What all this discord meant in practice was suggested by the case of Gustavo Duran, who had come to the notice of the Bureau, the security team at State, and several members of the Congress. Duran was of Spanish descent and had served with the anti-Franco forces in Spain in the 1930s. According to former Spanish defense minister Indalecio Prieto (a Socialist and foe of Franco), Duran had been an agent of the Soviet/Communist cause in the Spanish Civil War. By 1946, he had mysteriously turned up as an official in the Latin American division at State and been security-cleared to be there. A memo from Klaus recounts a tense discussion with Mickey Ladd about Duran, and also the case of Carl Marzani, a transferee from OSS. Said Klaus:
…in the course of the conversation, Mr. Ladd took occasion to assert with great emphasis that the State Department should have fired Marzani immediately and asked whether we had got rid of Duran. He said that if these people had been FBI employees they would have been fired at once…I…told him that, so far as Duran is concerned, we had, after careful consideration of Mr. Ladd’s own report, found in Duran’s favor and cleared him. We then argued the merits of the Duran case…The discussion on this point ended with Ladd saying that, if he were a Communist, he would hire me as his lawyer…*76 6
HAMPERED by suspicion and legal gridlock, the security squad nonetheless set out to grapple with the mess created by the merger, as well as with a number of homegrown cases that had earlier taken root at State. Reflecting the internal standoff, something like a split decision was arrived at, resulting in more delay and muddle. Officially, “reasonable doubt” prevailed, the more so post–McCarran rider, but this was a strictly formal posture; in fact, even flagrantly obvious cases weren’t ousted on their merits. Instead, things were handled in subliminal fashion—“reductions in force” and resignations, rather than outright dismissals. It was all very quiet and proper—aimed at easing people out discreetly, with no legal fuss or public uproar, and in a significant number of cases succeeded.
There were, however, serious drawbacks to these methods. For one, the vast extent of the penetration was kept secret from Congress and the public (and would remain so for years). For another, people who exited in this genteel manner could move on to other federal jobs or, as occurred with many, the United Nations or other global bodies. For yet another, pressuring someone out by these below-the-radar tactics could take months to work (when it did work), meanwhile leaving the suspect in place and risking possible security damage.
All these problems were on display in the most famous of the State Department cases, that of Alger Hiss. State had received several adverse reports on Hiss (including data supplied yet again by Chambers) beginning in the spring of 1945. By early 1946, the case had made its way to the top of the department. According to a Bureau memo of March 13, one State official had “advised in confidence that the Secretary [Byrnes] has on his ‘pending’ list the name of Alger Hiss, and has stated that Hiss is to be given no further consideration for promotion or assignment to responsible duties in the State Department…Secretary Byrnes is of the definite opinion that Alger Hiss should be disposed of, but is concerned over the best manner in which to do it.”7 (The timing of this report suggests Byrnes may well have read the COMRAP summary prepared for him on March 5.) Other State Department memos on Hiss reflect a similar negative judgment.
Thus, by March of 1946 if not before, the highest levels of the department were well aware of Hiss but because of uncertainty on how to act took no definite steps to oust him. At that time, given the Civil Service issues, inaction had some faintly plausible basis. However, it’s noteworthy that there was no overt move to cashier Hiss even after the McCarran rider was adopted. Instead, as happened in the vast majority of cases, he was quietly pressured to resign, which he finally did, effective in January of 1947. He was thus able to keep his post at State for ten full months beyond the date of Byrnes’s comment, and then bow out with seeming honor.*77
As would later be discovered, Hiss in this span was anything but idle—using the extra time he was afforded to busy himself with staffing the United Nations, the start-up of which was among his major projects. Congressional investigators would find that, during the spring and summer of ’46, Hiss forwarded to the U.N. the résumés of nearly 500 people, many of them his confreres at State, as prospective global staffers. About 50 of these later showed up on the permanent U.N. payroll, while more than 200 others got part-time assignments.†78
A real-time hint of what Hiss was doing surfaced in September of 1946, when security agents spotted the apparent leaking of a secret policy memo to journalist Drew Pearson. The document was known to have been in the possession of Hiss’s Office of Special Political Affairs (SPA), which triggered an in-depth investigation of that unit. Questioned about the matter by Klaus, Hiss was his usual double-talking self, revealing nothing while raising pedantic smoke-screen issues (whether the memo was being correctly quoted, whether it really matched the Pearson column).
