 
good friend, Mr. Hertzel, the Austrian, is in good friendship with 
Mr. Kline. 

Mr. Morris. Does he know if Szabo was the source of this deroga- 
tory information about him ? 

Monsignor Varga. He knows that Mr. Benjamin, a Hungarian 
refugee, Mr. Szabo and Mr. Hertzel, the Austrian, came together, they 
had a meeting, and it was decided, "We have to do everything to 
hinder Mr. Vidovics to go to America." 

Mr. KoRNis. "Otherwise it would create damage to us." 

Monsignor Varga. No. It was not "damage." If he will come to 
America, "he will finish us here in America." 

Senator Johnston. In other words, it was felt by them that if he 
came to America with the information tliat he had and gave it to 
America, it would be detrimental to what they were trying to do over 
there? 

Mr. KoRNis. Senator Johnston, I did not — I understood that what 
he said 

Mr. Morris. What did you understand him to say ? 

Mr. KoRNis. May I have the question repeated ? 

Mr. Morris. The reporter will read it. 

(The question was read. ) 

Monsignor Varga. Certainly, that they were fi'i'ghtened that if he 
will come, it would be detrimental to those people in Vienna. Benja- 
min, Mr. Benjamin 

Mr. Morris. What was his first name ? 

Mr. Tabian. Oliver. 

Monsignor Varga. Oliver. 

Mr. Morris. Oliver Benjamin ? 

Monsignor Varga. Oliver Benjamin, B-e-n-j-a-m-i-n, he is Secre- 
tary of the Hungarian Social Democrat Party in exile. 

Senator Johnston. And he is in a position where he can get people 
to come over here to America and 

Monsignor Varga. Certainly. Certainly. He had a position to 
help people come to America 

Mr. Morris. But, by the same token, he is in position to keep other 
people from coming ? 

Monsignor Varga. Naturally. 



SCOPE OF SOVIET ACTIVITY IN THE' UlSITTED STATES 4793 

Mr. Morris, And you know, from the fact of being once in the 
Hungarian Parliament and having been active in local Hungarian 
politics, that Mr. Vidovics is one of the outstanding personalities of 
Hungary ? 

Monsignor Varga. I am very happy to tell you that Mr. Vidovics 
is one of the greatest heroes in the resistance against nazism and 
against communism, and I am sure no one Hungarian suffered so terri- 
ble persecution from the Russians and from the Hungarian Com- 
mmiists as Mr. Vidovics, and nobody suffered in prison as much as 
Mr. Vidovics. 

Senator Johnston. And when Mr. Szabo worked and made it im- 
possible for him to come over here, he was working against the interest 
of America ; isn't that true ? 

Mr. Kornis. The answer is positively yes, and it was not only 
against his personal interest but also against the interest of this 
country. 

Mr. Morris. And, Senator, I may point out in connection with this, 
that our inquiries have shown that very often refugees are barred 
from coming to this country because of information that was furnished 
by Soviet agents, and his case is an example of that. 

Mr. Morris. You arrived last night at 6 o'clock ? 

Monsignor Varga. He arrived, yes, about 5 o'clock. 

Mr. Morris. And hoping to stay in the United States ; is that right ? 

Monsignor Varga. He would like to remain, naturally. 

jMr. Morris. You are here on temporary parole in the United States ? 

jVIonsignor Varga. Yes, temporarily in the United States, as other 
refugees under parole. 

He would like to say something ; may I ask him ? 

He is convinced that Mr. Hertzel and Mr. Szabo were connected 
with the Kadar government, and he has certain knowledge that the 
Kadar government or agents of the Kadar government wanted to 
hinder Mr. Vidovics to come to America, because he laiows many 
things, and he is a man who suffered so much under the Communist 
regime and he was persecuted by the Communists. 

In his 10 years' imprisonment, the Russians took him over twice and 
he is certain that no one refugee knows better the connection of the 
Hungarian Secret Police and the Russian Secret Agents, or AVO, 
or by whatever names, than he, because he was tortured by the Soviet 
Military Police, by the Soviet Secret Police, and by the Hungarian 
Communist Police, and naturally it is in the interest of the Kadar 
government to hinder him to come to America, the leading state of 
freedom. 

Senator Johnston. Do you have any immediate family, wife and 
children ? 

MonsigTior Varga. Yes ; he has a wife and he has a child, and his 
wife is imprisoned because she wanted to come after him, and he is very 
sad now, because of that. ^ 

His wife wanted to escape, to come after him, and this plan was 
known by three men in Vienna, outside of him, and Mr, Szabo was one 
of them, and the stories after his defection show certainly that he was 
one of the traitors against his wife. 

And when his wife was imprisoned, Mr. Szabo told to somebody 
in Vienna that "now Vidovics can commit suicide." 



4794 SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 

He has a continuous connection with a former Hungarian, or a Hun- 
garian engineer, Mr. Gertza, and he knows that Mr. Gertza had con- 
tacts and played together with the Hungarian secret police to follow 
him at the border. 

Mr. Morris, You have had a long trip, but after you have become 
rested would you make yourself available to the staff of the committee? 

Monsignor Varga. Yes. 

And he tells now his story, that he was sick, and he suffered so much 
because he was humiliated very much, and once he was sitting in a 
plane — he was standing before the plane, and he was recalled and told, 
"You are no good for America" — and he is a martyr for Hungary 
and a martyr for the whole of mankind, and he was humiliated and 
suffered so much, and now he is very happy to be here, and, naturally, 
he will not be just available, but he is asking in the interest of our 
common cause to continue his hearings, and he will be glad to tell 
everything to develop our common cause. 

And he feels now that these months of humiliation in the camps of 
Austria exhausted him even quicker and better than the prison in Hun- 
gary ; the humiliation, and injustice he suffered because of this humilia- 
tion, he fought against both dictatorships, against the Nazis and the 
Communists, and his blood pressure was 250 in the camp because of 
the humiliation. 

Mr. Morris. We will call him again. 

"We have another witness now, and we will have to stop this hear- 
ing at this time and listen to the next witness. 

Senator Johnston. The staff will get in touch with you and talk 
with you. 

Monsignor Varga. He says he is very grateful for this hearing and 
he will be very happy to tell everything^ — what he knows of the facts 
that he knows. 

Thank you very ranch. 

Senator Johnston. And we certainly wish to thank you. 

(The following document was later ordered printed in the subcom- 
mittee record in connection with the foregoing testimony:) 

[January-February 1957 Research Report, International Research on Communist 
Techniques, Inc., New York, N. Y.] 

Significance of the Hungabian Revolution 

(By V. N. Rudin, President, International Research on Communist 

Techniques, Inc.) 

Here is a firsthand evaluation of the climatic Hungarian Revolu- 
tion by an experienced analyst who returned to the United States 
in late December 1956, after five eventful months in Europe. 

The Hungarian Revolution caught everyone unprepared — the Communist 
rulers, the West — even the Hungarians themselves. It was premature for West- 
ern understanding, but was actually a logical step in the all-out process which 
started throughout the Soviet Empire with the death of Stalin. Its lessons, both 
tragic and encouraging, must be assimilated thoroughly and quickly if the free 
world is to be prepared to meet the next crisis. For the Hungarian Revolution 
is the first clear recognized explosion in an inevitable chain reaction. 

A SPONTANEOUS UNORGANIZED REVOLT 

The Hungarian Revolution was a genuine spontaneous uprising of the people. 
It was not instigated by any organization, Hungarian or foreign. Nor was 
it a nationalist uprising. The Hungarian Communists even more than the 



SCOPE OF SOVIET ACTIVITY IN THE' UlSnTED STATES 4795 

Bussians were the object of the revolt. Students, workers, farmers, and intel- 
lectuals rose against a tyranny that had finally become unendurable — the slavery 
of international communism. The Hungarian Revolution was the explosive 
protest of human beings against an inhuman system. 

It was completely unorganized. When the demonstrations in Budapest turned 
into open fighting Revolutionary Councils sprang up hastily in many different 
cities throughout Hungary. Although these shared the common objective of 
overthrowing the Communist regime, their positive political platforms differed 
and were often not too well defined. Attempts were being made by the Councils 
to unify their forces, when outside military power crushed the revolt. 

But although the revolt was militarily crushed, the revolution itself was not 
defeated. The revolutionary forces gained valuable experience, both politically 
and technically. They are now in the process of being strongly organized, and 
the fight continues by guerilla warfare, underground means, and popular resist- 
ance. Hungarians and Russians are allied, on both sides of the struggle, although 
the Communists cannot properly be called nationals of any country. 

THREE STAGES OF THE REVOLUTION 

The first stage of the Hungarian Revolution dates from the actual uprising 
on Oct. 23, through its victorious progress to the end of the eighth day, when 
the Nagy government surrendered to the revolutionaries. By acceding to the 
revolutionary demands Nagy in effect renounced communism and once more 
became a Hungarian. This was the moment of victory which could have been 
stabilized if the free world had acted with moral courage. 

This initial success was made possible by the attitude of the Soviet occupation 
troops. Sufllciently strong in men and arms, they could have crushed the revolt 
within 48 hours. But these Russians had been stationed in Hungary long enough 
to know the country and its people, and they immediately understood the nature 
of the uprising. The vast majority of the Soviet troops proclaimed sympathetic 
neutrality toward the revolutionaries. Many turned over their weapons to the 
Hungarian freedom fighters. Thousands — soldiers, young officers, even some 
tank crews — actively joined the revolution. 

It was this overwhelming sympathy toward the revolution on the part of the 
original Soviet occupation army that most alarmed the Kremlin, and was the 
decisive factor for the second stage of the revolution — aggressive military inter- 
vention to crush the revolt. 

This was a dangerous decision for the Communist hierarchy. In an earlier 
crucial attempt to save themselves, the collective Soviet rulers had risked political 
suicide by denouncing Stalin. They had gambled on an elaborate coexistence 
foreign policy and internal liberalization policy. Would these in turn have to 
be renounced in another effort to save the Communist system? 

Shortly after the Hungarian uprising began, the Soviet Govt, sent its trouble- 
shooters Mikoyan and Suslov to Budapest to evaluate the situation. They 
recognized at once that the Hungarian Revolution was no mere local threat 
born of nationalism — it was a revolt against the Communist system that could 
spread not only into other satellite countries but into the Soviet Union as well. 
Not even the Soviet Army could be counted on. Returning to Moscow, Mikoyan 
and Suslov gave their report to an extraordinary secret session of the Central 
Committee of the CPSU. 

Encouraged by the Suez crisis, the decision was made in favor of ruthless 
force. Original Soviet occupation troops were immediately withdrawn from 
the scene of action. Twenty fresh new tank divisions were ordered into Hungary 
from the interior of the USSR, where truth about the revolt had not yet pene- 
trated even via the underground. These new tank units were carefully indoc- 
trinated. Some were told that American imperialists and Horthyists (Hungarian 
fascists) were trying to subjugate the Hungarian people. Others were informed 
that they were being sent to East Berlin to fight against American invaders who 
had crossed the Elbe River. 

The result was Bloody Sunday— Nov, 4, 1956— a day that will live in ignominy, 
as the day an entire civilized world abandoned a people who fought for their 
freedom. 

It is significant that the Soviet aggressors did not send protective infantry 
with their new tank iinits into the fight on Nov. 4. Although such a tactic is 
militarily "impossible," the Soviet rulers were afraid to risk contact between the 
soldiers and the populace. To prevent such contact with the tank crews, these 
units were kept outside the cities in open country until actual time for attack. 



4796 SCOPE OF SOVIET ACTIVITY IN THE UlSriTED STATES 

Then with the crews safely enclosed against revolutionary influence, the tanks 
were dispatched for city fighting — in which these iron monsters are particularly 
vulnerable without infantry cover. This is why the Hungarians, even with 
homemade "Molotov cocktails," were successful in destroying so many tanks. 
It is one of the main reasons why 20 tank divisions were necessary to put down 
a revolt in a country of only 9 million people. 

Not only thousands of Hungarians were killed, but also numbers of young 
Russians were sacrificed by the Soviet rulers who were afraid for them to learn 
the truth. 

THE BEVOLUTION CONTINUES 

The heart-breaking appeals of the Hungarian revolutionaries for help — that 
did not come — from the free world will echo through history, to haunt the con- 
science of free men for a long time. But also their lone, undefeated struggle will 
inspire hope and courage, as it is already doing in other enslaved countries. 

The third stage of the revolution is now underway. The forces are becoming 
unified and new forms of resistance organized. All kinds of legal and semilegal 
opposition are being used effectively by the populace — strikes, boycotts, "hours of 
silence," demands to the puppet govt., etc. A strong underground resistance 
movement is being developed. Thousands of disciplined guerrilla troops harass 
the Communists. Among these are numbers of Russians who went over to the 
revolutionaries. 

Special MVD units under the personal direction of Gen. Ivan Serov, chief of 
Soviet State Security, are hunting down these "defectors." Some have been 
caught, but some are still hiding out among the Hungarians — as guerrilla 
fighters, underground workers, even as farmers and laborers. 

The question is frequently asked, especially by diehard "experts" : If there 
were so many Soviet defectors, why don't they show up in Austria ? The answer 
is quite simple. These Russians did not risk their lives to become refugees — 
they joined the revolution to fight communism, with the hope of overthrowing it 
not only in Hungary but in Russia as well. They intend to continue fighting until 
this is accomplished, or until they themselves are killed or captured. 

To them, as to all the enslaved people — including the people of Russia — the 
Hungarian Revolution marks the beginning of the end of the Soviet Empire. 
It is already an historical event, proving that : 

Both Soviet and some Western "experts" were completely wrong in as- 
suming that intensive Communist indoctrination would breed a generation 
devoid of the basic human desire for freedom. The Hungarian Revolution, 
the anti-Communist fight and opposition in other enslaved countries are 
sparked and led by young people born and bred under the Communist system. 
Even without aid from the free world, it is possible to make a successful 
revolution against a totalitarian terror regime. The Hungarian Revolution 
was almost immediately victorious, and was halted only by outside military 
intervention. 

The key factor in such anti-Communist revolution is the Soviet Army. 
The Hungarian Revolution demonstrated that the Communist rulers cannot 
count on their own troops to put down popular uprisings. This factor would 
be completely decisive within the USSR itself. There would be no outside 
military forge to intervene on behalf of the hated regime. 

WHAT PRACTICAL HELP CAN THE WEST GIVE WITHOUT PKOVOKING WOBLD WAE HI? 

The spontaneous reaction of free public opinion throughout the world in sup- 
port of the Hungarian Revolution showed that the people of the Western democ- 
racies were, as usual, ahead of their governments. Students were in the lead here 
also — in demonstrations, protests, even open assaults on Soviet Embassies. 

Organized labor — so long claimed by the Communists as their particular prov- 
ince — showed the knowledge gained in its long anti-Communist struggle, by being 
the first to recognize the significance of the Hungarian Revolution and to act 
on it — in boj'cotting Soviet goods, refusing to unload Communist cargo, etc. 

But military and political leaders of the West were so paralyzed with the fear 
of World War III, that they could not view the situation realistically. Propa- 
ganda about Soviet armed might and push-button retaliation had built up such 
firm acceptance that salient facts were ignored. Matters were further complicated 
by the American presidential election and the Suez crisis. 

The myth of push-button control by Khrushchev or any of the collective dictator- 
ship is an impossibility. It took the Kremlin 13 days to decide what to do about 
the uprising of unarmed people in a small satellite country. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4797 

The defection of Soviet occupation troops, played down in the West, was of 
paramount significance. The most formidable weapons are of no use without 
troops to man them. Turned against a dictatorship, armed might becomes fatal. 
One Soviet tank defecting to the side of the revolutionaries is worth two tanks 
from any other source — for it simultaneously subtracts one from the oppressor 
and adds one to the side of the people. 

If the Soviet rulers could not count on their own troops to defend the Com- 
munist system, could they have counted on the Hungarian Army — then fighting 
on the side of the revolution — to turn against the West? And what regime is 
going to start an international war with the guns of revolution at its back? 

Actually, the Hungarian Revolution was the strongest active deterrent to 
World War III in the decade since World War II. During the first stage of the 
revolution, the Soviet Union presented the least threat of danger to the West. 

What then could the West have done? 

There teas no need to send military assistance. This would have involved 
the greatest risk both politically and morally, since it would have provided 
physical evidence for Soviet propaganda accusations that the revolution was 
provoked by "Western imperialism." With aid from the Hungarian Army and 
the original Soviet occupation troops, the revolutionaries did not need weapons 
from the West. 

What they did need was aflirmation of principle and strong moral support, 
to be backed by armed might if necessary. 

In my considered opinion, the tide of history could have been turned on the 8th 
day of the Hungarian Revolution, if the Western democracies had acted in 
accordance with their oft-proclaimed principles. The crucial moment was the 
surrender of the Nagy government to the revolutionaries, its proclamation of 
neutrality and renunciation of the AVarsaw pact (actually a renunciation of 
communism). 

The Hungarians had every right to expect support of their neutrality by the 
free world. If the West had immediately declared its acceptance and support 
of the Nagy government, it would probably have halted the march of the new 
Soviet tank divisions which were even then crossing the Hungarian border. 
It would have been quite in order for the Western democracies and the United 
Nations to proclaim that such military intervention would constitute a violation 
of neutrality and would not be allowed. 

I firmly believe that such a declaration, especially by the United States — as 
forceful as that used against the threat of Soviet "volunteers" to Egypt — would 
have stopped the Soviet invasion of Hungary, as effectively as it stopped the 
"volunteers to Egypt" movement. Even if the Soviets should have disregarded 
such a proclamation, it would have proved to the Hungarian and other enslaved 
peoples that the free w^orld was backing their fight for freedom to the full moral 
and political extent possible short of war. 

Instead, the answer was Bloody Sunday — the final repudiation of human 
rights by the United Nations and the free world by their acceptance of the 
puppet Kadar, brought into Budapest on a Soviet tank. There exists no moral 
or legal right for recognizing the Kadar regime as the legal government of 
Hungary. By doing so, the West has surrendered a people and a country to 
international communism. 

IT IS FIVE MINUTES TO MIDNIGHT 

Granted that the West was psychologically and morally unprepared for the 
crisis in Hungary. In this sense, the Hungarian Revolution was premature. 

But it was not premature for the enslaved peoples. The Hungarian Revolu- 
tion was the most spectacular explosive outburst to date in the logical process 
of disintegration of the Soviet Empire. The roots of this disintegration lie in the 
Communist system itself, but the actual process on an overall scale may be said 
to have begun with the death of Stalin. It has accelerated rapidly ever since. 

The opportunity of the free world to redeem its pledges and regain leadership 
in the Hungarian crisis has been lost. History does not repeat itself — but it 
does move forward in a definite direction. 

Another opportunity will arise. Two great international social forces — 
democracy and communism — are locked in battle. 

If the free world learns the lessons of Hungary, the blood of brave men will 
not have been shed in vain. The W^est must be ready to act, swiftly and boldly, 
in full accordance with moral principle. There is no time for hesitancy, for 

93215— 58— pt. 86 3 



4798 SCOPE OF SOVIET ACTIVITY IN THE UNUTED STATES 

compromise, for looking the other way. There is no time for fear. The clock of 
history points five minutes to midnight. 

Hungarians Appeal foe East European Front Against Communism 

From their own tragic experience, Hungarian freedom fighters now in Western 
Europe are appealing for a united front of the enslaved peoples of Eastern Europe 
against communism. Signing themselves ''The East European Front, Hungarian 
Section" they have issued a brief but eloquent Manifesto, and a concise 15-point 
political program. 

The title of October Revolution — so long exploited by the Communists to de- 
scribe their 1917 coup — is now taken over by the Hungarians for their genuine 
revolution that began in Oct. 1956. Defining this October Revolution as the 
"burst of flame" of the "will to liberty," the Manifesto continues : 

"The ideals for which this immense sacrifice was made, must live. * * * VVe 
appeal to all East Europeans who share our fate, our thought and our feelings. 
We offer them our alliance for a cause common to all mankind. 

"Let us suspend controversies. We shall have time, after victory, for settle- 
ment of differences. No national or party differences are important enough to 
justify a breach of that unity which we all need at this hour." 

Calling upon all Hungarian refugees not to disperse, the Hungarian Manifesto 
defines main political issues. 

This political program stresses the need for a United Europe, in which each 
state remains completely sovereign but all cooperate in the achievement of 
common goals. 

In regard to Hungary itself, the program insists uiwn civil liberties for every- 
one, rejects "every political extremism," and demands a truly representative 
government. 

In foreign policy, the program advocates strict neutrality, equal participation 
in the European community, and welcomes "all help from abroad, provided it 
does not imperil our sovereignty." Economically, it opposes both state and indi- 
vidual monopoly ; favors worker-management cooperation and development of 
private initiative ; rejects the "Communist caste system" ; advocates free and 
independent trade unions. 

Mr. Morris. Senator, our next witness will give us a report of inter- 
views he has had on the subject of espionage in the ballistics field with 
Igor Gouzenko, who was a former Soviet code clerk and who defected 
in 1945 with a mass of documents which broJie the Soviet spy ring in 
Canada. 

Our witness is Mr. Siegrist, and the reason Mr. Siegrist is being 
asked to testify is because he spent a weekend with Igor Gouzenko, and 
the nature of these conversations with Mr. Gouzenko bore on this 
inquiry of Soviet espionage in the missile field. 

I know that he will have firsthand evidence. We would like to bring 
Mr. Gouzenko into the United States to testify, but that is difficult to 
achieve, and we have had a great deal of difficulty in negotiating that, 
and Mr. Siegrist has come here and he has Mr. Gouzenko's own taped 
statement on this subject. 

Senator Johnston. You may proceed. 

Will you stand and raise your right hand and be sworn ? 

Do you solemnly swear the evidence that you give before this sub- 
committee will be the truth, the whole truth, and nothing but the 
truth ? 

Mr. Siegrist. I do. 

TESTIMONY OF ROBERT R. SIEGRIST, SHOREWOOD, WIS. 

Mr. Morris. Will you give your full name and address? 
Mr. Siegrist. Robert R. Siegrist. My home address, 4073 North 
Prospect, Shorewood 11, Wis. 



SCOPE OF SOVIET ACTIVITT EST THE' UNTTED STATES 4799 

Mr. Morris. Wliat is jour business or profession ? 

Mr. SiEGRisT. Journalism. 

Mr. JSIoRRis. Do you have a radio program ? 

Mr. SiEGRisT. I am the chief editorial writer for the Milwaukee 
Sentinel, the Hearst newspaper in Milwaukee, and I do, in addition to 
that, a nightly news column on stations "VVLS, Chicago, and WISN, 
Milwaukee. And I should like to make it completely clear, and I 
think it is very important, particularly with the press represented here, 
I would like to make it completely clear that all of my activity on the 
air is completely separate from any activity with the Hearst organiza- 
tion or the Milwaukee Sentinel. That is purely my own arrangement, 
purely my own activity, and any connection with Gouzenko, being in 
connection with a radio broadcast, was in no way connected with the 
Hearst organization, per se, and the expenses, the idea, my contact, 
my personal and professional contact, with Mr. Gouzenko, is purely 
my own. That is very important for me to say. 

Mr. Morris. "Why did you look up Gouzenko ? 

Mr. SiEGRiST. I looked up Gouzenko because I had had some con- 
tact with Gouzenko, and in making that contact with Gouzenko I 
had known of his growing concern and the growing feeling — I got the 
feeling, there was a growing feeling that he should speak out some- 
where along the way about the course of espionage against this Na- 
tion and against, as he put it, the free world. 

Wlien I saw on the news wires, I saw a couple of paragraphs from 
INS a week ago Monday where Igor Gouzenko had written a rather 
strong appeal to the President of the United States the gist of which 
was, as I saw it on INS and used it on my newscast that night, that 
he had charged that the reason the United States had been unable 
to launch the first earth satellite had indicated to him there must 
have been Communist espionage in our missile system. 

I recognized, from my previous knowledge of Mr. Gouzenko, that 
represented a severe sacrifice on the part of Igor Gouzenko — and I 
don't think I have to go into that before this committee, which is very 
familiar with how difficult it is to contact Gouzenko, and with all the 
ramifications and the awful shadow world in which he and his family 
live — I spent one of the most peculiar weekends of my life with 
Gouzenko, and I got some idea of what that man lives under. 

And so, when a man like Gouzenko speaks up and says he is terri- 
bly concerned — and I have some of that concern on the tape, and I 
have also in the back of my mind some of the conversations not on 
the tape, which reflect this awful concern 

Mr. Morris. Do you have the tapes ? 

Mr. SiEGRiST. I do ; I have five tapes — don't be scared ; I will not 
play them all ; I will play one of what I have here. And he would not 
let me take an engineer. The only person he would let me take — and, 
as a matter of fact, he requested specifically, I took one other person, 
because Igor Gouzenko had never seen me. I had talked to him on 
the telephone, and he knew my work and what I am trying to do, so 
he asked that I take one person along. 

Mr. Morris. Will you play some of the more significant passages 
and make the other tapes available to the subcommittee? 

]Mr. SiEGRiST. Yes. Those are belts from the raw tape; I have 5, 
and 1 is a complete program, but, by taking out my introductory re- 



4800 SCOPE OF SOVIET ACTIVITY IN THE UNHTED STATES 

marks — I have about 8 minutes on this one, which establishes him, 
and is not particularly pertinent, and regarding the manner in which 
the missiles program in Canada would have been subverted by the 
Canadian scientists with whom he spoke 

Mr. Morris. As you know, the Internal Security Subcommittee of 
the Senate is charged with the responsibility of reporting to the Sen- 
ate of the United States evidence of espionage in the United States. 

Mr. SiEGRiST. This is tape No. 3, in which I simply ask him — and I 
want to remind you that he was a part of the Soviet ; he was a part of 
the apparatus, and he knows the objective of world conquest, and if 
you wish me to — we do not have to play all these tapes, and I have 
several points to make and I can make it rather brief — — 

Mr. Morris. Senator Johnston, may we accept all of those in the 
record ? 

Senator Johnston. I think it would be well for you to present 
those to the committee, these records, so that it can play them for the 
committee's information. 

Mr. SiEGRiST. I will be glad to do that. That is why I had these 
belts made. 

(Transcripts of the records were marked "Exhibit No. 521" and are 
printed at the conclusion of Mr. Siegrist's testimony.) 

Mr. Morris. Would you play that; and the reporter will not have 
to take tliis down because we will have the tape. 

(Thereupon, a recording was played.) 

Mr. Morris. Mr. Siegrist, can you sum it up for tlie committee? 

Mr. Siegrist. Yes ; I can, for the record. 

Mr. Morris. Of course, the whole thing will be in the record. 

Mr. Siegrist. There are five points, and one is general, and in the 
introductory broadcast last JNIonday, in this broadcast I asked Mr. 
Gouzenko why he chose this time to break his self-imposed silence, 
and he said because he thought it was his duty to warn the free world 
through the President of the United States, and he reflected consider- 
able concern, and I know he has considerable concern, as to why so 
much time has gone by since this warning he has given to the Presi- 
dent of the United States, and, as he feels, to the entire free world, 
through the President of the United States, why it is he has not 
received a single indication that the President of the United States 
has received that. 

And I asked him, does he have any idea why, and he said: 

I believe it is entirely possible — 

and I am quoting verbatim — 

that his assistants, whoever they are, may not even have given that letter to 
the President ; he doesn't even know I had written it. 

He doesn't say, "He doesn't even know I have written it"; that is 
not verbatim, but that is the idea. 
And then I said : 

Does this surprise you? 

And he said : 

No, it does not. Keep in mind, I gave my five-point program — 

to which I referred, and which is extremely pertinent and wliich be- 
came even more pertinent when I heard the testimony about the 



SCOPE OF SOVIET ACTIVITY IN THE U]SI1ITED STATES! 4801 

defection situation here today — he knows the value of defection to 
the free world : 

Keep in mind I gave my entire five-point program in which I allude very 
specifically and graphically in this letter to the Government of the United 
States, to the gentleman who was the United States Ambassador to Canada, in 
1954, I gave this program to the Government of the United States officially, and 
I never received any indication anybody did anything about it, and obviously 
nobody did. 

Now, his five-point program is the most important thing with Igor 
Gouzenko, and he is living with this constantly in his mind, and his 
five-point program very basically is the idea, as he said : 

You don't stop espionage without getting the spies. 

And he said that there are many people, he knows that there are 
many people. Communist officials, as he puts it, Soviet officials and 
Soviet agents like himself, who are looking for the opportunity, who 
care nothing for communism or the Communist regime, who are look- 
ing for the opportunity to make the break that Igor Gouzenko made — 
but they have no encouragement from the Government of the United 
States to defect against communism, and they feel themselves trapped 
in a ghost world, they feel they cannot go freely to the Government of 
the United States and say, "Look, I want to break away, I want 
asylum, I will tell you everything in the missiles program," for 
example, because there is no encouragement from the Government 
of the United States to do these things. 

And furthermore, he points out that in 1944 he, Igor Gouzenko, 
had this information and he wanted to break. He was sick of 
communism. 

Igor Gouzenko is my age; he was born in 1919, he is 38, and he is 
a Soviet-trained man, as he points out, and he points out that when 
he was in trouble he had been told by the Communist propaganda 
and the Communist schools that there was no God, and when in 1944 
he wanted to come West and give this information, he recognized 
that if he went to the Government of the United States or Canada, 
they would immediately turn him back as a traitor and he would be 
killed, and so he had this vital information until after the war ended, 
when Russia was no longer our great, noble ally, and then he took the 
chance — and since then he has lived in the shadows, fearing assassina- 
tion of his family if it is found out — and when a man like Igor Gou- 
zenko breaks this silence like he has before me and Charles Kei^ten, 
who he admires because Charles Kersten was the author of the escapee 
progi'am by which Mr. Vidovics and other Hungarian refugees came 
into this country — and that is why he wanted Mr. Kersten to come 
with me. 

I mentioned the fact, the word "God." As a Soviet-trained man, 
he was supposed to accept that there was no God, but he could not 
accept communism, although he accepted it to the extent that he 
thought that the West was worse — and, as you perhaps know, the 
Russian attitude is "Nichevo." That is the Russian Attitude, "We are 
living today, we are alive, don't wait until we are dead, because we 
have no God and there is no hereafter, and therefore it is better to 
live under this totalitarian rule than to die, because when you die, 
then you die like a dog, there is no soul in the human body." 



4802 SCOPE OP SOVIET ACTIVITY IN THE IINITET> STATES 

And SO, although Gouzenko said he had never known God, when 
they began getting suspicious of him in 1944 and he could not turn 
West, where he wanted to go, and he could not turn back to Moscow, 
in this tape Igor Gouzenko said : 

I threw myself down on my bed and I said, "God, if you exist, help me." 

Two days later he got an extension, and, as the result of that exten- 
sion — a year's extension in Canada — the spy ring was broken. And 
Igor Gouzenko says that he most emphatically believes in God, but 
at that time he did not know it when he was seeking help. 

And he says that if people like him are to defect, as he did, himself, 
then they should get this encouragement : 

He wants them to get a guarantee of citizenship. 

He wants them to get lifelong protection for themselves and their 
families. 

He wants them to get help for employment that would be commensu- 
rate with their education and training. 

Igor Gouzenko is a brilliant man. That is how he got his position, 
because he was brilliant, he did not get it because he was elected to it. 

