.KA^3>LJf^:i0i
Given By
II S. SUPX GK DOCUMENTS
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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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