However, the investigators soon uncovered copious information on Hiss, much of it alarming. Among other things, they learned, all kinds of official papers had been funneled to his office, including many on highly sensitive matters (data on the atomic bomb, the course of U.S. policy in China). As for the secret memo, they found it had variously been left sitting around in an open bookcase, taken off the premises by a staffer, and mimeographed in substantial numbers beyond any official need for copies. Such over-ordering, they also found, was standard practice at the SPA. There was thus no telling how many U.S. secrets had passed through Hiss’s office to unauthorized outside parties.‡79
One spin-off of all this was that the security squad began paying more attention, not just to Hiss, but to his subalterns, allies, and coworkers—at State and at the United Nations. A dozen or so names of these show up in department records, most prominently in the memos of Panuch, and many would later appear as well in proceedings of the Congress. Obviously, the investigators didn’t assume Hiss was going solo. They acted rather on the premise that he was all too possibly one of many.
And so in fact he was. Simultaneous with the Hiss investigation, the security bloodhounds were on the trail of Robert Miller, named by Bentley as a member of her spy ring. As seen, Miller was a transferee from CIAA who brought other people with him, and was in his way a major figure. The FBI had tracked his connections to the Silvermaster combine, the Maurice Halperin group from OSS, and various outside forces with high subversion quotients. In July of 1946, Bannerman drafted a report on Miller that was basically a digest of the Bureau findings. This reads in part as follows:
The FBI has established by investigative methods…that Mr. Miller is in close and constant association with a group of individuals who are subjects in a current investigation of Soviet espionage activities in agencies of the United States government. It has been determined that Mr. Miller has lunched with, visited the homes of and attended social functions with the subjects of the aforementioned investigation. He further has been in constant association with a number of persons known as Communists, and directly related to Soviet espionage activities in the United States…8
The Bannerman memo also discussed the problem of bringing formal charges against Miller under Civil Service rules and the trouble this might cause the FBI in surveilling Bentley’s people. As the McCarran rider had just been voted, Bannerman suggested Miller might be shown out through that exit. But, again, this didn’t happen. Instead, Miller stayed on until mid-December, when he quietly resigned his post, coincident with the long good-bye of Hiss.*80
A further protracted and more public case was that of Carl Marzani, newly arrived from OSS. Marzani was so provable a Communist agent that he would be convicted in a court of law for having denied it to Panuch. Before this happened, however, he also was pressured to resign, which he at first refused to do, and the matter dragged on for months. It was only after this strategy failed that he was finally, and atypically, dismissed via the McCarran rider, this also occurring in December of
1946. The slow pace at which the case developed became a sore point with the FBI and several members of the Congress.*81
Nor, in all of this, was the Amerasia case forgotten. Though the scandal had been fixed and buried, neither the Bureau nor the security squad at State was dissuaded from following up on its disturbing implications. Service, Jaffe, et al. were featured not only in the Bureau’s bulging Amerasia file but also in the comprehensive memo of November 1945 and COMRAP report of March 1946, all resting on a solid base of wiretaps. Likewise, as seen in the Bannerman charts, the Amerasia group at State was thought important enough to merit a section of its own, distinct from all the other cases.
All told, there were something like fifteen people at State who had links to Amerasia and/or its think-tank cousin, the Institute of Pacific Relations. Service, Vincent, Hiss, Michael Greenberg, Haldore Hanson, Esther Brunauer, Cora Dubois, and Philip Jessup were examples of such contacts. Another was William T. Stone, a former member of the Amerasia board and with Brunauer an incorporator of the American IPR. Stone had worked for Assistant Secretary of State William Benton—as had, intriguingly, Miller, Brunauer, Hanson, and still other security suspects to be considered in their turn hereafter.