He points out that one Soviet official not so long ago did defect, 
and a few weeks later he was washing dishes a few blocks from the 
Soviet Embassy and he was the laughingstock of the Soviet Em- 
bassy — and even a man who worked under communism does not want 
humiliation at the hands of the Communists when he comes to the 
West. He is very intense about this. 

He wants material security. 

And he wants documentary recognition of the service of a man who 
defects. That, basically, is the program. 

And Gouzenko said : 

"What does it mean? What does it matter if it costs a little bit of money to 
take care of one of these people that render service to the free world by 
bringing documents over and evidence? 

And everybody cries "evidence," and, as you know well. Senator, 
in espionage there is no corpus delicti, you know the espionage is 
there, because, as Gouzenko says, it is a part of the plot against the 
free world by this godless, materialistic system. It is a part of it. 
There is no such thing as God. 

And, as Gouzenko points up, this is no novelty, spinning overhead 
at 18,000 miles an hour. This is not a fluke. This is not pure scientific 
research. This is a vital weapon in Soviet warfare for the conquest 
of the world. 

And it is this that Gouzenko reflects in our conversations, and he 
expressed his concern to me, and that is further why he wanted 
former Congressman Kersten to be present — and some of it is on the 
tape — he is concerned, and that is his main tvme : Why doesn't someone 
here — why doesn't somebody do something — and he says on one of 
the tapes here : "Let us have some action now." And he wants action 
and he wonders how long the West will remain weak and irresolute 
and continue not strong and positive. He points out about stopping 
fingerprinting, which is precisely what the Communists want — that 
the State Department is backing down instead of being resolute in 
the face of the Communists. Force, he says, is the only thing that 
the Communists ever understand and appreciate, and yet we are now 
beginning to show signs that we are doing precisely what Khrushchev 



SCOPE OF SOVIET ACnVITY IN THE' UNTTED STATES 4803 

wants us to do. And this concerns Gouzenko personally and, as an 
American, it concerns me, too, if I may add that personal note. 

Mr. ^loRRis. Senator, we have had many former Soviet people 
testify before the subcommittee in much the same way as Mr. Gou- 
zenko, through Mr. Siegrist, has talked, saying our laws are inade- 
quate with respect to providing inducements. We have continually 
made recommendations, and there have been bills, but they did not 
go very far. I think it is important to point that out. 

Is there anything else, Mr. Siegrist, you can tell us here in connec- 
tion with this particular inquiry ? 

Mr. Siegrist. Well, I started to say about the matter of evidence, 
that you don't need evidence. Naturally, the Communists are not 
going to give you this evidence, but if you protect the agents who 
want to defect, they will bring it, and this he points out. 

Now, perhaps the committee knows this, perhaps the Senator knows 
this, but I did not, but it is again significant and very pertinent to 
what you were saying about laws, that today we are accepting as a 
kindly old professor here a Russian who happens to be the Soviet 
general of artillery, and Gouzenko was conc-erned about that, where 
this man, this Blagonaroff, I think that is the name — it has been in the 
press many times, and it has been in broadcasts — is accepted as a 
kindly old professor, participating with other Soviet Russians in the 
International Geophysical Year, while, in fact, he is a general of 
artillery in the Red Army and one of the top Soviet scientists regard- 
ing this program. Gouzenko points out that this typical kindly old 
professor was not that, but a lieutenant general in the Red artillery, 
and it is very important. He is a top man in the scientific field for 
Soviet Russia, and yet he is going through our United States Naval 
Laboratory — he went through it a week ago — and American newsmen 
could not get in. 

He points out — and, by the way, I would say, Mr. Morris, that he 
would be glad — he could not come into this country. You know all 
the difficulties about getting to him, but he said that he would be glad 
to talk to you, but you would have to come to him for all the reasons 
obvious to you, but he did ask me this : 

He wanted me to ask if I would please give it — the broadest — all 
possible publicity as to what he had to say, and naturally, when you 
had this inquiry, I was delighted to come down and bring down the 
tapes for your inquiry, as well as for the American people. 

Mr. Morris. Now, in connection with the three spies in Canada 

Mr. Siegrist. Yes. 

Mr. Morris (continuing). And the 750 pages ^ of scientific informa- 
tion — can they be identified ? 

Mr. Siegrist, He did not at that time, and I talked to Igor Gou- 
zenko on the telephone yesterday and asked about that — and keeping 
in mind his English got better as he got along, but over the telephone 
it is difficult — but he told me that the spies had cover names of — first, 
Badeau 

Mr. Morris. That was the name ? 

Mr. Siegrist. That was the cover name ; and he gave me this name, 
the real name. The real name of this man is Dunford Smith, and he 
said he was convicted in the [spy] trials ; that Dunford Smith, alias 



^ See transcripts, p. 4806. 



4804 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Badeaii, had been a scientist in the Canadian National Research 
Council. 

Now, this, gentlemen, I am giving you as Gouzenko gave me over 
the telephone yesterday. 

Another name he gave me was the name of Bagley, and I asked him 
to spell it, and that is it, B-a-g-1-e-y, as best as I can understand on 
the telephone, and the records would show the name anyway. He, 
too, was convicted, and he was a member of the National Council. 

Then, Edward Mazerall — and then he mentioned one he said 
was not convicted, and he did not understand why, but he was not 
convicted — if you want me to give that name in public, I hesitate, I 
don't know. I would be glad to give it to you privately. 

Senator Johnston. You may give it for our file. 

Mr. SiEGRisT. Yes. It will be a name very familiar to the com- 
mittee, however. 

Now, there was one point I was going to mention — I got off the 
subject. I did not know about the Gouzenko story, but he was actually 
a lieutenant in Red Army intelligence. He had been assigned to that 
intelligence school because he had a brilliant academy record. In 
Russia you have the gymnasium, and it is junior college and high 
school combined. He was assigned because he graduated with a gold 
diploma, and he went to architectural school. Wlien the Germans 
were 16 miles from Moscow, Soviet officials came in one day and, he 
tells me, they said, "You, you, and you are in the army, in intelligence, 
we are sending you to the intelligence school." 

And he came out a lieutenant. He said that they asked him, "Do 
you want to be a cipher clerk or a decipher clerk ?" He said that he 
didn't know which, and he was lucky that he became a cipher clerk, 
because they went to foreign countries, but the decipher clerks never 
get out, they never defect. The important thing is that he got his pay 
from the Soviet Red Army, although he was diplomatic personnel. 

And he said : 

I don't know what I was, if I was an administrative assistant or what, but I 
was a cipher clerk in the Soviet Embassy at Ottawa, but officially I was accepted 
by the Government of Canada as a diplomat, and — 

he said — 

it is the same way in every embassy. 

He said that it is the pattern ; that you cannot separate espionage 
or sabotage from Soviet diplomacy or pure science. Those are the 
things he wanted to point out. 

Senator Johnston. Are there any other questions ? 

Mr. Morris. I think not. 

Senator Johnston. All right. 

Mr. Morris. How long are you staying in town ? 

Mr. SiEGRisT. I will do whatever you want me to do. 

Mr. Morris. Is there anything more that you want to tell us now, 
Mr. Siegrist? 

Mr. Siegrist. There probably will be after I leave, in retrospect. 

Senator Johnston. You will be available to the committee? 

Mr. Siegrist. Yes. 

I do believe, though, that the main bod^ or the gist of our conver- 
sations is reflected in those tapes, I certainly hope so. If I missed 
that, I am not a very good reporter. 



SCOPE OF SOVIET ACTIVITY IN THE IHSTITED STATES 4805 

Mr. Morris. We thank you, Mr. Siegrist, and we are certainly very 
grateful to you to come all this way to appear before the committee. 

Senator Johnston. We certainly appreciate your coming here and 
giving that information to the committee. 

Mr. Siegrist. Thank you, Senator. 

Senator Johnston. Off the record. 

(Discussion off' the record.) 

Senator Johnston. Mr. Morris suggests that we meet at 3 o'clock — 
in this room ? 

Mr. Morris. Yes. 

Senator Johnston. Very well. 

We will meet again at 3 o'clock. 

(Whereupon, at 12 : 50 p. m., the subcommittee recessed, to reconvene 
at 3 p. m. of the same day.) 

(Following are transcripts of the taped interviews with Mr. Gou- 
zenko, preceded by a news story by Mr. Siegrist, based on the re- 
cordings :) 

The Pattern of Soviet Espionage 

By Igor Gouzenko, as told to Bob Siegrist 

Somewhere in Canada . . . October 15 (INS) — As a Soviet-trained man, I 
recognized that Russia's successful launching of history's first earth satellite 
represented a Soviet victory far beyond the complex field of so-called "pure" 
science. 

I recognized that it represented a vital and far-reaching victory in what, to 
the Kremlin-based world conspirators, must forever remain the companion 
sciences of propaganda, coercion, duplicity, red-style "diplomacy" and military 
force. 

All of these are vital weapons of international communism's amoral crusade 
for world conquest. 

As a former Red Army intelligence officer and cipher clerk in "diplomatic" 
guise, I recognized, too, that this ominous Soviet victory had been realized 
through the Kremlin's utilization of another of its mostly highly developed 
and most diabolical of sciences — the "science" of subversion, espionage, and 
sabotage. 

In this concerned recognition of these frightening facts, I accepted it as 
my duty to break my self-imposed silence to make the most direct effort pos- 
sible to warn the obviously confused and threatened portion of the world that 
still remained free. 

I believed it only proper and logical that my warning should be directed 
to President Eisenhower as the elected leader of the nation which represents 
the only major barrier to the Kremlin's effort to enslave all nations as the red 
leaders long ago enslaved my Mother Russia. 

Within 48 hours of the Moscow announcement of the launching of the red 
sputnik, I had mailed to the President a letter in which I warned : 

"The fact that the United States with its advanced scientific and material 
resources was not able to launch the first earth satellite should be a subject 
of serious thoughts and investigation. 

"In my opinion it indicates the work of well-organized Soviet spy rings in the 
U. S. missile production system. These espionage rings on one hand are pump- 
ing out of United States the valuable scientific and other information, and, on 
the other hand, are sabotaging and delaying the U. S. missiles efforts under all 
kinds of seemingly logical excuses." 

To that warning, I added : 

"May I recommend, Mr. President, that the U. S. government immediately 
adopt and put into effect my five-point program, the aim of which is, by bringing 
on our side the people with documents exposing the Soviet spy rings, to effect 
a crushing blow to the Soviet espionage system on American territory." 

I reminded the President : 

"This program, vital to the security of the U. S. and of the whole free world 
was officially handed over to the U. S. government in Jan. 1954 * * *." 



4806 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

There can be no question but what there are other communist-sickened Rus- 
sian officials and agents who yearn for an opportunity to break for freedom and 
to carry with them vital documentary evidence of Kremlin-directed espionage 
against the West, as did I in 1945. 

Yet these persons find little encouragement that they will not simply be drained 
of their information, played for propaganda purposes, and then dropped to fend 
for themselves in an awful, uncertain shadow world in which they will be 
spurned by the non-communists and hunted by the communists. 

My program would offer that desperately needed encouragement by assuring 
that defectees will be gi-anted American citizenship, financial help, lifelong 
protection, employment assistance, and documentary recognition of their services 
for freedom. 

To illustrate the importance of defection, permit me to remind the reader that 
in my defection I was able to expose, among others, three spies in Canada's 
National Research Council. 

Prior to that exposure, Canadians had accepted them as good, respectable, sin- 
cere, and loyal Canadian scientists. Yet, in just one day, these men had deliv- 
ered to the Soviet Embassy in Ottawa 750 pages of secret scientific information. 

When I exposed them, they were preparing to surrender, on film, all of the 
secret scientific library. 

In other words, the result of long years of work and achievement of the best 
Canadian brains were about to be placed at the disposal of Soviet Russian 
Science. 

Had not they been exposed, these three scientist-spies would have grown in 
number. Loyal scientists would have been milked of information and then 
squeezed from the picture wherever possible. The Canadian National Research 
Council would have become, in effect, a department of the Soviet Academy of 
Science. 

Had the Canadian government decided to launch an earth satellite program 
these spies would have pursued the following Kremlin-assigned course : 

They would have hastened to give Moscow every speck of information avail- 
able while slowing down Canada's program and while hurling into official and 
public eyes the soft dust of scientific alibis for lack of Canadian progress as that 
they were being hampered by such problems as "heat resistance,'' "erosion," 
"alloys," and so forth. 

Meanwhile, Russia would have capitalized on this by launching its own earth 
satellite to the accompaniment of the loud acclaim of these "respectable" Cana- 
dian scientists who, while publicly congratulating the Kremlin's scientists on 
their great achievement in the "innocent" and "peaceful" field of "pure" science, 
would simultaneously bemoan the "fact" that under the American free-enterprise 
system scientists had not been properly recognized, considered, supported, and 
honored. 

This would have been the pattern, for this is the Soviet pattern. 

Americans and their elected officials should note it well. 



(Following are the transcriptions :) 

Mr. SiEGKisT. On Friday, October 4, Soviet Russia rocked the world by 
launching the first space satellite in history. To those who best knew the 
Kremlin mind, this Russian-first in outer space carried especially frightening 
significance. This so greatly disturbed one of the greatest experts on that 
Kremlin mind this side of the Iron Curtain that it moved him to break the 
self-imposed silence of many years in an effort to warn the non-Communist 
world the danger inherent in this Russian victory in outer space. 

This man was Igor Gouzenko, the Russian code clerk, who in 1945 laid his 
life on the line by breaking with the Russian Embassy in Ottawa, Canada, to 
turn over to the Canadian Government volumes of vital information on Soviet 
espionage which was being carried out at that Soviet Embassy in Ottawa. 
In making that historic break, which shook the Soviet world as a true inter- 
national headline, Igor Gouzenko carried with him 109 secret documents to 
help prove his case against Russian espionage via the Russian Embassy in 
Ottawa, Canada. To this day, these papers which broke an important Soviet 
spy ring, which from the Ottawa Embassy spread out into the United States 
and Britain, remained the only important massive and organized documentary 
evidence of Red espionage ever secured. 



SCOPE OF SOVIET ACTIVITY IN THE "UNTrED STATES 4807 

As a result of the historically sensational Gouzenko revelations, 10 Canadian 
citizens and 1 British citizen were convicted. Among the 10 Canadian citizens 
convicted were 1 member of Parliament ; 1 top scientist, who was a millionaire, 
by the way ; a top official of munitions supply for the Canadian Government ; 
an External Affairs employee; and 2 scientists of Canada's National Research 
Council. The British citizen was Dr. Allan Nunn May, the renownetl nuclear 
physicist. 

The report of the Canadian Government Royal Commission, whose investi- 
gation of the Gouzenko charges set the scene for the trials and the convictions, 
had this to say of Igor Gouzenko, we quote : 

"We have been impressed with the sincerity of the man and with the manner 
in which he gave his evidence, which we have no hesitation in accepting." 

And the Royal Commission added: "In our opinion, Gouzenko, by what he 
has done, has rendered great public service to the people of this country and 
thereby has placed Canada in his debt." 

The Royal Commission. 

It was against this outstanding and trial-proved background that Igor 
Gouzenko became so alarmed by the launching of the Russian space satellite 
that he broke his silence by sending from his Canadian haven, the following 
letter to President Eisenhower. We quote that letter : 

"Dear Mr. President: The fact that the United States, with its advanced 
scientific and material resources, was not able to launch the first earth satellite, 
should be a subject of serious thoughts and investigation. In my opinion, 
it indicates the work of well-organized Soviet spy rings in the United States 
missile-production system. 

"These espionage rings, on one hand, are pumping out of the United States 
the valuable scientific and other information ; and, on the other hand, are sabo- 
taging and delaying the United States missiles efforts under all kinds of 
seemingly logical excuses. 

"May I recommend, Mr. President, that the United States Government im- 
mediately adopt and put into effect my .j-point program, the aim of which is, 
by bringing on our side the people with documents exposing the Soviet spy 
rings, to effect a crushing blow to the Soviet espionage system on American 
territory. This program, vital to the security of the United States and of the 
whole free world, was officially handed over to the United States Government in 
January 1954. It is also widely published in the United States and Canadian 
press. This program should have been adopted long ago. It should be adopted 
now before it is too late." 

And now, we have at our microphone tonight the man himself, Igor Gouzenko, 
for. upon learning of Gouzenko's dramatic breaking of his silence via the letter 
to President Eisenhower, parts of which were published in the press in great 
amounts in Canada and relatively small amounts in the United States, upon 
learning of the silence breaking by Gouzenko, we made contact with him in 
Canada and arranged, not without obvious difficulties, for exclusive interviews 
for our broadcast. Therefore, we are speaking with him as our guest tonight 
from an undisclosed place in Canada. 

Igor Gouzenko, it is truly an honor to have you on our microphone. 

Mr. Gouzenko. I thank you. 

Mr. SiEGRiST. Igor, I know from the many hours that we have talked and 
discussed things prior to this broadcast that, in the years that you have been in 
Canada, you have picked up some very fine English ability. 

Mr. Gouzenko. I hope so. 

Mr. SiEGRisT. Now, Igor, if you speak up and speak slowly, I am sure that our 
audience is going to understand you very, very, well. And what you may lack 
in English ability, grammatically speaking; dramatically speaking you have it, 
because we know you speak from the heart. 

Now, Igor, why did you pick this particular time to break your silence via this 
letter to President Eisenhower? 

Mr. Gouzenko. I took this time, chose this time because I think right now the 
free world is going through one of the most critical periods of its existence, and 
also a very dangerous period ; and, therefore, I thought it's my duty to warn the 
free world through President Eisenhower. 

Mr. SiEGRisT. Well, now, back in 1945 when you made your break with your 
Government, that is, the regime, the Communist regime that controls your Rus- 
sian country, Igor Gouzenko, when you made that break, why did you make the 
break when you did? 



4808 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. GouzENKO. In that time it was also — free world was also about to be in 
a dangerous situation. It was time when Soviet Government, through their 
agents, were already receiving information and data on atomic bomb and knowing 
that Soviet leaders if they have atomic bomb and if they knew, they can use it 
and as a result be destroyed themselves, they will do it. Knowing this all, I 
wanted to warn free world about imminent danger. 

Mr. SiEGKisT. And when you did that, Igor Gouzenko, when you did that, the 
Canadian Government first appointed the Royal Commission and as a result of 
the findings of the Royal Commission from talking to you, from your testimony, 
from your evidence, there were trials and the convictions which followed, which 
we have now enumerated. 

Now, the Canadian Government took action. Has any action been forthcom- 
ing from President Eisenhower or as a result of your letter to President Eisen- 
hower in connection with your warning regarding the Russian outer-space 
missiles? 

Mr. GouzENKO. Not yet. No ; I didn't receive any answer from him yet. 

Mr. SiEGRiST. Does this surprise you? 

Mr. Gouzenko. VSrell, in a way, no, because I am not sure that he read this, 
because I am not so sure that his assistants, whoever they are, passed to him 
that letter. 

Mr. SiEGBiST. Do you have any idea why that might not be passed on to Presi- 
dent Eisenhower ? Certainly, you are known in Washington. 

Mr. Gouzenko. Well, I wouldn't know the precise idea, but by my experience 
with — don't forget this is actually the second time I give advice, the same advice 
to the United States and Canadian Government. It was the first time in 1954, 
in January, and they didn't take action in that time. Well, and the — there is so 
much — there is not much movements on it right now, too. And 

Mr. SiEGRiST. All right. Now — pardon me — go ahead, Igor. 

Mr. Gouzenko. And yet, to tell you frankly, I think the situation like this is 
like a second Pearl Harbor, even much more so. Because while in the Pearl 
Harbor, it was only destroyed part of our United States might with whole coun- 
try intact ; right now over our heads, whirling that satellite which reminding 
about that danger which might destroy whole country, at least cities and mil- 
lions of population. 

Mr. SiEGRiST. All right. Now, when you broke with your country, with your 
Government of Russia in 1945 and took the action you did in Canada with the 
convictions which followed, you say that you were concerned because Soviet 
Russia was beginning to get our secrets of our atomic bomb. Now, we know they 
have the atomic bomb, in greatest part through espionage, and the hydrogen bomb 
now and these jet planes and the ballistics missiles, and now they have been 
able to propel into outer space this space satellite. So, if you were concerned 
in 1945 about what the Russians would be able to do with the atomic bomb, un- 
questionably you were even more greatly concerned, knowing that they can do 
in scientific fields what they are now doing? 

Mr. Gouzenko. Yes ; certainly so. And because right now they have means to 
deliver these hydrogenic bombs ; and we can, pretty sure, have evidence in the 
form of that Sputnik that they claim for having intercontinental ballistic missiles, 
it is not antiwar, it is British— it is facts. 

Mr. SiEGRisT. Well, now, if President Eisenhower or some representative of 
the Government of the United States, of either the legislative or the adminis- 
trative branches of the Government, should ask you : All right, you have made 
this claim, Igor Gouzenko, what is your evidence? What would you say? 

Mr. Gouzenko. Well, I would say this: I haven't got right now documentary 
evidence as I had in 1945, but I have that experience, intimate knowledge of Soviet 
espionage activities and, even more important, I have that intimate knowledge 
of workings of the Soviet mind, of how they would think and they will act in 
certain cases. And it all points to that fact, they certainly will try, do their best, 
through their fifth column to undermine United States efforts in a — on critical 
projects, like guided missiles or intercontinental ballistic missiles. Therefore, I 
also know that their aim is to control all free world. 

And in this case, I will say, it's not for nothing they publish every day, on a 
heading over their Communist newspaper Pravda, their main publication, words 
"Proletarii Vsekh Stran S0ediniaitis," proletariats of all countries, unite. AVell, 
this has nothing to do, of course, to proletarian hut it has to do with countries, 
free countries, everything to do with the free countries. And I can assure you 
they will take off that sign only when all free world will be under Communist 
regime. 



SCOPE OF SOVIET ACTIVITY EST THE TJlSnTED STATES 4809 

Mr. SiEGRisT. In other words, what you are saying about this cynicism of the 
Communist slogan "Workers of the World Unite" or "Proletarian of the World 
Unite," as you have read from the banner of Pravda which we have before us 
here- 

Mr. GouzENKO. Yes ; that's right. You have it right here. 

Mr. SiEGRisT. What you are saying, Igor Gouzenko, is that it is not the workers 
that make these advances, not the workers that advance under communism; 
the advances that are made, in great part, are due to espionage and fifth 
columns and boring from within a new fear. And you are quite confident 
that we will find, upon investigation, that their advance into outer space has 
been made in great part through duplicity and through espionage against our 
American Government ; am I correct? 

Mr. Gouzenko. I am fully — I absolutely believe in it and I am sure if a 
thorough investigation would be done, the results precise will happen. 

Mr. SiEGRisT. Thank you very much, Igor Gouzenko. We will be going into 
that matter further and, also, we will be discussing your five-point program, 
which you gave to the Government of the United States back in 1954, in subsequent 
broadcasts. 

Ladies and gentlemen, keep in mind that the voice you just heard was the 
voice of Igor Gouzenko. The warning that you have just heard came from Igor 
Gouzenko, a man -who knows, a Soviet Russian trained man, a former Red army 
intelligence agent who broke with Moscow in 1945. Keep it in mind. 



Mr. SiEGRisT. Igor Gouzenko, one of the few things that we can reveal re- 
garding you is, of course, something that has already been revealed, that is your 
age. You just happen to be the age of this reporter, 38 years old ; right? 

Mr. Gouzenko. Right. 

Mr. SiEGKiST.You were born in 1919, shortly after the end of World War I 
and, of course, you were born shortly after the Communist revolution against 
Mother Russia. 

Mr. Gouzenko. That's right. 

Mr. SiEGRiST. Now, where were you born? 

Mr. Gouzenko. I was born in a village, Ragachova, which is about 30 miles 
from Moscow. 

Mr. SiEGRisT. And did you live in that village very long or did you move 
elsewhere? 

Mr. Gouzenko. No; I was moved almost immediately after that to another 
village to live with my grandmother. Well, and then moved with my mother, 
with my parents, to other places and, eventually, I was in Moscow, studying 
at school until when I finished 10th grade when I went to an architectural 
institute in Moscow and — until war break out, and then was mobilized to the 
Military Engineering Academy during the war. And about 3 months later was 
again — commission come there and select several people, and I was one of them, 
to be sent to Military Intelligence Academy and I was studying ciphers in that 
academy. 

Mr. SiEGRisT. That was ciphers. You were studying code in the Military 
Intelligence Academy. 

Mr. Gouzenko. That's right. 

Mr. SiEGRisT. Now, at no time did you really have anything to say about 
your destiny, really. When you completed through the 10th grade at the school 
that you mentioned, that was actually what they call in Russia gynasium. 
Right? 

Mr. Gouzenko. That's right. 

Mr. SiEGRisT. Which is sort of a high school and a junior college combined; 
am I correct? 

Mr. Gouzenko. That's right. 

The only time they asked me, it's when — in the Military Intelligence Academy, 
they asked me, "Who do you want to be, cipher or decipher?" And I really 
don't know the difference and I just say, "Cipher," And, actually, it was a big 
difference? If I would be decipher, I wouldn't be sent abroad. 

Mr. SiEGRiST. Now, they asked you, "Do you want to be a cipher clerk or 
a decipher clerk?" And you just happened to say cipher clerk ; and that worked 
out for the good of Gouzenko and, actually, for the Government of Canada, be- 
cause it was the selection of you as a cipher clerk that led you to the Ottawa 



4810 SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 

Embassy assignment, from which you brolje with Soviet Russia and exposed 
the spy ring. 

Mr. GouzENKO. That's right. If I said decipher, I would be staying because 
they don't send deciphers — they have nothing to do abroad. 

Mr. SiEGRisT. Now, what year was this when they sent you to the Military 
Intelligence Academy and assigned you as a— to study to prepare yourself to 
become the cipher clerk as you did ; what year was that? 

Mr. GouzENKO. It was October 1941. And at that time, the Germans were 
already near Moscow and this academy moved in the rear to study and to con- 
tinue work, so it was October 1941. 

Mr. SiEGRiST. Now, let me get this straight: You were suddenly drafted into 
the army, you were in the academy and suddenly they drafted you into the 
army from your architectural studies and assigned you to this Military Intelli- 
gence School ; are we correct on that? 

Mr. GouzENKO. Well, yes. They drafted me in the army from the institute, 
to the Military Engineering Academy, and then from Military Engineering 
Academy to Military Intelligence Academy. 

Mr. SiEGRiST. Then after you had completed that study of being a cipher clerk 
in the Military Intelligence Academy— and that, as I understand was east of 
Moscow because it was during the war, the Russians were threatening ; is that 

right? 

Mr. GOUZENKO. Yes; that's right. And then, in April 1942, with the rank 
of lieutenant when I finished that course, I was placed in the Military Intelli- 
gence Headquarters in Moscow where all the cipher telegrams are received from 
all over the world, and including, of course, the United States; and there I 
was working until July— June 1943, when I was sent to Canada. 

Mr. SIEGRIST. Now, when you were sent to Canada, of course. World War 
II was still on and Soviet Russia was supposed to be our ally, that is, the 

American ally? ^ , i.-, c 

Mr. GouzENKO. Yes. And I was working there in the Embassy until Sep- 
tember 5, 1954. 

Mr. SiEGRiST. When you broke? 

Mr. GouzENKO. When I broke. 

Mr. SiEGRisT. Now, let me get one thing straight : The war was on, you were 
a lieutenant in the Red army intelligence division, and your specialty was code, 
as a cipher clerk ; yet, you were sent as diplomatic personnel, you were not sent 
as an officer of the Red army. You were sent as diplomatic personnel to that 
Ottawa Embassy; am I right? 

Mr. GOUZENKO. Right, in civil classes and with official — I was supposed to be 
assistant, technical assistant to military attache. 

Mr. SiEGRisT. In other words, the Government of Canada and the people of 
the United States, and so forth, our friends, were supposed to accept you as just 
another member of the diplomatic corps, but actually you were a military intel- 
ligence agent with a rank of lieutenant and you were working on code. 

Mr. GouzENKO. That's right. . . 

Mr. SIEGRIST. Now, did you join of your own volition or did you have to join 
somewhere along the way in your youth the Comsomol, that is, the young Com- 
munist organization in Russia ? 

Mr. GouzENKO. Yes; I joined, and it was in ninth grade at school, and, ot 
course, I joined- that was always drive to bring as many possible young boys 
and girls to young Communist organization, and I joined. And, also, because 
I thought it's the best thing to do at that time. 

Mr. SiEGRisT. Why did you think it was the best thing to do at that time.' 
^Q orgj; ahead? 

Mr. GouzENKO. To get ahead in studies; to get ahead in my work, eventual 
work, et cetera, because, first of all, it's clear for everybody there— what I me?in 
when clear for everybody, it means clear — it was clear there at that time, like 
to many other students, that, in some cases, if you are not member of young 
Communist organization you suffer in the way of not being accepted to some 
schools, and so on. . 

Mr. SiEGBisT. In other words, you just had to do that. And did you consider 
yourself as a Communist up until the time you quit the Embassy in Canada? 

Mr GOUZENKO. Well, I didn't question this, and, of course, I can say to myself, 
and I was— sincerely believed in the Communist propaganda, all things, like 
millions of others. ^ , „ ^^ 

Mr. SIEGRIST. All right. What changed you? What turned you away from 
communism? What made you want to break and live in the West? 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4811 

Mr. GouzENKO. Well, it's the first time the test of freedom ; even so, I didn't 
actually taste it in full at that time, because I was in the confines of the Em- 
bassy. But, still, even at that time, I see with my eyes ; you have to be blind not 
to see the diftereuce. 

And like, for example, election — well, it amazed us how election was con- 
ducted in Canada ; that there are several candidates and there was something 
to choose from, and now they criticized openly policies of the Government; 
things which are absolutely unheard of in Soviet Government, when on election 
leaves there is only one candidate, and that is a Communist. 

Mr. SiEGEisT. When you were a young man studying in Moscow and when, 
then, later you became a lieutenant in intelligence in the Red army and then 
when you were sent to the Russian Embassy at Ottawa, Canada, did you believe 
in God? 

Mr. GouzENKO. Well, no. And I, like any other Soviet citizen, I didn't be- 
lieve, I didn't — in fact, we just thought it's kind of something for old people, 
you know. 

Mr. SiEGBiST. And there was really no hereafter, as you believed, no God, no 
hereafter ; you just lived and then you died? 

Mr. GOUZENKO. That's right. Just die and then disintegrate; that's all. 

Mr. SiEGRiST. Now, do you believe in God now? And, if you do, what made 
you change? 

Mr. GouzENKO. Yes; I do believe. And it made change, many things; but 
there was — really, I was seriously thinking about God — things which I never 
told nobody but it's first time I mention it now. At a critical time in 1944 
when, first time, I was recalled to Moscow, and it was time when I know that 
if I — and I already actually decided to make my break, but I know if I do 
my break at that time, I would definitely be turned over back to the Soviets 
and I — so here I was in a situation, I wanted to help West World and yet I 
know I would be turned down because it was during the wartime and there 
was no, absolutely — even question of them being offended at their allies, and 
yet knowing what Soviet Government doing here behind the backs of them and — 
that was the time, when I was recalled to Moscow, I really — I remember defi- 
nitely that night, I first time think about actually, actually just plain ask for 
help of God. 

Mr. SiEGRiST. How did you pray? You didn't know how to pray, you hadn't 
been instructed in God 

Mr. GouzENKO. I didn't pray ; no, no. 

Mr. SiEGRiST. AVhat did you do? What did you say? 

Mr. GouzENKO. Well, I just said to myself, "If You exist, help me." That's 

all. 

Mr. SiEGBiST. "If You exist, help me"; and you were talking to God, prob- 
ably, for the first time in your life. 

Mr. GouzENKO. For myself — yes; first time. I didn't even mention this to 
my wife. 

Mr. SiEGRiST. You didn't mention this to your wife. This is the first time you 
reveal this, Igor Gouzenko. And tell me, do you think God heard your prayer 
that night? Do you think there is a God now? 

Mr. Gouzenko. Well, I think so. 

Mr. SiEGRiST. Thank you very much, Igor Gouzenko. 



Mr. SiEGRiST. Igor Gouzenko, you have told us on a previous broadcast that 
obviously you don't have the evidence and the documents to substantiate your 
claim to President Eisenhower that Russian Communist espionage had helped 
pave the way for the Russian victory in outer space via the Sputnik, but you 
have pointed out that you do have the evidence by way of your hard, cold knowl- 
edge as a Soviet-trained man and, as the former code clerk in the Russian Em- 
bassy in Ottawa, Canada, you know exactly how the Russians work. 

So, let us go back to 1945 at the time of your break with the Russian Embassy 
in Canada and your exposure of the Soviet spy ring that was working out of 
there. Let us go back to that time and let us assume that scientists were actually 
going into a missiles program on the basis of the information, the documents, 
and the evidence that you had then; how would they go about operating their 
situation? 



4812 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. GouzENKO. Well, I'll tell you this way: that I, myself, when I was in 
Moscow before the war as an ordinary Soviet citizen, I have no knowledge 
whatsoever about Soviet spy activities ; they never mentioned this. When they 
have some victory, some country — say, they control some country, it's always 
the proletariat, always the workers do it. It is spontaneous rebellion or spon- 
taneous demonstration, or done through parliament or something like that, by 
progressive elements ; never by spy, of course. 

When I was working in the Soviet intelligence headquarters, then I saw and 
I was amazed by the magnitude of that espionage work. But, really, I get 
shock of my life when in the Soviet Embassy in Ottawa. Then, when I saw 
it in the concentrated form, how they brought whole suitcases with informa- 
tion, with the blueprints, with actual telegrams from important persons — like, 
for example, the Prime Minister of Canada would send telegram to his Canadian 
Ambassador in Moscow and the Soviet intelligence spies worked so eflBcient that 
Moscow received that telegram before even the Canadian Ambassador. Well, 
that kind of thing really amazed me. 

Now, to illustrate to you, to show you the magnitude of that work, let me 
remind you of one actual fact which was recorded in the Royal Commission 
and is actual document which I brought — one of the documents I brought with 
me to the Canadian authorities, that concerned the work of espionage ring in 
the Canadian National Research Council. 

Well, at that time, at the time of my break with the Soviet regime in Septem- 
ber 1945, there were — among many other spies, there were three Soviet spies in 
National Research Council with cover names Bagley, Bacon, and Biedor. Well, 
cover names means not real names but names used in espionage system. Now, 
to all Canadians they were good scientists, good, respectable scientists. 

These three spies were able to give at one occasion — mind you not during 
certain periods, because they were actually organized only about half a year 
before my break — but on one day, they brought 750 pages of secret scientific 
information and were about to give all the scientific library, secret scientific 
library, on a film — on a film, of course — to the Soviets. In other words, the 
result of long year work and achievement of the best Canadian brains were 
about to be at disposal of Soviet scientists. My step prevented it. 

Well, yet suppose I was stopped in my action — well, stopped — suppose, when 
I was getting out these documents of the Soviet Embassy, I would be arrested 
or somehow prevented, what would happen now 12 years later? Well, these 
three spies would grow into more respectable scientists with whom anyone 
would be proud to shake hands. They would surround themselves during these 
years with many other spies, also scientists, who — and they will gradually 
squeeze, as many as possible, all the scientists out of this scientific body and 
will milk the rest of them to utmost. Then the National Research Council, to 
put it mildly, would be like a little private busy department of Soviet academy 
of scientists. 

Now, suppose Canadian Parliament decided to launch our satellite or to 
start a guided-missile program or intercontinental ballistic missile for its de- 
fenses, naturally the Government would entrust such a job to the National 
Research Council ; at least part of a job they will entrust with this task ; and 
naturally and dutifully, this multitude of spies would give every speck of in- 
formation to the Soviet Government. At the same time, the Soviet Govern- 
ment would demand from these spies that they slow down the actual launching 
of the satellite or sabotage the guided-missile production under all kinds of 
excuses ; and you know spy-scientists could find plenty of excuses. 

Suppose some Canadian Government official would ask these scientists, like 
we — like, let us say, like now people in America asking the scientists, some 
of them, "Why the delay?" They would' throw in face of that official the dust 
of scientific works, heat resistance, erosion, alloys — to find the alloys, metals, 
and so on — and nothing poor fellow can do about it but shake, probably, his 
head. Meanwhile Soviets would launch the first satellite and the.se spies, these 
B'lgleys, Bacons, Biedors — to use their cover names — would be the first to shout 
in the press words of admiration and sincere congratulations to their Soviet 
fellow .scientists in their magnificent achievements. 

And that's what precisely, I think, is happening right now in the United 
States. That's why I think when — once one prominent Canadian political figure 
said, in the end of 19.53, "What can one spy do?" Well, I tell you Soviet spies 
can do plenty. They can decide who will win, cold or even hot war. 



SCOPE OF SOVIET ACTIVITY IN THE UNTTED STATES 4813 

Mr. SiEGRiST. And you gi-jively fear that there are many people in the United 
States missiles program or about the missiles program in the scientific field or 
the quasi-scientific field in our Government or about our Government who are 
actually sabotaging our missiles program, have been doing so and you are leery 
of many scientists who raise up in praise of the Soviet project because you be- 
lieve that in great part, as you charged the President of the United States, they 
liave succeeded in launching this space missile by way of sabotage and slowdown 
of our own program. Are we correct in summation? 

Mr. GouzENKO. Yes, I believe so. That's right. 

Mr. SiEGRiST. Thank you very much, Igor Gouzenko. 



Bob Siegrist. Igor Gouzenko, what specifically is and what was the five-point 
program of your recommendations on how to deal with Soviet espionage which 
you gave to the Government of the United States back in 1954, and which you 
now have recommended that President Eisenhower employ? What are those 
five points, Igor Gouzenko? 

Mr. Gouzenko. Well, first, a special type of citizenship law should be enacted. 
Its effect would be that every escapee who brings documentary evidence, which 
can stand scrupulous investigation leading to the disclosure of Communist spy 
activity, should become a Canadian or an American citizen without complicated 
procedure and with utmost speed. That is the first. 

Now, second, this law should provide lifelong protection for such a citizen, 
if he desires it, and the protection thus provided should be friendly, understand- 
ing, and detached from personalities. In other words, the man must be insured 
safety whether he is an ugly, unpleasant, irritable person or not. 

Now, the third point is that man should be given material security in the shape 
of congressional grant, or parliamentary grant in the case of Canada, such as 
is given to war leaders who have served their country well. Such security could 
be in the form of government annuity or any other form agreed on by the repre- 
sentatives of the people. Inevitably, this person would have many enemies, and 
the greater his financial security the greater his safety. We must not forget 
that against such men would work the whole Soviet system with its unlimited 
financial resources for counterespionage work. Thei'e can be no question about it. 

Now, fourth, such a man should be given all assistance in finding employment 
which suits his ability and talent and which would not humiliate him. Now, 
like, for example, say he was officer and then this — he have no other job to do, 
but maybe working in a cleaner's or in a laundry. Well, this is humiliating; 
this make him laughingstock in the eyes of others, and that's no good. 

Now, fifth, and this is very important, such a man should be given, as a matter 
of right, a document in which the Government acknowledges his service to the 
country and entitles him to all help. Now this is important, because it's quite 
often it happen that Soviet agents, maybe through some stupid, ignorant people, 
will try to work their hands and push them around — anyway, make his life 
miserable. Well, such a document will more or less help him to put himself in 
more respectable place, more respectable position. Now, this is five : The effect 
of this would be really tremendous, in my opinion. In fact, it would till the very 
ground from under the Communist spy masters. Never again would they be sure 
of their men ; never would their inclinations and threats be effective. The very 
cement by which they keep their spy organizations together would be dissolved. 
The more completely this is recognized, the more clearly the value of such law 
as I suggest will be seen. 

In meeting the challenge of Communist conspiracy, the more energetic the 
American Government are in promoting, passing, and upholding such a law the 
safer we will be. There is no use of going halfway about it, because Soviet 
spies, in their secret work, do not go halfway. 

Bob Siegrist. Now, Igor Gouzenko, this is based on your educated opinion 
and, of course, your deep personal experience that actual Russian spies, Rus- 
sian espionage agents, working in the United States and Canada and elsewhere 
throughout the non-Communist world actually would like to defect, they would 
like to leave the Russian Communist system for which they are ordered to spy, 
if they were sure that their life would be spared and that they would be able to 
eat and that they would be able to be securely protected against reprisals by the 
Communists. Am I correct in that ? 



93215— 58— pt. 86- 



4814 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. GouzENKO. Yes ; absolutely correct. And, of course, it's not all of them, 
but some part of them. But even that part which would give us tremendous help, 
tremendous help. And our life would be more safer after that. 

Bob Siegrist. Let me ask you this : Of course, you were never a spy, you were 
never a Soviet agent ; you were a code clerk assigned to the Russian Embassy in 
Ottawa, Canada, but you couldn't even stand that because you saw what the 
Communists were trying to do against the world. Am I right on that point? 

Mr. GouzENKO. That's right. That's right. Well, I was a member of a spy 
ring in a sense that I was a cipher clerk there, and I— next to me people were, 
they were contact people, and they are going to meet agents— and my job was to j| 
code and decode messages. And, therefore, I knew perhaps more even than those 
who contacted that agent, because they knew only certain people and certain 
places, but they didn't know maybe overall picture. 

But the point is that modern spy rings could be broken only from inside ; that's 
proved once, again and again, by experience, by facts of recent spy disclosures. 

Bob Siegrist. Now, if broken by the inside 

Mr. GouzENKO. From the inside. 

Bob Siegrist. Broken from the inside by virtue of having a firm program of 
the type which you have suggested to the President of the United States now, 
and which you suggested to the Senate Internal Security Subcommittee back in 
1954, by which you set up a hard, firm program to encourage defection of the 
Russian agents themselves to come over to our side and stop this spying and 

tell us what they know 

Mr. GouzENKO. That's right. 

Bob Siegkist. Now, tell me this : Back in 1945, when you broke, you defected 
from your job as a code clerk in the Soviet Embassy in Ottawa, Canada, what 
percentage — could you give me this, do you believe— what percentage of people 
working like yourself for the Soviet Government would actually have been 
willing to defect if they thought that their lives would be spared and they 
could eat, and live after, and be protected? 

Mr. GouzENKO. Well, I tell you this ; that in that time would be quite a lot 
of people, I believe. I certainly suspected certain people in the Canadian Em- 
bassv would do it if they would be certain of the outcome of their step. I can't 
tell exactly percent; I mean this will be just plain speculation, but it would 
be — even 1 or 2, say, cases, say, in a couple years would be tremendous help for 
security of the Western World. And I am pretty sure we will have more if 
we have strong, effective law and, therefore, our security would be much better 
if that law which I recommended in 1954 would be adopted right away. It 
should be adopted now, anyway. 

It's so obvious for me and so obvious I don't understand how, unless some- 
body is— a spy himself is against such a law, but it seems to me people didn't 
understand the working of the mind, of Soviet mind, didn't understand the 
magnitude of their work, and they didn't understand that in Soviet spy rings 
there is not only our enemies but there is human beings and some are friendly 
secretly to us and some would like to help us, but they want to make sure what 
will happen to them after that. 

Bob Siegrist. And, since we have no program like that in the United States 
or even in Canada to encourage defections of enemy agents against us, they 
really feel that they have no place to go ; they don't like what they are doing, 
but they are afraid that they can't come over to what, so far, to them is the 
enemy? 
Mr. Gouzenko. That's right. They are put in a very— like between devils 

and blue — how you call it — blue 

Bob Siegrist. The devil and the deep blue sea, in English. 

Mr. Gouzenko. Deep blue sea; that's right. In other words, on the other 
hand, there might be innocent boy from Soviet regime, on the other hand, abso- 
lutely cool indifference from democratic governments, which sometimes even cool 
indifference is actually a very dangerous thing, and it could be for them mean 
this — mean in the best case humiliation, but humiliation, also, not many people 
can stand. 

So, therefore, they are in between two forces, and yet the very existence of a 
democratic government right now might be threatened, as we can see by recent 
developments, and by Soviet guided missiles, and so on. 

Right now is the time we should do something, stop talking, stop this pretend- 
ing there is no danger, and do something. Let's have some action. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4815 

Bob Siegkist. Because very briefly you would say in one word, tliere is an 
emphatic danger that we are going to be enslaved or destroyed; is that right? 
Mr. GouzENico. That's right, absolutely right. 
Bob Siegkist. Thank you very much Igor Gouzenko. 



Mr. Keksten. Igor Gouzenko, I would like to ask you this question : In watching 
this earth satellite, the Soviet leaders apparently are trying to throw a fear 
into the Western powers, the Government of the United States, to the effect that 
if we take any effective measures against the Soviet Government that this might 
precipitate war. Now, everybody wants to avoid war, but do you think that 
if we stand up for our rights, take a strong position that this would endanger 
war? Do you think that if we adopt a political offensive against the Soviet 
Union that this would mean war? 

Mr. Gouzenko. Not at all. War would rather come from the position of 
weakness. If the United States will be taking kicking, beating, and spitting from 
Soviet leaders like, unfortunately, seems to be they taking recently, this will 
lead rather to war than if the United States will stand up on their feet and 
proudly will affirm this action, certain moral principles for which it stands, then 
I would say we have much less chance of war. 

Mr. Keksten. In other words, as I understand you, Igor, you believe that there 
is no real cause for war between us as a people, the people of America, and the 
people of Russia. But do you agree with me that it is the Soviet Union, the 
Communist regime, that is trying to make war between these two nations? 

Mr. Gouzenko. Yes, it's absolutely clear they are preparing for war; they 
are dedicated to that idea that they have to control whole world. In other 
words, they have to (fight) the United States sometime. When they do it, they 
think they will do it only when they are ready in military, but also when they 
think United States absolutely paralyzed, not only in the military sense but 
in an ideological, moral sense, then they will intend to strike the final blow. 

Mr. Kersten. Do you think we can avoid war by speaking in a friendly, soft 
way trying to make friendship agreements with the Communist leaders? 

Mr. Gouzenko. No. Every time we deal with the Soviet leaders, we must 
I'emember we are dealing with actual hangmen which proved — even they admitted 
themselves they are hangmen, after all. 

Mr. Kersten. They are really the hangmen of the Russian people ; are they not? 

Mr. Gouzenko. That's right. So we have to make friendship and ally ourselves 
not with the hangmen but their victims, enslaved people 

Mr. Kersten. By that you mean the nations, the enslaved nations? 

Mr. Gouzenko. That's right. 

Mr. Kersten. Do you believe that a strong political offensive can do something 
to defeat the Soviet regime so that these people can regain their freedom 
eventually ? 

Mr. Gouzenko. Yes, there is absolutely great possibility in it, but we have to, 
first of all, strengthen ourselves. We have to think about strengthening our 
ideological front in a sense of using our free press, our free communications like 
movies, television, radio ; and we have to mobilize all these powerful weapons to 
strengthen our morale and defend our principles. 

Mr. Kersten. Don't you believe that we should stand up for the principles as 
enunciated in our American Declaration of Independence that supports the idea 
of human freedom as against a tyrannical government? 

Mr. Gouzenko. Yes, certainly. Let us put it this way, after all, it's — every- 
body, unless man is blind — it's clear that we are standing on the right side. We 
have freedom here, they don't have it. We have no concentration camps here, 
they have it. You can continue that list for an hour, that we are standing on the 
right side. All right, now, say so loud, proudly; don't let get kicked and spit 
upon like we have recently take beating from Soviet leaders. And go in 
offensive — and this offense, by the way, like my five-point program, is actually 
one of the means to approach over the heads of the Soviet Government to the 
actual people in the — behind the Iron Curtain. 

Mr. Siegrist. Igor Gouzenko and Mr. Kersten, I would like to break in here 
just for a moment as a reporter on this broadcast. 

You speak about the freedom of the press in America and utilizing it. I would 
like to point out, Igor, that that's what we try to do on this broadcast for one, 
and I think, I believe, my understanding is that that's what attracted you to let 
us come to Canada and talk to you as we are right now. 



4816 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. GotrzENKO. Yes, I am very grateful to you and only because I know you 
are an active fighter for freedom against Communist enslavement. That's why 
I talk to you. I don't think I would talk with a person who has no such 
reputation. 

Mr. SiEGRiST. All right. Now, Igor, I would like to ask you this : You mention 
about the matter of offensives and the matter of overt war possibilities, the 
possibilities of avoiding them. I certainly agree with what you said. But is it 
not true, Igor, as you have seen, as the Soviet trained man who broke with 
them— you were shocked in Ottawa, Canada, in 1943, 1944, and 1945 when you 
discovered that they were spying against us, not, as their propaganda had it to 
you young fellows, that we were spying against them, and so forth— will you not 
agree with this reporter's contention thereby that we are actually in an allout 
war right now for survival by every means just this side of shooting? 

Mr. GouzENKo. That's right, and not much time left I am afraid. We have to 
mobilize ourselves right now or it will be too late. 

Mr. SiEGRisT. This Russian satellite out in outer space right now has proved 
that to you to the point that you have even broken your silence to come on our 
program? 

Mr. GouzENKO. That's right. 

Mr. SiEGEisT. Well, now, the Russians will be demanding many things. They 
have already begun to demand them. For example, they are demanding the 
break-up of NATO, get away from bases, get out of the Middle East, et cetera, 

et cetera. Now 

Mr. GouzENKO. Well, this recent case, the moment they put out that satellite 
and prove themselves that they have ballistic, intercontinental ballistic missiles, 
you notice how Khrushchev already talk about frightening Turkey and they 
not— when they feel strength, they aren't afraid to talk from strength. 

Mr. Keksten. If we could make some real alliances with the Russian people, 
with the Ukrainian people and the peoples of the captive nations, do you not 
think that this is a greater force than any material force like earth satellites 
or hydrogen bombs, a force that could defeat the Communist Party politically 
and avoid an all-out war? 

Mr. GOUZENKO. Yes, it certainly— in the long run, this will come out the greatest 
force naturally ; and, at the same time, we have to clear ourselves from the fifth 
column. Otherwise, from inside they will take us over, maybe without even a 

single shot. . 

Mr. Kersten. You have indicated, Igor, that the Soviets move ahead primarily 
by the subversive fifth column in other countries. So, if this is attacked and if 
we make alliances with the people behind the Iron Curtain, there is a good 
chance of defeating the Communists politically ; don't you believe? 

Mr. Gouzenko. Absolutely, we have great field for that action and efforts, 
and we should not miss that opportunity, not in any case. Our survivals depend 
on this. 

Mr. Kersten. Well, now, Igor Gouzenko, you do not like the idea of anybody 
In the free world, so-called, and certainly you don't like the idea of anybody in 
the United States actually praising Russia for the scientific achievement, you 
don't like the idea of suggesting peaceful coexistence, you don't believe m that 
I am sure, and you don't like the idea of anybody saying that the Russians have 
done this purely for scientific reasons. Am I correct in that ? 

Mr. Gouzenko. Well, they certainly— even fact itself that this satellite was 
put in that high, so high, by the means of intercontinental missile, guided missile, 
as is admitted by some scientists, it speaks of itself that actually it's a byproduct 
of military might. Let's not forget about that. 

But, of course, they have good scientists, they always have good scientists, 
but the fact they have this fifth column it's one of the most important factors 
which brought us to this situation when they are ahead of us. 

Mr. Kersten. Igor, you can speak now as one who was trained in Soviet in- 
telligence schools and one who worked in the Soviet apparatus here in Canada 
and who broke with that apparatus at the risk of your life and that of your 
family. You have seen both sides; you have seen the mind of the Western 
World and you know the mind of the Soviet Union, Communists. 

Knowing both of those minds, which do you believe has the best chance of 
survival? 

Mr. Gouzenko. Well, best chance of survival— I think best— I wouldn t say 
best chance, I would say best deserve to survive, naturally, the free country. 
But, we might jeopardize ourselves ; if we wouldn't do nothing, we will ruin our- 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4817 

selves. But, if we take— there still may be time — if we take this drastic action, 
something has to be done — I think people in the United States and Canada, they 
feel already it's time to do something, action, and if it is done, it might — we might 
improve our position and eventually we will overcome, we will be victorious in 
this titanic struggle between these two ideological systems. 

Mr. SiEGEiST. Igor, you talk about the people of the United States and the 
people of Canada feeling that something must be done. I gather that you have 
the feeling, as frankly does this reporter, that the people of Canada and the 
people of the United States, the citizens are actually ahead of their respective 
governments in fearing what the Russians will do unless we stop being weak and 
start being strong in every department ; is that correct? 

Mr. GouzENKO. Yes, in this respect I have observed, myself, quite often 
in talking with ordinary people and the workers on the streets sometimes, and 
the workers, and ordinary — just ordinary people, I am amazed, actually, they 
sometimes have better understanding than our politicians. I don't know 
how it's come about, but that it is. And, therefore, our politicians sometimes 
put too much of that idealistic approach to that Soviet problem. They think 
it's enough for them to see, say, Khrushchev or Zhukov, to shake hands with 
himi and all the difficulties will be solved like by magic. No, it isn't so. These 
people are actually dedicated to destruction of the very — our system, of our 
best intellectual minds and our best institutions. They believe so, they said 
so openly in newspapers and I don't know, by the way, why these military 
attaches, all ambassadors in Russia in Moscow didn't inform the local, here, 
government. Why don't they tell them that's what they are actually printing 
every day in their newspapers, and this — yet in the press you read here lots 
of wishful thinking based on nothing but desire, of course, natural desire 
for peace, but at the same time based not on a realistic appraisal, not a realistic 
account of what's happening actually in the Soviet Union. 

Mr. Kersten. I take it that you believe, Igor, that this world cannot long 
continue to exist half slave and half free. It's either going to become all en- 
slaved or all free 

Mr. GouzENKO. That's right. 

Mr. Kersten. And the best chance is for all freedom; is that correct? 

Mr. GouzENKO. The best chances, but still I would say best chances if we 
do something. 

Mr. Kersten. And if we have faith in freedom? 

Mr. GouzENKO. Faith, and act — not faith 

Mr. Kersten. And act upon principles of freedom? 

Mr. GouzENKo. Yes. Faith, it's all right. We talk about faith; that's all 
fine, but we have to do something about it. 

Mr. SiEQEiST. In other words, Igor, you are saying: Be realistic, recognize 
communism for the infamy it is and get tough with it. 

Mr. GouzENKo. Well, get into action and do something about these sub- 
versive activities ; be tough with their agents and be tough in a sense, but not 
just— not so flexible like, but use approach which is best in this respect. And for 
this I give practical suggestion, my program, which — put it this way, I firmly 
believe if West didn't adopt this program, I think they will be deeper and 
deeper in the mess through the work of agents. 

Mr. SiEGRisT. Thank you very much Igor Gouzenko. Thank you very much, 
former Congressman, Charles J. Kersten. 

AFTERNOOX SESSION 

Mr. Morris. Will jou stand and be sworn, Mr. Khokhlov. 

Senator Johnstox. Raise your right hand. Do you swear the evi- 
dence you give in this case will be the truth, the whole truth, and 
nothing but the truth, so help you God ? 

Mr. Khokhlov. I do. 

Mr. INIoRRis. Be seated, Mr. Khokhlov. 

Mr. Khokhlov. Thank you. 

Mr. Morris. Mr. Kliokhlov has asked permission to leave that hat 
on. He has lost all his hair with a recent illness. 

Senator Johnston. You can leave your hat on if you wish. 



4818 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Khokhlov. Thank you very much. 

Mr. Morris. Senator, the witness here this afternoon, Mr. Khokh- 
lov, has previously testified before the Senate Internal Security Sub- 
committee and he has recently returned from a trip abroad and there 
are several episodes that may be of interest to the Internal Security 
Subcommittee. And since you were sitting today, we asked him to 
appear here today in the event that some of his experiences may be of 
interest to the United States Senate. 

TESTIMONY OF NIKOLAI KHOKHLOV, CARE OF INTERNATIONAL 
RESEARCH, INC., NEW YORK, N. Y. 

Mr. Morris. Will you give your full name and address to the re- 
porter ? 

Mr. Khokhlov. Nikolai Khokhlov. 

Mr. Morris. Spell it. 

Mr. Khokhlov. N-i-k-o-l-a-i. 

Mr. Morris. Last name. 

Mr. Khokhlov. K-h-o-k-h-l-o-v. And my address is care of Inter- 
national Research, Inc., 55 West 42d Street, New York, N. Y. 

Mr. Morris. Where were you born, Mr. Khokhlov ? 

Mr. Khokhlov. City Gorki in Russia. 

Mr. Morris. And you worked for the security police of the Soviet 
Union ; did you not ? 

Mr. Khokhlov. There was a slight difference. I worked for the 
intelligence service that was included in the Ministry of Security, but 
it was purely intelligence work. I worked only abroad, and my desk 
was German-Austrian desk for 13 j^ears. 

Mr. Morris. And when did you defect from this Soviet foreign 
ministry ? 

Mr. Khokhlov. I went over to the West in February 1954 and 
exactly it was February 18 that I contacted the Russian anti-Com- 
munist underground and on the 20th I contacted the American au- 
thorities in West Germany in Frankfurt. 

Mr. Morris. You are now active in the organization known as NTS ? 

Mr. Khokhlov. I am now what ? 

Mr. Morris. Active with the organization known as NTS. 

Mr. Khokhlov. Yes, I am in contact with them. I am working 
with them. However, while being in the United States I am acting 
only on my own behalf. 

Mr. Morris. Senator Johnston, Mr. Khokhlov testified before the 
subcommittee several years ago about his general background and 
experience, some of the things that he did for the intelligence organ- 
isation. 

You recently had a bad experience abroad, did you not, Mr. 
Khokhlov? 

Mr. Khokhlov. I suppose it was a bad experience. I was just 
about to die. I was on the brink of the grave, and I would like to 
express immediately from the very beginning my deep recognition 
of the help I received from American authorities in Germany. For- 
tunately, this time American science of life was supreme to the Soviet 
science of death so I was saved. 

Mr. Morris. Tell us what happened. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4819 

Mr. Khokhlov. It happened so that actually my friends and I my- 
self did not believe that after such a big and noisy story that my com- 
ing over to the West caused in 1954, that after this publicity, the 
Soviets would dare to kill me, to make an attempt to liquidate me, so 
I was more or less careless, I behaved myself freely. I took part 
in various anti-Communist meetings and I just did freely my work 
as a fighting anti-Communist. 

So m September, in the middle of September, I took part in an anti- 
Communist meeting, an international anti-Communist meeting ac- 
tuall}', from all the countries of the western part of the world, includ- 
ing the United States, that took place in Frankfurt in West Germany. 
And then September 15, the last day of the conference, toward the 
late evening about 10 : 30, 1 felt suddenly a dizziness, I could describe 
it as a feeling that I was disintegrating myself. Some heavy cramps 
of stomach. I was forced to vomit about every 10, 15 minutes with 
some loss for a few seconds of my rationalization, my mind. 

So I was taken to a German hospital and advised by a German doc- 
tor. She had the suspicion that I was poisoned but I myself did not. 
So I was delivered by some local German medical services in the 
clinic of the University of Frankfurt and then and there I was taken 
on a diagnosis of acute gastroenteritis. I do not know exactly what 
it means, but I was informed that I have some derangement of stomach 
based on some wrong food I have eaten. 

Well, I didn't discuss it, I accepted it. However, my friends have 
brought with them some samples that could be analyzed in the event 
of a suspicion of a poisoning. The unfortunate fact is that the Ger- 
man doctors did not believe that I could have been poisoned, so they 
actually threw away all the samples and for a week didn't do any 
analysis or any attempt to check for a chemical or other agents. But 
after the seventh day, suddenly overnight I developed some heavy 
symptoms of a severe poisoning that are described actually in the 
statements of American doctors based on the records of German 
doctors. 

I won't go into detail unless the committee requests so, but on the 
24th, 25th, and 26th, the German doctors actually gave me up. They 
officially informed mj^ friends that I am dying and they do not have 
any hope of saving me. That was their opinion. Their opinion was 
based on the fact that my bone marrow was heavily depressed. It 
means, as much as I know it now, that I did not have any leucocytes or 
granulocytes at all in my bone marrow and my blood picture dropped 
down to 750 leucocytes. Besides, I had so many hemorrhagic spots 
on my face and upper part of my body that I suppose Boris Karloff, 
very well known for his monster mask, could have envied me at that 
time. 

I couldn't eat. I lost temporary ability of speaking, and what 
was the worse, I had sometime a severe mental confusion. I wouldn't 
know who I was, where I was, and I felt I was losing my ability of 
rationalizing. 

So at this stage, the German doctors even told my friends officially : 
"Why are you so excited about what could have caused his sick- 
ness ? He will die probably in this night or tomorrow morning and 
the autopsy will show exactly what caused it." Going back a few 
days before 



4820 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Morris, He told you if you died and they took an autopsj^, tliey 
would be able to find out what was wrong ? 

Mr. KiiOKHLOv. Yes ; they didn't tell it to me. They concealed this 
fact from me; to my friends who, on the 25th, came to the hospital 
and asked, "What is going on with Khokhlov?" They said they can- 
not do anything. My friends asked, "But what caused that?" They 
said, "What are you excited about ? Wait a little bit. Be patient. He 
will die maybe tomorrow ; we will make an autopsy and then you will 
know exactly what caused that," 

My friends didn't declare themselves satisfied with this strange 
advice so they rushed to the American consulate in Frankfurt and 
told them the situation. I can tell there probably couldn't be any 
thing better and more quick and decisive what American authorities 
in Frankfurt did. 

Now, in going just a little bit back to the 24th and 25th, I would 
like to describe just how the first time I, myself, learned I was poisoned. 
In the night, I couldn't remember exactly the date, but I suppose from 
24th to 25th, after a few hours of mental confusion when I didn't 
know who I am or where I am, I took a bunch of hair on my head and 
I pulled it out without any pain, just like taking off my hat. It was a 
strange feeling, something extremely wrong is going on with me, 
I took from the other side and it was the same story. I just pulled 
out hair from any part of my body without feeling that I do that. 

So the next morning when Professor Schrade, the head of the 
clinic, came to me 

Senator Johnston. What was that name ? 

Mr. Khokhlov, Schrade, In German spelling it would be 
S-c-h-r-a-d-e, He was the deputy of the clinic of the University of 
Frankfurt, 

Senator Johnston. What day of the month was that ? 

Mr, Kpiokiilov, What day ? 

Senator Johnston, Yes, 

Mr, Khokhlov, I don't remember exactly, but I think it was Fri- 
day or Saturday. It would be probably the 24th or 23d. I couldn't 
know exactly. 

Senator Johnston. How long was that before you were hospital- 
ized? 