On March 22, 1946, Bannerman addressed a memo to Donald Russell concerning Stone, urging that he be removed from the department, once more by way of resignation—and once more showing the weakness of this tactic. Bannerman noted the pro-Communist nature of Amerasia, the activities of pro-Soviet editor Philip Jaffe and his flamingly obvious Communist colleague Frederick Field, and Stone’s linkage to this duo in the period 1937–41. The memo accordingly concluded:
…it is recommended that action be instituted to terminate the subject’s services with the State Department. It is suggested that, to achieve this purpose, an appropriate officer should inform Stone that his continued presence in the department is an embarrassment to the department and that he be given an opportunity to resign. If Stone should not resign voluntarily action should be instituted under Civil Service Rule XII [i.e., a hearing for dismissal] to terminate his services with the department.9
In this case the resignation gambit didn’t work, not even slowly. When push came to shove, Stone didn’t resign, nor was he fired under Civil Service, or thereafter by the McCarran method. Rather, he stayed on at the department until 1952—a good five years after Bannerman himself departed, and after Stone had been officially cleared by the security team then making such decisions. The episode, and the differing fates of the two parties, were symptomatic of much that would happen in the department in the latter 1940s.
Though halting and uncertain, the subliminal strategy pursued by the Panuch security unit did, after its fashion, get results. Hiss, Miller, Marzani, and others left the building, albeit for the most part sub rosa and at a near-funereal tempo. But, as suggested by the Hiss U.N. maneuvers and secret-memo probe, the costs of this approach were great. Among these was the fact that, while the slow-motion process took effect, the clock was running—not on the suspects, but on the security squad itself. At the beginning of 1947, there would be yet another upheaval in the department, bringing in a new group of players and dismantling the house-divided security team that struggled with the merger.
In the long run, the results of this further changeover were complex. In the short term they were fairly simple, though not for that reason unimportant. When the old security squad departed, it left behind an investigative and enforcement job that, as Panuch himself would comment, was just beginning. The suspects had come on board in a vast incursion, but had been going out by inches. Hiss was finally gone, but there were still in the department many of his allies and lieutenants. Likewise with Robert Miller, several of whose closest friends and contacts remained in their positions. As for the Amerasia/IPR contingent, not only did Vincent, Service, Hanson, Stone, et al. stay on, they were at this time, thanks to Vincent’s elevation, gaining steadily in power. And these affinity groups were representative of others: members of the OSS detachment, retreads from OWI, staunch allies of the Keeneys.
In the meantime, the American people had no idea that any of this had been occurring—had never heard of Alger Hiss or Robert Miller, couldn’t have dreamed that twenty alleged Soviet agents had ever been ensconced at State, and were in general blissfully unaware that any security problems at all existed in these early halcyon days of peace. Thanks both to the clandestine nature of the penetration and the subliminal methods used against it, the matter not only dragged out for months but was kept completely secret from the public. All of it, however, would soon become the subject of avid notice by certain members of the Congress.
CHAPTER 13
Acts of Congress
WHEN Martin Dies began compiling his provocative lists of security suspects on the federal payroll, America was at peace, the government was still wrestling with the ills of the Great Depression, and domestic issues were front and center. Accordingly, the places where the suspects worked dealt mainly with such issues. But when Pearl Harbor switched the scene of federal action to the world arena, the trail would lead to the State Department also. Some hints of security trouble there stemmed from the wartime congressional focus on OWI, and then on OSS, as alumni of both units moved en masse to the department.