Mr. Khokhlov. It was about 7 days. 

Senator Johnston. About 7 days before ? 

Mr. Khokhlov. It was Saturday, So I was delivered Monday in 
the night on the 16th, 

Senator Johnston, "Wliere were vou at that time ? 

Mr, Khokhlov. I was already in the clinic of the University of 
Frankfurt, and I was treated for 7 days for a disease of stomach and 
all the samples that could contain any poison were just thrown away 
by German doctors. They were not taken in account. But on the 
seventh day on Saturday when Professor Schrade came to me, he 
examined me and saw this heavy hemorrhaging over the face, he 
saw that I developed high fever and he saw I couldn't speak, I 
couldn't eat, and then I showed him the situation with my hair and 
that struck him. He was speechless for a few seconds. He couldn't 
believe it and then he told me : "Wait ; I would be damned !" That was 
his expression. "There was only one thing in the world that could 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4821 

have caused that." Then he came near to me and asked me with such 
a conviction; a note of discretion: 

"Look, tell me honestly, did you take something?" I asked him: 
"VYliat are you trying to tell? Are you trying to tell that I wanted 
to suicide me? Pie said : I don't know, but did you take something or 
didn't you? I told him "No." Is it too detailed ? 

Mr. Morris. No. 

Senator Johnston. Go ahead. 

Mr. Khokhlov. Then I told him that there is something I should 
have told you before. I am a former Soviet officer and there is a 
possibility that the Communists would try to poison me. Then he 
said : "Why didn't you tell me that before?" I looked at the German 
chief doctor, the same doctor who threw away everything, and saw in 
his eyes that he was just desperate. I didn't want to ruin his career 
so I said we didn't want just to scare you. 

From this moment the German doctors immediately tried to treat 
me from the poison they thought should be thallium. After a few 
words, German doctors came to me and examined me and confirmed 
that I probably have been poisoned. Then I asked of them : "Listen, 
what is this metal that you are talking about?" They told me this 
looks like thallium. What is this thallium? Thej told me it is a 
very strong poison that is used mainly in poisons against the animals, 
rats, and other animals in agriculture, but it is very difficult to get 
and we don't know how it could get into your stomach. But I knew 
how it could. 

So this is how I was informed by the German doctors that I prob- 
ably was poisoned. I informed immediately my friends from NTS 
and the German doctors informed the Attorney General of West 
Germany, so the police was immediately at work and they questioned 
me for many hours, but this investigation was abrupt because I was 
very sick and sometimes I just lost my memory. 

Well, I am going then over to the 27th of September when the 
American consulate was informed that I am probably poisoned. They 
asked the American hospital in Frankfurt to take care of me. In the 
morning, the 27th, I got a blood transfusion because that was the only 
one possibility that I may survive in my way from the German to the 
American hospital. 

The American doctors took me in their care and they did all what 
they could, even more. I got private nurses 24 hours, I got extremely 
good security precautions. I got a separate room and they used their 
most modern drugs like steroids, cortisone, ACTH, antibiotics, blood 
transfusions, intravenous nourishing, and everything. 

American doctors told my friends from NTS who represented my 
interests — I didn't have anybody in Germany, only my friends from 
NTS — that they are taking a big chance with these drugs, but they 
didn't have any other choice. So after about a week they actually 
pulled me out of grave. 

At October 8, I myself requested American authorities if it is pos- 
sible to release me from hospital because at this time in western press 
unfortunately appeared many misquotings, so many rumors and cast- 
ing of doubts about my story that I felt myself forced, even weak, to 
get out and to give press conference in trying to fight back. And so I 
got out on October 8 and October 10 I gave a press conference in 
Germany. 



4822 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Then in passing to London I gave a press conference in London 
and in arriving in New York I gave a press conference in New York. 

Mr. Morris. Mr. Khokhlov, I have here on the 9th of October 1957 
a report from Colonel Leaver from the Headquarters, United States 
Army Hospital, Frankfurt. Would you like to offer that for the 
record ? 

Mr. Khokhlov. I would like very much, because this report was 
one of the misquoted documents in all the press reports. 

(The report was marked "Exhibit No. 522" and reads as follows:) 

Exhibit No. 522 

Headquarters, United States Army Hospital, Frankfurt, 

APO 757, United States Army, October 9, 1957. 

Memorandum 

Subject : Hospitalization of Mr. Khokhlov. 

Mr. Khokhlov was admitted to the United States Army Hospital, Frankfurt, 
on September 27, 1957, as a transfer from a local German hospital. 

He had been hospitalized there On the 16th of September with what appeared 
to be an acute gastroenteritis, however, several days after admission he developed 
a severe hemorrhagic skin eruption, ulceration of the mouth, some mental con- 
fusion, loss of body hair, and severe depression of the bone marrow with a total 
white blood count of 750 and virtual disappearance of granulocytes. It was the 
impression of the staff of the German hospital that this probably was caused by 
poisoning, very likely thallium. 

On admission to this hospital on September 27 (11 days following the onset 
of his illness) he was acutely and critically ill with marked bone-marrow depres- 
sion, high fever, and he was unable to eat because of the hemorrhagic skin 
eruption which involved not only the body surface but included the mouth, 
throat, and mucous membranes. There was marked epilation and loss of hair on 
all body surfaces including the scalp. He was emotionally disturbed and some- 
times confused. 

As his condition was critical, he was immediately placed on the seriously ill 
list. He received special nursing care in a private room. His treatment consisted 
of antibiotics, ACTH, steroids, as well as local treatment for his skin and mouth 
lesions. His condition gradually improved. He has been able to be up and about 
his room during the past few days. Temperature was normal, and skin lesions 
cleared. The blood picture returned to approximately normal. He lost most of 
his body hair. At the time of discharge from the hospital on Tuesday afternoon, 
October 8, 1957, he was weak, but was able to eat without difficulty and was 
gradually regaining his strength. He was considered essentially recovered. 

Symptoms and clinical findings are believed to have been due to poisoning, 
probably by thallium and/or other chemical agents. Toxicologic studies were 
performed on his hair, skin, and urine which were negative, however, no speci- 
mens from the early period of his illness were available for study. 

F. Y. Leaver, 
Colonel, MC, Commanding. 

Mr. Morris. Will you tell us what that document is ? 

Mr. Khokhlov. Yes. This is an official statement issued by the 
headquarters of American hospital in Frankfurt after his conference 
and consultation with all the American doctors that have treated me 
and after his reading and analyzing of the records of German hospital. 

Mr, Morris. May that go in the record with the description the 
witness has just given ? 

Senator Johnstok. You offer this in evidence as part of your testi- 
mony here ? It is from the Headquarters, United States Army Hos- 
pital, Frankfurt, APO 757, United States Army, October 9, 1957. It 
is a memorandum of your hospitalization. 

Mr. Khokhlov. Yes. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4823 

Mr. Morris. And this shows, does it not, that Colonel Leaver, com- 
manding officer of that hospital, diagnosed that your difficulty here 
was very likely caused by poisoning, possibly thallium? 

Mr. Khokhlov. Yes ; he described the condition I was received in 
the American hospital. He described the picture of my blood, of 
acute sickness that, in the opinion of German doctors, looked like 
poisoning and, what is most important for me, he concludes his state- 
ment with two sentences. One of the sentences says, as I remember 
it — and I suppose I will remember it more or less exactly — that symp- 
toms and clinical findings are believed to be due to poisoning by 
thallium and/or other chemical agents. 

Now, to the last sentence of this statment. As I told you before, 
the German doctors threw away all the samples in the first week. 
After the 24th, they began to make analyses, but very slowly and they 
didn't know how. So the real work to find the poison has begun only 
on the 12th day of my sickness. That is probably what Colonel 
Leaver is trying to point out in the last sentence, and the last sentence 
reads as follows : 

Toxicologic studies were performed on his hair, skin, and urine which were 
negative ; however, no specimens from the early period of his illness were availa- 
ble for study. 

For me and my friends this last sentence means that, most probably, 
the toxicological studies were negative because of the lack of the early 
samples. 

Well, here I would like very much to attract your attention that, in 
m.any press agencies, this last sentence was cut in half and the word 
"however" that belongs to the second part was attributed to the first 
part and the last sentence looked this way : 

Toxicologic studies were negative, however. 

This is one of the tricks, deliberate or undeliberate, I wouldn't know, 
that cast a shadow of doubt about my story. 

Senator Johnston. Now, then, we have the medical statement from 
the hospital here that showed that, probably, some one had poisoned 
you. Can you tell us anything about how you got poisoned or by 
whom ? 

Mr. Khokhlov. Of course, we have only suspicions, but our suspi- 
cions are not only speculations, they are just not speculations, they are 
some attempt to analyze my behavior on September 15, the time 
schedule — what I did, where I was, what I have drank, what I have 
eaten. 

So, without going to many details, there were only three times I 
have eaten on this date. In the morning with a member of English 
Parliament and with some English journalists, where I ate and drank 
everything. Besides the fact that the persons involved in this lunch 
more or less are out of suspicion, the fact, of course, that couldn't be 
established 100 percent, but the fact that I have eaten and drunk 
everything to the end proves to us that it couldn't be then. From my 
early experience, from my meetings with the head of a special labora- 
tory in Moscow that is working for years and years on working out 
special poisons and methods of poisoning, I know much about it. If 
the committee would like, I can later go into description of this labo- 
ratory, on the facts of poisoning that are officially recorded in the 
Soviet history. 



4824 SCJOPE OP SOVIET ACTIVITY IN TEE UNITED STATES 

Well, in knowing the technique of this laboratory, I am sure that the 
overdoses that they usually give to the individual would have killed 
me without any hope. So for us, the lunch is actually failing out. 
But toward the evening at 7 o'clock I was invited by a person whose 
name, at the request of German authorities, I until novv' abstained to 
reveal. All I can tell to the committee is that this person is a jour- 
nalist from a foreign country who came to the conference with a special 
intention to see me; who has written many letters in requesting a 
meeting with me and whose behavior on the first 3 days of conference 
looked suspicious to me. In my subconscious I tried to avoid him and 
I rejected all his offers to lunch with him or to have a meeting with 
him. 

This person, a foreign journalist, invited me at 7 o'clock of the 
evening to a cup of cotfee. And in this society there were other per- 
sons present who involved me in a conversation about some anti-Com- 
munist magazines. I was so much absorbed in the studying of these 
anti-Communist magazines that I actually do not know when and 
under what circumstances a cup of coffee appeared before me and I 
was offered to drink this cup of coffee. 

Mr. Morris. You don't know who offered it to you ? 

Mr. KiioKiiLOV. This man whom I name as a foreign journalist. I 
told them that I usually do not drink coffee, but then all the society 
and at first hand this journalist told me, "All right; make an exception 
this time ; you are too tired ; drink it." 

So I was so much absorbed again witli these magazines that I 
couldn't know exactly at what time, under what circumstances, I 
finally took this cup of coffee and took just a little bit and then some- 
thing strange stopped me. It was not the taste of the coffee. I actu- 
ally didn't feel anything suspicious. But some strange feeling that I 
have to go away from that table stopped me. _ And I stand up and I 
walked away to the middle of the restaurant in telling myself I have 
to go to listen to the conclusions of the conference and the people back, 
I wouldn't know who exactly, told me : "What is the matter with you ? 
Drink at least your cup of coffee to the end. You cannot go away like 
that." 

And then I told them, "Well, gentlemen, I suppose I have to go away 
to listen to the conclusions." "Do not hurry," they told me. It is pity 
that the coffee will stay here. Then I asked myself : Why shouldn't I 
drink this coffee ? Suddenly, I heard the voice of my friend beginning 
the conclusion and then I ran away because I had to hear him. I never 
retm-ned and I never drank the cup of cofl'ee to the end. 

That is, in my opinion, one of the most important clues why I didn't 
die. We know exactly that if the Soviets give a poison, they give a 
poison strong enough to kill tens of people. When I testified before 
your committee in May 1954, one of the appendix to the testimony was 
some samples of secret weapons — silent and monitored by electrical 
batteries — and were containing poisoned bullets. And the experts in 
Washington, of special service, in examining these bullets, confirmed 
that the portion and the power of the mixture of the poison in one 
single bullet was sufficient to kill many, many people. I wouldn't 
remember exactly what number of the people they gave, but for me it 
looked like a big number of people and yet this bullet was assigned to 
kill just one man. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4825 

So, after this cup of coffee, I left the conference room for a few 
hours to eat. We left for a completely unknown restaurant. I had 
with me two close friends whom I knew for many years and whom I 
trust absolutely. Besides, I was all the time at the table and I looked 
at my food, incidentally. We took only a bottle of wine that I myself 
opened, or, better said, the Avaiter opened it and gave to me. And in my 
opinion, as in the opinion of the police, there is no possibility that I 
would have been poisoned on this dinner. 

Immediately after dinner when I went back to the conference that 
went already into the conclusion part, a concert, and some speeches. 
Then the symptoms started. 

Mr. Morris. Now, you have had some special training in poisons; 
have you not? 

JNIr. Khokhlov. I didn't myself have any special training in poisons, 
but in 1953 when I was at German- Austrian desk in Soviet intelligence, 
headed then by the former Ambassador to the United States, Panyush- 
kin, received an order from Soviet Government, from Central Commit- 
tee of Communist Party, an order to organize an assassination of the 
leader of Russian anti-Communist underground in West Germany, 
Mr. G. Okolovitch. 

Mr. Morris. Spell that for the reporter. 

Mr. Khokhlov. O-k-o-l-o-v-i-t-c-h. As much as I know, and 
Panyushkin himself told me, this order of assassination was signed by 
Central Committee. This was a high assignment, very high assign- 
ment. 

Therefore, the best forces of Soviet intelligence were involved in this 
operation. Panyushkin himself headed the preparation. I was many 
tmies in his office in MVD building in Moscow, and then and there, 
Avhen the question arose about poisoned bullets, some difficulties inter- 
vened. I don't know if I have to go into details, but in short : The 
construction of the bullets, some pieces of steel did not permit to use 
the special makes of poisons that were at that time available in the 
special 12th laboratory in Moscow headed by Dr. Naumov. 

Actually he is not a doctor like here. He has a title of candidate of 
chemical science. This is a specific Soviet title that designates a 
man with heavy and long scientific training. However, the job of 
Mr. Naumov was and is, I am sure still today, nothing else but mixing 
and inventing poisons that not only will kill man for sure, but will 
accomplish two other purposes. 

The first pui'pose is not to give to the doctors for the first few days 
the impression that the man in question was poisoned, so that the 
doctors will not act against the poison. Second, that after the man 
will be dead, no traces of suspicious poison will be found in his body. 

Well, in going back to 1953 when this Naumov and his laboratory 
were assigned to work out a special mixture for the poisoned bullet — 
by the way, the mixture that is now here in Washington in the hands 
of experts and is not an invented thing — Panyushkin himself sum- 
moned Mr. Naumov to his office, made him acquainted with me, and 
gave him the order to get in touch with other laboratory, with 13th 
laboratory near Moscow that was in charge of working some special 
silent secret weapons, and to work out quickly and surely a necessary 
mixture. Afterward, I met Naumov many times. We conferred on 
poisons and on that occasion I learned the principles of Soviet tech- 



4826 SCOPE OF SOVIET ACTIVITY IN THE "UNITED STATES 

niques of poisoning. Well, I suppose it is my own speculation, but in 
knowing how Soviet intelligence works, there is much chance that the 
mixture that I received was a kind of "friendly" service by Mr. 
Naumov personally to me. 

Mr. Morris. Senator, Mr. Sourwine, who was counsel who took the 
testimony of Mr. Kliokhlov when he appeared before the subcormnittee 
in 1954, has a few questions he wants to ask of this witness. 

Senator Johnston. Mr. Sourwine, proceed with your questions. 

Mr. Sourwine. Thank you. 

Mr. Khokhlov, you stated a little while ago that you did not think 
the Soviets would dare to attempt reprisals on you ? 

Mr. Khokhlov. That is correct. 

Mr. Sourwine. Wliat did you think they would fear ? 

Mr. Khokhlov. Excuse me ? 

Mr. Sourwine. "^Vhat did you think they would fear ? 

Mr, Khokhlov. The publicity that would attract the attention of 
public opinion again toward my name. You see, when the first time 
I came to the West and contacted my own Russian anti-Communist 
underground, for many months the press agencies spread the word 
that I was actually a publicity stunt of American intelligence, that I 
do ]iot exist, that I am just an old White immigrant who was used for 
cold war. Then afterward, in many years, despite the fact that the 
Communists did not dare to tell anything open against me — however, 
through their secret channels, through their agents in the West, 
through some liberal newspapers and Communist newspapers, they 
always tried to hint that I do not exist, that I am just an invention of 
American intelligence or of the people from Russian anti-Communist 
underground. 

There were probably, in my own opinion — and I see I was wrong — 
there was hope that my name began to fade, that I began to disappear 
from the public's mind. So, because my book was ready and I was 
scheduled to start a lecture tour in the United States, I told myself 
it would be just not wise for the Soviet intelligence to give me tliis 
kind of publicity, to give me a kind of anti-Communist medal that I 
am dangerous for them and that the job I am doing is right. Those 
were my speculations. 

Mr. Sourwine. You say that the Soviets feared opinion. Do you 
mean world opinion or opinion of the people in Russia ? 

Mr. Khokhlov. I think both. You see, the world opinion is im- 
portant for them primarily as a force that could join the Russian 
people in the efforts of overthrowing communism and tliat, of course, 
includes both sides, the people here and the people in Russia. 

Mr. Sourwine, Mr. Khokhlov, the Russian Revolution cost Russia 
over 70 million lives; directly and indirectly there are at any given 
time 20 million men, women, and children in concentration camps and 
political prisons in Russia; people are executed all the time without 
trial. Does that seem to indicate that they are worried about public 
opinion ? 

Mr. Khokhlov. Well, but you see that the history is going ahead. 
What was possible in 1930 was no longer possible in 1940 and is not 
possible in 1957. 

Mr. Sourwine. You were 

Mr. Khokhlov. Excuse me, I would like to answer your question', 
if it is possible. You see, communism, in my own opinion, is dying 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4827 

since World War II, and because it is dying, because it is becoming 
weaker and weaker, it is now at its end ; therefore, the public opinion 
to the West is more dangerous for them and that is one of the reasons 
they cannot longer execute the people they did before. You know it 
from the latest reports from the Soviet Union. 

Mr, SouRwixE. You are saying the Soviet people have stopped 
executing people and closed up their concentration camps? 

Mr. KnoKiiLOV. They have stopped doing it in the open and the 
way they did it, not because they have become more human but be- 
cause they know if they start mass execution they will start a revolu- 
tion, an explosion that they did not fear years before. 

Mr. SouEWixE. You were a member of the secret police ? 

Mr. Khokhlov. Yes. 

Mr. SouRwiXE- You were a captain ? 

Mr. KiiOKHLOV. Yes ; I was captain, but not actually secret police. 
I had access to the files of secret police. My service was higher than 
secret police. 

Mr. SouRW^ixE. You knew, did you not, that the one thing that 
the Russian Soviets do fear is that somebody will defect and get 
away with it? 

Mr. Khokhlov. That is correct. 

Mr. SouRwixE. You knew they had a policy, consistently pursued, 
to keep after defectors until they get them ? 

Mr. Khokhlov. Absolutely. 

Mr. SouRwixE. Yet, you felt in your case they would not dare to 
attempt any reprisals upon you ? 

Mr. Khokhlov. For two reasons. First of all, because the situa- 
tion changed since the death of Krivitsky in New York, or Reiss in 
Switzerland. In 1954, a certain Dr. Trushnovich was kidnaped in 
Berlin. I know from my own experience that that was not only one 
plan of kidnaping, and yet all over the world was conducted a big 
and noisy campaign of protest. ISTo more kidnaping was done in that 
way after Dr. Trushnovich was kidnaped. 

Mr. SouRwixE. Do you, of your own knowledge, know that Dr. 
Alexander Trushnovich was kidnaped ? 

Mr. Khokhlov. Yes ; I do. 

Mr. SouRWixE. How do you know ? 

Mr. Khokhlov. Because in 1953, when I was still in intelligence, I 
learned about two plans of action against Russian anti-Communist 
underground. These plans were elaborated when Beria was still in 
power. 

One of the plans concerned a man in Berlin, a leader of an anti- 
Communist organization, that could be kidnaped by some German 
agents near him. Then, I did not know his name. I knew only some 
details of the plan. 

The second plan was the assassination plan against Okolovitch. 

Wlien, in 1954, Mr. Trushnovich was kidnaped and I got the records 
of German police, everything fitted in, and I recognized this operation 
about which I was told so much in the summer and fall of 1953. 

Mr. SouRW^ixE. Do the records of the German police, to your 
knowledge, show that Trushnovich was kidnaped ? 

Mr. Khokhlov. Yes. There were many details that could suggest 
such an idea. Secondly, in the last days, a week or 2 weeks ago, in 
Germany, one of the men who took part in the kidnaping of Dr. 



4828 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATEiS 

Trusliiiovich was arrested by West German police when he wanted 
to surrender himself, without knowing that the records about him were 
already available. I suppose in a few days we will have a new proof 
that Dr. Trushnovich was kidnaped. 

Mr. SouRwiNE. You say we will have that proof in a few days ? 

Mr. Khokhlov. We will have it in a few days, officially. As much 
as we know, from unofficial sources, that man has tallied. 

Mr. SouRwiNE. You know that many thought that Mr. Truslino- 
vich fled to the Soviets a few hours before he was supposed to be ar- 
rested by Western authorities ? 

Mr. Khokhlov. I know there are many versions of that. I more 
or less know the initial source of these rumors, because that is what 
the Communists want so much to spread, and that was one of their 
purposes of kidnaping him. They did not want so much to liquidate 
Iiim as they wanted to present him as a defector to the East. 

Mr. SouRwiNE. Did you ever visit Dr. Trushnovich's office? 

Mr. Khokhlov. No; I never met him. I have read about him on 
both sides of the Iron Curtain in the literature of anti-Communist 
underground and in the secret files of the secret police while still being 
in Moscow. 

Mr. SouRwiNE. I would like to traverse a little of your earlier 
testimony before the committee, if I may. 

Mr. Khokhlov. Good. 

Mr. SouRwiNE. You were, at the time of your defection, attached to 
the GGGD, were you not? Do you remember telling us about the 
group for distant action you were attached to ? 

Mr. Khokhlov. I would not abbreviate it. This is a working term. 
We have abbreviations only for agencies or institutions. 

Mr. SouRwiNE. That is the agency you were attached to ? 

Mr. Khokhlov. Yes. 

Mr. SouRwiNE. That agency had what missions and duties at that 
time? 

Mr. Khokhlov. At what time ? 

Mr. SouRwiNE. At the time you defected. 

Mr. Khokhlov. You see, I was no longer agent in 1954. In my 
testimony, I told you that all these past years I worked in various 
sections, and since 1950 or 1951 — 1951, I think — finally, I began to 
work in this particular group. 

But, in 1954, 1 was already an officer, an officer of Ninth Division of 
Second Department of Intelligence, and our job was to send long-range 
agents with various missions. However, Operation "Ehine" was re- 
garded as a short-time mission, and the agents, not me, that were in- 
volved were considered short-time, one-mission agents. 

Mr. SouRwiNE. We go a little beyond what I wanted to ask you. 

Mr. Khokhlov. I see. 

Mr. SouRWiNE. I wanted to ask you whether you know whether this 
agency, which at that time had the job of infiltrating organizations 
outside the boundaries of the Soviet Union, still has such a mission? 

Mr. Khokhlov. I suppose the necessity of this mission still persists 
in Soviet intelligence. Of course, after my going over to the West, 
many sections were changed. Many people were replaced and re- 
moved, so I would not know exactly what section and what department 
handles that now. But, as I state, the necessity of this mission still is 
there, and I am absolutely sure that there are services that are work- 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4829 

ing on this mission and are accomplishing it, and one of the proofs is 
the incident with me. 

Mr. SouRwiNE. So, the Soviet, to your certainty, still have organiza- 
tions whose missions and duties include the infiltration of western and 
emigree organizations ? 

Mr. Khokhlov. Absolutely. Excuse me. More, even, than before, 
because right now these organizations represent for the Soviets even 
greater danger than before. 

Mr. SouRwiNE. Mr. Khokhlov, do you remember testifying at the 
beginning of your earlier testimony before us about the scholastic gold 
medal that you had received ? 

Mr. Khokhlov. Yes ; I received — it is not gold medal. It is Golden 
Star of Motherland War. 

Mr. SouRWiNE. Wlien did you receive that ? 

Mr. Khokhlov. I was decorated by a special bill from Presidium ; 
that is presidium of highest — what is it, the translation? It is like 
Parliament here. I would not know the exact translation now, I could 
not find it — by the Government. 

The bill was issued at the beginning of 1944. But I did not come 
back from partisan area imtil fall of 1944, so in September I was 
invited to the Kremlin and Mr. Schwernik — he is well known, because 
he was actually the kind of a President of the Republic then, he gave 
me this medal in Kremlin. 

Mr. SouRWTNE. That was for scholastic attainments ? 

Mr. Khokhlov. Please? 

Mr. SouRWiNE. For learning, for being a good student ? 

Mr. Khokhlov. No; that was for my achievement and special as- 
signment of Soviet intelligence while being behind the enemy lines. 
I was more than a year behind the enemy lines, fulfilling various 
assignments. 

Mr. SouRWiNE. Did you not tell us about a medal you had received 
for being a fine student, an outstanding scholar ? 

Mr. Khokhlov. No. 

Mr. SouRwiisrE. You did not ? 

Mr. Khokhlov. I received many medals, so I received a medal 
for defending Moscow. I received a medal for being a partisan, and 
so on. But we do not have the medals for being a good student. I 
received something from school when I graduated from school. It 
was not from intelligence. It was not a medal. It was a golden 
diploma that I graduated as a good student and could enter any uni- 
versity without examinations. 

Mr. SouRwiNE. Wlien did you get that ? 

Mr. Khokhlov. In 1940. 

Mr. SouRwiNE. Mr. Khokhlov, when you came to the West, you 
brought with you, among other things, documents establishing your 
identity and family photographs ; is that right ? 

Mr. Khokhlov. Not quite, because I brought with me documents 
and some notice and some pieces that could prove my idenity. But 
I did not bring something that would prove my real identity while 
still being back in the Soviet Union. 

I will clarify on that. I brought documents on the name of Hof- 
bauer. I brought many notices on many agents who were in Europe, 
who worked against the American military installations in Europe. 

I brought many samples of special things used in Soviet intelli- 

93215—58 — pt. 86 5 



4830 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

gence, but I did not bring any documents about Nikolai E. Khokhlov 
because I could not take them out of the Soviet Union. It would be 
too dangerous for me. 

You see, every time while leaving Soviet Union, in passing the 
border, I ceased to be Nikolai Khokhlov. Every time I become some- 
body else. Therefore, for me to take even the smallest piece of paper 
of my identity would be dangerous, because the Soviet intelligence 
by chance discovering that would immediately understand I intend 
to use it for my own purposes. 

Mr. SouRwiNE. Did you ever become Nikolai Evgeniyevitch ? 

Mr. Khokhlov. Nikolai Evgeniyevitch Khokhlov in my real name. 
I abbreviate Evgeniyevitch for "E." 

Mr. SouRwiNE. When you came to the West, you left on a mission 
that was the assassination of Okolovitch ? 

Mr. Khokhlov. I was not assigned myself to assassinate. For a 
staff officer, it is forbidden to go to assassinate. I was assigned to 
direct, to supervise an assassination that had to be carried out by 
two East German agents. 

Actually, I was in charge of directing this operation. 

Mr. SouRwiNE. Did you not go to Okolovitch and tell him you had 
been assigned to assassinate him ? 

Mr. Khokhlov. Yes. But the real wording of that in Eussian is 
that I am sent here to organize your assassination. 

Mr. SouRwiNE. Then you were sent out on a mission to organize the 
assassination ? 

Mr. Khokhlov. Yes; but, maybe you can abbreviate it by saying 
I was actually sent to assassinate him, technically. 

Mr. SouRwiNE. On that mission, did you go under your true identity 
or did you go under a different identity ? 

Mr. Khokhlov. I had a different identity. 

Mr. SouRwiNE. How does it come that you were not deprived of all 
the identification of your true origin or your family photographs or 
anything that had to do with your true identity ? 

Mr. Khokhlov. If I really understand your last question, I told 
you I really did not have anything with me that could prove my real 
identity. Every time I left the Soviet Union, I was somebody else. 

In coming to Okolovitch, all I had was an Austrian passport under 
the name of Josef Hofbauer, that an especial assignment was given to 
me in 1951. He did not know my real name. He knew only my name 
of Nikolai Evgeniyevitch that I told liim very confidentially. 

Even the American services did not know my name for a long time, 
and then they asked me to tell them my real name. I told them. But 
after 2 months, they had an opportunity to check that I really am 
Khoklilov. 

For instance, I can reveal to you that among the agents that were 
captured later on my revealing of networks, was an agent, a very im- 
portant agent, that defected to the West, who knew me personally 
while still being in Moscow, who knew my family, my mother, my 
sister, who knew exactly that I am Nikolai Khokhlov, and he knew 
my war record. 

So, in short, American intelligence got finally all the proofs that I 
am Nikolai Khokhlov, but in replying to your request, again I did 
not have anything with me at that time that would prove my real 
identity. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4831 

Mr. SouRWiNE. Not even your wife's photographs ? 

Mr. Khokhlov. Yes ; I had my wife's photo. But my_ wife was 
inchicled since 1952 in the operation that had to be carried out in 
Switzerland, so I had since then an official permission to have the 
picture of my wife. But it was made in a special photograph labora- 
tory in Moscow on a foreign paper in order that I could carry it out 
with me. 

Mr. SoirR\viNE. You may not remember precisely, but I want to 
quote back to you some of the words that you said to us when you 
testified before. 

Mr. Chairman, this is from page 42 of the printed record of our 
hearings. I am going to quote only portions of what you said on that 
page, because I want to ask you a question about it. 

You said : 

The Russian people do not want war, but the Russian people are not masters 
of their fate. It seems to me that the final answer to the question of whether there 
will be a war or not might depend upon even such a slight question as my own case, 
whether my wife will be arrested or not. If the Soviet Government is inhuman 
and stands* on the side of the assassins, then sooner or later there may be war. 

Do you remember that ? 

Mr. Khokhlov. Yes. 

Mr. SouRWiNE, Now, from your knowledge of the Soviet Govern- 
ment during your mature lifetime, has there ever been a time when they 
were not on the side of the assassins ? 

Mr. Khokhlov. Yes. Now, I already know. They were on the 
side of the assassins; but today in 1957 it is no longer meaning tliat 
there will be a war, because I testified in 1954. Since 1954, May, many 
things occurred in Soviet Union : de-Stalinization, revolution in Hun- 
gary, and other things that forced me in my interviews with many 
American magazines to tell that now revolution is going on inside of 
Soviet Union, and the Soviet Government is so much weakened and so 
much afraid that there is a very slight probability they would risk a 
war. And even the story with the Sputnik proves that to me. 

Mr. SouRWiNE. Let us see if we can go back to 1954 and try to re- 
capture your state of mind as of that time, if we can. 

Mr. Khokhlov. All right. 

Mr. SouRwiNE. The Soviet Union had then for nearly 40 years, 
for over 30 years certainly, had been committing dreadful sins against 
man and God and humanity ; the Western nations had not done any- 
thing about it effectively up to that time. 

"Wliy was it that you felt that if they were inhuman in your particular 
case, there might be a war ? 

Mr. Khokhlov. Well, because in 1954 when I came over to the West, 
I had a little bit of a distorted picture of the West, it seems. 

You see, May 1954, it is actually, let me see, it was actually the 
third month of my being in the West, and if we will skip 2 months away 
in being in the hands of Western authorities, it was actually just a few 
weeks that I began to learn about the West. 

I would like to point out that as every Soviet citizen today in the 
Soviet Union, I myself already had an idealized picture of the United 
States, for instance. I told myself there is no country in the world more 
united, more decided to fight communism as it is United States. 



4832 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATE'S 

Mr. SouRWiNE. You did not have an idealized picture of the Soviet 
Union in your mind ; did you ? 

Mr. Khokhlov. Please? 

Mr. SouRwiNE. You did not have an idealized picture of the Soviet 
Union in your mind ? 

Mr. Khokhlov. No. The picture I had of the Soviet Union did 
not change since then, because it was my country. I knew it. In 
trying to answer your question, my ability about the West, the ability 
of the West to act was different than I have today. 

Mr, SouRwiNE. You thought at that time that the Soviet Union 
would react to western public opinion in your case ? 

Mr. Khokhlov. I thought that; yes. But, as I realize, you are 
asking about the question of war. 

For me, the question was decisive about the position of the West, 
and I imagined that, if the Soviet Government will show itself com- 
pletely inhuman, therefore, the West, sooner or later, will realize that 
they have to light it for life and death. 

By the way, I would like only to make a remark here. This state- 
ment before the committee was not only addressed to the American 
people, to the Senate ; it was also addressed to the Soviet Government. 

I knew that there and then among the press people was a repre- 
sentative from TASS, the Soviet agency. You see, for me then, the 
main thing was the fate of my family. I wanted to present it in such 
a way, in the light of public opinion, and at the same time to the Soviet 
Government that they would have a dilemma, that the Soviet Govern- 
ment in a dilemma would have to decide something, and that was my 
hope of saving my family. Therefore, maybe I pointed out the things 
I would not point today. 

Mr. SouRwiNE. After you left the committee room in 1954, did you 
get any word about your wife ? 

Mr. Khokhlov. No ; I could not. 

Mr. SouRWiNE. You have not received any word up to the present 
time? 

Mr. Khokhlov. I could not, because the circumstances under which 
my family was arrested and disappeared are very well-known to you 
personally, I suppose. 

Mr. SouRWiNE. You have received no word about your wife since 
then? 

Mr. Khokhlov. No ; I could not, because they are held as hostages, 
and they are very, very well guarded, and nobody, including western 
intelligence agencies, would dare to approach them. 

Mr. SouRWiNE. Do you know whether they are alive ? 

Mr. Khokhlov. I would not know it for sure, but I hope. I hope 
for many reasons. 

Mr. SouRwixE. You said they are held as hostages. Do you have 
reason to believe that is true ? 

Mr. Khokhlov. What is true ? 

Mr. SouRwiNE. That your wife and children are held as hostages? 

Mr. Khokhlov. This is the guaranty for me that they could be 
alive, because they would be held as hostages, and that is again from 
my Icnowledge of Soviet intelligence customs. 

You remember the story of Kravchenko ? He was also in the West 
after he defected for many years. He has written his book, and then 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4833 

the process in Paris was, and at this process in Paris many years later 
Soviet intelligence brought his wife as a witness against him. 

Mr. SouEwiNE. I am trying to find out whether you had any knowl- 
edge or authenticated reports about your wife ? 

Mr. Khokiilov. I do not have any knowledge. I only have my 
ideas about that. 

Mr. SouRWiNE. While you have been associated with NTS, they have 
tried to do everything they could to get you word about your wife and 
children ? 

Mr. Khokhlov. The NTS is a private organization, and they have 
their own means of fightmg. If the committee would not insist, I 
would not want to go into their methods and manners. 

Mr. SouRWiNE. I am not talking about methods and manners. I 
wanted to know if they had not tried to find out about your wife and 
children. 

Mr. Khokhlov. I would endanger them if I said they did. 

Mr. SouRWiNE. They either diet not find out anything for you or 
they were not able to do so ; is that right ? 

]\Ir. Khokhlov. I suppose they were able. I asked them not to do 
that, because I knew that there would be news for me against the 
possible death of a man who will be sent inside the Soviet Union, 
and, therefore, I always told them, "Do not do that." 

If they really did or not, I do not know, but, because I have respect 
for this committee, I will ask to stop it from the press and I will tell 
you details. 

Mr. SouRWiNE. I will pass the question. 

Mr. Khokhlov. All right. 

Mr. Sour^\t;ne. Do you remember telling us, sir : 

I did not come to the West to ask for shelter and protection, but I asked 
Mr. Okolovich to save my wife and children. 

Mr. Khokhlov. Yes. 

Mr. Sour"v\t:ne. Since you testified it has come to our attention that 
on April 25, 1954, writing in Possev, you said : 

I requested Mr. Okolovich to be an intermediary and so help me to receive the 
protection of the West as a political refugee. 

Do you remember writing that ? 

Mr. Khokhlov. I suppose I could write something like that, but 
not exactly in this wording, because what I asked him was really to 
be an intermediary, but not in getting me political asylum. Instead, 
to be an intermediary to help to save my family. 

There is probably a mistake in your record or in my wording there 
that means that they probably misquoted me. I would not speculate 
on that right now, and I would not doubt your lines there, but, you 
see, the story that was exactly recorded, even in the testimony before 
your committee, was that I asked Mr. Okolovich to be an intermediary 
m asking Western authorities to save my family. 

Mr. Sour\vine. You told us, specifically, that you did not ask him 
for protection for yourself. 

Mr. Khokhlov. I did not need protection. 

Mr. SouEwiNE. For yourself. 

Mr. Khokhlov. I did not need any protection. 

Mr. SouRwiNE. Yes. Is it true that you asked him to help you get 
the protection of the West as a political refugee ? 



4834 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Khokhlov. It is not true. 

Mr. SouRwiNE. May I ask that this article in Posev, written by 
Mr. Khokhlov — April 25, 1954, issue — may go into the record ? 
Senator Johkstox. It will go into the record. 
Mr. SouRwiNE. We will produce it for the record. 
(The article referred to was marked "Exhibit No. 523" and reads as 

follows :) 

Exhibit No. 523 

[Source : Posev (Sowing), a Russian language weekly, Frankfurt/Main, Germany, April 25, 

1954, No. 17, pp. 5-6) 

Hekoism of a Russian Woman 

Our nation is indebted to the Russian mother, the Russian woman for all the 
greatness of its historical past. The moral standard and strength of the Russian 
woman did not fade during these hard times of the dark Communist era. 

A wife and mother who sacrificed herself and her family's happiness to save 
her husband from the heavy mark of an assassin presents a new token of the 
moral strength of the Russian woman. This woman is Elena Khokhlova. 
Yesterday she was quite unknown. Today all the world salutes the great- 
ness of her deed. All humanity should unite in doing all possible to save 
Elena Khokhlova from the hands of the Communist hangman. 

In the article presented below N. E. Khokhlov tells about his life, about his 
personal tragedy, about the motives which made him break with communism 
and the MVD organs and escape to the world of liberty, to people who fight 
for liberation of their home country. Mr. N. B. Khokhlov took his final deci- 
sion to escape to the West under the influence of his wife who sacrificed her 
happiness and the happiness of her little son in the name of the great law : 
"Do not kill!" (Editor's Note) 

I arrived at the decision to escape to the West as a result of my whole life. 
I am a Muscovite. Even now I am registered for residence at the house 
number five, Krivonikolskii Pereulok near Arbat, apartment thirteen. There 
my wife and my two-year-old boy remained. My cooperation with the Intelli- 
gence started in 1941. 

In September 1941 the NKVD started organizing underground groups for 
future partisan fight against the Germans in Moscow. I was quite happy to 
accept the NKVD's offer to stay in Moscow and to fight the Germans in the 
underground. 

Moscow wasn't given up. They suggested that I stay in the Intelligence. 
I accepted the offer as a way to fulfill my duty towards my country. I was 
taught shooting, explosive techniques, parachute jumping. The greatest atten- 
tion was paid to the German language and to familiarization with the German 
army. In the Summer of 1943 I was parachuted from a plane in the region of 
Minsk to join a guerrilla detachment. With documents made in Moscow, 
identifying me as a First Lieutenant of the Nazi field police I worked behind 
German lines for more than one year. There in the guerillas I got my first 
order to kill a person. At that time I felt that this kind of job was necessary, 
essential and even honorable. It was to kill the hangman of Belorussia, the 
Fascist Gauleiter Wilhelm Kube. To me Kube was an enemy and an inhuman 
criminal, and his killing was an act of revenge and my personal contribution 
to the war. 

I sneaked into the city of Minsk, lived there for some time as a German and 
found ways to get at Kube I met one Galina Mazanik, a maid in Kube's 
household. I convinced her of the necessity of killing Kube and, on Septem- 
ber 19, 1943, Kube was killed by a bomb placed under his bed. 

In the Fall of 1944 I returned to Moscow. At the beginning of 1945 I was 
sent to Romania. There I was to acquire European ways and manners. In 
the event of potential war in Europe, I was destined to lead a guerilla detach- 
ment. 

I was one of many who were sent by the NKVD to the countries of the 
so-called Peoples Democracies in order to build up agencies of terrorism and 
diversion in Western Europe under the protection of the new regimes. 

I remained in Romania for four and a half years. There I gradually started 
seeing clearly. All of a sudden I felt and conceived what Communism was. 
Maybe it was there that I asked myself for the first time what gods I was 
serving. In the Fall of 1949 I decided to break with the Intelligence. 



SCOPE OF SOVIET ACTIVITY IN THE' UNITED STATES! 4835 

On my request I was transferred back home to Moscow. After my return to 
Moscow my wish to break with the NKVD became firm. 

From the beginning of 1950 it became quite clear to me that I was a citizen 
of an unhappy nation tormented by starvation, poverty and moral terror. But 
the thought of escaping to the West was rather far from me at that time. 1 
conceived just one truth — that by serving in the NKVD I was serving those 
who mistreat my country. The occupation of an NKVD collaborator was a 
disgraceful occupation. 

I started fighting to leave the job. In this fight I found a faithful com- 
panion — my wife. We used to go to school together, then I did not see her for 
eight years. In the Fall of 1949 we met again and got married. The extremely 
great inner strength of this woman, her exclusive sense of humanity and right- 
eousness, her sound and true judgment of the surroimding reality, helped me 
in the following years, to avoid all the crimes which the NVKD pressed upon 
me. 

In the Fall of 1950 I suffered my first defeat in my fight. By an order of 
the Minister I was assigned to the staff of the Ministry of National Security 
as a cadre oflacer with the rank of a first lieutenant. From then on I was 
subject to CheKa (Secret Police) discipline. 

In 1951 I was ordered to make a short trip to the countries of Western 
Europe. Furnished with Austrian documents I visited Switzerland, France, 
Holland, Belgium, and Denmark. 

In the Spring of 1952 the first crisis came about. My chief. Lieutenant 
General Sudoplatov, sent for me and entrusted me with — as he put it — "a very 
responsible government assignment" — to go to France with Swiss documents 
and to kill a Russian emigree. It was then that I realized that the CheKa 
organs practiced acts of terror not only in times of war but also in times of 
peace, and that they do not hesitate to use every means to achieve their crim- 
inal aims. 

I knew that I was risking my own life and that of my family if I refused. 
Still, I could not accept the assignment. I declared that the present condition 
of my nervous system did not allow me to take over this kind of responsibility 
as I would risk failure and wreck the undertaking. 

Until now I have not been able to understand two things. How did it hap- 
pen that the MGB (Ministry of National Security) spared me, and how did it 
happen that they did not find out that I was a stranger to them, that I could 
not be entrusted with this kind of task, that I was more their enemy than their 
collaborator. Maybe all this could be explained by the stupid self-assurance of 
the CheKa that every Soviet citizen is under a hypnotic fear of the MVD and 
that the CheKa organs are omnipotent and can decide upon the fate of Soviet 
people at their discretion. 

For several weeks my wife and I would listen to the sound of every passing 
car, would jump up at night at the sound of every knock at the neighboring 
doors ; we had ready a little package with underwear and small items to take 
with us in case of an arrest. But there was no arrest. 

I was sent to Berlin to do some technical job with the apparatus of the MVD 
Representative in Germany. 

I saw that they intended to break me in again and to put me to work under- 
ground in Europe. But the most important and most terrible thing to me was 
the fact that I still remained a CheKa ofiicer and that there was no escape 
from this damned establishment. 

There in Berlin I got to read a German paper with a report on NTS [Russian 
Emigree Organization]. Up to that time my notion of the emigrees was that 
they were a group of human trash waiting passively in the West for the re- 
turn of old times and serving, from time to time, various foreign Intelligences. 

Here I met something new, of firm and independent convictions : a group of 
people who called their exodus — a revolution. For the first time I saw that in 
the West there are people who not only reject the Soviet system, but who had 
declared war on it. It was then that the idea of escaping to the West first 
occurred to me. 

At the end of 1952 I was offered leadership of those residing (?) in the 
countries of Western Europe, with headquarters in Switzerland. I made a 
condition that I would go there only with my wife and son. I was given this 
permission. We were happy : a new pleasant and hopeful perspective seemed 
to open before us. I was already in East Berlin and expected my family any 
time. 



L 



4836 SCOPE OF SOVIET ACTIVITY IN THE UNITEB STATES 

Stalin's death destroyed all our plans. I was ordered back to Moscow at 
once. During the spring and summer of 1953, MVD was in a state of complete 
dispersion. Beria's arrest added to the chaos. Not before September did my 
agency, renamed "Ninth Division", start receiving Government assignments. 
And the very first task fell upon myself. 

In a festive surrounding the new Chief of the Intelligence Division of MVD, 
Panyushkin — the same who used to be Ambassador to America — informed me 
that the Ministry entrusted me with organization of a very important political 
assassination. The task was to kill one of the leaders of the NTS, Georgii 
Sergeevich Okolovich. This was disastrous. To refuse for a second time to 
perform this kind of a job would equal suicide. To tell the truth, in those days 
I was quite perplexed and broken under the tragedy of the situation in which 
I found myself. The problem was very acute and complicated. To go to the 
West would mean to kill my family. I admit that several ideas came to my 
mind and not all of them were honest. 

The assassination was to be carried out by two Germans : I was to go to 
West Germany and to make on the spot the necessary arrangements for the 
operation. Could I just close my eyes and let the Germans alone? They would 
do it without me too. 

Were I in Moscow alone at that time, it would be very hard for me to find 
the right and faultless solution, and to face the truth. 

But I wasn't alone. Later, on my way to West Germany, the words said by 
my wife when I told her my plans, were ringing in my ears. She said to me : 

"If that man is killed — you will be the killer. Those who direct the killer's 
hand are guilty in the first place. If he is killed — you will have no wife, no 
child any more. I won't be able to continue to live with a killer-husband, no 
matter how much I love him. I cannot allow him to remain my son's father." 

This obstacle was unconquerable indeed. I couldn't raise any objections. I 
merely asked her : "Do you realize what awaits you when I escape to the 
West?" She knew but it changed nothing in her resolution. 

I made the decision. I realized that if I didn't prevent the murder from 
being committed, I'd lose my wife, my child and my own conscience, killing 
myself morally. 

In January I said goodbye to my wife and son and went to the West. 

The assassination of Mr. Okolovich was prepared very carefully : The best 
agents were engaged, a special noiseless weapon with poisonous bullets was 
constructed, much money was spent. People of such caliber as Panyushkin, 
Serov, and Minister Kruglov himself were engaged in organization of the 
operation. 

Naturally, I arrived at Frankfort without special difficulties. Next evening 
I went to Okolovich's apartment and found myself alone with him in an empty 
quarter. I told him that I was sent to kill him but could not do it. I asked 
him for his assistance in getting a political asylum. He answered that he would 
do it as a matter of course because he owed his life to me. That's what he 
thought. 

But I think that both he and I now owe our lives to the honest heroic Russian 
woman left in Moscow. 

She knew that the great law of humanity says : "Do not kill !" 

(Translated by George Starosolsky, Library of Congress, Dec. 28, 1957.) 

Mr. SouRwiNE. Mr. Khokhlov, do you remember your testimony to 
us that your wife was a member of the church ? 

Mr. Khokhlov. Yes. 

Mr. SouRwiNE. Was that the Uniate Church ? 

Mr. Khokhlov. Well, it was explained here by some commentators 
that it was a Uniate Church. As much as I know — I am not too 
much versed about churches and religions — I know she was born from 
a Catholic father, and she was baptized as has to be done in the 
Catholic Church. Later, when her father died, she was taken by her 
mother to the Orthodox Church. 

Then, the people asked me: What particular Catholic Church. 
There is only one Catholic Church in Russia, Uniate Catholic Church. 
I thought that was what it was. She herself referred onl}^ to the 
Catholic Church. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4837 

Mr. SouRwiNE. Uniate Church is the Eastern Rites under the 
Vatican ? 

Mr. Khokhlov. Probably. 

Mr. SouEWiNE. Do you know where a Uniate Church is in Moscow ? 

Mr. Khokhlov. No ; I would not. 

Mr. SouRwiNE. Can you tell us where the church is in Moscow 
where you attended ? 

Mr. Khokhlov. Yes; we attended many times, and we baptized 
our son there. This is a small church in a small street about, let's 
see, 300 feet from Arbatsky Square in Moscow, and the name of this 
church is Serbskaia. It means Serbian Church. By the way, in the 
guide of Moscow I helped to prepare, I pointed out this church as de- 
scribed and mentioned. 

Mr. SouRwiNE. Your wife was a practicing Christian at the time 
you married her ? 

Mr. Khokhlov. Was what ? 

Mr. SouRwiNE. Your wife was a Christian at the time you married 
her? 

Mr. Khokhlov. Yes ; and she still is. 

Mr. SouRwiNE. You were at that time a captain ? 

Mr. Khokhlov. Yes. 

Mr. SouRwiNE. In the MVD ? 

Mr. Khokhlov. At that time, yes. I was captain since the fall 
of 1953. 

Mr. SouRwiNE. How was it that an MVD captain was permitted 
to marry a practicing Christian ? 

Mr. Khokhlov. Actually, I did not ask any permission and no- 
body questioned me, and I would like very much to attract your 
attention that thousands of party members are married to the people 
who are Christian, and more than that. 

Mr. SouRwiNE. You were not a party member, you were captain 
in the MVD. 

Mr. Khokhlov. That is right. 

Mr. SouRwiNE. Are many MVD captains permitted to marry prac- 
ticing Christians ? 

Mr. Khokhlov. We do not have a status who is Christian and who 
is not. 

She has her passport, and in her passport there are written many 
things, and among them there is religion. She is Catholic in the 
papers. If she is practicing the religion or not, it has to be asked in 
a private conversation, or somebody would see her, that she is going 
to the church. However, I did more than that. I went myself to 
the church. That was really something dangerous. I understand 
your viewpoint. How I could be permitted ? Of course, if any su- 
periors would know that my wife was an active Christian, a Christian 
that is going to the church, and believes in God, of course I would have 
a great conflict, but they did not know. 

Mr. SouRwiNE. Is an MVD officer permitted to marry without the 
approval of his superiors ? 

Mr. Khokhlov. Not quite, and I did not quite so. But I was in 
friendly relations with her, and I married her without telling my 
superior. In trying to postpone that, she would be taken in the files 
of the secret service. I used then the good relations between me and 
my superior. General Sudoplatov, that^ trusted me very much. 



4838 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

However, in February 1952, a few months after we married, I had 
a very strong note from him when he got out of conversation that I 
already had a wife. He told me, "You are crazy. How it is possible 
you are married, I do not know about that. Immediately, sit down 
and write a report." And I did that in February 1952. 

Mr. SouRWiNE. You told us your wife was a very moral woman 
and was opposed to some of the things you were expected to do as an 
MVD captain. 

Mr. Khokhlov. Yes. 

Mr. SouRwiNE. She was an engineer ? 

Mr. Khokhlov. Yes. 

Mr. SoTiRWiNE. At the time you married, she had her own apart- 
ment? 

Mr. Khokhlov. Yes. 

Mr. SoTJRWiNE. You moved into that apartment after you married ? 

Mr. Khokhlov. That is right. I did not move just like that. I 
got a room and I took her brother and I transferred him to a room, 
and then I used the room of the brother. That is how it is done in 
the Soviet Union. 

Mr. SouRwiNE. How big was her apartment? 

Mr. Khokhlov. I can tell you that it had four rooms, but the rooms 
were so small that in American standards it was really a very small 
apartment. 

Mr. SouRWiNE. By Soviet standards, it was very grand and elegant ? 

Mr. Khokhlov. Yes; by the Soviet standards, it was a big one. 

Mr. SouR^^^NE. The ordinary people there got four square yards 
each by law, at that time ? 

Mr. Khokhlov. That is correct. The principal thing was we had 
a separate apartment, and that is extremely difficult to get. 

Mr. SouRwiNE. Your wife was undoubtedly, being an engineer, an 
educated woman. Certainly, she knew what the duties of an MVD 
officer were. 

Mr. Khokhlov. Absolutely. 

Mr. SouRwiNE. So, despite the fact that she was opposed to what 
you were expected to do, she knew what your duties were when she 
married you. 

Mr. Khokhlov. Exactly. First, we studied together in the school. 
Second, I approached her again then as a woman I would like to marry, 
in 1949. And it was only in 1951, when she really saw that I am 
struggling to get out and I am ready to risk everything, including my 
life, to get out of Soviet Intelligence, she understood the real meaning 
of my life and she agreed to marry me. Because as many women, 
including American women, she understood that I need her help for 
that. 

Mr. SouRwiNE. She said nothing to protest your assignments until 
the Okolovitch case came up ? 

Mr. Khokhlov. Well, she did not protest actually. She did not 
have to. You see, it was in 1952 that I got an assignment of murder 
also. Then, I rejected it under the protest that I am sick. And then 
my wife and me were absolutely ready to go in concentration camp. 

In 1953, it was a different tiling. If it would be just rejected, 
Okolovitch would die. We had the responsibility to save Okolovitch, 
and that was the time when she backed me and told me, "We have 
to do everything to save this man." 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4839 

Mr. SouRwiNE. You told us, sir, that you had refused to Ccarry out 
that assignment to kill. 

Mr. Khokhlov. In 1952 ? - 

Mr. SoumviNE. That is right. 

Mr. Khokhlov. That is right. 

Mr. SouRwiNE. You told us you refused because you considered that 
murder, or assassination, as a crime against religion and conscience; 
do you remember that ? 

Mr. Khokhlov. That is correct. 

Mr. SouKwiNE. "WTiat I would like to know, if you felt that murder 
and assassination was a crime against religion or conscience, why did 
you ever become and remain an officer of the terroristic and murderous 
MVD? 

Mr. Khokhlov. Because to remain an officer, is not because you 
forget to file a paper that they would release you. I filed many 
papers. I filed in the fall of 1949. That was why I was removed from 
Rumania to Soviet Russia. To get out of Soviet Intelligence and 
remain alive is a heavy job. I tried to remain alive. I tried that for 
many years. That was climaxed in 1954. 

Mr. SouRWiNE. It is hard to get in and hard to get out ? 

Mr. Khokhlov. That is right. 

Mr. SouRwiNE. To get in, you have to prove you are superior men- 
tally and physically and in ruthlessness. 

Mr. Khokhlov. I would not regard it exactly so, because the ruth- 
lessness is not absolutely necessary. "VVliat you have to prove is you 
are — what is the English name — your loyalty to the party. 

The party and the dogma of Communist philosophy is the most 
important thing for them, and that is what happened to my superiors. 
They confused my loyalty to my country in the time of war with my 
loyalty to the party. 

So they, the same thing as they did with millions of Russians, so 
they said I was a perfectly loyal Communist. By the way, I did not 
become Communist until 1953. 

Mr. SouRw^iNE. Now, I want to refer for just a moment to what 
you talked about earlier here ; that is, your belief that at the time, that 
is in 1954, your belief that an appeal to the American people, to the 
people of the West, could save your wife and son, who were then in 
the center of Russia, 

Mr. Khokhlov. No. Actually the time that I believed it, could be 
measured by 10 days. 

Mr. SouRWiNE. Yes, if you believed it for 10 days. 

Mr. Khokhlov. Yes. 

Mr. SouRwiNE. During those 10 days and before those 10 days, you 
had gone through the experience of being an MVD captain. You were 
an official of the intelligence agency of the Soviet Union. 

Mr. Khokhlov. Yes. 

Mr. SouRwiNE. Yet, at that time, you believed that the American 
people or the American Government could somehow save your wife 
and son in the center of Russia. 

Mr. Khokhlov. Yes. And I certainly believe that I did have all 
the opportunity to believe that of Americans. 

Mr. SouRWiNE. You now know that America could not even save 
United States citizens in foreign countries ? 



4840 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

Mr. Khokhlov. If the committee will permit 5 minutes, I could 
describe you the psychological side of this. 

Mr. SoTJRvaxE. I am afraid we are running short of time. 

Mr. Khokhlov. I could not answer your question in a short way, but 
I could tell you what happened with me when I came to America, in 
having an opinion that Americans are religious, that they believe in 
God, Jbelieve in man, and believe in the sanctity of human life. 

Mr. SouEwiXE. I am trying to find out how you, an MVD captain, 
could believe that American public opinion could help when a dozen 
countries had been lost to Communists, how you thought American 
public opinion could help in the case of 1 woman and 1 child, when 
a dozen countries had been lost without any resistance by the West. 

Mr. Khokhlov. First of all, I do not agree with you that Americans 
betrayed their citizens abroad so easily. 

Mr. SouRwiNE. Those are your words, not mine. 

Mr. Khokhlov. I am sorry. That means I misunderstood you. 
For me, it was that America tried always to do what they could. 
That may be because of some pictures that I saw where the American 
correspondents in the assignment of American intelligence did mir- 
acles in saving. And I believe maybe a part of truth is there. 

Secondly, I knew about an incident in Rumania, where the man was 
taken to the American Embassy and was saved. 

Thirdly, what was much more important, I was in the hands of 
American authorities. I gave to the United States everything I had, 
including the life of my family. Imagine you would be there. Try to 
be in my position. I gave everything I had to the United States. All 
the secrets, what could help the United States. 

I did not ask anything from the United States but to save my 
family. 

Now, the representative of such a great country, in my opinion, of 
a country true to the interests of mankind, true to the interests of high 
morality, come to me and tell me, "Mr. Khokldov, there is only one 
way to save your family. We will take your wife to the American 
Embassy, Moscow." 

I could not believe it. "You will not get permission for that." 

"Well, we know this is an unusual story. We spoke with Wash- 
ington, and Washington guaranteed us that your wife will be taken 
to the American Embassy." 

I told myself, the Americans are not cannibals. What sense, what 
purpose they would have to lie to me? Everything I had to help 
America I did. If my wife and my child would be killed, there is no 
interest for the United States, for heaven's sake. I could not sup- 
pose that. 

They came to me and presented to me a very carefully elaborated 
plan, including Voice of America, all the stations over the world, 
including Embassy in Moscow, the American authorities in Wash- 
ington and American Bonn authorities. 

They sent a special man from the State Department in Washington 
to Frankfurt. He came to me and told me, "Mr. Khokhlov, you 
broadcast a special speech to your wife, and this broadcast will be 
transmitted by station Voice of America exactly at the time you will 
start your conference, and this time we will guarantee you that the 
people in Moscow from Embassy will rush to your apartment and 



k 



SCOPE OP SOVIET ACTIVITY IN THE UNITED STATES 4841 

invite your wife to go to the American Embassy, and give an inter- 
view and will fight for her." 

Tell me, gentlemen, is there any reason I could tell that the Ameri- 
cans are lying to me ? I am sorry, but for me there was not a reason 
of this sort, so I believed, and I told if the American Government 
guarantees me that my family will be saved, I have to believe them. 
So I did. 

As you know, I did my part. 

The Voice of America did their part. The State Department did 
their part. But the people in Moscow did not want to go to my fam- 
ily in the last moment. They did not care even to send back a tele- 
gram that they would not do that. 

Who jeopardized my family ? I do not know still today, but I do 
not think it was bad will there. I am sure I did not commit a mistake 
in trusting the Americans. And I was not naive or stupid in trust- 
ing the United States. 

Mr. SouRwiNE. I have no more questions, Mr. Chairman. 

Senator Johnston. Any further questions ? 

Mr. Morris. No, Senator. 

I want to thank Mr. Khoklilov for coming down here to testify. 

Senator Johnston. Thank you. 

Mr. Khokhlov. Thank you, very much. 

This whole story is too important for me. I just could not tell it 
in another way. 

Mr. Morris. Senator, the other thing — I have not had a chance 
during the recess to digest Mr. Mandel's summary of the Greenglass 
session yesterday, and the memorandum is now in such form that I 
would not like to offer it in the record with the names of the people 
mentioned. 

May I offer it for the record now, but prepare it overnight ? 

Senator Johnston. That will be all right. 

Mr. Morris. And we will present it with this record tomorrow 
morning. 

Senator Johnston. All right. 

Mr. Morris. Thank you, very much. 

(The summary above referred to was marked "Exhibit No. 524," 
and reads as follows :) 

Exhibit No. 524 

Memorandum 

OCTOBEK 16, 1957. 
To : Mr. Morris. 
From : Ben Mandel. 

Re interview with David Greenglass and Harry Gold at Lewisburg Penitentiary 
on October 15, 1957. 

DAVID GREENGLASS 

In 1947 or 1948 when Julius Rosenberg was moving some of his furniture from 
Knickerbocker Village on Monroe Street, New York City, to Chappaqua, N. Y., 
for the summer he was standing on the street corner near the moving van 
with David Greenglass and his brother. At that time Rosenberg said, "We now 
have a space platform." He said he had heard this from a friend. At that 
time Rosenberg explained the details and the technique of the space platform. 

When Greenglass was alone with Rosenberg later he asked again about the 
space platform. Rosenberg said it was being surveyed. He said one of the 
boys gave me information and "I gave it to the Russians." 

Rosenberg also mentioned to Greenglass the atomic airplane. He said that 
the mathematics for the atomic airplane had already been worked out. Rosen- 
berg said that he got it from its people and had passed it on to the Russians. 



4842 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

The information on this matter may have come to Rosenberg either from a 
physicist and aerodynamic expert who worked with the National Advisory Com- 
mission for Aviation at the time, or an engineer who worked on the project at 
Sperry Gyroscope. Rosenberg told Greenglass that the latter was one of "his 
people." 

Rosenberg seemed to be well acquainted with the inside mechanism of the 
atomic airplane. He explained that the operator of the plane would have to 
be in a separate compartment from the reactor. He claimed that a report on 
the atomic airplane had been given to him. 

Rosenberg, it should be noted, was chief inspector for the Signal Corps of the 
United States Army. In this capacity he went to all plants manufacturing equip- 
ment for the Signal Corps. It might be possible to secure from the Signal Corps 
a detailed analysis of the work done by Rosenberg. Through his employment, 
Rosenberg came to know individuals, experts, in the various plants throughout 
the country. Thus, for example, he was friendly with some people in the Phila- 
delphia Branch of the Procurement Division of the xiir Corps and he cultivated 
this friendship. It should be noted that the Signal Corps worked on components 
of the guided missile, according to Greenglass. 