At war’s end, certain members of Congress began to delve into security affairs at State itself. In October of 1945, Rep. George Dondero (R-Mich.) got wind of the Amerasia scandal and called for an investigation, resulting in the curious Hobbs inquiry that has been noted. In November, Rep. Paul Shafer, another Michigan GOPer, delivered some scathing comments on staff and policy changes at State, with reference to the transferees from OSS and OWI, the departure of Joe Grew, and the ascendancy of the Acheson forces in the department. A similar critique was made a few weeks later by Rep. Carl Curtis (R-Neb.).1
By the early months of 1946, it was apparent that security data from the FBI and the security squad at State were making their way to members of both the House and Senate. In March, Rep. Andrew May (D-Ky.), chairman of the House Military Affairs Committee, demanded the removal from intelligence ranks at State of officials with “Soviet leanings”—a clear reference to the OSS contingent.2 By April, Sen. Kenneth McKellar (D-Tenn.) was asking the FBI for information on Gustavo Duran and Alger Hiss. Similar interest was expressed by Sen. Kenneth Wherry (R-Neb.) in the matter of Duran.
By mid-summer, concern about security affairs at State was becoming widespread in Congress, as still other lawmakers began to call for information on the penetration problem and press for action. It was at this time that the McCarran rider was adopted, supposedly to ease the way for ousting some of the more flagrant suspects. At this juncture also, yet another Michigan GOPer, Rep. Bartel Jonkman, had a lengthy powwow with Joe Panuch about the Carl Marzani case. In this evidently heated session, Panuch advised his visitor that some forty security suspects had already been eased out of the department, mostly via resignations.
A few days later, Panuch drafted a lengthy memo for Donald Russell reporting on the exchange with Jonkman and passing along some other data indicating that trouble over security issues was building up in Congress. “Sen. [Styles] Bridges [R-N.H.],” said Panuch, “has evidenced a lively interest as to when we are going to begin firings. This is also true of many members of the House. The sentiment clearly seems to be—What is Jimmy Byrnes waiting for?” The following week, Byrnes himself would try to smooth the feathers of another influential solon inquiring about security matters. In a letter to Rep. Adolph Sabath (D-Ill.), Byrnes disclosed that, of 284 State Department employees whose removal had been recommended by security screeners, seventy-nine had been disposed of (this number including the forty previously mentioned by Panuch).*82 3
Thus, members of both parties and both houses were focused on the security shop at State, albeit from different angles, by the latter part of 1946.†83 The most decisive occurrence on this front, however, had yet to happen: the electoral landslide scored by the congressional GO
P in that November’s midterm voting. This brought in the first Republican Congress since the early days of the depression, a hiatus in which virtually all the loyalty-security problems at State and other agencies had developed. The GOP had long harbored suspicions of infiltration, had campaigned on an anti-Communist platform, and had every partisan reason to press the issue. So when the 80th Congress came to town in January of 1947, many individual members and several newly staffed committees were geared up for Red-hunting action, and plenty of it.
BY ACCIDENT of timing, this Congress took control precisely as further seismic changes were rumbling through State, fracturing a security team that already had its share of troubles. On January 21, a chronically restless Secretary Byrnes had his oft-threatened resignation accepted by the White House and was replaced by Gen. George C. Marshall, just back from a foray to China. As a career military man, Marshall knew even less about the daily workings of the State Department than did Byrnes, and asked the already powerful Acheson to stay on and manage such internal matters for him.*84 Joe Panuch, at swords’ points with the Under Secretary, and now without the shield of Donald Russell, couldn’t survive in a department where Acheson was the unchallenged in-house ruler. By close of business on the first day of the Marshall era, Joe Panuch was out of office.4
Thereafter, in an exodus that resembled the turnover at the Far East division in late 1945, other members of the security squad would get their walking papers also. Among the first to go was Frederick Lyon. His colleague Robert Bannerman would follow a few months later, and still others of the hard-line faction would soon be ousted. Taking over the security shop were two youngish Acheson protégés who would loom large in disputes to follow: Assistant Secretary of State for Administration John Peurifoy, who assumed the duties of Panuch, and Hamilton Robinson, the new Director of Controls, replacing Lyon.
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