I questioned Greenglass as to whether or not the espionage ring included any 
technical experts who could evaluate information on the spot. Greenglass said 
that the man whom he met at night in an automobile on the East Side of New 
York City in the Forties (streets) seemed to him to be an expert engineer from 
the pointed questions he asked. He might have been a prominent person because 
he kept his identity hidden, his hat down, and his face in the shadow. He 
repeatedly warned Greenglass to keep his eye on the road and at one time he 
turned Greenglass' face with his hand away from looking at him. 

HABRY GOLD 

Gold remembered the following details about Rosenberg which he had not 
previously mentioned : 

About October 23, 1949, when Gold was on his way to meet Russian Agent 
Sarytchev outside of the Bronx Park Zoo, he was walking past a restaurant 
which he had been instructed to pass. A man was watching him through the 
window of a restaurant whom he recognizes as having been Julius Rosenberg. 

On the first Sunday of February 1950, after the arrest of Klaus Fuchs, Gold 
had a meeting in Queens near the 90th Street station of the Queens-Flushing 
line of the BMT. The meeting was what Gold called optional. This meant 
that if Gold was anxious to see the agent he was to walk on a certain side of the 
street and if the agent was anxious to see Gold, the agent was to walk on 
another side of the street. At that time Gold was filled with anxiety because of 
the Fuchs case and was anxious to get the lowdown from the Russian. When 
Gold was on the little island under the elevated structure, a man came toward 
him. From the photographs which Gold saw in the newspapers later he believes 
that man was Rosenberg. In both cases it would seem that Rosenberg had 
been assigned to keep Gold under surveillance. 

Gold also described other items of espionage which he had not detailed 
previously. He said he gave to a Russian agent whom he knew as Paul Smith 
the information regarding the manufacture of synthetic normal butanol alcohol, 
a solvent for lacquer, in which the Navy was deeply interested. Gold says that 
Paul Smith was the man who established the espionage ring in which he 
opera<!ed. He was either a Dane or Czech, about 5 feet 7, chunky, with a rather 
old face, light hair and eyes, and about 35 to 40 years of age. He had a wide 
mouth, was a neat dresser, had traveled widely, and spoke Danish and English. 
Gold knew him from October or November 1935 to July 1936 and met him about 
12 or 15 times. 

Gold also gave Smith information about absolute ethyl alcohol used to blend 
with motor fuel in order to extend such fuel. Gold's source of information was 
the Pennsylvania Sugar Co. Gold also passed on information of the process for 
manufacturing ethyl chloride, an anesthetic, which he obtained from the Penn- 
sylvania Sugar Co. Gold also passed on information about other lacquer and 
varnish solvents, such as diethyl oxylate, amyl acetate, amyl butyrate, butyl 
acetate. 

Gold believes that this information saved the Russians time and money which 
would have been required for their own experiments in producing these prod- 
ucts. The information consisted of progress reports showing techniques. 



SCOPE OF SOVIET ACTIVITY IN THE' UNITED STATES 4843 

Gold said that Semenov was a nieclianical engineer and mathematician of a 
high order who worl^ed for Amtorg. Semeuov would be another example of 
a highly skilled scientific agent, a Russian, working in this country. 

Gold listed the agents with whom he worked and the field in which they 
operated : 

1. Al Slack. Worked on sensitizers and developers for films used for Koda- 
chrome, manufactured by Eastman Kodak, for whom Slack worked. These were 
used for aerial photography. From Slack, Gold also obtained the process for 
making the explosive known as RDX. Slack worked for the Holston Ordnance 
Works in Kingsport, Tenn., a division of Eastman Kodak which also manu- 
factured explosives. Slack also gave Gold information regarding the manu- 
facture of nylon which is used for many purposes including parachutes. 

2. Abraham Brothman, a chemical engineer, gave Gold the process for the 
manufacture of Buna S, a type of synthetic rubber of great importance. Broth- 
man was rather vague in his information as to his sources, claiming at one 
time that he got this information from' the United States Rubber Reserve Com- 
mission. Brothman worked for the Hendrick Manufacturing Co., which may 
have had contact with the United States Rubber Reserve Commission. 

At one time Brothman said he had designed the machinery for chemical 
engineering mixing equipment, a very important factor in the chemical industry. 
This information he passed on to Gold. He also gave Gold a design for an 
aerosol container for spraying DDT. 

Brothman gave Gold the design for making magnesium powder which is used 
for manufacturing flares and tracer bullets, both of considerable military 
importance. 

Brothman was a partner in the Chemurgy Design Corp. 

The visit to Greenglass and Gold was made possible through the courtesy of 
James V. Bennett, Director of the Bureau of Prisons, and John C. Taylor, 
warden of the Lewisburg, Pa., prison, and H. A. Cox, associate warden. 

Mr. IkloRRis. Is Mr. White here ? 
Senator Johnston. Off the record. 
(Discussion off the record.) 
Senator Johnston. Thank you, very much. 
(Whereupon, at 4 : 30 p. m., the hearing was adjourned.) 
(The following statement was later ordered printed in connection 
with the testimony of Mr. Vidovics :) 

Peemanent Mission of the Hungarian People's Republic to the United 

Nations 

Press release, October 9, 1957 

Statement Made bt Mr. Miklos Szabo^ 

At a press conference held in Budapest on October 3, 1957, by the Information 
Bureau of the Council of Ministers of the Hungarian People's Republic 

the emigres were utilised for purposes contrary to the interests of the 

hungarian nation 

I should like to begin by giving the reasons which prompted me to leave the 
country in December 1955. 

I was set at liberty in the autumn of 1953 when internment camps were dis- 
solved. Alter some difiiculties I managed to find employment, but a year later 
I was dismissed from my job on account of my political past. The situation then 
did not enable me to find a job — at least not one which would have given me a 
decent living. My troubles and difiiculties became worse and worse. At the 
same time I had political views and aspirations I did not see any possibility of 
realising in Hungary then. All these circumstances led me to the conviction 
that only together with my political friends who have been in the West for a 
long time now, and only from the West, could I wage a fight to bring into power 



^ Mr. Miklos Szabo is a bourgeois politician, a former Member of Parliament of the Small- 
holders' Party. He was sentenced to a term in prison. He was set free in 1953 and two 
years later defected to the West, where he became a leading emigre personality. Mr. Szabo 
returned to Hungary a few weelis ago. 



4844 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

in Hungary a social system corresponding to my political views. Therefore I 
then decided to flee. 

In Austria I concerned myself with refugee problems, which I continued until 
my return home. Of course, I became connected with the political life of the 
emigres and, as a result of my worlc in this field, I was regarded one of the 
emigre leaders. For a long time, virtually from the outset, I advocated the 
affairs of the refugees upon their request and on their behalf, in Vienna and in 
Burgenland. In this activity I had the backing of Ferenc Nagy and Bela Varga, 
and I was acting for the Hungarian National Committee. 

After the events of autiunn 1956 I became a foundation member of the Hun- 
garian Revolutionary Council, in the setting up of which I played a decisive role. 
From that time on, by virtue of the Strasbourg resolution, I was the Hungarian 
Revolutionary Council's delegate in Austria. Ever since spring this year I spent 
several months organizing the Cultural Institute of Hungarian Refugees, of 
which I was elected secretary general. 

I think I can say I performed this work with honesty, conscientiousness, and 
in keeping with my convictions and, in the course of which, I had the opportunity 
to become acquainted with a cross section of the 6migr4s. Ever more often I met 
with disquieting occurrences both as far as the present and the future are con- 
cerned. I had to see also that the 6migr6s, due to their being under constraint, 
were being utilised for purposes contrary to the interests of the Hungarian 
nation. These problems preyed much on my mind and I had many talks about 
them with my emigre friends who were also aware of them and worried. 

During my emigration I also pursued a policy in keeping with my own principles 
and convictions, which I have never recanted or concealed, and thus I came up 
against those who can enthuse only over the restoration of some past regime, and 
against those who, for their own financial interest, are serving such sinister aims 
as can only be harmful to the Hungarian people. 

However, I was not alone with my worries. My political friends also conflicted 
with the same forces, both those who had been abroad for a long time then and 
those who had gone abroad after the tragic events of last autumn. Thus I 
became aware also of the facts which made me size up the situation as I see it 
now and which I am going to relate to you. 

I should like to state most emphatically and explicitly that I always have 
and am still acting out of conviction. I am a man of bourgeois mentality, I believe 
in human progress and I think it necessary. When I returned home, I took into 
account that I would have to assume responsibility for my deeds, but even this 
consideration could not prompt me to refute my principles. 

I am fully aware and concede that, especially this year, substantial changes 
have occurred in the life of the people in Hungary. But there are certain 
aspects — above all in matters of ideology— in which I differ from the Communists. 
Right at the outset and in the course of the October events — all my friends of 
that time know it well and can testify to it — I foresaw and foretold in horror 
the ensuing tragedy. In October and November I had to wake up to the fact that 
the high-sounding phrases proclaimed by the Western organs for a decade or so, 
the declaration of statesmen, were nothing but irresponsible incitement. 

I realised also that — as was best shown by the Suez events — my people had to 
suffer only in order that the West might seize some more important economic 
assets in another area of the globe. In deciding to come home I was prompted 
by the realization that the Western Powers had plunged my people into a tragedy 
full of bloody sacrifices and that events of the same kind had been and were 
being prepared by those who are not concerned at all with casualties and with 
the suffering of people cut off from their families. 

It is by no chance that I have come back at the time when the U. N. General 
Assembly Eleventh Session was reconvened. I have reached the conviction that 
certain governments and groups of interests would profit by it, but my people, the 
Hungarian people, would be all the worse for it. 

I think my people need tranquillity and ordet, not the stirring up against 
of the already pacified atmosphere. 

Allow me now to expound the motives of my decision. First I wish to relate 
the facts I had the opportunity to see, hear, and watch continuously since my 
arrival in Austria. I was not aware of their significance then ; in order to 
understand it, I had to see the destruction of Budapest in November and from 
that time on the misery of hundreds of thousands of refugees. 

There certainly were mistakes at home. The Hungarian people objected to 
them, I think with reason, but, as you will see, this was not the decisive factor 
that turned the events into a catastrophe. 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4845 

The situation of the refugees was terrible in 1956 as well. Until the outbreak 
of the events of last autumn there was hardly any possibility of emigrating. 
In the conditions existing is Austria the refugees could get a labour permit 
only under exceptional circumstances, therefore they gladly accepted any offer 
to earn some money. Making use of this situation the Western secret services 
recruited their agents from among the refugees. 

The contact of the refugees with the secret agents began, as a rule, at the 
point where they transmitted data and news on Hungary. After the ques- 
tions concerning the social and economic situation in general they had to an- 
swer questions related to underground organisations in Hungary as well as 
to military information. Especially keen interest was manifested in informa- 
tion on the strength, equipment, and supply of the Soviet armed forces in Hun- 
gary, on armament and ammunition factories, as well as the site of works in 
Hungary which can be converted to such production. 

The refugees usually began by handing over these materials to the Vienna 
oflBce of Radio Free Europe (address: Lindengasse 26, Vienna VII), and then 
gradually they came into touch with British, West-German, French, and U. S. 
agents, many of whom posed as journalists. Such was, for instance, that agent 
who was living as a journalist at Westbahngasse 4, Vienna VII, who was well- 
known to Radio Free Europe, to whom Konrad Holcznei*, the interpreter of 
the refugee camp at Haidengasse 2, Vienna XI, escorted the refugees and who, 
according to the refugees, has the most detailed and precise maps of all military 
objectives in Hungary. In connection with this the refugee Bela Toth, now in 
Canada, and Gyorgy Nagy said to me once that those data were directed not 
against the regime, but against the country, and that they were not inclined 
to commit high treason. The agents of the various intelligence organisations 
then selected from among the refugees those who appeared suitable for more pre- 
cise interrogation and handed them on to Munich and Berchtesgaden. In both 
places, as is known, large CIC centres are operating, which in certain respects 
compete one with the other. The refugees who have been at those places re- 
lated that this rivalry was growing to such proportions that a person who had 
been enlisted by one of the organisations and was on his way to headquarters 
to be questioned, was dissuaded by the agents of the other organisation and 
taken to the other headquarters for interrogation. First Taszilo Dar6czy, then 
Janos Rakoczi and several others gave me detailed accounts of this. The main 
task of these organisations is subversive activity against the people's democracies 
and, above all, against Hungary. 

The practice was the following : 

The agents of the two CIC headquarters functioning in West Germany ob- 
tained passports for refugees in possession of more extensive information and 
picked for a hearing and took them to Munich or Berchtesgaden. The repre- 
sentative of the Berchtesgaden centre is Sandor Keszthelyi, former general staff 
air-force major, a resident of Salzburg. Through his agents he used to sum- 
mon the chosen persons to Salzburg, where he would provide them with full 
board at the Schiller Richtenwirte Inn in Glasenbach, and gave them some 
pocket money. These persons stayed there until they received their passports 
and visas. From there they went to Berchtesgaden where they were accommo- 
dated and questioned in a building maintained especially for this purpose. 

The questioning was conducted by Americans, if necessary through inter- 
preters, who in fact were of assistance during the questioning. Here full and 
detailed accounts had to be given of the situation in Hungary, especially of 
the activity of the groups opposing the existing social system, and sketches and 
maps had to be drawn of any objective of military character known to those 
questioned. The refugees who had been there recounted that these data were 
checked on the spot against available facts and maps. 

The organisations of Munich and Berchtesgaden also differed in that the 
latter was concerned, above all, with questions on air forces, air defence, and 
the Munich organisation was interested in motorised formations, armoured cars, 
and heavy artillery. From among those refugees who had been taken to these 
places they picked those who seemed to be fit for activities in Hungary. These 
persons then received a thorough training. Several people related how they 
were enlisted. The person who had been questioned was taken by an American 
friend to a first-class night club where they made the acquaintance of most 
beautiful and attractive society women and were shown large bundles of dollars 
and marks, and told : Behold, all depends on money here, the wonderful life or 
the possession of this woman, everything. You, too, can get all this, all you 
have to do is to be wise. 

93215— 58— pt. 86 6 



4846 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

By the way, I have to point out that this is characteristic of these elements. 
They resorted to such vile means to drag down those people and to use them 
against their country. They usually made concrete financial offers ranging 
from 40,000 to 80,000 schillings for a successful task to be fulfilled in Hungary. 

Among those who travelled this road from Salzburg to Berchtesgadeu were 
Gyula Csiki, Ferenc Grabendr, Istvan Kovacs, Bela Szolnoki, and many other 
refugees. Istviln Kovacs was arrested in Hungary in November last. 

Another characteristic example of this activity is the fate of fireguard ofiicers 
Ervin Rim6czi and Jozsef Katona. Both fled from Hungary in summer 1956 
and reported to me in Vienna, asking me to help them get to West Germany. 
I warned them that in West Germany they would be taken to a refugee camp 
where life was miserable, almost unbearable, and where they would have to live 
together with the scum of Europe at that, so there would be a great temptation 
to become entangled with an espionage organisation. As became known later, 
this did occur in spite of my warning. Both became agents of the CIC in 
Munich after having undergone several weeks of training. 

During the October events Jozsef Katona returned with a group to Hungary. 
He had already been here several times in previous months. As far as I know he 
was arrested. Rimoczi called at my home in January 1957 asking for advice 
on how to escape the clutches of his masters. 

He told me that he had been enlisted in the same way as I had heard from 
several refugees. He had been in Hungary on three occasions on behalf of that 
organisation. He was to go back again, he said. He was afraid, yet did not 
dare to shun the task. 

On my advice he reported in Vienna as a new refugee. It was possible for 
him to do so and to be legalised as such owing to the huge masses of refugees 
and to the resulting slack control. 

As far as I know, during subsequent months his bosses from Munich reestab- 
lished contact with him and presumably under some pressure he maintained this 
contact up to recent months. At the beginning of 1957 Rimoczi related, on 
behalf of his Munich bosses, that they were extremely interested in different 
Soviet military equipment, as well as Soviet and Hungarian military documents 
photographs, and that they were ready to pay many thousands of dollars for 
each one. He wrote down these items and their price in his own hand. 

Here is another line. In spring 1956 the refugee Gyula Mandaczko related 
first, that he had made the acquaintance of some Laszlo Matrai, a British intelli- 
gence officer of Hungarian descent. Matrai entrusted him with the task of 
bringing Hungarian refugees to him to an appointed place. Thus Matrai main- 
tained systematic contact with the refugees. He entered into relation with me 
first by 'phone early in 1957 and later personally, and asked me to help him 
obtain news from Hungary. We conducted our talks partly at my home, partly 
in coffee houses, in a rather informal atmosphere. He told me that they had 
been informed well in advance about the probable outbreak of the Hungarian 
events for he and his collaborators had been in Hungary and in other people's 
democratic countries for that purpose on several occasions. To prove the truth 
of this story he related that once, in an attempt to flee, he had been arrested 
in Czechoslovakia and held in the prison of Kosice. Aware that he had to face 
a death sentence, he managed to get up on the roof and to jump from the five- 
story building to the snow-covered roof of the adjacent three-story cinema. He 
succeeded in making his escape in this difficult, risky way. I have to point out 
that I do not believe this part of the escape story, but I have told it only because 
also in this respect I want to keep strictly to what he had related. Matrai told 
me that the activity in Hungary is considered to be more important in 1957 
than before. As a matter of fact, with the tacit consent of his bosses, some 
more important persons were smuggled out of Hungary. 

These talks took place between us toward the end of February and in March, 
and it was at the same time that he mentioned to me that he had succeeded in 
bringing four persons to Vienna. 

At the same time I also mentioned to him that Ji\nos Batyka, who had been 
secretary of the Central Workers' Council, was in a very dangerous position in 
Hungary ; he was an important personality, and his arrest was imminent. As 
two weeks after that talk Batykai fled from the country with the help of the 
British — that is, he is living in London now — I have every reason to suppose that 
Mitral did it in the manner he deemed safe. On this occasion he asked me to 
introduce him to persons living in Hungary, especially to politicians, who can 
effectively support their activity in Hungary. In this connection he mentioned 
that in the near future, mainly in Poland but also in Czechoslovakia and then in 



SCOPE OF SOVIET ACTIVITY IN THE' UNITED STATES 4847 

Hungary, new strikes and uprisings were expected to break out, the prepara- 
tion of which was being directed by them. 

When I said this would lead to unnecessary bloodshed and bring no result 
without Western support, and asked him if he would do it even then, he told 
me that in Loudon he hnd conferred about this thoroughly with his bosses and, it 
would appear, the West had definitely decided on intervention. 

As far as Matrai's identification is concerned, he had offices in Austria ; namely 
in Vienna. I know the telephone numbers of some of them : R-24-084 and 
R-24-118, which answers as an Austrian-Canadian company and connected me 
with Mdtrai regularly ; another such number is R-28-713. 

One of his collaborators was Miklos Schwarcz, a tradesman, who has an office 
in Schwarzenberggasse and who said he had been in Hungary several times per- 
forming intelligence work for Matrai. It should be mentioned that Miklos 
Schwarcz often complained to me, especially around May, against Matrai cheat- 
ing him. In spring 1956 in one of the camps in Vienna was a former Budapest 
clerk, Matild Cseko, who then was suspected of having been an employee of the 
Hungarian Ministry of the Interior. 

A former officer, Ferenc Szimcsak, and university students Andras Olevitzky 
and Sandor Szabo, one afterndon on their own initiative searched in Csekfis 
room. It turned out later that during the search Szimcsak had taken away the 
girl's money, Canadian dollars and Hungarian forints. 

When the matter was taken before the camp commander, Szimcsdk claimed he 
had acted on behalf of the authorities who deemed it necessary to examine 
Csekos documents and he needed the money in order to take fingerprints from 
the notes. Typical of the circumstances is that when the authorities were 
mentioned the commander of the camp did not dare to take any steps against 
Szimcsak. As the girl complained I took up the matter and threatened Szim- 
csak, as a common or garden thief, with the legal consequences of his deed. 
Something interesting occurred then. In the Caf6 Stadtpark Szimcsdk intro- 
duced me to a woman of about 35, well dressed and wearing conspicuously much 
gold jewelry, who seemed to be intelligent. She told me that they knew well 
who I was and, therefore, she would have confidence in me. She said she was 
the collaborator of one of the West-German secret agencies and that it was they 
who had entrusted Szimcsak with making a check on Matild Cseko. When I 
demanded some evidence she told me that their activity would be verified by 
some high-ranking official of Radio Free Europe. But this did not take place 
owing, first of all, to the ensuing and rapidly moving events. That woman is 
known to the waiters of the cafe as Frau Krause. 

Soon afterwards Andras Olevitzky related to me that this same agency wanted 
to send him to Hungary and he had been promised, if he fulfilled his task, a con- 
siderable sum of money and West-German citizenship. He asked for my advice. 
I dissuaded Olevitzky like very many other refugees. 

To the same organization belonged the refugee Sandor Kopcsa, who acted as a 
selector of agents. Early in October 1956 in connection with social matters I was 
contacted by a former army officer and old refugee called Michael, who said he 
was the chief of the aforementioned agency in Austria and the boss of Mrs. 
Krause. I learned that the agency was the Gehlen organization. Michael ex- 
plained to me that the struggle against the Communist countries was more im- 
portant now than ever before. The trend of the Hungarian events made it 
imperative more intensively concern with that question. He said that any mili- 
tary document available to that intelligence agency could be most helpful in a 
possible armed intervention later or in case of war. Therefore, he said, the thor- 
ough and methodical organization of the work was highly significant. 

As I maintained the closest contact with the refugees, he asked me to provide 
him with such contacts and gave me a list containing in 15 points all they were 
primarily interested in from a military point of view in Hungary. He handed 
over some of his own news reports on the maps of the Hungarian army, on anti- 
aircraft barracks, etc., to show me how such material has to be compiled. Michael 
is living in Vienna, at Grosschiffgasse 6/13, with Frau Thea Mozdsanovszky. 
In the first few days of the October events he called on me and told me how impor- 
tant it was for the insurgents to get weapons. As I was informed later, he had 
come to Hungary at that time. I know this from his landlady, who said she was 
his wife, who once asked me if we knew what had happened to him. She said 
he had gone to Hungary and disappeared. I further want to add that Michael 
had previously worked with the British Intelligence Service and received com- 
plete training as a paratrooper and radio operator. 



4848 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

The CIC headquarters functioning in Berchtesgaden before October 1956 bought 
from refugees coming from Hungary all clothing that was typically Hungarian 
made. They said they did so because they were maintaining a refugee museum. 
In point of fact they did so in order to supply agents going to Hungary with 
suitable clothing. All these organizations were buying all kinds of Hungarian 
certificates : identity cards, soldier's books, driving licences, etc. They paid 
refugees 50 schillings for each such certificate. It is rather characteristic that 
the real price was much higher. In Berchtesgaden identity cards were selling 
at 300 schillings and soldier's books at 500 schillings each. Indicative of the 
large-scale buying of certificates is that the Austrian authorities were compelled 
to intercede and immediately confiscated the certificates of the newly arrived 
refugees. At the same time the organs of the Austrian Ministry of the Interior 
made large-scale investigations to find the buyers. 

One of the chief agents of both the Munich and the Berchtesgaden CIC head- 
quarters was Count Palffy, one-time politician of the Christian Party. In Austria 
he maintained a pig breeding farm on the money he obtained there to conceal his 
real activity. One of his agents was Miklos Nemeth, known to the Americans by 
the name of Micki. For a long time he toured all the camps in Austria to gather 
material and recruit would-be agents suitable for being trained and, of course, 
to be sent to Germany. During his activity Mikl6s Nemeth came up against the 
Austrian authorities and, what is characteristic of the Americans, the man who 
had got into trouble was let down by them. Following my advice, Nemeth also 
reported to the Austrian authorities as a new refugee in the winter of 1956, and 
equipped with a new certificate, he emigrated to New Zealand. His address is 
available. 

It may be of some interest to relate that General B61a Lengyel also maintained 
an American espionage and diversionary group in Graz and later in Vienna. 
These activities of Bela Lengyel are fully known to the emigre leaders. During 
1956 only to my knowledge, he sent 30 Hungarian youths to the country to 
perform espionage and sabotage work. He received per capita rewards and, it 
is generally believed, he was working not only for American, but also for several 
other secret agencies. 

Lengyel's activities were far from secret in emigre circles. Moreover, he was 
accused several times of having unscrupulously sent people to death, for instance 
the question was raised in the course of a conversation at his home in Graz in 
the summer of 1956. General Lengyel replied quite cynically that he might 
not send British to their death. This fact was confirmed by Ferenc Vidovics, 
a former lord lieutenant of Somogy County, because much later, at the beginning 
of 1957, he was told the same in Graz, accusing Lengyel once more of sending 
young people to death or to prison. 

As a matter of fact, in November 1956, B^la Lengyel became head of the organi- 
zation called First Aid for Hungary in Austria, and as such continued his 
activity. In his organisation he employed only former staff, field, and other 
army officers. 

Early in 1957 Ferenc Vidovics himself said to me indignantly that Lengyel 
had again sent to Hungary a young refugee, and gave him — alluding to the 
patriotism of the man — 1,000 forints for his activity, although he had received 
many times that sum. Vidovics came to know this because the young man — by 
some good fortune — had been stopped by the agents of another intelligence 
organisation and taken to West Germany. This activity of Lengyel roused deep 
indignation in emigre circles there. 

The president of the First Aid for Hungary is Tibor Eckhardt. The financial 
foundation of the organisation was laid by the millions of the Vanderbilt family. 
But the organisation has received considerable support also from official U. S. 
organs. In spring 1957 Eckhardt objected to this activity of Lengyel verging 
on murder, and Lengyel was criticised for utilising his post as leader of a relief 
organ for espionage purposes. Nevertheless Eckhardt did not take any steps. 
Conferring about this matter, several leaders of the emigration, including 
Ferenc Vidovics himself, who is a great admirer and friend of Eckhardt, stated : 
It is obvious that Eckhardt cannot relieve General Lengyel, for he, too, is a 
member of the American secret service and is supposed to have obtained U. S. 
citizenship as a reward for his activity. 

The Free Europe Citizen Service also maintains a so-called refugee service, 
which first functioned in Salzburg and later in Vienna. Its Vienna address is 
Ditscheinergasse 3. In reality it is another espionage centre. This is proven 
also by the fact that when its head, Mihaly Nagy, an ex-colonel, was killed in a 
car accident last year, Ferenc Nagy, a former prime minister, wanted me to 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4849 

occupy that post. Ferenc Nagy's plan failed and later in Switzerland he made the 
following statement in front of his friends : "Miklos Szab6 could not be appointed 
to the post of the late Colonel Nagy, because he does not speak English. This 
post, however, belongs to the CIC which insists that the representatives are able 
to negotiate without interpreters." This statement was related to me later 
by an engineer, Janos Hajdu, who had been one of those present. 

Large-scale espionage activity was conducted against Hungary by the so-called 
Fraternal Community of Hungarian Fighters — known as MHBK — standing in 
the service of the French Intelligence Agency. The members of this organisation 
were recruited only from among former Horthyite army officers belonging to the 
extreme Right. Their head is Andras Zi'iko, a former general. 

The MHBK stepped up its activity also in Austria immediately before the 
October events. On the basis of a license by the Austrian Ministry of the In- 
terior they created a cover organisation vmder the name of St. Ladislaus Fra- 
ternal Society. A few hours after the outbreak of the October events they set 
up a veritable headquarters at the Hotel Kaiserhof in Vienna. On one occasion 
engineer Tibor Bolyai, who was then living at Zelinkagasse 12, 1st floor, No. 3, 
Vienna I, called me with a mysterious message. There was quite a close re- 
lationship between Bolyai and me. • 

The message was : "Uncle Bandi would very much like to speak with you." 
Of course, I did not want to follow up this mysterious invitation, but he did not 
tell me who this Uncle Bandi was, for, he said, he had given his word not to. 
Finally, appealing to our friendship, he persuaded me to go to the appointment. 
The thing was so strange that my closest collaborators, Gyorgy Veto, Janos 
Rak^czi, and several others, followed us in another car. I was driven to the 
Hotel Kaiserhof and there I was shown to a room on the main floor. It 
struck me already in the passage that men in topboots were bustling about. 
The room into which I was ushered reminded me in a ghastly manner of the 
offices of the 1944 Pronay detachment. Several people came to meet me and 
introduced themselves with a soldierly bearing. I remember one of the names : 
Ferenc Adonyi-Narody, ex-officer of the general staff, now aide-de-camp of 
General Zako. 

That man told me that General Zako had invited me for a talk. After a few 
minutes arrived Andras Zak6. During our pretty short talk he related that 
they had organised fighting units to support the revolution and he thought, al- 
though their political aims did not agree with my views, the joining of our 
forces would be helpful in the interest of the fight against Communism. Namely, 
he intended to join forces not with me, but rather with Ferenc Nagy, and asked 
me to help him contact Ferenc Nagy. All this gave me the impression of a 
terroristic organisation and, quite apart from that, my aforementioned collab- 
orators ; who had not the slightest idea that it was the headquarters of Zdk6 and 
company, were under the same impression. Characteristic of the situation was 
that when — during my talk in there — three top-booted figures in the hotel went 
oflt" flanking a fourth man, my collaborators, being incapable of recognising his 
face in the darkness, thought it was I. Therefore they followed the car and 
wanted to hold them up. Typical of their terroristic nature is that these 
people usually and rather overtly proclaimed before the Emigres that they 
deemed it necessary to do away with the Communists. Moreover, some of their 
manifestations pointed to the fact that they intended the same fate for the 
families and children of Communists and their supporters. 

I always protested against these manifestations and — as many witnesses can 
confirm — before the refugees who were rather nervous at the time, I always 
stressed the wrongness of this view, explaining that we, honest people of bour- 
geois mentally, cannot approve of such means. 

In those days I heard from several people, among others also from engineer 
Tibor Bolyai, that Zako and his company were to send armed units to Hungary. 
Early in 1957 the MHBK was in financial straits. To surmount the difficulties, 
Zako, like the Emigre military organs in general, offered his services to the 
various Western secret agencies. 

Meanwhile, during his trip to Europe, Eckhardt negotiated with the leaders 
of the MHBK personally and gave them financial support. At this year's 
congress of the MHBK in Salzburg, Austria, Eckhardt was represented by 
Ferenc Vidovics, who also took the floor. The MHBK has since stepped up its 
activities and it is obvious that they have succeeded in surmounting their finan- 
cial difficulties with the help of the American secret service. 

I think all this has shown clearly that the ^migr^ organisations are usually 
connected in some way with the western intelligence agencies. Very few are 



k 



4850 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

those who have enough moral strength to keep away from this. The financial 
position of these persons, as a whole, rarely becomes satisfactory. The Emigres, 
and especially the leaders, know well that money and an easy life are obtainable 
only by those who accept such relations and have no inhibitions. The modern 
American luxury cars owned by Bela Lengyel, Sandor Keszthelyi, and others 
have not been earned by honest work, but are the reward for their treacherous 
and vile acts performed for different Western secret services. What I have 
said is but complementary circumstances. The most important, and at the same 
time the most saddening conclusion is, that these organisations contributed much 
to the incitement of the Hungarian people. 

They even wished to justify their espionage activity by saying that the con- 
stant observation and watching of the military forces were in the interest of 
the Hungarians, for only in this way can they prepare for attack against the 
Soviet troops stationed in Hungary. 

Well, the events of last autumn have unmasked them in this respect too, and 
have made it clear that they were not concerned about the fate of the Hungarian 
people. All they had in mind was to utilise the events to profit by them, leaving 
out of consideration how great material and physical sacrifice this meant for the 
Hungariaja people. 

Towards the end of October and in the first days of November several hundred 
young Hungarians returned from Austria, West Germany, Belgium, and other 
countries to Hungary to take part in the fighting. Part of these people had 
already been enlisted in the US army, for instance, Antal Szabo and his com- 
panions. Istvan Kovacs and his companions were sent home by Sandor Kesz- 
thelyi, foi-mer air force major of the general staff, on behalf of the Salzburg 
CIC headquarters, whose agents also organised several groups and helped them 
cross the Hungarian frontier. 

Thus, the group of aristocrats living abroad did everything possible to influence 
the events. By raising funds and granting transport facilities they lent a help- 
ing hand to those who were on the way home to support the uprising. Thus, for 
instance, Dulve Laszlo Eszterazy and Count Festetich maintained a real ofiice 
at the Eszterhazy palace in Vienna. At the same time, many of these aristocrats 
stayed on the Hungarian frontier, maintaining sytematic relations with the 
frontier guards, national guards, and the then heads of the frontier towns, giving 
them advice in their own interest. In fact they expected that, in case of a 
successful outcome of the events, it would be useful to find favour with the 
people. Therefore they handed out various gifts of clothing, food, medicines, as 
for instance, the gifts of His Majesty King Otto and Prince Liechtenstein. 

After the outbreak of the October events the employees of Radio Free Europe 
were also on permanent duty at the frontier. It was so especially at Hegye- 
shalom where they regularly met leading personalities from Mosonmagyarovar 
s.nd Gyor. Kalman Konkoly, a Munich collaborator of Radio Free Europe, to- 
^pards the end of October went to Gy6r to negotiate with Attila Szigethy, chair- 
man of the revolutionary committee there. Following the advice of his chiefs 
he proposed to Szigethy to organise a countergovernment opposed to the Imre 
Nagy government, to ask the United Nations to intervene immediately by send- 
ing observers and, if possible, emergency forces covering the whole territory of 
West Hungary. Underlying this plan was the idea of creating in Hungary an 
area to which, upon request of the countergovernment, weapons could be sent 
for further fighting. This is what prompted the convocation of the Trans- 
danubian Parliament to Gy5r, to which the delegates of every revolutionary 
and national committee of West Hungary were invited. Immediately prior to 
his trip to Gy6r, Kalman Konkoly — possibly upon instructions from his Ameri- 
can bosses — conducted negotiations with the Italian ambassador in Vienna, who 
agreed that if Attila Szigethy as president of the counter-government at Gyor 
wrote a letter to that effect and sent it to him, he would immediately forward 
it through his government to the General Assembly or the Secretariat of the 
United Nations. 

Konkoly took the letter with him and handed it over to an American known 
as Niki, who is one of the Munich chiefs of Radio Free Europe, and, according 
to RFB correspondents, a CIC officer. A plan was advanced to cut off the town 
of Sopron, which projects far into Austria, and to forward arms supplies there. 
I wish to stress here that, as I judged the situation at the time and as was 
proven at a later date, the United States, and the West in general, would not 
have been prepared to send troops, but only weapons and ammunition. In case 
this plan had been realised, therefore, Hungary would have become another 
Korea, bringing untold suffering and devastation to the Hungarian people. 



SCOPE OF SOVIET ACTIVITY EST THE UNITED STATES 4851 

Again during the events of last autumn a 10-kw radio transmitting apparatus 
was transported from Munich to Gyfir. It was dispatched to Ferenc Kasa, a 
car dealer in Vienna, Neustiftgasse 54, who carried it by car to Gyflr. For the 
transaction he received, as far as I know, 10,000 schillings. 

This was several times related to those present by Dr. Istvan Incze, a 
Christian Party politician, who was later arrested in Vienna for having com- 
mitted several crimes, but who at that time was still in close connection with 
Ferenc Kasa. 

Simultaneously with the radio apparatus there arrived in GyiSr a car of Radio 
Free Europe, bringing, besides some American chiefs, Gdbor Tordai, a former 
large-estate owner. 

The personnel of this car had the task, among others, of training an operator 
of the new modern apparatus. Ferenc Kasa regularly drove in his car to the 
Hungarian frontier those young people who had been directed to Hungary by 
various organisations to take part in the fighting or to carry out other tasks. 
This fact was also confirmed by Dr. Istvan Incze, who now and then was 
associated with Kasa in these actions, as well as by Janos Rakoczi, who was em- 
ployed by Kasa. 

The activity of Radio Free Europe was for many years characterised by its 
role of creating an atmosphere suitable for unleashing the revolt. Sober-minded 
Emigres, including myself, sometimes warned them that their broadcasts, irre- 
sponsible incitement, balloon campaigns, and leaflets could create a dangerous 
situation. 

On such occasions these gentlemen replied that it was not wrong, the funds 
necessary to their activity — about 70 million dollars annually — came from Ameri- 
can millionaires and they must earn that sum by being active so that they would 
be able to cover their budget for the next year. Evidence of what the activity 
of Radio Free Europe brought about and how it was assessed abroad shall be 
given by the resolution adopted in this matter by the Hungarian Revolutionary 
Council congress on January 6, 1957. The resolution reads: "The Hungarian 
Revolutionary Council expresses its thanks to the broadcasting stations of the 
free world for their Hungarian-language programme, which considerably contrib- 
uted to the opportunity for information and maintaining the spirit of resistance." 
The participants of the Strasbourg congress, in the debate on Radio Free Europe, 
consistently and very sharply criticised that radio station for its irresponsible 
inciting activity pursued before and during the October events. These attacks 
were extremely sharp and decided. In this connection a declaration of similar 
sense slipped into the material of the press conference held on the second day of 
the congress. 

Mr. Griffiths, the American chief of Radio Free Europe in Munich, who had gone 
to Strasbourg for the occasion, then demanded that the leaders of the Revolution- 
ary Council should express their regrets for it publicly and make it clear at a 
press conference that it had been included in the material by mistake. 

The leaders of the Strasbourg congress, however, did not meet this demand 
and decided that they would not publish any rectification. Another controversy 
arose on Radio Free Europe having committed a mistake by attacking Imre 
Nagy for, they said, Imre Nagy was necessary during the transition period. These 
views make it clear that they accepted the Imre Nagy government in Hungary 
as a temporary solution and thereafter — as is best proven by quarrels among the 
emigres— the conflict in home politics would have begun. The signs abroad in- 
dicate that this conflict would have ended in the complete hegemony of reaction. 
As proof I can point to the fact that after the events of last autumn even the 
West German government deemed it necessary to check the tape recorded broad- 
casts of the Munich radio station. It did so because in the unanimous opinion 
of the refugees the broadcasts of Radio Free Europe were seriously responsible 
for the events. I may state that the refugees in general despise and hate Radio 
Free Europe to such an extent that they completely boycott this organ. Both the 
masses of refugees and the emigre leaders openly put the historical responsibility 
at the door of Radio Free Europe. But they themselves provided the most con- 
clusive proof when, early in 1957, all commentaries by both Radio Free Europe 
and the Voice of America were banned and they restricted themselves to broad- 
casting only news from official news agencies. It is evident that if the managers 
of these stations had been convinced of the correctness of their previous broad- 
casts, they would not have deemed it necessary to take such measures. 

About Radio Free Europe I wish to add that its personnel has come under 
serious and repeated objection by the emigres as well. Among the collaborators 
of the Munich radio we find the former secretary of Szalasi, then Colonel Bell 



4852 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

whose real name is Julian Borsanyi and who during the October events gave 
military advice involving criminal consequences, as well as the former big 
landowner Gabor Tordai ; Kalman Konkoly, known by the name of Kuci, whose 
moral depravity is a much talked-about topic abroad. It was obvious in con- 
sequence of these facts that what amounts to a "changing of the guards" has 
taken place recently, when Istvan Bede, former Hungarian minister in Lon- 
don, was appointed head of the Hungarian section, and Istvrm Szabo, an ex- 
staff member of "Nepszava," and Gyorgy Szabo, a former Social-Democratic 
leader in Gy6r, were added to the staff. 

On February 14, 1957, a former air force lieutenant of Horthy's army pre- 
pared a report disclosing appalling events. He reported that on October 29, 
1956, several air force officers of Horthy's army, who had served in World 
War II, led by Pal Nemeth, former lieutenant-colonel and chief of general staff, 
and former air force lieutenant-colonel Kazay, called at the headquarters of 
the national anti-aircraft forces, where they interfered with the direction of the 
air forces and demanded that the Hungarian air force should bomb the Soviet 
military units stationed in Hungary. This did not happen because even Bela 
Kiraly did not dare to wage a fight against the Soviet air forces. Just imagine 
the consequences of the realisation of the ideas and plans of these gentlemen 
for our country and especially for the population of the capital. 

In October 1956, Ferenc Nagy called me on the telephone and then came to 
Vienna. As the news of his arrival spread in a wide circle, and was published 
also in the press, he returned to Switzerland, following the advice of the Aus- 
trian Ministry of the Interior, which otherwise used not to be oversensitive 
on such matters. From there he again asked me by 'phone to go home and 
contact leading politicians of the Imre Nagy government to prepare his home- 
coming and to arrange for his appointment by Imre Nagy to represent Hun- 
gary in the United Nations. The necessary funds were brought to Vienna by 
one of his American friends, whom I knew only by his first name, Jimmy. I 
executed the commission of Ferenc Nagy. On November 3, I arrived by car in 
Budapest, where I conducted negotiations with Jozsef KSvag6, the then secre- 
tary general of the Smallholders' Party, Sandor Kiss, national director of the 
Peasants' Union, Jozsef Adorjan and other members of the Executive Commit- 
tee of the Smallholders' Party. "When I returned to Vienna I found out that 
the aforementioned American called Jimmy was a leading functionary of the 
Free Europe Committee. This made it clear to me that Ferenc Nagy had 
prepared his homecoming and his plans in cooperation with the Free Europe 
Committee and the U. S. Department of State. 

THE WESTERN POWERS ABE ORGANISING A NEW TTPRISING IN HUNGARY 

After the October events, at the end of November 1956, the organisation of the 
Hungarian Revolutionary Council was begun. This proceeded until the Stras- 
bourg congress in my flat at Stalzhammergasse 4/10. Vienna III. One of the 
official aims was the liquidation of the Hungarian National Committee, which 
had proved to be completely reactionary, because it had become more and more 
obvious that the old 6migr6s were not even willing to accept bourgeois 
democratic forms. 

The financial resources of the Strasbourg congress were provided by the MRP 
(French Catholic party), the Christian Democratic Union, and the French trade 
unions under government influence. The Council for Europe also contributed 
considerable sums. The Council for Europe supplied 500,000 francs for the con- 
gress. The French trade union mentioned, the Force Ouvri^re, contributed about 
the same amount. The French government donated one million francs for this 
purpose. 

An extremely sharp discussion took place at the congress whether the financial 
support of the Free Europe Committee should be accepted at all. Those in 
favour of accepting support argued that the Free Europe Committee was actually 
an organisation of the State Department and without the Americans it was any- 
how impossible to get anywhere. The resolutions passed at Strasbourg, how- 
ever, categorically stressed the responsibility of U. S. politicians and political 
organs for the events in Hungary. They also stressed as an irrevocable wish 
of the Hungarian people that, even in case of a possible change of regime in 
Hungary, the land reform, the nationalisation of large plants and factories, and 
social achievements in general, would have to be retained. Because of this the 
reactionary ^migrds classified the new ^migr^s as left-wing, even Communist, 
and the U. S. authorities declared them anti-American. The supporter of some 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES) 4853 

of the leaders of the revolutionary council, for instance Dr. Pal Jonas and 
Instvdn B. Racz, and their go-between as far as financial matters are concerned, 
is Frigyes Piski-Schmidt — Ferenc Nagy's son-in-law — who, according to his 
most intimate friends, was on the staff of the FBI. 

Later the Revolutionary Council became actually divided into two factions. 
The European faction enjoyed the support of various European governments and 
trade unions, and particularly that of the Council for Europe. It should be noted 
that by trade unions I mean the so-called yellow French trade unions. 

The faction in New York came completely under the influence of the State 
Department. The members living in the USA, such as Janos Horvath, explained 
to me personally in Vienna at the beginning of July 1957, that it was a prime task 
to convince the Americans that the aim of the Revolutonary Council was not 
anti-American, that it cooperated with American leadership, because it could 
obtain money only from the Americans, as even the funds we received from the 
Europeans and other countries were reaching us ultimately from the U. S. State 
Department. 

One of the most blatant examples of this is the money donated by Chiang 
Kai-shek, which also came from the Americans. On the first occasion the Rev- 
olutionary Council received a few thousand dollars from Chiang Kai-shek and 
later, according to Dr. Oliver Benjamin, it received 25,000 dollars for immediate 
expenses and 25,000 for use in Hungary. 

It became always more obvious that after the so-called revolution the restora- 
tion of the old, feudal reactionary social order would have taken place and even 
unquestionably the restoration of the Hapsburgs would have been attempted. 

The revival of the extreme right-wing Arrow Cross Regime would also have 
been attempted. There were various concrete indications of this. What were 
they? The Hungarian National Committee in the USA was not willing to accept 
even the most lukewarm bourgeois strivings or the demands championed by the 
Social-Democrats. The stationery and publications of this Hungarian Na- 
tional Committee featured the national emblem with the angels and the crown 
as a sign that they were in favour of so-called legal continuity, and in its com- 
position this organisation was also strongly feudal. 

This is proved by Miklos Kallay, former Horthy premier. Count Bakacs- 
Bessenyei, Count Hadik and the rest. Secondly, there are extreme Right, fascist 
elements among the members of the "Freedom Movement" led by Ferenc 
Kisbarnaki-Farkas and the Fraternal Community of Hungarian Fighters led by 
Andras Zako, who openly declared that the restoration of conditions under Horthy 
was the only way. 

Thirdly, the legitimists were and still are extremely active under the leadership 
of Otto of Hapsburg. In Vienna it was an open secret among emigre leaders 
that the Hungarian aristocrats had put aside about 200,000 dollars from the 
funds of the First Aid for Hungary organisation for their legitimist aims. 

Fourthly, the activity of the Arrow-Cross Party is growing, especially in 
Austria. The TJt ds C^l (Way and Aim) paper appearing in Salzburg is pub- 
lished in more than 10,000 copies. 

The refugee camps, their vicinity, but particularly the hostels for secondary- 
school students, are flooded with Arrow-Cross posters, slogans, leaflets and other 
publications. The money for these was supplied by big capitalists in West 
Germany, partly through the Kampfgruppe gegen Unmenschlichkeit, one of their 
organisations with headquarters in Hanover, a high-sounding anti-Communist 
organisation, and partly through the fascist emigres in South America, who 
supplied tremendous sums of money for this purpose through Countess Palffy, a 
member of a family known as an Arrow-Cross supporter, who was in Austria 
during the spring and summer of 1945. It should also be mentioned in this 
connection, fifthly, that the clerical wing of the emigres, who call themselves 
democratic, frequently stressed that the maintenance of democratic and social 
conditions was championed merely for technical purposes. 

According to the clerical emigres, after a change of regime in Hungary the 
restoration of private ownership was desirable and inevitable. If the worst 
comes to the worst, that is the nationalisation of landed estates and large plants 
were to be maintained, their owners have definitely to be compensated. Ac- 
cording to them if the October events had been successful, the regime in Hungary 
would have been a clerical one, somewhat similar to the Horthy regime. The 
composition and acts of the so-called old Emigres made it obvious that they were 
dreaming of restoring their own regime and were not willing to acquiesce in the 
democratic development achieved so far. 



4854 SCOPE OF SOVIET ACTIVITY IN THE UlSriTEI> STATES 

After the tragic October events one would have expected that these earlier 
6migr6s would at least have drawn the conclusion that the Hungarian i)eople were 
equivocally attached to democratic principles. But that is not what happened. 
The most rational, decent elements among the Emigres are to this day struggling 
in vain against the always more frequently manifest fascism of the reactionaries. 

It is almost impossible not to realise that those who perhaps struggled only 
to correct the mistakes, and also those who would have liked to bring about the 
bourgeois mode of life in Hungary, are being pushed more and more into the 
background. It is a sad fact that the tragedy of Hungary, especially of Budapest, 
for the old masters of Hungary was not enough of a lesson, and even so some 
of them are concerned with the organisation of a new rising. In reply to worried 
questions they always reply that a nation has to accept all sacrifices for its own 
future. True, it is easy for them to say this, as it is not they who have to make 
the sacrifice, but the children, women, and those whom they are irresponsibly 
involving in such actions, because such people can always be found. But the fate 
of these people usually leads to prison, and their success would mean for tens 
of thousands only death, or — at the very best — untold misery, which is the share 
of the refugees in the West now. 

The organisers of such action can obtain large sums of money under such 
pretences and, it appears, they are not much concerned how dear their nation 
would have to pay for their prosperity. 

On this basis and in the interest of this organisation the preparation of a 
new uprising in Hungary began early in 1957. Such preparations were made 
in various quarters ; as I have already mentioned, the British Intelligence 
Service and Bela Kiraly also played a role. 

Bela Kiraly's plans were supported by the U. S. military authorities. Ties 
between Kiraly and the U. S. leaders are so close that — and this happens only 
very rarely — the most secret and closely guarded weapons of the Pentagon were 
shown to him. 

Istvan Jankovics, a university lecturer, one of the members of the Executive 
Committee of the Revolutionary Council, in a confidential conversation at the 
end of the Strasbourg congress asked me, as the one responsible for Austria and 
one well acquainted with the situation in Austria, to help him obtain men. 
I was to select men from among the freedom fighters who would appear most 
suitable and send them to addresses in Italy and West Germany, which I was to 
be given. In reply to my enquiries, he told me that special, smaller camps were 
being maintained chiefly in Italy and West Germany where freedom fighters 
were being trained as leaders of a new rising. I asked him whether the leaders 
of the Revolutionary Council knew about this plan, because otherwise I was 
not willing to concern myself with this question. He then named B61a Kiraly, 
on behalf of whom he was doing this, and he called on me to address myself 
on this question to B61a Kiraly. 

Dr. Oliver Benjamin and Sandor Kiss, whom I told about this, were shocked, 
but were willing to accept that Kiraly was capable of doing such a thing. Later 
it came to my knowledge and I obtained certain proof that Bela Kirdly and his 
supporters were organising a new rising in Hungary. With the help of the 
Swiss secret service and the cooperation of the Schweizer Studentenhilfe they 
sent to Hungary their collaborator called Menzil, a Swiss high-school student, 
who made direct contact in Hungary with other still existing insurgent groups. 
The Swiss leader of this action was the Hungarian-born Kalman Sz611 (address: 
Basel, Reding Strasse 23). The Italian secret service also participated in this. 
Further, at the beginning of 1957, pocket tape recorders, silent revolvers to kill 
people unnoticed, large quantities of money were sent to Hungary. The Italian 
organs promised one million forints a month for an insurrection. The first 
instalment of one million forints was sent to the Italian legation in Budapest; 
perhaps the amount is to this day deposited there. It was also promised to 
send considerable quantities of arms and ammunition to certain addresses in 
Hungary. To avoid any misunderstanding, I should like to add that the quan- 
tities mentioned could be given only in lorry loads. 

The representatives of the Swiss students organisation repeated the authen- 
ticity of these statements in the presence of a number of people, including Dr. 
J6zsef Szentkuti, who is IstvSn Jankovic's brother-in-law, and who lives in 
Vienna, Pension Neuer Markt, and Lajos Sipos, an engineer, later B61a Kirdly's 
representative in Austria ( address : Vienna VI, Webbgasse 40) . 

At the beginning of June 1957 B61a Kirdly held a meeting of freedom fighters 
in the private room of the Kiss Restaurant in Richter Gasse, Vienna, in which 
about fifty people took part. A great many of the participants were former army 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4855 

officers. B61a Kiraly announced that he would place Ferenc Vidovics in com- 
mtind of the freedom fighters' organisation in Austria. He also announced that 
the Freedom Fighters' Association organised by him had been guaranteed its 
funds by the Americans. In his speech he referred to the grandiose plans of 
the organisation for which the necessary money had been obtained. 

Later I learned from his associates that negotiations were in progress with 
the >;AT0 high command concerning the setting up of a division consisting of 
Hungarian emigres within the frame of NATO. It is moreover said about 
Eela Kiraly in emigr<§ circles that he intends to buy an estate in the United 
States. 

I know the poverty in which refugees are living in Austria and in other coun- 
tries. Involuntarily the question arises, how Bela Kiraly has obtained the money 
for such a purchase. 

Bela Varga supplied new proof about the preparation in Hungary for a new 
rising in a speech he made at the beginning of this March to a meeting of a 
women's organisation in the USA, when he announced to a large audience that 
he had certain knowledge about a large-scale rising in Hungary beginning on 
March 7th. As his source of information he gave his close contacts as president 
of the Hungarian National Committee with the organisers and leaders of the 
underground movement in Hungary. 

The intelligence and diversionist activity not long ago of Ferenc Domotor, a 
former colonel, was also intended to incite a new rising. In the form of proof, 
the address of Ferenc Domotor is Modling, Goldene Stiege 10, and his cover 
address is Elek Takacs, Wien II, Ens Gasse 3. 

Sandor Keszkenys, born in Kalmancsa, at present a refugee, said in August 
of this year that thanks to the intermediary of Fei'enc Vidovics, he had come 
into contact with former colonel Ferenc Domotor who, by appealing to patriotism, 
had asked him to participate in activity organised by him in Hungary. He 
told Keszkenyos that should he undertake this task he would be given many 
v.eeks of training in Austria and Morocco. This means that Ferenc Domotor 
probably receives the funds for this from Spanish quarters, as this is indicated 
by the facilities available in Morocco. Ferenc Domotor's financial position 
is so favourable that, among others, he already has a 3,000 dollar worth Lancia 
sports car at his disposal. 

At Wirten in Austria there is to this day a youth camp housing altogether 100 
Hungarian boys. The oldest of these children is eighteen. The discipline and 
morals of these boys is absolutely terrible. A whole book could be written 
about this. According to a statement by one of the boys' wardens it is the plan 
of the Americans to ship them shortly to the U. S. A., where they are to be 
trained in a military school as officers for a national army at a later stage. 
According to these plans four of the present wardens would be shipped together 
with the boys. 

How did the special committee of the United Nations work in Vienna? 

THE POSITION OF HUNGARIAN BEFUGEES IN THE WEST 

As I have already stated in my introduction, these events led finally to my 
Opposition to them and my return home, facing my responsibility for everything 
I deserve. 

In my decision I was given the final impetus by the events in connection with 
the work of the so-called Special Committee and the inscription of the Hun- 
garian question on the agenda of the special session of the U. N. General Assem- 
bly. I know I am repeating myself, but I cannot stress enough that I consider 
all this an irresponsible renewed excitation of the atmosphere, which I am con- 
vinced may have helped many, but can only harm the Hungarian people. 

It is known that the Special Committee examining the so-called Hungarian 
question as appointed by the General Assembly of the United Nations arrived in 
Austria in the spring of 1957. Before its arrival Ferenc Vidovics, Gabor 
Havash, Lajos Sipos and I were asked in letters signed by Anna K6thly and B61a 
Kiraly to collect data for the committee and to recruit witnesses. In their letter 
they pointed out that witnesses should be presented to the committee who would 
prove Soviet intervention, the cruelty of Soviet soldiers and the AVH, and prove 
that the rising had been spontaneous and democratic. Only Gabor Havash among 
those asked was willing to do this. The rest of us had considered the work of 
the committee irresponsible from the start. In fact Gabor Havash was of the 
same opinion. Apart from Gabor Havash, Dr. Tamas Pasztor, and Tibor Pfisztori 
collaborated with the committee. In any event. Dr. Tamas Pasztor could not 



4856 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

have had complete knowledge of the events, because on November 1st, or the 2nd 
at the latest, he had left Budapest for Vienna. At least, when I returned on the 
3rd to Budapest he was already in Vienna posing as the special revolutionary 
delegate of the Smallholders' Party. Moreover, many of the emigres accused 
him of having tried to obtain advantages during his years in prison by being an 
informer, which he himself admitted in written statements. Tibor Pasztori is 
quite a young man, who first introduced himself as secretary to Zoltan Tildy. 
In August 1957, however, during the conference in Alpbach of the Oester- 
reichisches College, where such well-known personalities as, for instance. Nobel 
Prize winner Professor Schroder, and Halstein, West-German Secretary of State 
for Foreign Affairs participated, he already said he had been Secretary of State 
for Finance in the Imre Nagy government. 

Those who appeared as witnesses for the committee had to go through various 
screenings. First of all, they were questioned by Dr. Tamas Pasztori and he 
only allowed those to pass whose testimony would be desirable only to western 
quarters. The second testimony was taken by Hungarian-born employees of 
the committee and witnesses could appear before the committee only then, after 
satisfactory preparation. The refugees themselves stressed that those who went 
to give testimony were, with few exceptions, attracted mainly by the prosi)ect of 
a fee. In general, the witnesses received about 200 schillings a day, which amount 
equals the wages for 20 hours of a good skilled worker. Indicative perhaps of the 
composition of the Hungarian staff, in addition to the above, is the fact that 
Count Gyorgy Sz^chenyi worked as a sort of secretary. On the whole a strong 
political bias, financial situation and social standing was presupposed in the 
case of those who appeared as witnesses. The committee was not objective 
either as far as taking testimony is concerned. According to those present during 
the investigation, for instance Laszlo Bereczky, Tamas Pdsztor and others, the 
delegate of Ceylon on a number of times doubted the testimony and asked various 
questions. According to Bei'eczky the Ceylonese delegate qualified certain of his 
statements during the hearing as incredible and he objected to them. The chair- 
man of the committee, Mr. Andersen, who obviously was sympathetic toward the 
witnesses and their far from objective statements, on such occasions always 
interrupted on behalf of the witnesses to smooth over the situation. 

In general, the attitude of the West over the past ten years and during the 
autumn events made a decisive influence on the trend in Hungary's position. 

Almost all witnesses in their written statements and recordings expressed their 
decided opinion that the West, and primarily the USA, was heavily responsible 
for the Hungarian catastrophe. Moreover, Tamds Pdsztor complained to me when 
discussing this activity that he had done everything to find members who could 
prove the deportations, however, he had not foimd anyone who had in his pos- 
session acceptable facts. On this count the committee members also had their 
doubts and from time to time put questions indicating these doubts. On such 
occasions, as I have been informed by Tamas Pasztori and others, chairman 
Andersen saved the face of the witnesses. As far as I am concerned I should 
like to say that the special committee of the U. N. acted incorrectly and is open 
to attack by its unfortunate disregard for strict adherence to objectivity, so 
important for an international organisation. Instead of selecting the witnesses 
to be heard themselves, let us say by choosing 40 persons at random from a 
camp, the committee members entrusted the selection of witnesses to Emigres 
when it was obvious that it was in the interest of the latter to collect only wit- 
nesses who would give incriminating testimony. Taking into consideration the 
circumstances under which the report was compiled, the Special Committee of 
the U. N. can hardly refute the allegation of the Hungarian Government, namely, 
that this report is nothing else but a fake. I therefore consider it necessary to 
state, as I have already said, that in my view the report arrived at in this way 
is suitable exclusively to sustain and stir up tension, that is the upholding of 
a situation which means only suffering to the Hungarian people. 

I also consider it necessary to state the following: I was concerned with the 
affairs of the refugees. Those who know me are well aware that my flat was open 
from early morning until late at night to those in trouble and worried, and they 
know how many called on me every day, every hour, people who brought me 
their life full of pain, need, and fear of the morrow. Those who knew me are 
well aware of how much I suffered on account of the unsolved problems of dis- 
tressing human fate. Believe me, there is no more terrible feeling than to know 
about the justified complaints harassing others, to see tbeir tears or dumb lips 
compressed in bitter silence, and to be impotent. There was a time when many 



SCOPE OF SOVIET ACTIVITY IN THE UlSnTED STATES 4857 

of our unfortunate Hungarian compatriots tried to find a way out by attempting 
suicide. Sucti facts could not be kept secret. But, unfortunately, no one con- 
sidered it important, and tbe U. N. itself does not consider it important even 
today, to investigate these facts and to appoint a committee to remedy them. 

I am telling you this because I know that a few people spoke about their sorry 
fate in front of the Special Committee, but this committee ignored this with 
the excuse that it was not in their terms of reference to concern itself about such 
things. Perhaps in their minutes some reference to this is made. Nor should 
the fate of refugees in the Dominican Republic be left unmentioned. I feel I 
have to speak about this, because I was the one who wrote in good time, in 
spring this year, articles about this question in the ^migr6 newspaper Nemzetor 
(National Guard). I described the horrors published in the U. S. magazine 
Harpers at the end of 1956 about the Dominican Republic and its social condi- 
tions. I succeeded with this article so that only 600 instead of the 20,000 Hun- 
garians as planned went to the hell in the Dominican Republic. In letters smug- 
gled out under risk of their lives they are pleading for help. These letters, which 
can be found in the editorial oflSces in Vienna of the Emigre papers Magyar HIrado 
(Hungarian News) and Nemzetor, are highly revealing and to anyone who is a 
humanitarian they are deeply shocking. 

Do you know what has become of the 600 cheated and sold Hungarians? They 
were taken to the jungle adjoining Haiti like veritable slaves. They live in 
palm-leaf huts, their nourishment is below the subsistence level, and they are 
taken ill by the humid heat and malaria. Only those on their death bed see a 
doctor. Altogether 300 have protested and demanded their return to Austria. 
All this can be read in their letters. They were sent to penitentiaries and their 
Austrian passports were confiscated. Those who complained are abducted and 
never seen again. 600 Hungarians, women and small children, have become 
slaves in the middle of the Twentieth Century. I heard that a few weeks ago 
about 200 of these unfortunates were after all returned to Austria. I ask those 
who have a chance to question them about the difference between the promises 
made and reality. Ask them about their life in the Dominican Republic, the 
same country which spouted about humanity and against oppression in the United 
Nations. I ask you again to convince yourself of the truth of my statement and 
to fight in your papers to save the 400 Hungarians still there, Hungarian or 
foreign, and' also so that the U. N. and its General Assembly send there a special 
committee. There would be plenty of reason for this, but it would have to be 
done before it is too late, while these unfortunate people are still alive. 

As far as the special session of the U. N. General Assembly that started on 
September 10th is concerned, I should like to say that in the name of the 
Hungarian National Committee Zolt^n Pfeiffer circularised a letter in which 
he stressed that the Special Committee report should be supplemented with facts 
of Soviet interference in Hungary in 1957. He enclosed a questionnaire with 
his letter, most of the questions of which were of such a nature that after 
reading through, Anna K6thly herself, in front of me, said that this was straight- 
forward espionage. During the same conversation she said that although she 
was in favour of a change of regime in Hungary, she in no way wanted to pay 
the price of a white terror following such a change. She said that she had lived 
through a white terror in Hungary, and under no circumstances wished for 
another one. The almost open propagation of future aims of Hungarian reaction 
in the West and the intensive organisation of fascism were causing her grave 
concern. I stress, these are not my words, but Anna Kethly's. 

Further Gabor Havash, the Vienna representative of the IBFG, Anna Kethly's 
confidant, in our talks stated that the policy of the Emigres was sharpening the 
situation. As a result of it people at home are being imprisoned and, in his 
opinion, as well, a realistic policy of the emigres would be a preparation to 
return home in some acceptable way. 

The facts and events presented by me, which can be proved, and which are 
actually only a small fraction of what I have seen, are ample to make every 
thinking, decent person, sincerely concerned about the fate of his people, recon- 
sider his stand. On my part, I do not wish to say much more, because I feel 
this is ample. 

If you have any questions, and there is opportunity, I shall be glad to answer 
them. I should like, however, to use this chance to address from here those 
who shoulder responsibility for the fate of individuals and peoples, and of the 
whole world. From here I ask the United Nations not to allow the General 
Assembly to be used to sanctify actions which would only lead to further suffering 
and sacrifice by the Hungarian people. 



4858 SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 

I also have a request to the governments of the West. Today, in the age of 
the hydrogen bomb, missiles, and other terrible weapons of mass destruction, 
the whole of mankind, including my people, are living with a terrible danger 
hanging over their heads. The social structure of certain regimes can certainly 
be questioned. But this is not the primary question of today ; more important 
is the protection of peace and of human life itself from extinction. I consider 
it necessary in my present position to appeal to the social organisations, Hun-, 
garian politicians irrespective of their party affiliations, and even the Hungarian 
government, concerning the fact that tens of thousands of Hungarians cut off 
from their families are living in various parts of the world. To the best of 
their ability, they ought to contribute to helping that these can return to their 
parents, wives, and children, and again find their place in the country's busy 
life. 

And, finally, I should like to say a few words to the Hungarian people, irre- 
spective of whether I acted correctly or incorrectly, but at all times I was out 
to represent the interests of my people in accordance with my conscience and 
conviction and for this I always made sacrifices. I love my country and people 
from whom I stem and this love prompts me to convey this message. It is tbp 
only important approach, almost the historic task of the Hungarian people, not 
to pay credit to any enticing promise or the phrases hackneyed to satiety, and 
not to allow themselves to be driven into any adventure. The peoples who 
have constant faith in the present and future, who are diligent, active, and con- 
sistent in desiring peace, remain and grow stronger, others are swept off the 
face of the earth by war. 

By returning home and telling of my experiences and opinion, I wished to 
contribute to saving the peace and tranquillity of my people and country. I 
feel I have attained my aim by making this statement and I thank the Hun- 
garian authorities for having enabled me to do this. I hope the Hungarian 
people will develop and grow in prosperity. 



The journalists present at the press conference then put several questions to 
Mr. Szabo. Here are some of these questions and Mr. Szabo's answers. 

Question. What kind of relationship exists between the Hungarian National 
Committee and the Strasbourg Council? What is B^la Varga's connection with 
the Strasbourg Council? Could you say anything more about the relations 
between the Strasbourg Council and Radio Free Europe? 

Answer. Perhaps this is neither the place nor the time to dwell in detail 
on questions about which actually volumes could be written. Suffice it to men- 
tion that the Hungarian National Committee is to be considered as more or 
less nonexistent, since the U. S. authorities stopped their financial support at 
the end of July this year. This fact, however, has been the result of a long- 
standing and serious struggle of the Emigres, which in practice is going on also 
as present. The relationship between the Hungarian National Committee and 
the so-called Hungarian Revolutionary Council can best be expressed by the 
fact that the Hungarian National Committee, which receives from some U. S. 
quarters ample reward for its activity, in defence of this support launched 
violent attacks against the new ^migr^ organisation. 

These attacks were diverted along personal and organisational lines. B^la 
"Varga, who was the president of the Hungarian National Committee, took part, 
of course, in the direction of these actions, which were often — and I might say, 
always — contrived by rather base means of human behaviour. Ferenc Nagy, 
however, belonged to the Strasbourg group. Recently the question has been 
raised of creating an 6migr6 top organisation of leaders of the old and the new 
Emigres. This had brought no results up to my return, because personal quar- 
rels have been going on for the different leading positions. This is what I can 
say in answer to the question. 

Question. I would like to ask whether there are such persons abroad — of 
course, without giving their names, who, like you. have grown disgusted with 
the situation there and perhaps would like to come home. What do they expect 
the Hungarian Government to do? 

Answer. I feel the most precise and positive answer to this question would be 
that homecoming is a constant problem, an everyday topic of the ^migr^s. Well. 
there is a broad scale of ideas about returning home. Among the leaders of the 
new ^migr^s there are many who have woken up to reality and are disillusioned, 
while under the impact of the past twelve years at home — wherever they might 



SCOPE OF SOVIET ACTIVITY IN THE UNITED STATES 4859 

have spent those years, even if they were in prison — and who have felt and feel 
now that abroad they have not found that world for which they wished to fight. 
These people, but particularly those masses who are still now dragging an 
unbearable life in the camps of Canada, Italy, or Austria, would gladly come 
home if they were not afraid of what would happen to them. I think some 
reassuring statement or facts would be conducive to prompting these people to 
carry out their concealed, often secret intentions. 

Question. Could you supply us with any information on the children under age 
who absconded from the country? It is known that very many unfledged and 
rash children have left the country. A great part of them would like to come 
home, and their parents also desire so. We have very serious problems in arrang- 
ing for their repatriation. 

Answer. I am going to answer this question all the more gladly, as it raises a 
problem which was sore spot for me also abroad. The fate of youth in emigra- 
tion is rather bitter, often catastrophic. It is so not as far as their financial 
situation is concerned, but from the moral point of view. As regards the moral 
situation of the boys, and especially of the minor girls, I could not even say that 
they are going downhill, for they are far beneath the hill. These young people 
will become either criminals or prostitutes, at least the present circumstances 
are indicative of this trend. 

All I can say in connection with the return of the minors is that the rumour 
has been spread abroad — presumably in a tendentious way — according to which 
the Hungarian Government exerted some pressure on the parents to request the 
repatriation of the minors, and these children are told that their parents do not 
want them to return, but they cannot do otherwise. I hold the opinion that, 
irrespective of what anyone may think, these children ought to be repatriated, 
for — come what way— they would be much better off at home with their parents 
than abroad. 

It may be a convincing example of the situation of our youth abroad if I say 
that the refugees arriving to the camps in Austria were compelled to sleep not 
only in common rooms, but in a common bed under the pretext of the lack of 
places, and this was done, irrespective of sex. This situation still exists. One 
must go to a camp in Austria and see who are living there side by side and 
under what circumstances. This cannot be considered at all satisfactory for the 
youth from the moral point of view. 

In the Hirtenberg camp, for instance, about which I said a few words in my 
statement, there are ISO children under age. It occurred more than once that 
during the night a knifing duel took place in consequence of which one of the 
children got eight wounds and lost one and a half litres of blood. I think no 
more comment on the situation of the youth is necessary. 



INDEX 



Note. — The Senate Internal Security Subcommittee attaches no significance to 
the mere fact of the appearance of the name of an individual or an organization 
in this index. 

A 

Page 

Adonyi-Narody, Ferenc 4849 

Adorjan, Jozsef 4852 

Amtorg 4843 

Andersen, Mr 4856 

Anti-Communist meeting 4819 

Anti-German 4775 

Anti-Semitic 4775 

Arbatsky Square (Moscow) 4837 

Arrow Cross Regime 4853 

Austria 4772, 4775, 4782, 

4787-4791, 4794, 4796, 4844, 4845, 4847-^850, 4853, 4855, 4857, 4859 

Austrian 4770, 4782, 4785, 4792, 4830, 4835 

Austrian camps 4790 

Austrian Ministry of the Interior 4848, 4849, 4852 

Austrian Social Democrat Party 4787, 4790 

AVH 4855 

AVO 4790, 4791, 4793 

B 

Bacon (cover name) 4812 

Badeau (cover name for Dunford Smith) 4803, 4804 

Bagley (cover name) 4804, 4812 

Bakacs-Bessenyei, Count 4853 

Baky, Laszlo 4773 

Balaton-Endrez 4778 

Balaton-Szeedi 4781 

"Bauhidy" 4772 

Bankupy, Geza 4790 

Batyka, Janos 4846 

Bede, Istvan 4852 

Belgium 4835, 4850 

Benjamin, Dr. Oliver 4792, 4853, 4854 

Bennett, James V. (Director, Bureau of Prisons) 4843 

Berchtesgaden 4845, 4846, 4848 

Bereczky, Laszlo 4856 

Beria 4827, 4836 

Berlin 4827, 4835 

Berlin, East 4795, 4835 

Biedor (cover name) 4812 

Blagonaroff 4802 

Bolyai, Tibor 4849 

Borsanyi, Julian 4852 

British citizen, convicted 4807 

British Intelligence Service 4847, 4854 

Brothman, Abraham 4843 

Budapest 4769, 

4770, 4772, 4777, 4779, 4781, 4783, 4786, 4788, 4789, 4795, 4843, 4844, 

4847, 4852, 4854, 4856. 

Bureau of Prisons 4843 

Burgenland 4844 

93215— 58— Pt. 86 7 I 



H ESTD'EX 

c 

Page 

Canada 4798, 4800-4802, 4805-4817 4845, 4859 

Canada, Prime Minister of 4812 

Canada, United States Ambassador to 4801 

Canadian Ambassador (Moscow) . 4812 

Canadian citizens, convicted 4807 

Canadian Government 4804, 4807. 4808 

Canadian Government Royal Commission 4807, 4808, 4812 

Canadian National Research Council 4804, 4805, 4807, 4812 

Canadian scientists 4800 

Catholic Church 4836 

Central Workers' Council 4846 

Cagy, Jollan 4790 

CheKa (secret police) 4835 

Chemurgry Design Corp 4843 

Chiang Kai-shek 4853 

Christian Democratic Union 4852 

Christian Party 4848, 4851 

CIC 4845, 4846, 4848-4850 

Communist(s) 4770, 4774, 4775, 4777. 

4778, 4780, 4781, 4700. 4791, 4793-4799, 4801-4803, 4807, 4808, 4821, 

4826, 4828, 4834, 4839, 4840, 4844, 4847, 4852. 

Communist Government in Hungary 4790 

Communist Party 4780, 4789, 4790 

Communist Party, Central Committee of 4825 

Communist Party Soviet Union, Central Committee of 4795 

Comsomol (young Communist organization in Russia) 4810 

Council for Europe 4852, 4853 

County Somogy (Hungary) 4780, 4781, 4848 

Cox, H. A. (associate warden. Lewisburg prison) 4843 

Cseko, Matild ^ 4847 

Csiki, Gyula 4846 

Cultural Institute of Hungarian Refugees 4844 

Czechoslovakia 4846 

D 

Daroczy, Taszilo 4845 

Democratic Party in Hungary 4774 

Denmark 4835 

de-Stalinization 48.31 

Dominican Republic 4857 

Domotor, Ferenc 4855 

E 
Eastman Kodak 4843 

Eckhardt, Tibor 4769-4775, 4848, 4840 

Testimony of 4769-4775 

Egypt 4797 

Eisenhower, President 4799, 4800, 4805, 4807, 4808, 4811, 4813 

Elbe River 4795 

Emigres wore l^tilized for Purposes Contrary to the Interests of the 

Hungarian Nation, by Miklos Szabo 4843-4859 

Endre, Laszlo 4773 

English joiu-nalists 4823 

English Parliament 4823 

Espionage agents 4841—4843 

Espionage, objects of : 

Absolute ethyl alcohol 4842 

Aerosol container for spraying DDT 4843 

Amyl acetate 4842 

Amyl butyrate 4842 

Atomic airplane 4841. 4842 

Buna S (a type of synthetic rubber) 4843 

Butyl acetate 4842 

Diethyl oxylate 4842 



INDEX im 

Espionage, objects of — Continued Pase 

Ethyl chloride 4842 

Flares and tracer bullets 4843 

Guided missile 4842 

Lacquer and varnish solvents 4842 

Magnesium powder 4843 

Nylon, manufacture of 4843 

RDX explosive 4843 

Space platform 4841 

Synthetic normal butanol alcohol 4842 

Espionage ring, contact points : 

Bronx Park Zoo, New York 4842 

Chappaqua, N. Y 4841 

Knickerbocker Village, Monroe Street, New York 4841 

East Side in the Forties, New York City 4842 

Queens-Flushing Line of the BMT, 90th Street Station 4842 

Eszterazy, Duke Laszlo 4850 

Europe 4781, 4794 

Eastern and Western 4798 

Exhibit No. 522 — -Medical memorandum re hospitalization of Nikolai 

Khokhlov, dated October 9, 1957 4822 

Exhibit No. 523 — Article, Heroism of a Russian Woman, by N. Khokhlov, 

in April 25, 1954, issue of Russian-langauge weekly, Posev 4834-4836 

Exhibit No. 524 — Memorandum dated October 16, 1957, re staff level inter- 
view with David Greenglass and Harry Gold at Lewisburg Penitentiary 

on October 15, 1957 4841-^843 

Exhibit No. 52.5 — Letter to Herald Tribune, September 1, 1957, p. 4, from 
Bela Fabian, member of the executive committee, Hungarian National 

Council re Ferenc Vidovits [sic] 4770 

F 
Fabian, Bela : 

Testimony of 4769-4775 

Interpreter for Ferenz Vidovics 4778-4794 

Ferihegy 4779 

Festetich, Count 4850 

Fifth column (Soviet) 4808, 4809, 4816 

First Aid for Hungary (organization) 4772. 4848, 4853 

First earth satellite 4799, 4805-4817 

Foley Square, New York City 4769 

Force Ouvriere (French trade union) 4852 

France 4787, 4791, 4835 

"Francis" 4772 

Frankfurt (Germany) _ 4818, 4819, 4821, 4822, 4834, 4836, 4840 

Frankfurt, American consulate in 4820, 4821 

Frankfurt, University of 4819, 4820 

Fraternal Community of Hungarian Fighters (MHBK) 4849,4853 

Free Europe Citizen Service 4848 

Free Europe Committee 4772,4852 

Freedom Fighters 4770-4773, 4786, 4795, 4798 

Freedom Fighters' Association 4855 

Freedom Party 4784 

French Catholic Party (MRP) 4852 

French Government 4852 

French Intelligence Agency 4849 

Fuchs, Klau.s 4842 

G 

Gehlen organization 4847 

German (s) 4775, 4804, 4819^4824, 4827,' 4834 

German-Austrian desk 4818, 4825 

Germany 4779, 4787, 4791, 4818, 4827, 4835, 4848 

East 4830 

West 4818, 4819, 4825, 4828, 4836, 4845, 4846, 4848, 4850, 4851, 4853, 4854 

Germany, West, Attorney General of 4821 

Gertza, Mr 4794 



IV ESTDEX 

Pago 

Gestapo 4779 

GGGD 4828 

Gold. Harry, memorandum dated October 16, 1957 re staff level interview 

with, October 15, 1957 (exhibit No. 524) 4841-484.3 

Golden Star of Motherland War (medal received by N. Khokhlov) 4829 

Gouzenko, Iffor 4798, 4799, 4801-4817 

Robert Siegrist news .story about 480.5^?06 

Transcriptions of recorded interviews between Gouzenko and 

Siegrist 4806-4817 

Gouzenko five-point program 480.5-4817 

Grabenar, Ferenc 4846 

Graz 484S 

Greenglass, David, memorandum dated October 16, 1957, re staff level inter- 
view with, October 15, 1957 (exhibit No. 524) 4841-4843 

Griffiths, Mr. (American Chief of Rado Free Europe, Munich) 4851 

Guided missiles 4808, 4812, 4816, 4842 

H 

Hadik, Count 4853 

Haiti ^ 4857 

Hajdu, Janos 4849 

Halstein, Mr. (West German Secretary of State for Foreign Affairs) 4856 

Harden, Mr 4791 

Harpers (magazine) 4857 

Havash, Gabor 4855, 4857 

Hearst newspai)er 4799 

Help organization 4787 

Hendrick Manufacturing Co 4843 

Herald Tribune, September 1. 1957, page 4, No Visa, Mystery Surrounds 

Case of Vidovits [sic] (exhibit No. 525) 4769, 4770 

Heroism of a Russian Woman by N. Khokhlov in April 25, 1954 issue of 

Russian-language weekly. Posev (exhibit No. 523) 4834-4.S36 

Hertzel, Mr 4792, 4793 

Hertzolg, Karl 4790 

Herzak, Karl (see also Hertzolg. Karl) 4790 

Hirtenberg camp 4859 

Hofbauer, Josef (name once used by Khokhlov) 4829, 4830 

Holczner, Konrad 4845 

Holland 4835 

Holston ordnance works (Kingsport, Tenn.) 4843 

Hoover, President 4772 

Horthy 4852 

Horthyist (Hungarian Fascist) 4795, 4849 

Horvath, Janos 4853 

Hungarian (s) 4773, 

4780, 4783, 4788-4790, 4792^798, 4850, 4854, 4855, 4857, 4858 

Hungarian Army 4797 

Hungarian Assistant Secretary of Interior 4773 

Hungarian Assistant Secretary of State 4773 

Hungarian Communist(s) 4793, 4794 

Hungarian Communist Party 4773, 4789 

Hungarian Culture Party (Hungarian Educational League) 4783 

Hungarian Educational League 4783 

Hungarian frontier : 4772 

Hungarian Government 4780, 48-56. 4858. 4859 

Hungarian Landholders Party. (See Small Landholders Political Party.) 

Hungarian Legation (Vienna) 4777, 4791 

Hungarian Manifesto 4798 

Hungarian Ministry of the Interior 4770, 4847 

Hungarian National Committee 4844, 4852, 4853, 48-55. 48-57. 48-58 

Hungarian National Council 4770. 4772. 4774 

Hungarian National Council, Executive Committee of 4770 

Hungarian Parliament 4770, 4793 

Hungarian Prime IMinister 4784 

Hungarian Revolution 4770, 4772. 4777, 4781, 4794-4797. 4831 

Hungarian Revoluntionary Council 4844, 4851—48-54, 4858 



IXD'EX V 

Page 

Huugarian secret police 4770, 4791, 4793, 4794 

Huugarian Social Democrat Party 4783-4785, 4792 

Hungary 4770, 4772-4775, 4777, 4780-4782, 4788-4791, 4793-4797, 4843-4857 



IBFG 4857 

Immigration Department 477U, 4778 

Incze, Dr. Istvan 4851 

Information Bureau of the Council of Ministers of the Hungarian Peo- 
ple's Republic 4843 

INS (International News Service) 4799, 4805 

Intercontinental ballistic missiles 4808, 4812, 481G 

International Geophysical Year . 4803 

International Rescue Committee 4789, 4790 

International Research on Communist Techniqvies, Inc 4794 

Italian Ambassador (Vienna) 4850 

Italy 4854, 4859 

J 

Jankovics, Istvan 4854 

Jesuit High School (Kalocsa, Hungary) 4778 

Johnston, Hon. Olin D 4769, 4777 

Jonas, Dr. Pal 4853 

"Joseph" 4773 

Judiciary Committee, Senate 4769 

Justice, Department of 4778 

K 

Kadar (Prime Minister of Hungary) 4784 

Kadar government 4793, 4797 

Kaiserhof Hotel (Vienna) 4849 

Kallay. :\Iiklos 4853 

Kasa, Ferenc 4851 

Katona, Jozsef 4846 

Kazay. Mr 48.52 

Kersten. Charles ___ 4801, 4802, 481-5-4817 

Recorded interview with Igor Gouzenko 4815^817 

Keszkenys, Sandor 4855 

Keszrhelyi, Sandor 4845, 4850 

Kethly. Mrs. Anna ___ 4782, 4785, 4786, 4855, 4857 

Khokhlov. Nikolai Evgenivevitch 4818-4841 

Care of International Research, Inc., 55 West 42d Street, New York, 

N. Y 4818 

Born, Gorki, Russia 4S1S 

Defected to the West, February 1954 4818 

Memorandum, October 9, 1957, re hospitalization (exhibit No. 522) 4822 

Khokhlova (Khokhlov) Elena 4834 

Khrushchev 4796, 4802, 4816, 4817 

Kiraly, Gen. Bela 4784, 4852, 4854, 4855 

Kisbarnaki-Farkas, Ferenc 4853 

Kiss Restaurant (Vienna) 4854 

Kiss. Sandor 4S.52, 4854 

Kline. Mr 4792 

Konkoly, Kalman ("Kuci") 4850, 4852 

Kopcsa, Sandor 4847 

Korea 4,S.50 

Kornis, Louis E. : Interpreter for Ferenz Vidovics 4778-4794 

Kosice prison 4846 

Kovacs, Istvan 4846, 4850 

Kovago, .Tozsef 4852 

Krause, Fran 4847 

Kravchenko, Mr 4832 

Kremlin 4795^ 480.5, 4806, 4829 

Krivitsky, death of 4827 

Kruglov. ilinister 4836 

Kube, Wilhelm 4834 



VI INDEX 

L 

Page 

Leaver, Colonel (United States Army hospital, Frankfurt, Germany) 4822, 4823 

Lengyel, Gen. Bela 4772, 4774, 4848, 4850 

Lewisburg Penitentiary 4841, 4843 

Liechtenstein, Prince 4850 

London 4822, 4846, 4847 

M 

Magyar Hirado (Hungarian News) 4857 

Magyar Kozosseg (Hungarian secret society) 4773 

Mandaczko, Gyula 4846 

Mandel, Benjamin 4769, 4777, 4841 

Matrai, Laszlo 1 4846, 4847 

May, Dr. Allan Nunn 4807 

Mazanik, Galina 4834 

Mazerall, Edward 4804 

McManus, Robert 4777 

Menzil 4854 

Mikoyan 4795 

Military Engineering Academy 4809, 4810 

Military Intelligance Academy 4809, 4810 

Milwaukee Sentinel, The 4799 

Ministry of National Security (MGB, Russia) 4818, 4835 

Missile system 4799, 4811, 4812 

Morocco 4855 

Morris, Robert 4769, 4777, 4841 

Moscow 4795, 4802, 4804-4817, 

4823, 4825, 4828-4831, 4S34r-4837, 4840, 4841 

Mozdsanovszky, Frau Thea 4847 

Munich (Germany) 4845, 4846, 4848 

Munich, University of 4778 

MVD 4796, 4825, 4834-4840 

"Mystery Surrounds Case of Vidovits'' [sic]. Herald Tribune, September 

1, 1957, (exhibit No. 525) 4770 

N 

Nagy, Mr 4785, 4786 

Nagy, Ferenc 4782, 4844, 4848, 4849, 4852, 4858 

Nagy government 4795, 4797 

Nagy, Gyorgy 4845 

Nagy, Imre (Prime Minister) 4775, 4850-4852, 4856 

Nagy, Mihaly 4848 

National Advisory Commission for Aviation 4842 

NATO 4855 

Naumov, Dr 4825 

Navy 4842 

Nazi(s) 4770, 4774, 4775, 4779, 4780, 4794 

Nazi society (secret) 4773 

Nemeth, Miklos ("Micki") 4848 

Nemeth, Pal 4852 

Nemzetor (publication. National Guai'd) 4857 

New York, N. Y 4769, 4822 

New Zealand 4848 

"Niki" 4850 

NKVD 4834, 4835 

NTS (Russian emigree organization) 4818, 4821, 4833, 4835, 4836 

O 

Okolovitch, Mr. Georgii Sergeevich 4825, 4827, 4830, 4833, 4836, 4838 

Olevitzky, Andras 4847 

Operation "Rhine" 4828 

Ottawa (Canada) 4806, 4811, 4813, 4816 

Otto, King (of Hapsburg) 4850, 4853 



iN-DEx vn 

p 

Palffy, Count 4848 

Palffy, Countess 4853 

Panyushkin (former Soviet Ambassador to United States and Chief, Intel- 
ligence Division of MVD 4824, 4836 

Paris 4833 

Pasztor, Dr. Tamas 4786, 4855, 4856 

Pasztori, Tibor 4855, 4856 

Pattern of Soviet Espionage, The, a news story by Igor Gouzenko as 

told to Bob Siegrist 4805, 4806 

Peasants' Union 4852 

Pennsylvania Sugar Co 4842 

Permanent Mission of the Hungarian People's Republic to the United 

Nations 4843-4859 

Pfeiffer, Zoltan 4857 

Piski-Schmidt, Frigyes 4853 

Poland 4846 

Pos(s)ev (Russian-language weekly) 4833, 4834 

Pravda (publication) 4808, 4809 

Presidium (Communist Party) 4829 

Press Release, October 9, 1957, Statement by Miklos Szabo 4843^859 

Procurement Division of the Air Corps, Philadelphia Branch of 4842 

B 

Racz, Instvan B 4853 

Radio Free Europe 4845, 4847, 4850, 4851, 4858 

Radio Free Europe, Vienna office of 4845 

Rajk, Laszlo (onetime Hungarian Minister of Interior) 4770 

Rakeczi, Janos 4849 

Rakoczi, Janos 4845, 4851 

Rakosi 4770, 4773, 4780 

Red Army 4803-i805 

Reiss, death of 4827 

Rimoczi, Ervin 4846 

Rosenberg!, Julius 4841^842 

Rudin, V. N., president. International Research on Communist Techni(iues, 

Inc., Significance of the Hungarian Revolution 4794—4798 

Rumania 4834, 4839, 4840 

Russia 4801, 4804, 4805-4817, 4826, 4839 

Russian (s) 4781, 4782, 4788, 4793, 

4795, 4796, 4801, 4803, 4806-4817, 4831, 4834, 4839, 4841, 4842, 4843 

Russian anti-Communist underground 4826, 4827 

Russian Army {see also Red army) 4779 

Russian Legation (Vienna) 4791 

Russian outer-space missiles 4808 

Russian Revolution 4826 

S 
Saghi, Dr. Zoldan 477I 

St. Ladislaus Fraternal Society 4849 

Salzburg (Austria) 4845, 4846, 4848^850, 4853 

Sarytchev, Russian agent 4842 

Schiller Richtenwirte Inn 4845 

Schrade, Professor 4820 

Schroder, Professor 4856 

Schroeder, Frank W 4777 

Schwarcz, Miklos 4847 

Schweizer Studentenhilfe 4854 

Schwernik, Mr 4829 

Scientific alibis 4806 

Second Department of Intelligence, Ninth Division of 4828, 4836 

Secret documents, 109 4806 

Secret scientific information, 750 pages of 4806, 4812 

Semenov 4843 

Serbskaia 4837 

Serov, Gen, Ivan """4796, 4836 



Vni IISTDEX 

Page 
Siegrist, Robert R., 4073 North Prospect, Sliorewood 11, Wis. : 

Journalist and chief editorial writer for the Milwaukee Sentinel 4799 

Has nightly news broadcast on stations WLS, Chicago, and WISN, 

Milwaukee 4799 

Testimony of 4798-4S03 

Transcriptions of recorded interview between Igor Gouzenko and 

Robert Siegrist 4805^817 

Signal Corps, United States Army 4842 

Significance of the Hungarian Revolution, by V. N. Rudin, January-Febru- 
ary 1957 Research Report, International Research on Communist Tech- 
niques, Inc., New York 4794-4798 

Sipos, Lajos 4854, 4855 

Slack. Al 4843 

Small Landholders Political Party (Hungary) 4779, 

4780, 4782, 4783, 4785, 4852, 4856 

Smith, Dunford (alias Badeau) 4803.4804 

Smith, Paul 4842 

Sourwine, J. G 4777 

South America 4853 

Soviet (s) __4775, 4793, 4795^797, 4800-4805, 4818, 4819, 4824, 4826-^831, 4833, 4835 

Soviet Academy of Science : 4806 

Soviet Embassy 4802, 4804, 4806 

Soviet Empire 4797 

Soviet Government 4795, 4808, 4825, 4831. 4832 

Soviet Intelligence 4838, 4839 

Soviet military police 4793 

Soviet secret police 4770, 4773 

Soviet spy rings 4807, 4810, 4811 

Soivet State Security 4796 

Soviet Union 4795, 4797, 4827-^833, 4838, 4839 

Sperry G.vroscope 4842 

Stadtpark Cafe 4R47 

Stalin 4770, 4794, 4797, 4836 

Starosolsky, George (translator. Library of Congress) 4836 

State, Department of (United States) 4802, 4840, 4841, 4852, 4853 

Strasbourg Conference Committee ^^ 4783, 4785 

Strasbourg Congress 4S51, 4852, 4854 

Strasbourg Council 4858 

Strasbourg resolution 4844 

Sudoplatov, Lieutenant General 4835, 4837 

Suez 4795, 4844 

Suslov 4795 

Swiss secret service 4854 

Switzerland 4827, 4831, 4835, 4849, 4S52 

Szabo, Antal 4850 

Szabo, Gyorgy 4852 

Szabo, Istvan 4852 

Szabo, Miklos 4769, 

4771^773, 4777, 4778, 5782, 4783, 4785, 4786, 4788-4790, 4792. 4793 

Statement by 484.3-1859 

Szabo, Sandor 4847 

Szabo-Vidovics case 4772 

Szechenyi, Count Gregory 4856 

Szell, Kalman 4854 

Szentkuti, Jozsef 4854 

Szeredas, Mr 4709, 4777 

Szigethy, Attila 4850 

Szimcsak, Ferenc 4847 

Szolnoki, Bela 4846 

T 

TASS 48.32 

Taylor, John C. (warden, Lewisburg prison) 4843 

Tild.v, Zoltan 4856 

Tordai, Gabor 4S53, 4852 



n«rDEX IX 

Page 

Toth. Bela 4845 

Transdanubian Parliament — 4850 

Trausdanubian section of Hungary (west of the Danube) 4781 

Trushnovich, Dr. Alexander 4827,4828 

U 

Uniate Church 4836 

rniate Catholic Church 4836 

United Nations 4777, 4789, 4797, 4850, 4852, 4855, 4857 

United Nations General Assembly 4850, 4855, 4857 

11th session 4844 

United Nations investigating committee in Vienna 4786 

United Nations records 4786 

United States Army hospital, Frankfurt, Germany 4822 

United States Courthouse, Foley Square, New York 4769 

United States Naval Laboratory 4803 

United States Rubber Reserve Commission 4843 

Utes Cel (publication. Way and Aim) 4853 

V 

Varga, Msgr. Bela 4769, 4777, 4778-4794, 4844, 4855 

Interpreter for Ferenz Vidovics 4778^794 

Varosliget 4779 

Vertesi 4770 

"S'eszprem (west Hungarian community) 4780 

Veto. Gyorgy 4849 

Vidovics, Ferenc (Francis) 4770-^772, 

4777, 4778-4794, 4801, 4848, 4849, 4855 

Letter from Bela Fabian to Herald Tribune regarding 4770 

Testimony of 4778-4794 

Interpreter, Bela Fabian, Louis E. Kornis, Msgr. Bela Varga 4778-4794 

Statement printed in connection with testimony of 4843— i859 

Vienna '4770-4772, 

4774, 4777, 4783, 4785-4787, 4789-4793, 4844, 4846-^848, 4850-4853, 
4856, 4857. 
Voice of America 4840, 4841 

W 

Warsaw Pact 4797 

World War II 4797, 4827 

Y 

Y'^ugoslavia 4770 

Z 

Zashi. Mr 4772 

Zako. Andras 4849, 4853 

Zliukov 4817 

o 




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